Letter to Jesse Jones on the Lending Power of the Reconstruction Finance Corporation.

Dear Jesse:

I have approved the bill, S. 2125, 73d Congress, 2d Session, "To continue the functions of the Reconstruction Finance Corporation, to provide additional funds for the Corporation, and for other purposes."

It is my understanding that the bill does not confine the total lending authority of the Reconstruction Finance Corporation to the sum of $850,000,000 specified therein, but that the extension of the life of the Corporation automatically makes available to it the amount of any repayments received during the period of such extension and that you may make commitments and expenditures under the indefinite provisions of the Reconstruction Finance Corporation Act. It is to be noted that the bill does not confine the payments on account of commitments and agreements entered into by the Corporation to the period ending February 1, 1935, but provides for payments over a period of one year after the date of such commitments and agreements.

In order to confine all additional expenditures required to be made in 1935, which were not expressly provided for in the Budget, to the amount indicated in my Budget Message, I find it necessary to advise you that my approval of this bill is given with the distinct understanding that the cash withdrawals from the Treasury by the Corporation for the fiscal year 1935, including any debentures issued for the purchase of preferred stock and capital notes of banks, and exclusive of the funds which you may be called upon to allocate to other agencies of the Government as provided by law, will not, without my prior approval, exceed the sum of $500,000,000, and that no commitments or agreements shall be made so that expenditures may be made thereon after June 30, 1935. Your estimates of repayments for the fiscal year 1935 indicate that this total authorized expenditure of $500,000,000 may for the most part be made out of repayments.

Cordially yours,

Hon. Jesse Jones

Chairman, Reconstruction Finance Corp.

Washington, D. C.