Executive Order 7180—Prescribing Rules and Regulations Governing the Making of Loans by the Puerto Rico Reconstruction Administration Under the Emergency Relief Appropriation Act of 1935

REGULATION NO. 8. By virtue of and pursuant to the authority vested in me by the Emergency Relief Appropriation Act of 1935, approved April 8, 1935 (Public Resolution No. 11, 74th Congress), I hereby prescribe the following rules and regulations governing the making of loans by the Puerto Rico Reconstruction Administration: Section 1. Loans may be made by the Puerto Rico Reconstruction Administration for the purpose of financing, in whole or in part, the purchase by farmers, farm tenants, croppers, or farm laborers, of farm lands and of necessary equipment for the production, preparation, and preservation of farm and rural community products for distribution and use, where such purchases are incidental and necessary to the effectuation of authorized projects of rural rehabilitation. Section 2. Loans for the purposes mentioned in section 1 hereof may be made by the Puerto Rico Reconstruction Administration either to individuals or to such bona fide associations, cooperative associations, partnerships, or other like agencies composed of farmers, farm tenants, croppers, or farm laborers as the Administrator shall approve: Provided, however , That such loans shall be made to such bona fide associations, cooperative associations, partnerships, or like agencies only upon condition ( a ) that they impose no inequitable restriction upon membership or participation therein, ( b ) that they be so conducted under the supervision of the Puerto Rico Reconstruction Administration as to protect adequately the interests of the members or participants therein, and ( c ) that where such a loan is for the purpose of financing the purchase of community equipment, the operation of such equipment shall be subject to the supervision and control of the Puerto Rico Reconstruction Administration so long as the loan remains unpaid. Section 3. Interest shall be charged on all loans made by the Puerto Rico Reconstruction Administration at rates to be fixed by the Administrator, which rates shall not be greater than five per cent nor less than three per cent per annum, and need not be uniform ( a ) throughout Puerto Rico or ( b ) on loans of different classes. Where circumstances so require, the Administrator may reduce the rate at which unaccrued interest shall be payable on outstanding loans, but in no case to a rate less than three per cent per annum. Section 4. All loans shall be for such a period, not to exceed 40 years, as the Administrator shall prescribe. The period for any loan or class of loans shall be fixed by the Administrator upon the basis of ( a ) the use to which the proceeds thereof are to be put, ( b ) the financial resources and earning capacity of the borrower, and ( c ), in the case of loans to finance the purchase of specific property, the estimated life thereof, the probable rate of depreciation, and the amount of the loan as compared with the total purchase price. Section 5. Unless otherwise authorized by the President, all loans for a period of two years or more shall provide for repayment in equal annual installments, which may include interest in the discretion of the Administrator, except that when the loan is for a period of five years or more, and in the opinion of the Administrator the financial condition of the borrower so justifies, there need be no requirement that any payment be made on the principal during the first three years after the loan is made. Section 6. Upon default in the repayment of any loan or the payment of interest, the Puerto Rico Reconstruction Administration may ( a ) enforce payment by realizing upon the security and by legal proceedings, ( b ) extend the time of payment where the circumstances so justify, or ( c ) refinance such loan upon terms and conditions not inconsistent with the provisions of this regulation. FRANKLIN D. ROOSEVELT The White House, September 6, 1935.