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The President, in his message transmitting the Budget for the fiscal year beginning July 1, 1945, stated that the borrowing requirements during the fiscal year 1946 would amount to an estimated $40,000,000,000, and that a further increase in the $260,000,000,000 debt limit would be necessary. It was estimated in the Budget that the gross public debt on June 30, 1945, would amount to $251,800,000,000 and a year later, if the war continues, would reach $292,300,000,000, necessitating a statutory limitation of about $304,000,000,000.

In connection with the estimated $40,000,000,000 borrowing requirements during the fiscal year 1946, it has been reported to your committee that about $5,000,000,000 of Federal trust funds will be available for investment in Government securities, thus leaving $35,000,000,000 to be borrowed from individuals and financial and other institutions. The Under Secretary of the Treasury, in testifying before your committee, stated that the Treasury Department is proceeding with plans for another war loan drive, which will probably take place some time after April 1. He pointed out, however, that before the Treasury undertakes this drive, it will be necessary to increase the present debt limitation.

The bill differs from the bills which have been enacted in recent years placing a limitation on the amount of obligations which may be issued and outstanding at any one time under the Second Liberty Bond Act, as amended, by incorporating a provision, suggested by your committee, fixing an over-all limitation applying not only to the public-debt securities issued under the Second Liberty Bond Act, as amended, but also including securities issued by governmental corporations and agencies which are guaranteed as to principal and interest by the United States and are outstanding in the hands of the public. These securities are customarily referred to as guaranteed obligations of the United States and their issuance under certain statutory limitations and conditions has been authorized to finance activities of the following corporations and agencies:

Commodity Credit Corporation.
Federal Farm Mortgage Corporation.
Federal Housing Administration.
Federal Public Housing Authority.
Home Owners' Loan Corporation.
Reconstruction Finance Corporation.
Tennessee Valley Authority.

United States Maritime Commission. There is an over-all limitation in each case as to the amount of guaranteed obligations which each corporation or agency may issue or have outstanding, but your committee is of the opinion that such obligations should not be used as a supplement and in place of regular public-debt obligations. As a matter of fact, the policy adopted by the Treasury in October 1941, which has been followed since that date, contemplates that governmental corporations and agencies, with minor exceptions, will not issue guaranteed obligations in the market but will sell such obligations to the Treasury, which has authority to purchase them. Under this policy the Treasury issues regular public-debt securities to obtain the funds necessary to finance the activities of the corporations listed above. The Under Secretary of the Treasury informed your committee that there would be no objection to including in the limitation both public-debt obligations and the guaranteed obligations of Federal agencies which are outstanding in the hands of the public. The obligations referred to by your committee are those that may be issued under section 4 of the act of March 8, 1938, as amended (U. S. C., title 15, sec. 7138-4); section 4 (a) of the act of January 31, 1934, as amended (U. S. C. title 12, sec. 1020c); sections 204, 207, 604 and 608 of the act of June 27, 1934, 48 Stat. 1249, as amended (U. S. C., title 12, secs. 1710, 1713, 1739, and 1743); section 20 of the act of September 1, 1937, as amended (U. S. C., title 42, section 1420); section 4 of the act of June 13, 1933, as amended (U. S. C., title 12, sec. 1463); section 9 of the act of January 22, 1932, as amended (U. S. C., title 15, sec. 609); sections 15 (a) and 15 (c) of the act of May 18, 1933, as amended (U. S. C title 16, secs. 831n-1 and 831n-3), and section 1105 of the act of June 29, 1936, as amended (U. S. C., title 46, sec. 1275).

The status of such obligations as of December 31, 1944, is summarized in the following table:

Borrowing power and outstanding obligations of corporations and credit agencies which issue obligations guaranteed by the United States, as of Dec. 31, 1944

(Figures rounded to nearest million and will not necessarily add to totals]

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1 Funds have been deposited with the Treasurer of the United States for payment of all obligations guara anteed by the United States, representing outstanding matured principal of $44.3 million and interest of $1.7 million. * Less than $500,000.

: Limit of authority to insure mortgages. This amount may be increased by $1,000 million upon approval by the President. Debentures may be tendered and issued only in exchange for insured property acquired through foreclosure, under titles II and VI of the National Housing Act, as amended.

Limit of authority to işsue obligations. This amount may be increased only by the amount of issues for refunding purposes.

This amount may be increased only by the amount of issues for refunding purposes. • Exclusive of $6.3 million issued on the credit of the United States and held by the Reconstruction Finance Corporation.

? Limit which may be outstanding at any one time with respect to the insuring of ship mortgages and the issuance of debentures.

On January 31, 1945, the gross public debt actually outstanding was approximately $232,408,000,000, but the face amount of the debt subject to the existing statutory limitation at that time was approximately $241,020,000,000, leaving an unused balance under the present limitation of approximately $18,980,000,000. United States Savings bonds of series A through F are sold at a discount and they increase in redemption value at regular intervals until their maturity (10 years in the case of series A through E, and 12 years for series F). For many years the limitations on outstanding public debt included in public debt acts have specified “face amount” of obligations. With regard to obligations that are sold at a discount the Treasury construes face amount to be the same as maturity value. As these discount securities are carried in the Treasury's public-debt accounts at their current redemption value and are so stated in published statements of outstanding public debt, it is necessary to make the adjustments and reconciliation shown in the following tables. It will be noticed from the tables that there are certain other obligations, for which it is necessary to make adjustment, that are reported as outstanding public debt but are not subject to the statutory limitation. This is shown in detail in the following table: Total face amount that may be outstanding at any one time-- $260, 000, 000, 000 Outstanding as of Jan. 31, 1945: Interest-bearing-Bonds: Treasury

$92, 221, 398, 450 Savings (maturity value) 1 50, 835, 772, 025 Depositary

502, 540, 250 Adjusted-service..

715, 704, 106

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RECONCILEMENT WITH DAILY STATEMENT OF THE U. 8. TREASURY,

JAN. 31, 1945
Total face amount of outstanding public-debt obligations,

issued under authority of the Second Liberty Bond Act --- 241, 019, 830, 853 Deduct, unearned discount on savings bonds (difference between current redemption value and maturity value) ---- 9, 695, 488, 535 Total.-

231, 324, 342, 318 Add other public-debt obligations outstanding, but not subject to the statutory limitation:

Interest-bearing (postal savings, etc.)----- $195, 824, 740
Matured obligations on which interest has
ceased.

6, 614, 805 Bearing no interest.

881, 034, 447

1,083, 473, 992 Total gross debt outstanding as of Jan. 31, 1945.------ 232, 407, 816, 310 " Approximate maturity value. Principal amount (current redemption value) according to public debt statement was $41,140,283,490.

On the basis of the limitation contained in the present bill, which includes guaranteed obligations, there would have been an unused balance under the present limitation of approximately $17,450,000,000, as illustrated in the following table: Total face amount that may be outstanding at any one time.- $260, 000, 000, 000 Issued under authority of Šecond Liberty Bond Act: Outstanding as of Jan. 31, 1945; Interest-bearingBonds: Treasury

$92, 221, 398, 450
Savings (m a turity
value) 1

50, 835, 772, 025
Depositary-

502, 540, 250 Adjusted service.-

715, 704, 106

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Grand total.---

241, 019, 830, 853
Guaranteed obligations outstanding as of
Jan. 31, 1945 (not held by Treasury):
Interest-bearing-

Bonds: Home Owners' Loan
Corporation

754, 904, 000
Notes: Commodity Credit Cor-
poration.--

411, 596, 000
Debentures: Federal Housing Ad-
ministration.-

30, 360, 786
Demand obligations: Commodity
Credit Corporation.

299, 529, 125
Matured obligations on which interest
has ceased..

33, 543, 750

Total...

1, 529, 933, 661

242, 549, 764, 614

Face amount of obligations issuable, Jan. 31, 1945, had

guaranteed obligations been subject to the debt
limitation on that date.--

17, 450, 235, 486

1 Approximate maturity value, principal amount (current redemption value) according to public debt statement $41,140,283,490.

RECONCILEMENT WITH DAILY STATEMENT OF THE U.S. TREASURY

JAN. 31, 1945

Total face amount of outstanding public-debt obligations issued

under authority of the Second Liberty Bond Act.. -$241, 019, 830, 853 Total face amount of guaranteed obligations outstanding -- 1, 529, 933, 661

Total.

242, 549, 764, 514 Deduct, unearned discount on savings bonds (difference be

tween current redemption value and maturity value)-. 9, 695, 488, 535

Total.

232, 854, 275, 979 Add other public-debt obligations outstanding but not subject to the statutory limitation:

Interest-bearing (Postal Savings, etc.)----- $195, 824, 740
Matured obligations on which interest has
ceased.--

6, 614, 805 Bearing no interest.

881, 034, 447

1,083, 473, 992

Total gross public debt and guaranteed obligations
outstanding as of Jan. 31, 1945..

233, 937, 749, 971 The following shows the situation with respect to the limitation necessary to cover the public debt and publicly held guaranteed obligations on June 30, 1945, and June 30, 1946, on the basis of the Budget estimates of January 1945:

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It has been observed by your committee that on the basis of Budget estimates the limitation necessary to cover the estimated public debt on June 30, 1946, will be about $304,000,000,000. However, it is believed that $300,000,000,000, the amount stated in the bill, will carry the Treasury until nearly that date. In any event, Treasury Department representatives will have the opportunity of appearing before your committee prior to that date if the situation should necessitate an increase in the debt limit for the period subsequent to June 30, 1946.

Section 3 of the bill would amend subsections (h) and (i) of section 22 of the Second Liberty Bond Act, as amended, as added by the Public Debt Act of 1943 (Public Law No. 34, 78th Cong., 57 Stat. 63).

Pursuant to subsection (h) the Secretary of the Treasury is authorized to utilize incorporated banks and trust companies in connection with redemption of United States savings bonds, and redemptions have

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