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agreement, or other instrument entered into for the purpose of financing
the purchase of freight train cars. "(c) (1) The Secretary may, upon such terms and conditions as he may prescribe with the approval of the Secretary of the Treasury and consistent with the provisions of this section, guarantee in whole or in part any lender, by commitment to purchase, agreement to share losses, or otherwise, against loss of principal or interest on any loan which may be made to a carrier for the purpose of financing the cost of additions and betterments to road property.
“(2) No guaranty shall be made under this subsection for any loan having a maturity date of more than 10 years and unless the Secretary has determined
“(A) After consultation with the Commission, that the proposed additions and betterments will result in savings or increased earnings to the carrier sufficient over a period of 5 years to equal or exceed the principal amount of the loan;
“(B) That the carrier has actively sought to obtain funds without guaranty and has been unable to obtain the loan on reasonable terms otherwise than with the requested guaranty; and
"(C) That there is reasonable assurance that the loan will be repaid according to its terms. “(3) The aggregate amount of the guaranties under this subsection shall not exceed $500,000,000, exclusive of interest.
“(d) (1) The Secretary also may, upon such terms and conditions as he may prescribe with the approval of the Secretary of the Treasury and consistent with the provisions of this section, guarantee any holder or holders of equipment obligations issued or created for the purpose of financing the acquisition by a carrier or group of carriers of freight-train cars against loss of principal or interest on such equipment obligations: Provided, however, That the maximum liability of the Government under any such guaranty shall not exceed 10 per centum of the purchase price of the freight-train cars to be acquired.
“(2) No guaranty shall be made under this subsection unless the Secretary has determined
“(A) After consultation with the Commission, that the freight-train cars to be purchased will have improved performance capabilities and will result in savings or increased earnings to the carrier or group of carriers;
“(B) That the carrier or group of carriers would not be able to purchase the freight-train cars, or obtain funds therefor on reasonable terms otherwise than with the requested guaranty; and
“(C) That there is reasonable assurance that the equipment obligations will be paid according to their terms.
(3) The aggregate amount of the guaranties under this subsection shall not exceed $200,000,000.
“(e) The Secretary may prescribe such regulations, not inconsistent with the provisions hereof, as may be required for the administration of this section: Provided, however, That any regulation that may prescribe terms and conditions of guarantees made hereunder shall be approved by the Secretary of the Treasury.
“(f) The Secretary shall charge and collect reasonable guaranty fees, the amount of which shall be prescribed by him with approval of the Secretary of the Treasury.
“(g) Receipts under this section shall be credited to a Railroad Loan Guaranty Fund (hereafter referred to as "the Fund”). The Fund shall be available without fiscal year limitation for administrative expenses of the Department of Commerce, within such amounts as may be approved in annual appropriation Acts, principal and interest payments to the Treasury Department, and for payments required as a consequence of any guaranties under this section. Moneys in the Fund, not needed for current operations, may be invested in direct obligations of the United States or in obligations guaranteed as to principal and interest by the United States, or in other obligations eligible for the investment of public funds. Security property acquired by the Fund shall be liquidated in such manner and on such terms as will best preserve the Fund.
"(h) If at any time the moneys in the Railroad Loan Guaranty Fund authorized by subsection (g) are not sufficient to pay any amount the Secretary is required to pay by this section, the Secretary is authorized to issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions as may be prescribed by the Secretary, with the approval of the Secretary of the
Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yields on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of such notes or other obligations. The Secretary of the Treasury is authorized and directed to purchase any notes and other obligations to be issued hereunder and for such purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are extended to include any purchases of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Funds borrowed under this subsection shall be deposited in the Fund and redemptions of such notes and obligations shall be made by the Secretary from said Fund.
"(i) The Secretary shall transmit to the President and the Congress, every six months, a report of the activities carried on pursuant to this section.
“(j) Any lender who has made a loan which has been guaranteed pursuant to this section may bring suit against the Secretary to enforce payment, in the event of default, of the principal or interest on such loan. In any such action, the district courts of the United States shall have jurisdiction, without regard to the amounts involved. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff, or any of the plaintiffs if there is more than one, reside, or has his principal place of business, or if he does not have his principal place of business within such judicial district, in the District Court of the United States for the District of Columbia : Provided, however, That nothing herein shall be construed to exempt the Secretary from the application of sections 507 (b) and 2679 of title 28, United States Code, or section 367 of the Revised Statutes (5 U. S. C. 316).
“ (k) The au ority granted by this section shall terminate at the close of June 30, 1961, but the termination of such authority shall not affect the disbursement. of funds under, or the carrying out of, any guaranty entered into under this section pursuant to application filed with the Secretary prior to the date of such termination, or the taking of any action necessary to preserve or protect the interests of the United States."
V. Section 7, relating to the establishment of construction reserve funds by carriers, should be deleted from S. 3778.
GENERAL ACCOUNTING OFFICE,
Washington, May 29, 1958.
United States Senate. DEAR MR. CHAIRMAN: Further reference is made to your letter of May 13, 1958, requesting our comments on 8. 3778.
The bill would (1) restrict the ratemaking rule as to railroads, to a consideration by the Commission of the facts and circumstances attending transportation in determining whether a rail rate is lower than a reasonable minimum rate (sec. 5); (2) allow the Commission greater flexibility in the removal of discrimination against interstate commerce found to exist in intrastate rates, fares, or changes (sec. 3) ; (3) endow the Commission with control over the curtailment or abandonment of intrastate services (sec. 4); (4) establish a guaranteed loan program (sec. 6); (5) set up a construction reserve fund (sec. 7); (6) limit the agricultural commodities exemptions (sec. 8); and (7) curtail so called "buy and sell” operations by prescribing a “primary business test” (sec. 9).
While reports of economic complications involving the railroads have come to attention, we do not have any special knowledge concerning the situation and are not in a position to make any definite recommendations on the remedial proposals contained in S. 3778 which appear to involve questions of policy for the determination of the Congress. It is not anticipated that enactment of the
bill would have any adverse effect upon the interests of the United States as a
CIVIL AERONAUTICS BOARD,
DEAR SENATOR MAGNUson : This will acknowledge receipt of your letter of May 13, 1958, enclosing a copy of S. 3778, a bill to amend the Interstate Commerce Act, as amended, so as to strengthen and improve the national transportation system, and for other purposes.
Inasmuch as the legislation is limited to amending the Interstate Commerce Act and relates solely to surface transportation, the Board has no comment to make On it.
DEPARTMENT OF STATE,
DEAR SENATOR MAGNUson : Your letter of May 13, 1958, acknowledged May 14, 1958, requested the comments of the Department of State on S. 3778, a bill to amend the Interstate Commerce Act, as amended, so as to strengthen and improve the national transportation system, and for other purposes.
The Department of State has been seriously concerned over one feature of S. 3778; namely, the amendment of section 203 (b) (6) of the Interstate Commerce Act, which proposed to remove “property imported from any foreign country” (subsec. a, sec. 8, S. 3778), from the definition of agricultural commodities exempt from regulation as to their transportation by motor carriers.
The effect of such an amendment would be to subject imported agricultural commodities to regulation while similar domestically produced commodities would continue free from control. Such a differentiation between regulations applicable to imported products as compared with those applicable to similar domestic commodities would, in our opinion, be a violation of the national treatment principle embodied in numerous international treaties and agreements entered into by the United States, including several treaties of friendship, commerce and navigation, the General Agreement on Tariffs and Trade, and bilateral trade agreements. Under this principle, imported products, once they have duly entered the country, are to be accorded treatment no less favorable than that accorded like products of national origin in respect of all laws, regulations, and requirements affecting their internal sale, purchase, transportation, distribution, or use. This arrangement provides highly valuable protecton for American exports against various types of discrimination in foreign countries. The difficulties that the proposed amendment would engender with many of our principal trading partners has, therefore, been of deep concern to the Department.
We understand that the committee has voted to eliminate this provision from the bill. If this understanding is correct and the terminology “property imported from any foreign country” has been deleted from the amendment in section 8 of S. 3778, the Department has no objection to the enactment of this bill. The other provisions of S. 3778 do not appear to have foreign economic policy implications.
The Department has been informed by the Bureau of the Budget that there is no objection to the submission of this report. -
Sincerely yours, - -
Senator SMATHERs. The meeting stands adjourned. Thank you very much.
(Whereupon, at 5:28 p.m., the committee adjourned, to reconvene at the call of the Chair.)