White House Statement on the Publicity Amendment to the Emergency Relief and Construction Bill.
AS A RESULT of the publicity amendment and the attitude of insistence of the House upon its position, the Reconstruction Finance Corporation met late yesterday and advised the President of the damage that would result to the financial credit structure of this country if this amendment were insisted upon. By reason of that fact, the President felt impelled to call the available conferees on the bill into conference where an opportunity could be afforded for the Reconstruction Finance Corporation Board and the only available Senate conferees to meet and hear what they had to say.
All present frankly stated their views as to what would be the specific results and outcome if this publicity amendment were insisted upon. President Hoover stated to the conference his policy was and had been to give the fullest publicity to all governmental activities, but that he wished the Congress to be fully and absolutely apprised in view of the urgency of the emergency situation and of the unique relations of the Reconstruction Finance Corporation with building and loan associations, insurance companies, banks, and other financial institutions generally and of the consequent responsibility that lay upon Congress in the considering of the unanimous views of the Reconstruction Finance Corporation Board and what they had to say about the situation.
Having made it possible for the Board to acquaint these Members with its views, then the responsibility, in the final analysis, for whatever might happen must necessarily rest upon Congress.
Note: As printed above, this item follows the text set forth in a contemporary news account.
The Rainey amendment, requiring monthly reports to the Congress on RFC loans, was added to the proposed legislation on July 13, 1932.
On the same day, the White House issued the text of a statement by the Board of Directors of the Reconstruction Finance Corporation, dated July 14, which follows:
The attention of the Board of Directors of the Reconstruction Finance Corporation has been called to a provision inserted yesterday by the House of Representatives in the so-called "Relief Bill" providing for the monthly publication of a report covering all of the activities of the Reconstruction Finance Corporation "together with a statement showing the names of the borrowers to whom loans and advances were made, and the amount involved in each case."
This would mean that all loans made, or to be made, by this Corporation to banks, insurance companies, mortgage loan companies, building and loan associations and other financial institutions would become public property.
In the opinion of the Board, this provision, if enacted into law, would undo much that has been accomplished by this Corporation in preserving the credit structure of the Nation and, in a large measure, restrict its usefulness in the future. The publication of the loans made by this Corporation to the financial and fiduciary institutions above enumerated, whose relations with the public are of a particularly sensitive character, would, in the Board's judgment, be decidedly harmful, more especially, if the fact that these institutions are borrowing from this Corporation and the amount of the loans is published, as it would be, without adequate explanation of their circumstances or resources or the conditions under which the advances were made.
One of the fundamental purposes of the Reconstruction Finance Corporation is to strengthen our credit structure and to prevent bank closings under the extremely difficult conditions resulting from this great depression. No one can contend that the publication of the names of the thirty-six hundred (3,600) banks that have borrowed from this Corporation will tend to strengthen their position. In the absence of a complete explanation of all of the circumstances, which this Corporation clearly could not give in the reports contemplated, it is self-evident that such a procedure, far from strengthening these institutions, would weaken them, and thus destroy the very purpose for which the Corporation was created.
And what is true of the banks is, in large measure, true of the other institutions.
Such a provision was considered by both Houses at the time the Reconstruction Finance Corporation Act was enacted and rejected by both of them for the reasons above mentioned.
The reason advanced in favor of such a proposal is that this kind of publicity is necessary in order to subject to constant scrutiny the actions of the Corporation.
But such an objective can equally well be attained through a select committee of the Senate or House, to whom the books of the Corporation would be opened at all times, as has already been provided by the Senate. The Senate Committee has asked for the very information provided for in the section above-mentioned. The information is being compiled and will be furnished to that Committee at an early date. Thus, the public interests are fully safe-guarded.
In the unanimous opinion of the Board, therefore, not only is there no necessity for the paragraph inserted in the House Bill, but such a provision is against the public interest and may result in irreparable damage.
By direction of the Board of Directors:
Respectfully,
G. R. COOKSEY,
Secretary
Herbert Hoover, White House Statement on the Publicity Amendment to the Emergency Relief and Construction Bill. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/207209