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 War Finance 
 Corporation Act 
 
 Guaranty Trust Company 
 of New York 
 
War Finance Corporation Act 
 
 Approved AprU 5, 1918 
 
 A 
 
 Guaranty Trust Company of New York 
 140 Broadway 
 
 FIFTH AVENUE OFFICE LONDON OFFICE 
 
 Fifth Avenue and 43rd Street 32 Lombard Street, E. C. 
 
 MADISON AVENUE OFFICE PARIS OFFICE 
 
 Avenue and 60th Street Rue des Italians, 1 & 3 
 

 COPYRIGHT, 1918 
 GUARANTY TBUST COMPANY OF NEW YORK 
 
Contents 
 
 Foreword 3 
 
 Synopsis of Act 7 
 
 Text of Act 31 
 
 Index to Synopsis 51 
 
 373735 
 
War Finance Corporation Act 
 
 Approved, April 5, 1918 
 
 FOREWORD 
 
 Purpose of the Measure 
 
 T 1 1HE War Finance Corporation Act is purely 
 JL an emergency measure designed to obtain 
 credits and resources for the operation of indus- 
 tries necessary and contributory to the prosecu- 
 tion of the war. To accomplish this, the law has 
 a twofold purpose, first, to provide facilities 
 whereby war industries may obtain necessary 
 funds for operation, and, second, to restrict un- 
 necessary capital expenditures in other than war 
 industries. The term "war industries" is not 
 limited to those industries turning out the actual 
 munitions of war but, as stated by the Secretary 
 of the Treasury, includes "all those supplying 
 any of the elements of production or distribution 
 in an industrial structure designed to meet the 
 diversified requirements of the war." 
 
 War Finance Corporation 
 
 To provide funds and credits in aid of war 
 industries, the Act creates the War Finance Cor- 
 poration, the organization and powers of which, 
 [3] 
 
as defined in the law, will be later explained. 
 This Corporation is so organized as to take care of 
 loan?, credits and discounts, by permitting loans 
 to banks, bankers and trust companies, and in 
 certain cases to industries direct for war purposes. 
 
 The Secretary of the Treasury in his report to 
 the Finance Committee, states the object of the 
 War Finance Corporation as follows : 
 
 "In Europe central banks are permitted to grant to 
 banks and bankers loans upon stocks and bonds upon 
 certain well-defined terms. The Federal reserve act 
 does not provide for these, and the War Finance Cor- 
 poration is designed as a war emergency to fill this 
 gap. The provisions of the Federal reserve act which 
 permit Federal reserve banks to rediscount and purchase 
 commercial paper and paper secured by the Govern- 
 ment's obligations have had the effect of forcing the 
 banks to discriminate against loans on ineligible paper, 
 even where such loans were vitally necessary for war 
 purposes, in favor of loans on commercial paper, even 
 where they represented activities or enterprises not 
 related to the war, and which might well be curtailed 
 during the period of the war." 
 
 "The bill contemplates that the War Finance Cor- 
 poration shall lend money to banks, both National and 
 State, which are making loans to enterprises conducted 
 by persons, firms, or corporations producing materials 
 or supplies, or doing anything else which is necessary 
 for or contributory to the war. If a bank, for in- 
 stance, should loan money, we will say, to a munitions 
 company, and take the company's six months' note with 
 the company's bond as collateral security, that note 
 would not be eligible for rediscount in the Federal re- 
 serve banks; but the War Finance Corporation hi such 
 [4] 
 
circumstances could advance to the bank against the 
 note of the munitions company, so secured with that 
 bank's indorsement on it, 75 per cent, of the face of 
 that note." 
 
 Capital Issues Committee 
 
 For the success of the war, it is important that 
 funds should not be directed to channels not 
 aiding in its prosecution. Such diversion of 
 capital not only lessens the financial resources 
 of our war industries but creates a demand for 
 labor and materials which would otherwise be 
 directed to operations contributory to the war. 
 
 Industries which are now necessary or con- 
 tributory to the conduct of the war, should be 
 first provided for out of funds available for 
 investment. Capital, which in normal times is 
 freely permitted to seek its own investment, 
 should during the war be so directed that the 
 financial requirements of the Government and 
 of our war industries may be taken care of before 
 available capital is invested either in new enter- 
 prises, or for the expansion of old enterprises 
 which are not directly or indirectly essential to the 
 prosecution of the war. 
 
 By the establishment of the Capital Issues 
 Committee, with authority to pass on issues of 
 securities, unnecessary expenditures of capital 
 may be kept within bounds during the period 
 of the war. 
 
 (5] 
 
Synopsis of the 
 
 War Finance Corporation Act 
 
 War Finance Corporation 
 
 Organization 
 
 The Act creates a corporation known as the 
 "War Finance Corporation," composed of the 
 Secretary of the Treasury and four additional 
 persons who shall act as directors. The life of 
 the Corporation is limited to ten years, but it is 
 prohibited from exercising any of its powers after 
 six months after the termination of the war, 
 except those incident to the liquidation of its 
 assets and the winding up of its affairs. (Sec. 1.) 
 Until authorized by the President to commence 
 business, the Corporation shall not exercise any 
 of its powers nor perform any acts, except such 
 as are incidental and preliminary to its organi- 
 zation. (Sec. 14.) 
 
 Offices 
 
 The principal office of the Corporation shall be 
 located in the District of Columbia, but branch 
 offices may be established in any cities of the 
 United States under regulations prescribed by 
 the board of directors. (Sec. 5.) 
 [7] 
 
Board of Directors 
 
 The directors are appointed by the President, 
 with the advice and consent of the Senate, to 
 manage the affairs of the Corporation, but any 
 director, as well as any officer or employee, is 
 prohibited from participating in any way in the 
 determination of any question affecting his per- 
 sonal interests or those of any corporation, part- 
 nership or association, in which he is directly or 
 indirectly interested. The Secretary of the Treas- 
 ury shall act as chairman of the board. 
 
 All directors and officers must take an oath 
 for the faithful discharge of their duties, and 
 directors must devote their time, not otherwise 
 required by the business of the United States, prin- 
 cipally to the business of the Corporation. 
 
 The President shall designate two directors to 
 serve for two years and two for four years, but 
 each director appointed thereafter will hold 
 office for a term of four years. Directors are 
 subject to removal by the President. Officers 
 and employees of the United States and directors 
 of Federal reserve banks are eligible for appoint- 
 ment as directors of the Corporation. When a 
 vacancy occurs in the board of directors, the 
 person appointed to fill the vacancy shall serve 
 for the unexpired term. Three members of the 
 board shall constitute a quorum. (Sec. 3.) 
 
 The salaries of directors are fixed at $12,000 
 [8] 
 
per annum. If a director receives compensation 
 from the United States for services, he may not 
 receive as salary from the Corporation any 
 amount which would make the total paid him by 
 the United States and the Corporation exceed 
 $12,000. (Sec. 4.) 
 
 Capital Stock 
 
 The capital stock of the Corporation is fixed 
 at $500,000,000, all to be subscribed by the United 
 States, which subscription, upon approval of the 
 Secretary of the Treasury, shall be subject to call 
 upon the vote of three-fifths of the board of direc- 
 tors, at such time as may be deemed advisable. 
 The sum of $500,000,000, or so much of that 
 amount as may be necessary, is appropriated for 
 making payment upon the subscription. Re- 
 ceipts for payments by the United States for or 
 on account of such stock shall be issued by the 
 Corporation to the Secretary of the Treasury, and 
 shall be evidence of stock ownership. (Sec. 2.) 
 
 Powers 
 Administrative Powers 
 
 The Corporation has the following administrative 
 powers: to adopt, alter and use a corporate seal; 
 to make contracts; to purchase, lease, hold and 
 dispose of real estate necessary for the prosecution 
 of its business; to sue and be sued in any Federal 
 or state court; to appoint by its board of directors 
 [9] 
 
and fix the compensation of necessary officers, 
 attorneys, employees; to define their duties, re- 
 quire bonds and fix the penalties of such bonds 
 and to dismiss at pleasure such officers, attorneys 
 and employees; and to prescribe, amend and re- 
 peal by its board of directors, subject to the ap- 
 proval of the Secretary of the Treasury, by-laws 
 regulating the manner in which its general busi- 
 ness may be conducted and the privileges, granted 
 it by law, may be exercised and enjoyed, and 
 prescribing the powers and duties of its officers 
 and agents. (Sec. 6.) 
 
 Power to Deal in United States Bonds 
 
 The Corporation may subscribe for, acquire and 
 own, buy, sell and deal in bonds and obligations 
 of the United States, issued or converted after 
 September 24, 1917, to such extent as the board 
 of directors, with the approval of the Secretary 
 of the Treasury, may determine. (Sec. 11.) 
 
 Advances to Banking Institutions 
 
 The Corporation is authorized to make advances 
 for periods not exceeding five years as follows: 
 
 (1) to any bank, banker or trust company in 
 the United States, which shall have made, after 
 April 6, 1917, and which shall have outstanding, 
 any loans evidenced by notes, to any person, 
 firm, corporation or association conducting an 
 [10] 
 
established and going business in the United 
 States, whose operations are necessary or con- 
 tributory to the prosecution of the war. No such 
 advance shall exceed seventy-five per centum of 
 the face value of such loan or loans, and 
 
 (2) to any bank, banker or trust company in the 
 United States, which shall have rendered financial 
 assistance to any such person, firm, corporation 
 or association, by the purchase after April 6, 1917, 
 of its bonds or other obligations. No such 
 advance shall exceed seventy-five per centum of 
 the value of such bonds or other obligations at the 
 time of the advance as estimated and determined 
 by the board of directors of the Corporation. 
 
 All advances shall be made upon the promissory 
 note of the bank, banker, or trust company, 
 secured by the notes, bonds or other obligations, 
 which are the basis of such advances by the 
 Corporation, together with all the securities 
 which such bank, banker, or trust company may 
 hold as collateral for such notes, bonds, or other 
 obligations. 
 
 The Corporation, however, shall have power 
 to make advances (a) up to one hundred per cen- 
 tum of the face value of any loan made by any 
 such bank, banker, or trust company to any per- 
 son, firm, corporation or association, and (b) 
 up to one hundred per centum of the value, at the 
 time of such advance, of such bonds or other 
 obligations by the purchase of which financial 
 
 [in 
 
assistance has been rendered to suqh person, 
 firm, corporation or association. Every such 
 advance shall be secured as described in the fore- 
 going paragraph and, in addition, by collateral 
 security, of such character as shall be prescribed 
 by the board of directors of the Corporation and 
 of a value, at the time of such advance (as esti- 
 mated and determined by the board of directors 
 of the Corporation), equal to at least thirty-three 
 per centum of the amount advanced by the Cor- 
 poration. The Corporation is authorized to 
 require additional security at any time. (Sec. 7.) 
 
 Advances to Savings Institutions 
 The Corporation is empowered to make advances, 
 for periods not exceeding one year, to any savings 
 or other banks, or trust companies, in the United 
 States, receiving savings deposits or to any build- 
 ing and loan association in the United States, on 
 the promissory notes of the borrowing institution, 
 whenever the Corporation deems such advances 
 necessary or contributory to the prosecution of 
 the war, or important in the public interest. 
 Such notes shall be secured by the pledge of se- 
 curities, prescribed by the board of directors of 
 the Corporation, the value of which at the time 
 of such advance, ascertained by the board of 
 directors of the Corporation, shall equal at least 
 one hundred and thirty-three per centum of the 
 amount advanced. 
 
 [12] 
 
The rate of interest charged on any such ad- 
 vance shall not be less than one per centum per 
 annum in excess of the rate of discount for ninety- 
 day commercial paper, prevailing at the time of 
 the advance at the Federal reserve bank of the 
 district in which the borrowing institution is 
 located. Such rate in no case shall exceed the 
 average rate receivable by the borrowing insti- 
 tution on its loans and investments made during 
 the six months prior to the date of the advance, 
 except that where the average rate receivable by 
 the borrowing institution is less than the rate 
 of discount for ninety-day commercial paper, the 
 rate of interest on such advance shall be equal 
 to the rate of discount. Additional collateral 
 may be required by the Corporation in its dis- 
 cretion. (Sec. 8.) 
 
 Direct Advances to War Industries 
 
 In exceptional cases, the Corporation is empowered 
 to make advances directly to any person, firm, 
 corporation or association conducting an estab- 
 lished and going business, whose operations are 
 necessary or contributory to the prosecution of 
 the war. Such advances shall be made only for 
 the purpose of conducting such business in the 
 United States and only when the board of direc- 
 tors of the Corporation is of the opinion that 
 such person, firm, corporation or association is 
 [13] 
 
unable to obtain funds upon reasonable terms 
 through banking channels or from the general 
 public. Advances may be made for a period not 
 exceeding five years, subject to terms and regu- 
 lations prescribed by the board of directors of the 
 Corporation. 
 
 In no case shall the aggregate amount of such 
 direct advances exceed, at any one time, an 
 amount equal to twelve and one-half per centum 
 of the sum of (1) the authorized capital stock 
 of the Corporation, plus (2) the aggregate amount 
 of bonds of the Corporation authorized to be 
 outstanding at any one time when the capital 
 stock is fully paid in. Such advances must be 
 secured by adequate security prescribed by the 
 board of directors of a value at the time of such 
 advance, as estimated by the board, equal to 
 (except in case of an advance made to a railroad 
 in the possession and control of the President, 
 for the purpose of making additions, betterments 
 or road extensions to such railroad) at least one 
 hundred and twenty-five per centum of the 
 amount advanced by the Corporation. The Cor- 
 poration shall have power to require additional 
 security at any time. 
 
 The rate of interest charged on any such ad- 
 vance shall not be less than one per centum per 
 annum in excess of the rate of discount for ninety- 
 day commercial paper prevailing at the time of 
 [14] 
 
such advance at the Federal reserve bank of the 
 district in which the borrower is located. (Sec. 9.) 
 
 Limitation on Advances 
 
 In no case shall the aggregate amount of the 
 advances made to any one person, firm, corpora- 
 tion or association exceed at any one time an 
 amount equal to ten per centum of the authorized 
 capital stock of the Corporation. This provision 
 does not apply in the case of an advance to a 
 railroad in the possession and control of the 
 President, for the purpose of making additions, 
 betterments or road extensions to such railroad. 
 (Sec. 10.) 
 
 Power to Issue Bonds 
 
 The Corporation is authorized to issue and have 
 outstanding at any one time its bonds in an 
 amount aggregating not more than six times its 
 paid-in capital, such bonds to mature not less 
 than one year nor more than five years from the 
 respective dates of issue. Bonds shall bear inter- 
 est at such rate or rates as may be determined by 
 the board of directors and may be redeemable 
 before maturity at the option of the Corporation. 
 Such rates shall be subject to the approval of 
 the Secretary of the Treasury. These bonds shall 
 have a first and paramount floating charge on 
 all the assets of the Corporation which shall not 
 at any time mortgage or pledge any of its assets. 
 [15] 
 
They may be issued at not less than par in pay- 
 ment of any advances authorized, or may be 
 offered for public sale or to any individual, firm, 
 corporation or association, at such prices as the 
 board of directors, with the approval of the 
 Secretary of the Treasury, may determine. 
 (Sec. 12.) 
 
 Upon terms prescribed by the board of directors, 
 with the approval of the Secretary of the Treasury, 
 at or before issue, any of such bonds may be 
 issued payable in foreign money, or at the option 
 of the respective holders, either in dollars or in 
 foreign money, at such fixed rate of exchange as 
 may be stated in the bonds. To determine the 
 amount of bonds issued payable in foreign money, 
 the dollar equivalent shall be determined by the 
 par of exchange at the date of issue as estimated 
 by the Director of the Mint, and proclaimed by 
 the Secretary of the Treasury in pursuance of the 
 provisions of section twenty-five of the Act en- 
 titled "An Act to reduce taxation, to provide 
 revenue for the Government, and for other pur- 
 poses," approved August 27, 1894. (Sec. 12.) 
 
 Liability of United States 
 
 The United States shall not be liable for the 
 payment of the bonds or obligations of the 
 Corporation, or the interest thereon, nor for any 
 act or omission of the Corporation. (Sec. 17.) 
 [16] 
 
Discount by Federal Reserve Banks 
 
 Federal reserve banks are authorized, subject 
 to the maturity limitations of the Federal Reserve 
 Act and to regulations of the Federal Reserve 
 Board, to discount the direct obligations of mem- 
 ber banks secured by bonds of the Corporation 
 and to rediscount eligible paper secured by such 
 bonds and indorsed by a member bank. No 
 discount or rediscount under this section shall 
 be granted at a less interest charge than one per 
 centum per annum above the prevailing rates 
 for eligible commercial paper of corresponding 
 maturity. (Sec. 13.) 
 
 Security for Federal Reserve Notes 
 
 With the approval of the Federal Reserve Board, 
 a Federal reserve bank may use any obligations 
 or paper so acquired for any purpose for which 
 it is authorized to use obligations or paper secured 
 by bonds or notes of the United States, not 
 bearing the circulation privilege. Whenever Fed- 
 eral reserve notes are issued against the security 
 of such obligations or paper, the Federal Reserve 
 Board may make a special interest charge on 
 such notes, which in the discretion of the Federal 
 Reserve Board need not be applicable to other 
 Federal reserve notes which may from time to 
 time be issued and outstanding. 
 [171 
 
All provisions of law, in respect to the acquisi- 
 tion by any Federal reserve bank of obligations 
 or paper secured by bonds or notes of the United 
 States and in respect to Federal reserve notes 
 issued against the security of such obligations or 
 paper, not inconsistent with this Act, shall extend, 
 in so far as applicable, to the acquisition of obli- 
 gations or paper secured by the bonds of the 
 Corporation and to the Federal reserve notes 
 issued against the security of such obligations or 
 paper. (Sec. 13.) 
 
 Disposition of Funds 
 
 All net earnings of the Corporation, not required 
 for its operation, shall be accumulated as a reserve 
 fund until the Corporation is liquidated. Such 
 funds shall, upon direction of the board of direc- 
 tors, with the approval of the Secretary of the 
 Treasury, be invested in bonds and obligations 
 of the United States issued or converted after 
 September 24, 1917, or upon like direction and 
 approval, may be deposited in member banks 
 of the Federal Reserve System, or in any of the 
 Federal reserve banks, or may be used in the 
 purchase and redemption of any bonds issued 
 by the Corporation. Federal reserve banks 
 are authorized to act as depositaries for and as 
 the fiscal agents of the Corporation in the general 
 performance of the powers conferred. (Sec. 15.) 
 [18] 
 
Taxation 
 
 All bonds issued by the Corporation shall be 
 exempt, both as to principal and interest, from 
 all taxation imposed by the United States, its 
 possessions or any state, or by any local taxing 
 authority, except (a) estate or inheritance taxes, 
 (b) graduated additional income taxes, known 
 as surtaxes, and excess profits and war profits 
 taxes, now or hereafter imposed by the United 
 States upon the income or profits of individuals, 
 partnerships, corporations or associations. The 
 interest on an amount of such bonds, the principal 
 of which does not exceed in the aggregate $5,000, 
 owned by an individual, partnership, corporation 
 or association, shall be exempt from income and 
 excess profits and war profits taxes. 
 
 The Corporation, its franchises, capital and 
 reserve or surplus, together with income derived 
 therefrom, shall be exempt from all taxation 
 imposed by the United States, any state or any 
 possession of the United States or by any local 
 taxing authority, except that any real property 
 of the Corporation shall be subject to state, 
 county or municipal taxes to the same extent, 
 according to its value, as other real property. 
 (Sec. 16.) 
 
 Dissolution of Corporation 
 
 Beginning six months after the termination of 
 the war, the date being fixed by proclamation 
 
 'lit] 
 
of the President, the directors of the Corporation 
 shall proceed to liquidate its assets and wind 
 up its affairs, but they may from time to time, 
 prior to such date, sell and dispose of any securi- 
 ties or other property acquired by the Corporation. 
 Any balance remaining after the payment of the 
 debts of the Corporation shall be paid into the 
 Treasury of the United States as miscellaneous 
 receipts and thereupon the Corporation shall be 
 dissolved. (Sec. 15.) 
 
 Penalties 
 False Statement 
 
 For obtaining any advance by means of any 
 statement, known to be false, the penalty is a 
 fine of not more than $10,000, or imprisonment 
 for not more than five years, or both. 
 
 Overvaluation 
 
 For obtaining any advance through wilfull over- 
 valuation of any security, the penalty is a fine 
 of not more than $5,000, or imprisonment for not 
 more than two years, or both. 
 
 Forgery and Counterfeiting 
 
 For forging, altering or counterfeiting any bond, 
 coupon or paper issued by the Corporation or 
 for passing or attempting to pass the same, know- 
 ing it to be forged, altered or counterfeited, the 
 [80] 
 
penalty is a fine of not more than $10,000, or 
 imprisonment for not more than five years, or 
 both. 
 
 Embezzlement 
 
 The penalty for the embezzlement of funds of 
 the Corporation, or the making of any false entry 
 in the books of the Corporation, or the drawing" 
 or assigning of any note, bond, mortgage or draft 
 of the Corporation, with intent to defraud, is a 
 fine of not more than $10,000, or imprisonment 
 for not more than five years, or both. (Sec. 18.) 
 
 Detection of Violations 
 
 The Secretary of the Treasury is authorized 
 to direct and use the Secret Service Division of 
 the Treasury Department to detect, arrest and 
 deliver into the custody of the United States 
 marshal, having jurisdiction, any person com- 
 mitting any of the foregoing offenses. (Sec. 18.) 
 
 Reports of the Corporation 
 
 The Corporation shall file quarterly reports 
 with the Secretary of the Senate and with the 
 Clerk of the House of Representatives stating, 
 as of the first day of each month of the quarter 
 just ended, 
 
 (1) the total amount of capital paid in, 
 
 (2) the total amount of bonds issued, 
 
 (3) the total amount of bonds outstanding, 
 
 [21] 
 
(4) the total amount of advances made, 
 
 (5) a list of the classes and amount of securities 
 taken, 
 
 (6) the total amount of advances outstanding, 
 and 
 
 (7) such other information as may be here- 
 after required by either House of Congress. 
 
 The Corporation shall also make a report 
 to Congress on the first day of each regular 
 session, including a detailed statement of receipts 
 and expenditures. (Sec. 19.) 
 
 Indebtedness of National Banks 
 
 The restriction imposed by Section 5202, Revised 
 Statutes of the United States, providing that, 
 except in certain specified instances, a national 
 bank shall at no time be indebted or in any way 
 liable to an amount exceeding the amount of its 
 capital stock, at such tune actually paid in and 
 remaining undiminished by losses or otherwise, 
 is limited to exclude liabilities incurred under 
 the provisions of the War Finance Corporation 
 Act. (Sec. 20.) 
 
 [22] 
 
Capital Issues Committee 
 
 Membership and Organization 
 
 A Committee is created known as the "Capital 
 Issues Committee," composed of seven members 
 appointed by the President by and with the 
 advice and consent of the Senate, at least three 
 of whom must be members of the Federal Reserve 
 Board. Officers and employees of the United 
 States and directors of Federal reserve banks are 
 eligible for appointment on the Committee. Four 
 members shall constitute a quorum for the trans- 
 action of business. The President shall designate 
 one member as chairman but any subsequent 
 vacancy in the chairmanship shall be filled by 
 the Committee. Members of the Committee, 
 as well as its officers, attorneys, agents or employ- 
 ees, are disqualified from all participation in the 
 determination of any question affecting their 
 personal interests or those of any corporation, 
 partnership or association in which they are in 
 any way interested. 
 
 The terms of office of the several members 
 of the Committee shall be determined by the 
 President and the compensation of those who are 
 not members of the Federal Reserve Board 
 shall be $7,500 per annum. If a member receives 
 any other compensation from an office under the 
 United States, the amount received shall be 
 deducted from his salary and if such other com- 
 [83] 
 
pensation is $7,500 or more, he shall receive no 
 salary as a member of the Committee. (Sec. 200.) 
 
 Powers of Committee 
 
 The Committee may, under rules and regulations 
 to be prescribed by it, investigate, pass upon, 
 and determine whether it is compatible with the 
 national interest that there should be sold, or 
 offered for sale or for subscription, any securities, 
 hereafter issued by any person, firm, corporation 
 or association, the total face value of which, and 
 any other securities issued by the same person, 
 firm, corporation or association since the passage 
 of this Act, is in excess of $100,000. Shares of 
 stock of any corporation or association without 
 nominal or par value, shall, for the purpose of 
 this section, be deemed to be of the par value 
 of $100 each. Any securities, which, upon the 
 date of the passage of this Act, are in the posses- 
 sion or control of the corporation, association or 
 obligor issuing the same, shall be deemed to have 
 been issued after the passage of this Act. (Sec. 
 203.) 
 
 No Approval of Validity of Issue 
 
 Nothing done or omitted by the Committee 
 shall be construed as carrying the approval of 
 the Committee or of the United States of the 
 legality, validity, worth, or security of any securi- 
 ties. (Sec 203.) 
 
 [24] 
 
Issues not Subject to Investigation 
 
 The Committee is not authorized to pass upon 
 
 (1) Any borrowing by any person, firm, cor- 
 poration or association in the ordinary course of 
 business, as distinguished from borrowing for 
 capital purposes, 
 
 (2) The renewing or refunding of indebtedness 
 existing at the time of the passage of this Act, 
 
 (3) The resale of any securities, the sale or 
 offering of which the Committee has determined 
 to be compatible with the national interest, 
 
 (4) Any securities issued by any railroad 
 corporation, the property of which may be in the 
 possession and control of the President, or 
 
 (5) Bonds issued by the War Finance Corpo- 
 ration. (Sec. 203.) 
 
 Employees 
 
 The Committee may employ and fix the compen- 
 sation of any officers, attorneys, agents and other 
 employees deemed necessary to conduct its 
 business, who shall be appointed without regard 
 to the provisions of the Civil Service Act of the 
 United States or any rules or regulations made 
 in pursuance thereof. The compensation of 
 any officer, attorney or employee shall not exceed 
 that received by persons performing services 
 of similar character under the Federal Reserve 
 Board. (Sec. 201.) 
 
 [25] 
 
Expenses 
 
 All expenses of the Committee, such as for trans- 
 portation incurred by members or officers, at- 
 torneys or employees under its orders in making 
 investigation, or upon official business hi any 
 other places than at their respective headquarters, 
 shall be allowed and paid on the presentation 
 of itemized vouchers approved by the chairman. 
 (Sec. 202.) 
 
 Office of Committee 
 
 The principal office shall be in the District of 
 Columbia, but it may meet and exercise all its 
 powers at any place. Any inquiry, necessary to 
 the duties of the Committee, may be prosecuted 
 by one or more of its members, or by such agents 
 as it may designate, in any part of the United 
 States. 
 
 The Committee may rent suitable offices and 
 purchase such furniture, equipment and supplies 
 as may be necessary, but shall not expend more 
 than $10,000 annually for offices in the District 
 of Columbia. 
 
 The sum of $200,000 is appropriated for the 
 purpose of defraying the expenses of the estab- 
 lishment and maintenance of the Committee, 
 including the payment of the salaries and rents 
 authorized. (Sec. 204.) 
 
 [26] 
 
Report to Congress 
 
 The Committee shall make a report to Congress 
 on the first day of each regular session, including 
 a detailed statement of the receipts and dis- 
 bursements and also including the names of all 
 the officers and employees and the salaries of each. 
 (Sec. 205.) 
 
 Termination of Duties of the Committee 
 
 These provisions shall continue in effect until, 
 but not after, the expiration of six months after 
 the termination of the war, the date being de- 
 termined by a proclamation of the President. 
 The President may, however, at any time by 
 proclamation declare that the provisions of this 
 title are no longer necessary and thereupon it 
 shall cease to be in effect. (Sec. 206.) 
 
 Miscellaneous Provisions 
 
 Penalties 
 
 Except where the penalty is otherwise provided 
 for in this Act, the wilfull violation of any of the 
 provisions hereof, or participation in such vio- 
 lation, shall be punishable by a fine of not more 
 than $10,000, or imprisonment for not more than 
 one year, or both. (Sec. 300.) 
 [27] 
 
Stamp Tax 
 
 Stamp taxes shall not be required or imposed 
 upon a promissory note secured by pledge of bonds 
 or obligations of the United States, issued after 
 April 24, 1917, or secured by the pledge of a 
 promissory note which itself is secured by the 
 pledge of such bonds or obligations, but in either 
 case the par value of such bonds or obligations 
 shall at least equal the amount of such note. 
 (Sec. 301.) 
 
 Provisions Deemed Separable 
 
 If any clause, sentence, paragraph or part of 
 this Act shall for any reason be adjudged by any 
 court of competent jurisdiction to be invalid, 
 or in case any such court shall adjudge to 
 be invalid any of its provisions in respect to any 
 class of securities, such judgment shall not 
 affect, impair or invalidate the remainder of this 
 Act, but shall be confined in its operation to the 
 clause, sentence, paragraph, part, or subject 
 matter of this Act, directly involved in the con- 
 troversy in which such judgment shall have been 
 rendered. (Sec. 302.) 
 
 Securities Defined 
 
 The term " Securities, " as used in this Act, includes 
 stocks, shares of stocks, bonds, debentures, notes, 
 certificates of indebtedness and other obligations. 
 (Sec. 303.) 
 
 128] 
 
Repeal Provisions 
 
 The right to amend, alter or repeal this Act is 
 expressly reserved (Sec. 304), and all pro- 
 visions of any other act inconsistent herewith 
 are repealed. (Sec. 305.) 
 
War Finance Corporation Act 
 
 Approved April 5, 1918 
 
 AN ACT 
 
 To provide further for the national security and 
 defense, and, for the purpose of assisting in the prosecu- 
 tion of the war, to provide credits for industries and 
 enterprises in the United States necessary or contribu- 
 tory to the prosecution of the war, and to supervise the 
 issuance of securities, and for other purposes. 
 
 Be it enacted by the Senate and House of Representa- 
 tives of the United States of America in Congress assem- 
 bled, 
 
 Title I. War Finance Corporation 
 
 That the Secretary of the Treasury and four addi- Organization 
 tional persons (who shall be the directors first appointed <^Corpora- 
 as hereinafter provided), are hereby created a body 
 corporate and politic in deed and in law by the name, 
 style, and title of the "War Finance Corporation" 
 (herein called the Corporation), and shall have suc- 
 cession for a period of ten years : Provided, That in no 
 event shall the Corporation exercise any of the powers 
 conferred by this Act, except such as are incidental 
 to the liquidation of its assets and the winding up of its 
 affairs, after six months after the termination of the 
 war, the date of such termination to be fixed by procla- 
 mation of the President of the United States. 
 
 SEC. 2. That the capital stock of the Corporation Capital Stock 
 
 shall be $500,000,000, all of which shall be subscribed 
 
 by the United States of America, and such subscription 
 
 shall be subject to call upon the vote of three-fifths of 
 
 [81] 
 
the board of directors of the Corporation, with the 
 approval of the Secretary of the Treasury, at such time 
 or times as may be deemed advisable; and there is 
 hereby appropriated, out of any money in the Treasury 
 not otherwise appropriated, the sum of $500,000,000, 
 or so much thereof as may be necessary for the purpose 
 of making payment upon such subscription when and 
 as called. Receipts for payments by the United States 
 of America for or on account of such stock shall be 
 issued by the Corporation to the Secretary of the 
 Treasury, and shall be evidence of stock ownership. 
 
 Management SEC. 3. That the management of the Corporation 
 shall be vested in a board of directors, consisting of the 
 Secretary of the Treasury, who shall be chairman of the 
 board, and four other persons, to be appointed by the 
 President of the United States, by and with the advice 
 and consent of the Senate. No director, officer, attor- 
 ney, agent, or employee of the Corporation shall in any 
 manner, directly or indirectly, participate in the 
 determination of any question affecting his personal 
 interests, or the interests of any corporation, partner- 
 ship, or association, in which he is directly or indirectly 
 interested; and each director shall devote his time, not 
 otherwise required by the business of the United States, 
 principally to the business of the Corporation. Before 
 entering upon his duties, each of the four directors so 
 appointed, and each officer, shall take an oath faithfully 
 to discharge the duties of his office. Nothing contained 
 in this or any other Act shall be construed to prevent 
 the appointment as a director of the Corporation of any 
 officer or employee under the United States or of a 
 director of a Federal reserve bank. 
 
 Board of 
 Directors 
 
 Terms of 
 Office 
 
 Of the four directors so appointed, the President of 
 the United States shall designate two to serve for two 
 years, and two for four years; and thereafter each direc- 
 [32] 
 
tor so appointed shall serve for four years. Whenever 
 a vacancy shall occur among the directors so appointed, 
 the person appointed director to fill any such vacancy 
 shall hold office for the unexpired term of the member 
 whose place he is selected to fill. Any director shall 
 be subject to removal by the President of the United 
 States. Three members of the board of directors shall 
 constitute a quorum for the transaction of business. 
 
 SEC. 4. That the four directors of the Corporation 
 appointed as hereinbefore provided shall receive annual 
 salaries, payable monthly, of $12,000. Any director 
 receiving from the United States any salary or com- 
 pensation for services shall not receive as salary from 
 the Corporation any amount which, together with any 
 salary or compensation received from the United States, 
 would make the total amount paid to him by the United 
 States and by the Corporation exceed $12,000. 
 
 SEC. 5. That the principal office of the Corporation 
 shall be located in the District of Columbia, but there 
 may be established agencies or branch offices in any 
 city or cities of the United States under rules and regu- 
 lations prescribed by the board of directors. 
 
 SEC. 6. That the Corporation shall be empowered and 
 authorized to adopt, alter, and use a corporate seal; to 
 make contracts; to purchase or lease and hold or dis- 
 pose of such real estate as may be necessary for the 
 prosecution of its business; to sue and be sued; to com- 
 plain and defend in any court of competent jurisdiction, 
 State or Federal; to appoint* by its board of directors, 
 and fix the compensation of such officers, employees, 
 attorneys, and agents as are necessary for the transac- 
 tion of the business of the Corporation, to define their 
 duties, require bonds of them and fix the penalties 
 thereof, and to dismiss at pleasure such officers, em- 
 ployees, attorneys, and agents; and to prescribe, amend, 
 [33] 
 
 Salaries of 
 Directors 
 
 Office of 
 Corporation 
 
 Administra- 
 tive Powers 
 
Advances 
 to Banking 
 Institutions 
 
 Security for 
 Advances 
 
 and repeal, by its board of directors, subject to the 
 approval of the Secretary of the Treasury, by-laws 
 regulating the manner in which its general business may 
 be conducted and the privileges granted to it by law 
 may be exercised and enjoyed, and prescribing the 
 powers and duties of its officers and agents. 
 
 SEC. 7. That the Corporation shall be empowered 
 and authorized to make advances, upon such terms, not 
 inconsistent herewith, as it may prescribe, for periods 
 not exceeding five years from the respective dates of 
 such advances: 
 
 (1) To any bank, banker, or trust company, in the 
 United States, which shall have made after April sixth, 
 nineteen hundred and seventeen, and which shall have 
 outstanding, any loan or loans to any person, firm, cor- 
 poration, or association, conducting an established 
 and going business in the United States, whose opera- 
 tions shall be necessary or contributory to the prosecu- 
 tion of the war, and evidenced by a note or notes, but 
 no such advance shall exceed seventy-five per centum 
 of the face value of such loan or loans; and 
 
 (2) To any bank, banker, or trust company, in the 
 United States, which shall have rendered financial 
 assistance, directly or indirectly, to any such person/ 
 firm, corporation, or association by the purchase after 
 April sixth, ninteen hundred and seventeen, of its bonds 
 or other obligations, but no such advance shall exceed 
 seventy-five per centum of the value of such bonds or 
 other obligations at the time of such advance as esti- 
 mated and determined by the board of directors of the 
 Corporation. 
 
 All advances shall be made upon the promissory note 
 or notes of such bank, banker, or trust company, 
 secured by the notes, bonds, or other obligations, which 
 are the basis of any such advance by the Corporation, 
 together with all the securities, if any, which such 
 [34] 
 
hank, banker, or trust company may hold as collateral 
 for such notes, bonds, or other obligations. 
 
 The Corporation shall, however, have power to make Additional 
 advances (a) up to one hundred per centum of the face Security for 
 
 value of any such loan made by any such bank, banker, 100 % Ad ' 
 
 i / .. vances 
 
 or trust company to any such person, nnn, corporation, 
 
 or association, and (b) up to one hundred per centum 
 of the value at the time of any such advance (as esti- 
 mated and determined by the board of directors of the 
 Corporation) of such bonds or other obligations by the 
 purchase of which financial assistance shall have been 
 rendered to such person, firm, corporation, or associa- 
 tion: Provided, That every such advance shall be 
 secured hi the manner described in the preceding part 
 of this section, and in addition thereto by collateral 
 security, to be furnished by the bank, banker, or trust 
 company, of such character as shall be prescribed by 
 the board of directors, of a value, at the tune of such 
 advance (as estimated and determined by the board 
 of directors of the Corporation) , equal to at least thirty 
 three per centum of the amount advanced by the Cor- 
 poration. The Corporation shall retain power to re- 
 quire additional security at any time. 
 
 SEC. 8. That the Corporation shall be empowered Advances 
 and authorized to make advances from time to time, to Savings 
 upon such terms, not inconsistent herewith, as it may In8titution8 
 prescribe, for periods not exceeding one year, to any 
 savings bank, banking institution or trust company, 
 in the United States, which receives savings deposits, 
 or to any building and loan association in the United^ 
 States, on the promissory note or notes of the borrowing 
 institution, whenever the Corporation shall deem such 
 advances to be necessary or contributory to the prose- 
 cution of the war or important in the public interest: 
 Provided, That such note or notes shall be secured by 
 [35] 
 
the pledge of securities of such character as shall be 
 prescribed by the board of directors of the Corpora- 
 tion, the value of which, at the time of such advance 
 (as estimated and determined by the board of directors 
 of the Corporation) shall be equal in amount to at least 
 one hundred and thirty-three per centum of the amount 
 of such advance. The rate of interest charged on any 
 such advance shall not be less than one per centum 
 per annum in excess of the rate of discount for ninety- 
 day commercial paper prevailing at the time of such 
 advance at the Federal reserve bank of the district 
 in which the borrowing institution is located, but such 
 rate of interest shall in no case be greater than the 
 average rate receivable by the borrowing institution 
 on its loans and investments made during the six 
 months prior to the date of the advance, except that 
 where the average rate so receivable by the borrowing 
 institution is less than such rate of discount for ninety- 
 day commercial paper the rate of interest on such 
 advance shall be equal to such rate of discount. The 
 Corporation shall retain power to require additional 
 security at any time. 
 
 Direct SEC. 9. That the Corporation shall be empowered 
 
 Advances and authorized, in exceptional cases, to make advances 
 to Persons, directly to any person, firm, corporation, or association, 
 Corporations con ducting an established and going business in the 
 United States, whose operations shall be necessary or 
 contributory to the prosecution of the war (but only for 
 the purpose of conducting such business in the United 
 States and only when in the opinion of the board of 
 directors of the Corporation such person, firm, corpora- 
 tion, or association is unable to obtain funds upon 
 reasonable terms through banking channels or from the 
 general public), for periods not exceeding five years 
 from the respective dates of such advances, upon such 
 [36) 
 
terms, and subject to such rules and regulations as may 
 be prescribed by the board of directors of the Corpora- 
 tion. In no case, shall the aggregate amount of the 
 advances made under this section exceed at any one 
 time an amount equal to twelve and one-half per cen- 
 tum of the sum of (1) the authorized capital stock of 
 the Corporation plus (2) the aggregate amount of 
 bonds of the Corporation authorized to be outstanding 
 at any one time when the capital stock is fully paid 
 in. Every such advance shall be secured by adequate 
 security of such character as shall be prescribed by the 
 board of directors of a value at the time of such advance 
 (as estimated and determined by the board of directors), 
 equal to (except in case of an advance made to a rail- 
 road in the possession and control of the President, 
 for the purpose of making additions, betterments or 
 road extensions to such railroad) at least one hundred 
 and twenty-five per centum of the amount advanced 
 by the Corporation. The Corporation shall retain 
 power to require additional security at any time. The 
 rate of interest charged on any such advance shall not 
 be less than one per centum per annum in excess of the 
 rate of discount for ninety-day commercial paper pre- 
 vailing at the tune of such advance at the Federal 
 reserve bank of the district in which the borrower is 
 located. 
 
 SEC. 10. That in no case shall the aggregate amount Limitation 
 of the advances made under this title to any one person, on Advances 
 firm, corporation, or association exceed at any one time 
 an amount equal to ten per centum of the authorized 
 capital stock of the Corporation, but this section shall 
 not apply in the case of an advance made to a railroad 
 in the possession and control of the President, for the 
 purpose of making additions, betterments or road 
 extensions to such railroad. 
 
 [37] 
 
Power to 
 Deal in 
 Securities of 
 United States 
 
 SEC. 11. That the Corporation shall be empowered 
 and authorized to subscribe for, acquire, and own, buy, 
 sell, and deal in bonds and obligations of the United 
 States issued or converted after September twenty- 
 fourth, nineteen hundred and seventeen, to such extent 
 as the board of directors, with the approval of the Sec- 
 retary of the Treasury, may from time to time deter- 
 mine. 
 
 SEC. 12. That the Corporation shall be empowered 
 and authorized to issue and have outstanding at any one 
 time its bonds in an amount aggregating not more than 
 six times its paid-in capital, such bonds to mature not 
 less than one year nor more than five years from the 
 respective dates of issue, and to bear such rate or rates 
 of interest, and may be redeemable before maturity at 
 the option of the Corporation, as may be determined 
 by the board of directors, but such rate or rates of 
 interest shall be subject to the approval of the Secre- 
 tary of the*Treasury. Such bonds shall have a first 
 and paramount floating charge on all the assets of the 
 Corporation, and the Corporation shall not at any time 
 mortgage or pledge any of its assets. Such bonds may 
 be issued at not less than par in payment of any ad- 
 vances authorized by this title, or may be offered for 
 sale publicly or to any individual, firm, corporation, or 
 association, at such price or prices as the board of 
 directors, with the approval of the Secretary of the 
 Treasury, may determine. 
 
 Upon such terms not inconsistent herewith as may be 
 determined from time to time by the board of directors, 
 with the approval of the Secretary of the Treasury, at 
 or before the issue thereof, any of such bonds may be 
 issued payable in any foreign money or foreign moneys, 
 or issued payable at the option of the respective holders 
 thereof either in dollars or in any foreign money or 
 [38] 
 
foreign moneys at such fixed rate of exchange as may 
 be stated in any such bonds. For the purpose of 
 determining the amount of bonds issued payable in 
 any foreign money or foreign moneys the dollar equiva- 
 lent shall be determined by the par of exchange at the 
 date of the issue thereof, as estimated by the Director 
 of the Mint and proclaimed by the Secretary of the 
 Treasury in pursuance of the provisions of Section 25 
 of the Act entitled "An Act to reduce taxation, to pro- 
 vide revenue for the Government, and for other pur- 
 poses," approved August twenty-seventh, eighteen 
 hundred and ninety-four. 
 
 SEC. 13. That the Federal reserve banks shall be Discount 
 authorized, subject to the maturity limitations of the hy Federal 
 Federal reserve Act and to regulations of the Federal 
 Reserve Board, to discount the direct obligations of 
 member banks secured by such bonds of the Corpora- 
 tion and to rediscount eligible paper secured by such 
 bonds and indorsed by a member bank. No discount 
 or rediscount under this section shall be granted at a 
 less interest charge than one per centum per annum 
 above the prevailing rates for eligible commercial paper 
 of corresponding maturity. 
 
 Any Federal reserve bank may, with the approval 
 of the Federal Reserve Board, use any obligation or 
 paper so acquired for any purpose for which it is au- 
 thorized to use obligations or paper secured by bonds 
 or notes of the United States not bearing jfhe circula- 
 tion privilege: Provided, hoivever, That whenever Issue of 
 Federal reserve notes are issued against the security Jj^JJ* 
 of such obligations or paper the Federal Reserve Board jy otes 
 may make a special interest charge on such notes, which, 
 in the discretion of the Federal Reserve Board, need not 
 be applicable to other Federal reserve notes which may 
 from time to time be issued and outstanding. All 
 provisions of law, not inconsistent herewith, in respect 
 [39] 
 
President's 
 Authoriza- 
 tion to Begin 
 Business 
 
 Earnings of 
 Corporation 
 
 to the acquisition by any Federal reserve bank of obliga- 
 tions or paper secured by such bonds or notes of the 
 United States, and in respect to Federal reserve notes 
 issued against the security of such obligations or paper, 
 shall extend, in so far as applicable, to the acquisition 
 of obligations or paper secured by the bonds of the 
 Corporation and to the Federal reserve notes issued 
 against the security of such obligations or paper. 
 
 SEC. 14. That the Corporation shall not exercise 
 any of the powers granted by this title or perform any 
 business except such as is incidental and necessarily 
 preliminary to its organization until it has been author- 
 ized by the President of the United States to commence 
 business under the provisions of this title. 
 
 SEC. 15. That all net earnings of the Corporation not 
 required for its operations shall be accumulated as a 
 reserve fund until such time as the Corporation liqui- 
 dates under the terms of this title. Such reserve fund 
 shall, upon the direction of the board of directors, 
 with the approval of the Secretary of the Treasury, 
 be invested hi bonds and obligations of the United 
 States, issued or converted after September twenty- 
 fourth, nineteen hundred and seventeen, or upon like 
 direction and approval may be deposited in member 
 banks of the Federal Reserve System, or in any of the 
 Federal reserve banks, or be used from time to time, 
 as well as any other funds of the Corporation, in the 
 purchase or redemption of any bonds issued by the 
 Corporation. The Federal reserve banks are hereby 
 authorized to act as depositaries for and as fiscal agents 
 of the Corporation in the general performance of the 
 powers conferred by this title. I/Beginning six months 
 after the termination of the war, the date of such 
 termination to be fixed by a proclamation of the Presi- 
 dent of the United States, the directors of the Corpora- 
 [40] 
 
tion shall proceed to liquidate its assets and to wind 
 up its affairs, but the directors of the Corporation, in 
 their discretion, may, from time to time, prior to such 
 date, sell and dispose of any securities or other property 
 acquired by the Corporation. Any balance remaining 
 after the payment of all its debts shall be paid into the 
 Treasury of the United States as miscellaneous receipts, 
 and thereupon the Corporation shall be dissolved. 
 
 SEC. 16. That any and all bonds issued by the Corpo- 
 ration shall be exempt, both as to principal and interest, 
 from all taxation now or hereafter imposed by the 
 United States, any State, or any of the possessions of 
 the United States, or by any local taxing authority, Taxes on 
 except (a) estate or inheritance taxes, and (b) gradu- Bonds 
 ated additional income taxes, commonly known as 
 surtaxes, and excess-profits and war-profits taxes, now 
 or hereafter imposed by the United States, upon the 
 income or profits of individuals, partnerships, corpo- 
 rations, or associations. The interest on an amount 
 of such bonds the principal of which does not exceed 
 in the aggregate $5,000, owned by any individual, 
 partnership, corporation, or association, shall be exempt 
 from the taxes referred to in clause (b). The Corpora- 
 tion, including its franchise and the capital and reserve 
 or surplus thereof, and the income derived therefrom, 
 shall be exempt from all taxation now or hereafter J, axcs on . 
 imposed by the United States, any State, or any of 
 the possessions of the United States, or by any local 
 taxing authority, except that any real property of the 
 Corporation shall be subject to State, county, or muni- 
 cipal taxes to the same extent, according to its value, 
 as other real property is taxed. 
 
 SEC. 17. That the United States shall not be liable 
 for the payment of any bond or other obligation or States 
 [41] 
 
Penalties 
 
 False 
 Statement 
 
 Over- 
 Valuation 
 
 Forgery and 
 Counterfeit- 
 ing 
 
 Embezzle- 
 ment 
 
 the interest thereon issued or incurred by the Corpora- 
 tion, nor shall it incur any liability in respect of any 
 act or omission of the Corporation. 
 
 SEC. 18. That whoever (1) makes any statement, 
 knowing it to be false, for the purpose of obtaining 
 for himself or for any other person, firm, corporation, 
 or association any advance under this titlefshall be 
 punished by a fine of not more than $10,000, or by 
 imprisonment for not more than five years, or both. 
 Whoever wilfully overvalues any security by which 
 any such advance is secured, shall be punished by a 
 fine of not more than $5,000, or by imprisonment for 
 not more than two years, or both. 
 
 Whoever (1) falsely makes, forges, or counterfeits 
 any bond, coupon, or paper in imitation of or purport- 
 ing to be in imitation of a bond or coupon issued by 
 the Corporation; or (2) passes, utters, or publishes, or 
 attempts to pass, utter, or publish, any false, forged, 
 or counterfeited bond, coupon, or paper purporting 
 to be issued by the Corporation, knowing the same to 
 be falsely made, forged, or counterfeited; or (3) falsely 
 alters any such bond, coupon, or paper; or (4) passes, 
 utters, or publishes as true any falsely altered or spuri- 
 ous bond, coupon, or paper issued or purporting to 
 have been issued by the Corporation, knowing the 
 same to be falsely altered or spurious, shall be punished 
 by a fine of not more than $10,000, or by imprisonment 
 for not more than five years, or both. 
 
 Whoever, being connected in any capacity with the 
 Corporation, (1) embezzles, abstracts, or wilfully mis- 
 applies any moneys, funds, or credits thereof, or (2) with 
 intent to defraud the Corporation or any other com- 
 pany, body politic, or corporate, or any individual, or 
 to deceive any officer of the Corporation, (a) makes 
 any false entry in any book, report, or statement of 
 [42] 
 
the Corporation, or (b) without authority from the 
 directors draws any order or assigns any note, bond, 
 draft, mortgage, judgment, or decree thereof, shall be 
 punished by a fine of not more than $10,000, or by 
 imprisonment for not more than five years, or both. 
 
 The Secretary of the Treasury is hereby authorized Use of 
 to direct and use the Secret Service Division of the Secret 
 Treasury Department to detect, arrest, and deliver *" 
 into custody of the United States Marshal having 
 jurisdiction any person committing any of the offenses 
 punishable under this section. 
 
 SEC. 19. That the Corporation shall file quarterly Reports of 
 reports with the Secretary of the Senate and with the Corporation 
 Clerk of the House of Representatives, stating as of the 
 first day of each month of the quarter just ended (1) the 
 total amount of capital paid in, (2) the total amount 
 of bonds issued, (3) the total amount of bonds out- 
 standing, (4) the total amount of advances made under 
 each of sections 7, 8, and 9, (5) a list of the classes and 
 amount of securities taken under each of such sections, 
 (6) the total amount of advances outstanding under 
 each of sections seven, eight, and nine, and (7) such 
 other information as may be hereafter required by 
 either House of Congress. 
 
 The Corporation shall make a report to Congress on 
 the first day of each regular session, including a detailed 
 statement of receipts and expenditures. 
 
 SEC. 20. Section fifty-two hundred and two of the 
 Revised Statutes of the United States is hereby amended 
 so as to read as follows: "Sec. 5202. No national bank- Indebtedness 
 ing association shall at any time be indebted, or in any f National 
 way liable, to an amount exceeding the amount of its Banks 
 capital stock at such time actually paid in and remain- 
 ing undiminished by losses or otherwise, except on 
 account of demands of the nature following: 
 [43] 
 
Organization 
 
 and 
 
 Membership 
 
 "First. Notes of circulation. 
 
 "Second. Moneys deposited with or collected by 
 the association. 
 
 "Third. Bills of exchange or drafts drawn against 
 money actually on deposit to the credit of the associa- 
 tion, or due thereto. 
 
 "Fourth. Liabilities to the stockholders of the as- 
 sociation for dividends and reserve profits. 
 
 "Fifth. Liabilities incurred under the provisions of 
 the Federal reserve act. 
 
 "Sixth. Liabilities incurred under the provisions of 
 the War Finance Corporation Act." 
 
 Title II. Capital Issues Committee 
 
 SEC. 200. That there is hereby created a committee 
 to be known as the "Capital Issues Committee," here- 
 inafter called the Committee, and to be composed of 
 seven members to be appointed by the President of 
 the United States, by and with the advice and consent 
 of the Senate. At least three of the members shall 
 be members of the Federal Reserve Board. 
 
 No member, officer, attorney, agent, or employee of 
 the Committee shall in any manner, directly or in- 
 directly, participate in the determination of any ques- 
 tion affecting his personal interests, or the interest of 
 any corporation, partnership, or association in which 
 he is directly or indirectly interested. Before entering 
 upon his duties, each member and officer shall take an 
 oath faithfully to discharge the duties of his office. 
 Nothing contained in this or any other Act shall be 
 construed to prevent the appointment as a member of 
 the Committee, of any officer or employee under the 
 United States or of a director of a Federal reserve bank. 
 [44] 
 
The terms during which the several members of the Term of 
 Committee shall respectively hold office shall be deter- gjjj^^jf 
 mined by the President of the United States, and the Members 
 compensation of the several members of the Com- 
 mittee who are not members of the Federal Reserve 
 Board shall be $7,500 per annum, payable monthly, 
 but if any such member receives any other compensa- 
 tion from any office or employment under the United 
 States the amount so received shall be deducted from 
 such salary, and if such other compensation is $7,500 
 or more, such member shall receive no salary as a 
 member of the Committee. Any member shall be 
 subject to removal by the President of the United 
 States. The President shall designate one of the 
 members as chairman, but any subsequent vacancy 
 in the chairmanship shall be filled by the Committee. 
 Four members of the Committee shall constitute a 
 quorum for the transaction of business. 
 
 SEC. 201. That the Committee may employ and fix Employees 
 the compensation of such officers, attorneys, agents, 
 and other employees as may be deemed necessary to 
 conduct its business, who shall be appointed without 
 regard to the provisions of the Act entitled "An Act 
 to regulate and improve the civil service of the United 
 States," approved January sixteenth, eighteen hundred 
 and eighty-three (volume twenty- two, United States 
 Statutes at Large, page four hundred and three), and 
 amendments thereto or any rules or regulations made 
 in pursuance thereof. No such officer, attorney, agent, 
 or employee shall receive more compensation than per- 
 sons performing services of like or similar character 
 under the Federal Reserve Board. 
 
 SEC. 202. That all the expenses of the Committee, Expenses 
 including all necessary expenses for transportation in- 
 curred by the members or by its officers, attorneys, 
 [45] 
 
agents, or employees under its orders in making an 
 investigation or upon official business in any other 
 places than at their respective headquarters, shall be 
 allowed and paid on the presentation of itemized vouch- 
 ers therefor approved by the chairman. 
 
 The Committee may rent suitable offices for its use, 
 and purchase such furniture, equipment, and supplies 
 as may be necessary, but shall not expend more than 
 $10,000 annually for offices in the District of Columbia. 
 
 The principal office of the Committee shall be in 
 the District of Columbia, but it may meet and exercise 
 all its powers at any other place. The Committee 
 may, by one or more of its members, or by such agents 
 as it may designate, prosecute any inquiry necessary 
 to its duties in any part of the United States. 
 
 SEC. 203. That the Committee may, under rules and 
 re g ulations to be Prescribed by it from time to time, 
 investigate, pass upon, and determine whether it is 
 compatible with the national interest that there should 
 be sold or offered for sale or for subscription any issue, 
 or any part of any issue, of securities hereafter issued 
 by any person, firm, corporation, or association, the 
 total or aggregate par or face value of which issue and 
 any other securities issued by the same person, firm, 
 corporation, or association since the passage of this 
 Act is in excess of $100,000. Shares of stock of any 
 corporation or association without nominal or par value 
 shall for the purpose of this section be deemed to be 
 of the par value of $100 each. Any securities which 
 upon the date of the passage of this Act are in the 
 possession or control of the corporation, association, 
 or obligor issuing the same shall be deemed to have 
 been issued after the passage of this Act within the 
 meaning hereof. 
 
 [46] 
 
Nothing in this title shall be construed to authorize Loans Not to 
 such Committee to pass upon (1) any borrowing by he Passed 
 any person, firm, corporation, or association in the 
 ordinary course of business as distinguished from 
 borrowing for capital purposes, (2) the renewing or 
 refunding of indebtedness existing at the time of the 
 passage of this Act, (3) the resale of any securities the 
 sale or offering of which the Committee has determined 
 to be compatible with the national interest, (4) any 
 securities issued by any railroad corporation the prop- 
 erty of which may be in the possession and control of 
 the President of the United States, or (5) any bonds 
 issued by the War Finance Corporation. 
 
 Nothing done or omitted by the Committee here- No Approval 
 under shall be construed as carrying the approval of 
 the Committee or of the United States of the legality, 
 validity, worth, or security of any securities. 
 
 SEC. 204. That there is hereby appropriated out of Appropri- 
 any money in the Treasury not otherwise appropriated, ation 
 for the remainder of the fiscal year ending June thirtieth, 
 nineteen hundred and eighteen, and the fiscal year 
 ending June thirtieth, nineteen hundred and nineteen, 
 the sum of $200,000 for the purpose of defraying the 
 expenses of the establishment and maintenance of the 
 Committee, including the payment of the salaries and 
 rents herein authorized. 
 
 SEC. 205. That the Committee shall make a report Report to 
 to Congress on the first day of each regular session, Congress 
 including a detailed statement of receipts and expendi- 
 tures, and also including the names of all officers and 
 employees and the salaries paid to each. 
 
 SEC. 206. That this title shall continue in effect until, Duration of 
 but not after, the expiration of six months after the Committee 
 termination of the war, the date of such termination 
 to be determined by a proclamation of the President 
 
 [47} 
 
of the United States, but the President may at any 
 time by proclamation declare that this title is no 
 longer necessary, and thereupon it shall cease to be 
 in effect. 
 
 Title III. Miscellaneous 
 
 Penalty g EC . 300. That whoever wilfully violates any of the 
 
 provisions of this Act, except where a different penalty 
 is provided in this Act, shall, upon conviction in any 
 court of the United States of competent jurisdiction, 
 be fined not more than $10,000 or imprisoned for not 
 more than one year, or both; and whoever knowingly 
 participates in any such violation, except where a 
 different penalty is provided in this Act, shall be 
 punished by a like fine or imprisonment, or both. 
 
 Stamp Taxes SEC. 301. That no stamp tax shall be required or 
 imposed upon a promissory note secured by the pledge 
 of bonds or obligations of the United States issued after 
 April twenty-fourth, nineteen hundred and seventeen, 
 or secured by the pledge of a promissory note which 
 itself is secured by the pledge of such bonds or obliga- 
 tions: Provided, That in either case the par value of 
 such bonds or obligations shall equal the amount of 
 such note. 
 
 Provisions 
 
 Deemed 
 
 Separable 
 
 SEC. 302. That if any clause, sentence, paragraph, 
 or part of this Act shall, for any reason, be adjudged 
 by any court of competent jurisdiction to be invalid, 
 or, in case any court of competent jurisdiction shall 
 adjudge to be invalid any provisions hereof in respect 
 of any class or classes of securities, such judgment 
 shall not affect, impair, or invalidate the remainder of 
 this Act, but shall be confined in its operation to the 
 clause, sentence, paragraph, part, or subject matter of 
 this Act directly involved in the controversy in which 
 judgment shall have been rendered. 
 [48] 
 
SEC. 303. That the term "securities," as used in this Securities 
 
 Act, includes stocks, shares of stock, bonds, debentures, Defined 
 notes, certificates of indebtedness, and other obligations. 
 
 SEC. 304. That the right to amend, alter, or repeal Right to 
 
 this Act is hereby expressly reserved. Appeal 
 
 SEC. 305. That the short title of this Act shall be Short Title 
 the "War Finance Corporation Act." 
 
 SEC. 306. That all provisions of any Act or Acts in- Other Acts 
 
 consistent with the provisions of this Act are hereby Repealed 
 repealed. 
 
 [49] 
 
Index to Synopsis 
 
 ADVANCES 
 
 Additional Security may be 
 Required on, 12, 13, 14 
 
 Allowable only for Conduct- 
 ing Business in the United 
 States, 13 
 
 Directly to War Industries, 13 
 
 For Period not Exceeding 
 Five Years, 10, 14 
 
 For Period not Exceeding One 
 Year, 12 
 
 Interest on, 13, 14 
 
 Limitations on Amount of 
 Advances, 11, 14, 15 
 
 Limitations on Amount of 
 Direct Advances, 14 
 
 Must be Adequately Secured, 
 12, 14 
 
 Security, 11, 12, 14 
 
 To Banks Lending Money to 
 War Industries, 10 
 
 To Banks Rendering Finan- 
 cial Assistance to War In- 
 dustries, 10 
 
 To Railroads under Control 
 of United States, 14, 15 
 
 To Savings Institutions, 12 
 
 Up to 100% of Face Value 
 of Loan by a Bank, 11 
 
 Up to 100% of Value of Ob- 
 ligations Purchased by 
 which Financial Help was 
 Given, 11, 12 
 
 APPROVAL OF UNITED STATES OF 
 LEGALITY OF SECURITIES, 
 24 
 
 BONDS 
 
 Determining Amount Issued 
 
 Payable in Foreign Money, 
 
 16 
 
 Floating Charge, 15 
 Interest Rate, 15 
 
 [51 
 
 Issuance by the Corporation, 
 15 
 
 Issued Payable in Foreign 
 Money, 16 
 
 Sale of, 16 
 CAPITAL ISSUES COMMITTEE 
 
 Chairman, 23 
 
 Employees of, 25 
 
 Expenses of, 26 
 
 Limitations on Powers of 
 Members, 23 
 
 Members, 23 
 
 Office, 26 
 
 Persons Eligible for Appoint- 
 ment, 23 
 
 Powers, 24 
 
 Quorum, 23 
 
 Salaries of Members, 23 
 
 Termination of Duties of, 27 
 
 Terms of Office of Members, 
 23 
 
 CAPITAL STOCK 
 
 Amount Subscribed, 9 
 Receipts for Stock Issued, 9 
 
 DIRECTORS OF THE CORPORA- 
 TION 
 
 Appointment, 8 
 
 Chairman of Board, 8 
 
 Compensation of, 9 
 
 Limitation on Activities, 8 
 
 Oath, 8 
 
 Persons Eligible for Appoint- 
 ment, 8 
 
 Quorum, 8 
 
 Removal of, 8 
 
 Terms of Office, 8 
 
 Vacancies, 8 
 
 DISCOUNT BY FEDERAL RE- 
 SERVE BANKS, 17 
 
 DISSOLUTION OF THE CORPORA- 
 TION, 19 
 
FEDERAL RESERVE BANKS 
 Depositaries and Fiscal 
 Agents of the Corporation, 
 18 
 Discount of Obligations of 
 
 Member Banks, 17 
 Provisions as to Obligations 
 
 Acquired by, 18 
 FEDERAL RESERVE NOTES 
 Interest Charge on, 17 
 Security for, 17 
 
 FISCAL AGENT OF THE CORPOR- 
 ATION 
 
 Federal Reserve Banks as, 18 
 FUNDS 
 Deposited in Banks of Federal 
 
 Reserve System, 18 
 Investment of, 18 
 Purchase and Redemption of 
 
 Bonds, 18 
 Reserve, 18 
 INDEBTEDNESS OF NATIONAL 
 
 BANKS, 22 
 
 LIABILITY OF UNITED STATES AS 
 TO OBLIGATIONS OF THE 
 CORPORATION, 16 
 NATIONAL BANK INDEBTED- 
 NESS, 22 
 
 ORGANIZATIONS OF WAR FIN- 
 ANCE CORPORATIONS 
 Directors, 7 
 Duration, 7 
 Exercise of Powers, 7 
 Offices, 7 
 PAR VALUE OF SHARES OF 
 
 STOCK, 24 
 PENALTIES 
 
 Embezzlement. 21 
 False statements, 20 
 Forgery and Counterfeiting, 
 20 
 
 In General, 28 
 Over- valuation, 20 
 
 POWERS OF CAPITAL ISSUES 
 
 COMMITTEE. 24 
 Limitations on, 25 
 
 POWERS OF CORPORATION 
 Administrative, 9, 10 
 Limitations on, 7, 15 
 To Deal in United States 
 
 Bonds, 10 
 To Issue Bonds, 15 
 To Issue Bonds Payable in 
 
 Foreign Money, 16 
 To Make Advances to Banks, 
 
 10, 11 
 To Make Advances to Savings 
 
 Institutions, 12 
 To Make Direct Advances to 
 
 War Industries, 13 
 
 PRESUMPTION AS TO TIME OF 
 ISSUE OF SECURITIES, 24 
 
 PROVISIONS DEEMED SEPA- 
 RABLE, 28 
 
 REPEAL PROVISIONS, 29 
 
 REPORTS TO CONGRESS OF 
 Committee, 27 
 Corporation, 21, 22 .. 
 
 SECURITIES|DBFINED, 29 
 STAMP TAXES, 28 
 
 TAXES 
 
 Bonds of the Corporation, 19 
 Franchises, Capital and Re- 
 serve Funds, 19 
 Real Property, 19 
 
 UNITED STATES NOT LIABLE ON 
 BONDS OF THE CORPORA- 
 TION, 16 
 
 VIOLATIONS OF THE ACT, DE- 
 TECTION OF, 21 
 
 [52] 
 
THIS BOOK IS DUE ON THE LAST DATE 
 J * STAMPED BELOW 
 
 AN INITIAL FINE OF 25 CENTS 
 
 WILL BE ASSESSED FOR FAILURE TO RETURN 
 THIS BOOK ON THE DATE DUE. THE PENALTY 
 WILL INCREASE TO SO CENTS ON THE FOURTH 
 DAY AND TO $1.OO ON THE SEVENTH DAY 
 OVERDUE. 
 
 r 
 
 JSOV 9 1932 
 
 12 
 
 LD 21-50m-8,'32