z. G-8 IC-NRLF SB ITS ^ 3 ig, 8 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