sn 205\ 19 \£ ALBERT R. MANN LIBRARY New York State Colleges OF Agriculture and Home Economics Cornell University Cornell University Library HG2051.U5A5 1916a The Federal farnti loan ac'. SimmiiiM'^ 3 1924 014 007 326 m Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924014007326 64TH CONGRESS ) o-PTffATir J ^^OCUMENT 1ST SESSION ) SENATE j ^^ ^^^ THE FEDERAL FARM LOAN ACT APPROVED JULY 17, 1916 An Act "To provide capital for agricultural development, to create a standard form of investment based upon farm mortgage, to equalize rates of interest upon farm loans, to furnish a market for United States bonds, to create Government depositaries and financiEd agents for the United States, and for other purposes." WITH MARGINAL NOTES AND INDEX PREPARED BY W. W. FLANNAGAN Secretary, Joint Committee on Rural Credits PRESENTED BY MR. FLETCHER July 17, 1916.— Ordered to be printed WASHINGTON GOVERNMENT PRINTING OFFICE 1916 PERSONNEL OP THE SEVERAL COMMITTEES OF THE SIXTY-FOTTRTH CONGRESS ■WHICH CONSIDERED THE BILI,. 357123 JOINT COMMITTEE ON RURAL CREDITS. CABTEE GLASS, Virginia, Chairman. EOBEET L. OWEN, Oklahoma. MICHAEL F. PHELAN, Massachusetts. HENEY F. HOLLIS, New Hampshire. ASBTJEY F. LEVEE, South Carolina. THOMAS P. GOEE, Oklahoma. EALPH W. MOSS, Indiana. HOKE SMITH, Georgia. EVEEIS A. HAYES, California. KNUTE NELSON, Minnesota. WILLIS C. HAWLEY, Oregon. JAMES H. BEADY, Idaho. W. W. Flannagan, Secretary. SENATE COMMITTEE ON BANKING AND CURRENCY. EOBEET L. OWEN, Oklahoma, Cliairman. G. M. HITCHCOCK, Nebraska. JAMES A. EBED, Missouri. ATLEE POMEEENE, Ohio. JOHN F. SHAFEOTH, Colorado. HENEY F. HOLLIS, New Hampshire. BLAIE LEE, Maryland. PAUL O. HUSTING, Wisconsin. DUNCAN U. FLBTCHEE, Florida. KNUTE NELSON, Minnesota. GEO. P. McLEAN, Connecticut. JOHN W. WEEKS, Massachusetts. CAEEOLL S. PAGE, Vermont. ASLE J. GEONNA, North Dakota. GEO. W. NOEEIS, Nebraska. J. W. Bellee, Clerk. HOUSE COMMITTEE ON BANKING AND CURRENCY. CAETEE GLASS, Virginia, Chairman. THOMAS G. PATTEN, New York. C. U. STONE, Illinois. MICHAEL F. PHELAN, Massachusetts. JOE H. EAGLE, Texas. OTIS WINGO, Arkansas. EMMETT WILSON, Florida. RALPH W. MOSS, Indiana. T. F. KONOP, Wisconsin. W. W. HASTINGS, Oklahoma. JOUETT SHOUSE, Kansas. H. B. STEAGALL, Alabama. C. D. Hamnee, Cleric. EVEEIS A. HAYES, California. F. E. GUEENSEY, Maine. F. P. WOODS, Iowa. EDMUND PLATT, New York. GEO. E. SMITH, Minnesota. CHAS. A. LINDBEEGH, Minnesota. A. L. KEISTEE, Pennsylvania. L. T. McFADDEN, Pennsylvania. CONFERENCE COMMITTEE. SENATE. EOBEET L. OWEN, Oklahoma. HENEY F. HOLLIS, New Hampshire. DUNCAN U. FLETCHEE, Florida. KNUTE NELSON, Minnesota. ASLE J. GEONNA, North Dakota. HOUSE. CAETEE GLASS, Virginia. MICHAEL F. PHELAN, Massachusetts. EALPH W. MOSS, Indiana. EVEEIS A. HAYES, CalltomJa. EDMUND PLATT, New York. THE FEDERAL FARM LOAN ACT. AN ACT To provide capital for agricultural development, to create standard forms Purpose, of investment ba^ed upon farm mortgage, to equalize rates of interest upon farm loans, to furnish a market for United States bonds, to create Government depos- itaries and financial agents for the United States, and for other purposes. Be it enacted ly the Senate and House of Representatives of the JJnited States of America in Congress assemhled, That the short title of this |a?5'Lqln Act. Act shall be "The Federal Farm Loan Act." Its administration shaU j„;|^™'|^^^" Lom be imder the direction and control of the Federal Farm Loan Board Board. hereinafter created. DEFINITIONS. First mortgage de- fined. Sec. 2. That wherever the term "first mortgage" is used ia this Act it shall be held to include such classes of first Hens on farm lands as shall be approved by the Federal Farm Loan Board, and the credit instruments secured thereby. The term "farm loan bonds" shall be held to include all bonds secured by collateral deposited j-^j.^ j^^ jj^^^g with a farm loan registrar under the terms of this Act; they snail be defined. distiuguished by the addition of the words "Federal," or "joint stock," as the case may be. FEDERAL FARM LOAN BOARD. Sec. 3. That there shall be established at the seat of government in the Department of the Treasury a bureau charged with the execu- tion of tms Act and of aU Acts amendatory thereof, to be known as the Federal Farm Loan Bureau, under the general supervision of a Federal Farm Loan Board. Said Federal Farm Loan Board shall consist of five members, iucluding the Secretary of the Treasury, who shall be a member and chairman ex ofl&cio, and four members to be appointed by the Presi- dent of the United States, by and with the advice and consent of the Senate. Of the four members to be appointed by the President, not more than two shall be appointed from one political party, and all four of said members shall be citizens of the United States and shall devote their entire time to the business of the Federal Farm Loan Board; they, shall receive an annual salary of $10,000 payable monthly, together with actual necessary traveling expenses. One of the members to be appointed by the President shall be designated by him to serve for two years, one for four years, one for six years, and one for eight years, and thereafter each member so appointed shall serve for a term of eight years, unless sooner removed for cause by the President. One of the members shall be designated by the President as the Farm Loan Commissioner, who shall be the active executive officer of said board. Each member of the Federal Farm Loan Board shall within fifteen days after notice of his appoint- ment take and subscribe to the oath of office. The first meeting of the Federal Farm Loan Board shall be held in Washington as soon as may be after the passage of this Act, at a date and^ace to be fixed by the Secretary of the Treasury. Federal Farm Loan Bureauestablished. To consist of five members, including Secretary of Treasury (ex officio), to be ai>- pointed by the Presi- dent. Bipartisan; must be citizens, and devote entire time. Salaries and expenses. Terms of olEce. Designate Farm Loan Commissioner. Oatli of office to be talcen within 15 days. First meeting must be held in Washington. 4 Sec. 3. THE FEDERAL FARM LOAN BOARD. a^^Stof^Si^Sth^? No member of the Federal Farm Loan Board shall, during his banking or mortgage continuance in oflB.ce, be an ofl&cer or director of any other institution, interests. association, or partnership engaged in banking, or in the business of making land mortgage loans or selling land mortgages. Before entering upon his duties as a member of the Federal Farm Loan Oath taken. Board each member shaU certify under oath to the President that he is eligible under this section. flikdT'aeftesWmf '^^^ President shall have the power, by and with the advice and y e esi en . ^^j^ggj^^ q£ ^j^^ Senate, to fill any vacancy occurring in the membership of the Federal Farm Loan Board; if such vacancy shall be filled during the recess of the Senate a commission shall be granted which shall expire at the end of the next session. farm%m regist?ar°tor The Federal Farm Loan Board shall appoint a farm loan registrar eadi district, feod-teA in each land bank district to receive applications for issues of farm bS^ffiSiners. loan bouds and to perform such other services as are prescribed by this Act. It shaU also appoint one or more land bank appraisers for each land bank district and as many land bank examiners as it shall deem ciaL" n?>t''to?OTSfed to necessary. Farm loan registrars, land bank appraisers, and land otie^institutions, des- bank examiners appointed under this section shall be public officials "^^ ' and shall, during tlieir continuance in office, have no connection with or interest in any other institution, association, or partnership en- gaged in banking or in the business of making land mortgage loans Temporary employ- or Selling land mortgages: Provided, That this limitation shall not ment for special -work ,=■ °i°ji_j.i-ujj. -ixJ • i allowed. apply to persons employed by the board temporarily to do special work, saiari^andemenses The Salaries and expenses of the Federal Farm Loan Board, and paid by United States. , « , ■ a. ^ j ■ ^.i • j i j.t_- j.- Boardtofixcompen-oi farm loan registrars and exammers authorized under this section, ^sSerst^bt'^'^Sd^y ^^^^ ^® P^^*^ "^ *^® United States. Land bank appraisers shall Frapeotiveiand banks, receive such Compensation as the Federal Farm Loan Board shall fix, and shaU be paid by the Federal land banks and the joint stock land banks which they serve, in such proportion and in such maimer as the Federal Farm Loan Board shall order. Board may enapioy The Federal Farm Loan Board shall be authorized and empowered tiVetee. '^^" to employ such attorneys, experts, assistants, clerks, laborers,, and other employees as it may deem necessary to conduct the business in^a^S'^pakfby ^^ ^^^^ board. All Salaries and fees authorized in this section and United States. not Otherwise provided for shall be fixed in advance by said board and shall be paid in the same manner as the salaries of the Federal ext^^l'frqm p™ ^^"^ ^^an Board. AH such attorneys, experts, assistants, clerks, visions of civii-serrioe laborers, and other employees, and aU registrars, examiners, and ^' appraisers shall be appomted without regard to the provisions of the Act of January sixteenth, eighteen hundred and eighty-tly?ee (volume twenty-two, United States Statutes at Large, page four himdred and three), and amendments thereto, or any rule or regulation made in President mayjteoe pursuance thereof: Provided, That nothing herein shall prevent the ^i^.^ in c ass e ppggj(jgQ^ from placing said employees in the classified service. Federal land banks Every Federal land bank shall semiannually submit to the Federal to%S^am^nyFarm Loan Board a schedule showing the salaries or rates of com- ^id™to ™fflrara ^and pensation paid to its officers and employees. employees. aiSu"irep™uos°^k- . ^he Federal Farm Loan Board shall annually make a full report of er of the House. its operations to the Speaker of the House of Representatives, who shall cause the same to be printed for the information of the Congress. rep.Ss°rf*^n^tioro^f ^he Federal Farm Loan Board shaH from time to time requh-e land banks to be made examinations and reports of condition of all land banks established to^ tor an pu - yj^^jgj. .(.j^g provisions of this Act, and shaU publish consolidated state- Board must require ments of the results thereof. It shall cause to be made appraisals S^i^e'^oS of farm lands as provided by this Act, and shall prepare and publish ^n tables to be pub- amortization tables which shall be used by national farm loan asso- ciations and land banlis organized under this Act, Sec. 4. FEDERAL LAND BANKS. 5 The Federal Farm Loan Board shall prescribe a form for the state- ,oS^S'of%ondf- ment of condition of national farm loan associations and land banks tion; require quarterly under its supervision, which shall be filled out quarterly by each"^^^"' such association or bank and transmitted to said board. It shall be the duty of the- Federal Farm Loan Board to prepare y^Bi^etins^ofinfom^ from time to time bulletins setting forth the principal features of this anddistributed show- Act and through the Department of Agriculture or otherwise to dis- timtiou™^^fi?i™?n- tribute the same, particularly to the press, to agricultural journals, i„g™"°^^ ^Znlne^ and to farmers' organizations; to prepare and distribute in the same farm-ioanassociations. manner circulars setting forth the principles and advantages of amor- tized farm loans and the protection afforded debtors under this Act, instructing farmers how to organize and conduct farm loan associa- tions, and advising investors of the merits and advantages of farm .investors to te ad- 1 'it J i J- • i • -J. J- J.- -J i- j; j.i_ vised of merits and ad- loan bonds; and to disseminate m its discretion.imormationior the vantages of farm-ioan further instruction of farmers regarding the methods and principles mSho\is^SfioopSa™t of cooperative credit and organization. Said board is hereby author- credit to be explained. ized to use a reasonable portion of the organization fund provided in madf aranltS. ' " " "^ section thirty-three of this Act for the objects specified m this par- agraph, and is instructed to lay before the Congress at each session Further appropria- its recommendations for further appropriations to carry out said coSgrlss'SnMded. objects. FEDERAL LAND BANKS. Sec. 4. That as soon as practicable the Federal Farm Loan Board ^umtedstatestobedi- shaU divide the continental United States, excluding Alaska, into nine to^inciudl' a ftS twelve districts, which shall be known as Federal land oank districts, tionai part "'a state. and may be designated by number. Said districts shall be appor- jeitrmM'to'lrSi-ioan tioned with due regard to the farm loan needs of the country, but no '^^^■ such district shall contain a fractional part of any State. The boundaries thereof may be readjusted from time to tune in the dis- cretion of said board. Tbe Federal Farm Loan Board shall establish in each Federal land b^lne^totricf'^ bank district a Federal land bank, with its principal ofiice located in such city within the district as said board shaUdesignate. Each Federal of city whSe'iorat^** land bank shall include in its title the name of the city in which it is located. Subject to the approval of the Federal Farm Loan Board, any Federal land bank may estabhsh branches within the land bank Branches. district. Each Federal land bank shall be temporarily managed by five Temporary manage- directors appointed by the Federal Farm Loan Board. Said directors iSent b™ded"dk^ shall be citizens of the United States and residents of the district. ""'^• They shall each give a surety bond, the premium on which shall be paid from the funds of the bank. They shall receive such compen- saUonS'^dioM™^! sation as the Federal Farm Loan Board shall fix. They shall choose cers. from their number, by majority vote, a president, a vice president, a secretary and a treasurer. They are further authorized and empow- ered ta employ such attorneys, experts, assistants, clerks, laborers, and other employees as they may deem necessary, and to fix their May employ ade- compensation, subject to the approval of the Federal Farm Loan g™||ti^°^f = ^ «"°- Board. Said temporary directors shall, under their hands, forthwith make ^ Must make orgarn- an organization certificate, which shall specifically state: Soiude-^" '^'^*°' *" First. The name assumed by such bank. Name assumed. Second. The district within which- its operations are to be carried prScf ifomji^ ""'^ "' on, and the particular city ia. which its principal oflace is to be located. '^^ ° ™" Third. The amount of capital stock and the number of shares into ^^^^^^^^ ^^"^^ '"™- which the same is to be divided: Provided, That every Federal land ^ ^^^' bank organized under this Act shall by its articles of association per- mit an increase of its capital stock from time to time for the purpose . increase of stock for of providing for the issue' of shares to national farm loan associations bommws?' ^^''^ *° 6 Sec. 4. FEDERAL LAND BANKS. and stockholders who may secure loans through agents of Federal land banks in accordance with the provisions of this Act. ca?e'"^S''°bo '^my Fourth. The fact that the certificate is made to enable such persons acknowledged, authen- to avail themselves of the advantages of this Act, The organization to'^o^sto^to^be certificate shall be acknowledged l)efore a judge or clerk of some Kublfota^^il,r° co^* of record or notary pubhc, and shall be, together with the ■ acknowledgment thereof, authenticated by the seal of such court or notary, transmitted to the Farm Loan Commissioner, who shall record and carefully preserve the same in his office, where it shall be at all times open to pubhc inspection. cw^inor'^atton The Federal Farm Loan Board is authorized to direct such changes certificate. ^q qj. additions to any such organization certificate, not mconsistent with this Act, as it may deem necessary or expedient. coSSItr^* * ^°*^ Upon duly making and filing such organization certificate the ba,nk shall become, as from the date of the execution of its organization certificate, a body corporate, and as such, and in the name designated With powers to- j^ ^]^g organization certificate, it shall have power — Adopt and use seal. First. To adopt and use a corporate seal. Have succession. Second. To have succession until it is dissolved by Act of Congress or under the provisions of this Act. Contract. rjr^^^ rj,^ ^^^^ COUtractS. Sue and defend. Fourth. To suc and be sued, complain, mterplead, and defend, in any court of law or equity, as fully as natural persons, t^^l°^^^^^' Fifth. To elect or appoint directors, and by its board of du-ectors to elect a president and a vice president, appoint a secretary and a Require bonds. treasurer and other officers and employees, d!efine their duties, require bonds of them, and fix the penalty thereof; by action of its board of erS^^."^"*" ^^ directors dismiss such officers and employees, or any of them, at pleasure and appoint others to fill their places. idte^Sethod^to'etOTk Sixth. To prescribe, by its board of directors, subject to the super- tea^™ eiectioi of°di- vision and regulation of the Federal Farm Loan Board, by-laws not bmSlssT^diwfedf^*' inconsistent with law, regtdating the maimer in which its stock shall be transferred, its directors elected, its officers elected or appointed, its property transferred, its general business conducted, and the privileges granted to it by law exercised and enjoyed. powOTs^'nec^M^^for Seventh. To exercise, by its board of directors or duly authorized conduct of business, officers Or agents, subject to law, aU such incidental powers as shall be necessary to carry on the business herein described. isIKribS'b^^fMm After the subscriptions to stock in any Federal land bank by loan associations, per- national farm loan associations, hereinafter authorized, shall have rTtoJ^be'^h^^n reached the sum of $100,000, the officers and directors of said land and take over manage- bank shall be chosen as herein provided and shall, upon becoming duly qualified, take over the management of said land bank from the temporary officers selected under this section. niJ|'m°nSSib^rs'x The board of directors of every Federal land bank shall be selected l^soolations 'ttoe' a^ *^ hereinafter specified and shall consist of nine members, each holding pointed by i'arm Loan office for three vcars. Six of said directors shall be known as local "*■ directors, and shall be chosen by and be representative of national farm loan associations; and the remaining three directors shall be known as district directors, and shall be appointed by the Federal Farm Loan Board and represent the pubhc interest. Notice of election of At least two months before each election the Farm Loan Commis- of*noSi^foiS'**pre- sioner shall notify each national farm loan association in writing that scribed. guch election is to be held, giving the number of directors to be elected for its district, and requesting each association to nominate one candidate for each director to be elected. Within ten days of the receipt of such notice each association shall forward its nomina- tions to said Farm Loan Commissioner. Said commissioner shall prepare a hst of candidates for local directors consisting of the twenty persons securing the highest number of votes from national farm loan associations making such nominations. Sbo. 5. CAPITAL STOCK OF FEDERAL LAND BANKS. 7 At least one month before said election said Farm Loan Commis- sioner shall mail to each national farm loan association the list of candidates. The directors of each national farm loan association shall dto^taS!™'*^^"^"^ cast the vote of said association for as many candidates on said hst as there are vacancies to be filled, and shall forward said vote to the Farm Loan Commissioner within ten days after said Hst of candidates is received by them. The candidates receiving the highest number of votes shall be elected as lodal directors. In case of a tie the Farm Loan Commissioner shaU determine the choice. The Federal Farm Loan Board shall designate one of the district d^^tes^^ift%^ directors to serve for three years and to act as chairman of the board rectors; axes terms oi of directors. It shall designate one of said directors to serve for a °®™' term of two years and one to serve for a term of one year. After the first appointments each district director shall be appointed for a term of three years. At the first regular meeting of the board of directors of each Federal „atlf ?es Sve tem land bank it shall be the duty of the local directors to designate two ot office £or°ooai (Ur™ of the local directors whose term of ofiice shall expire in one year *""• from the date of such meetingj two whose term of office shall expire in two years from said date, and two whose term of office shall expire in three years from said date. Thereafter every local director of a Regular term after Federal land bank chosen as hereinbefore provided shall hold office ^l^s!^^^^*'™'**""* for a term of three years. Vacancies that may occur in the board ^^^^^^^^.^led '" of directors shall be filled for the unexpired term in the manner pro- tion^"^^ "™ ^^ ^ vided for the original selection of such directors. Directors of Federal land banks shall have been for at least two j^?5™'°J^^^^*.j^« years residents of the district for which they are appointed or elected, years previous to eiec- and at least one district director shall be experienced in practical ^^kiSlaraltog!'* *"' farming and actually engaged at the time of his appointment in farming operations within the district. No director of a Federal mth^o^h^^tan^g or land bank sha,ll, during his continuance in office, act as an officer, tatiofl^rtnerahf "' director^ or employee of any other institution, association, or part- ^' nership engaged in banking or in the business of making or selling land mortgage loans. Directors of Federal land banks shall receive, in addition to any Directors allowed compensation otherwise provided, a reasonable allowance for necessary ^mt!o?'to ra^fns™ expenses in attending meetings of their respective boards, to be paid ""''• by the respective Federal land banks. Any compensation that may ■^°'^^^^^^°^ f^^. be provided by boards of directors of Federal land banks for directors, i'arm Lom'Eoald. officers, or employees shall be subject to the approval of the Federal Farm Loan Board. CAPITAL STOCK OF FEDERAL LAND BANKS. Sec. 5. That every Federal land bank shall have, before beginning ^ *?jS°i™ capital business, a subscribed capital of not less than $750,000. The Federd ^°° ^ '"''''' Farm Loan Board is authorized to prescribe the times and conditions conmaSis*ofpayme?t° of the payment of subscriptions to capital stock, to reject any sub- ™ayrejeotaiiysubsorV scription m its discretion, and to requu-e subscribers to furnish ade- quate security for the payment thereof. The capital stock of each Federal land bank shall be divided into ^^^^ ™'^» of shares shares of $5 each, and may be subscribed for and held by any indi- bymyone. ^"''^™'^'^ vidual, firm, or corporation, or by the Government of any State or of the United States. Stock held by national farm loan associations shall not be trans- ^^^"^ ^i^^. ^y f''™ f erred or hypothecated, and the certificates therefor shall so state. noTbTtr^tored^or Stock owned by the Government of the United States in Federal ''^t^ekheidi.Vnnited land banks shall receive no dividends, but aU other stock shaU share states receives no divi- in dividend distributions without preference. Each national farm ™o stock aiWed any loan association and the Government of the United States shall be by unltoSVtates and 8 Sec. 7. NATIONAL FARM LOAN ASSOCIATIONS. ^ bISilfntraedT.; entitled to one vote for each share of stock held by it in decidmg one vote on each share. aU Questions at meetings of shareholders, and no other shareholder votedby toS^S shall be permitted to vote. Stock owned by the United States shall as directed by board, be voted by the Farm Loan Commissioner, as du-ected by the Federal Farm Loan Board. opmedby b?ard*"°° I* shaU be the duty of the Federal Farm Loan Board, as soon as practicable after the passage of this Act, to open books of subscription for the capital stock of a Federal land bank in each Federal land bank sttti^uteCTibe^aiiM district. If withm thu-ty days after the opening of said books any minimum capital not part of the minimum capitaHzation of $750,000 herein prescribed for o erwise a en. Federal land banks shall remain unsubscribed, it shall be the duty of the Secretaiy of the Treasury to subscribe the balance thereof on behalf of the United States, said subscription to be subject to call in Subscription subject whole or in part by the board of directors of said land bank upon tocauattersodays'no-^j^j^^y ^^^^, ^^^-^^ ^-^j^ ^-^^ approval of the Federal Farm Loan semetary^of Treasury Board; and the Secretary of the Treasury is hereby authorized and for fame. ^'^^ ^ ^^ directed to take out shares corresponding to the imsubscribed balance No increase of sto^ as Called, and to pay for the same out of any moneys in the Treasury boS^ers onStgage not Otherwise appropriated. Thereafter no stock shall be issued ^™*- except as hereinafter provided. at° M whm^amftoan -^"^r the subscriptions to Capital stock by national farm loan asso- assSSatioM sSoribe ciations shall amount to $750,000 in any Federal land bank, said bank »75o,ooo. shall apply semiaimually to the payment and retirement of the shares of stock which were issued to represent the subscriptions to the original capital twenty-five per centum of all sums thereafter sub- scribed to capital stock until all such original capital stock is retired at par. a°"^teb''famuSan * least tweuty-fivc per centmn of that part of the capital of any aSSS^ions'' m™t °be Federal land bank for which stock is outstanding in the name of held m quick assets, national farm loan associations shall be held in qui(S: assets, and may consist of cash in the vaults of said land bank, or in deposits in mem- ber banks of the Federal reserve system, or in readily marketable securities which are approved imder rules and regulations of the capitei^ta^t^'"ta Federal Farm Loan Board: Provided, That not less than five per united states bonds, ccutum of such Capital shall be invested in United States Government bonds. GOVERNMENT DEPOSITAKIES. dii^tKlTubu? Sec. 6. That all Federal land banks and joint stock land banks depositaries, except lor organized tmder this Act, when designated for that purpose by the Sipi^ed'*^s^*!jntt°d Secretary of the Treasury, shall be depositaries of public money, states flnanoiai agents, except receipts from customs, under such regulations as may be pre- scribed by said Secretary; and they may also be employed as finan- cial agents of the Government; and they shall perform aU such reasonable duties, as depositaries of public money and financial agents Satisfactory security of the Government, as may be required of them. And the Secretary th?is d^i^ffi. ''^'^ of the Treasury shall require of the Federal land banks and joint stock land banks thus designated satisfactory security, by the deposit of United States bonds or otherwise, for the safekeepmg and prompt payment of the pubHc money deposited with them, and for the faith- ful performance of their duties as financial agents of the Government. mfy ?"™ veftT'ta ^o Government funds deposited under the provisions of this section mortgage loans or in shall be invested in mortgage loans or farm loan bonds. farm loan bonds. NATIONAL FARM LOAN ASSOCLA.TIONS. Organization farm Sec. 7. That Corporations, to be known as national farm loan loan associations. associations, may be organized by persons desiring to borrow money Articles of associa- on farm mortgage security under the terms of this Act. Such per- teSJtiml^Siterrito^ sons shall enter into articles of association which shall specify in served. general terms the object for which the association is formed and the Sec. 7. NATIONAL FARM LOAN ASSOCIATIONS. 9 territory ■within -which its operations are to be carried on, and which may contain any other provision, not inconsistent with law, which „t?!?7 ™Sm™ "^J .■w '' •,. "^ f. 111 1 1- p'1- otjier provision not the association may see nt to adopt for the regulation oi its business inconsistent with law. and the conduct of its affairs. Said articles shall be signed by the signed copy must be persons uniting to form the association, and a copy thereof shall be forwarded to Federal forwarded to the Federal land bank for the district, to be filed and'^"^^'^""^" preserved in its office. Every national farm loan association shall elect, in the manner i^g^^^^five directors! prescribed for the election of directors of national banMng associa-in same manner as tions, a board of not less than five directors, who shall hold office for "VSor^oid office the same period as directors of national banking associations. It™ey«ar. shall be the duty of said board of directors to choose in such manner choose a seoretary- as they may prefer a secretary-treasurer, who shall receive such com- treasmrer, Ax ws com- pensation as said board of directors shall determine. The board of oS:s'£uid*ioan com- directors shall elect a president, a vice president, and a loan commit- ™"eeo"i>ree. tee of three members. The directors and aU officers except the secretary-treasurer shall -g^^^?,^^^^^- serve without compensation, unless the payment of salaries to them i-oau Board approves shall be approved by the Federal Farm Loan Board. All officers and ° °"™®" directors except the secretary-treasurer shall, during their term of office, be bona fide residents of the territory within which the asso- ^u^t be residents of ciation is authorized to do business, and shall be shareholders of the beshSoidera.' ™ association. It shall be the duty of the secretary-treasurer of every national Duties of secretary- farm loan association to act as custodian of its funds and to deposit a"SodS°of1tu'nds; the same in such bank as the board, of directors may designate, to foans°meel'Si^biig^ pay over to borrowers all sums received for their account from the tions' under orders of Federal land bank upon first mortgage as in this Act prescribed, and ancewithbyjaws!""^ to meet all other obligations of the association, subject to the orders of the board of directors and in accordance with the by-laws of the association. It shall be the duty of the secretary-treasurer, acting imder the direction of the national farm loan association, to collect, receipt for, and transmit to the Federal land bank payments of inter- ^^Pay ovm aii couec- est, amortization installments, or principal arising out of loans made bS. " " "*' '^""^ through the association. He shall be the custodian of the securities, custodian of securi- records, papers, certificates of stocky and all documents relating to or docuiSISs^' ^'^ *" bearing upon the conduct of the affairs of the association. iS shall furnish a suitable surety bond to be prescribed and approved by the ^^^rnish bond for per- Federal Farm Loan Board for the proper performance of the duties ''™™''®'' ^'■^^■ imposed upon him under this Act, whicTi shall cover prompt collec- tion and transmission of funds. He shall make a quarterly report Mate quarterly re- to the Federal Farm Loan Board upon forms to be provided^ for that ^" ' purpose. Upon request from said board said secretary-treasurer shall furnish information regarding the condition of the national farm loan Fmnish statement of association for which Tie is acting, and he shall carry out all duly°°" '°^' authorized orders of said board. He shall assure himself from time Must satisfy wmseit to time that the loans made through the national farm loan associa- propwiyappued"^ ^™ tion of which he is an officer are appHed to the purposes set forth in the application of the borrower as approved, and shall forthwith report to the land bank of the district any failure of any borrower to Reportfaiiuxeomon- comply with the terms of his application or mortgage. He shall also SoVby bonowe^ m- ascertain and report to said bank the amount of any delinquent i'2[*™i,fS^Monmo^tI taxes on land mortgaged to said bank and the name of the delinquent, gagediand. The reasonable expenses of the secretary-treasurer, the loan com- mittee, and other officers and agents of national farm loan associa- tions, and the salary of the secretary-treasurer, shall be paid from of^^S^reatSOT the general funds of the association, and the board of directors is paid by association. authorized to set aside such sums as it shall deem requisite for that purpose and for other expenses of said association. When no such „ directors may levy Jr i, •iiiiii^ji'Ti 1 i assessment on mem- funds are available, the board ol directors may levy an assessment on bers « necessity arises. members in proportion to the amount of stock held by each, which 50913°— S. Doc. 500, 64-1 2 10 Sec. 7. NATIONAL FARM LOAN ASSOCIATIONS. b^^ Fetoaf^^^ ^^y ^® repaid as soon as funds are available, or it may secure an b^ in anticipation of advauce from the Federal land bank of the district, to be repaid with dividends. interest at the rate of six per centum per annum, from dividends belonging to said association. Said Federal land bank is hereby authorized to make such advance and to deduct such repayment. Ten pereoM^ow^^ Ten Or more natural persons who are the owners, or about to become iran^Jiation.^ * the owners, of farm land qualified as security for a mortgage loan under section twelve of this Act, may unite to form a national farm Organize subject to loau associatiou. They shall organize subject to the requirements hSg"*dS™'not and the conditions specified in this section and in section four of this less than flTe;^rambme^(,^^ SO far as the Same may be applicable: Provided, That the board ta™M indMduaiTwho of directors may consist of five members only, and instead of a secre- neednotbeshareiioider. ^^^^ ^^ ^ treasurer there shall be a secretary-treasurer, who need not be a shareholder of the association. Report of loan com- When the articles of association are forwarded to the Federal land mittee must accom- bank of the district as provided in this section, they shall be accom- pany articiesof associa- "". ,." ,1 ■,, -^ , J i-L 1 -ii ■ J • tion, with affidavit of panied by the written report oi the loan committee as required m lppS"^'tods section ten of this Act, and by an aflSdavit stating that each of the I'oms^'''^ '" mortgage subscribers is the owner, or is about to become the owner, of farm °^™' land qualified imder section twelve of this Act as the basis of a mort- gage loan; that the loan desired by each person is not more than Loans can not exceed $10,000, uor less than $100, and that the aggregate of the desired Mra^grl^atelefsThS loans is not less than $20,000; that said affidavit is accompanied by $2o,oo9withoriginaiap- ^ subscription to stock in the Federal land bank equal to five per plication, so that initial -Si.i , i'i i i i ji i subscription to stock of centum of the aggregate sum desired on mortgage loans; and that a iS'^t^^siTMo"" Ai^ temporary organization of said association has been formed by the t'm'*'rary'oT*aniza-®-^®''*^*^^ ^^ ^ board of directors, a loan committee, and a secretary- ttaa^has been effected, treasurer who Subscribes to said affidavit, giving his residence and post-office address. totnl^'^^tebrd^ Upou receipt of such articles of association, with the accompanying toiS^^o^determine if affidavit and stook subscription, the directors of said Federallandbank JSted. °"^" '° ^^ shall send an appraiser to investigate the solvency and character of the apphcants and the value of their lands, and shall then determine whether in their judgment a charter should be granted to such associ- aatitmS*t betom^- ^^OQ- They shall forward such articles of association and the accom- edtoFarmLoauBoard- panying affidavit to the Federal Farm Loan Board with their recom- mendation. If said recommendation is unfavorable, the charter shall be refused. chStOTdes^atinfto- "^ ^^^^ recommendation is favorable, the Federal Farm Loan Board ritOTv^and forward to shall thereupon grant a charter to the apphcants therefor, designating ??s6s^e!' " ""^^ '*" the territory in which such association may make loans, and shafl forward said charter to said apphcants through said Federal land bank: Provided, That said Federal Farm Loan Board may for good cause shown in any case refuse to grant a charter. mfmblrs*w hf^ Upon receipt of its charter such national farm loan association shall ceiTOi after (iarter is be authorized and empowered to receive from the Federal land bank s<^^- of the district sums to be loaned to its members under the terms and conditions of this Act. ButecribI*'?? 8100™"^' Whenever any national farm loan association shall desire to secure Weimi Vid bank to f or any member a loan on first mortgage from the Federal land bank ^r™TofT^*ap' of its district it shaU subscribe for capital stock of said land bank to puedfor. the amount of five per centum of such loan, such subscription to be paid in cash upon the granting of the loan by said land bank. Such lafiS^ sec^ty^but <^^pi*^ ^^^^ ^^^ be held by said land bank as collateral security dividends thereon to for the payment of Said loan, but said association shall be paid any dloCd."^'^'^'""' ^ di^dends accruing and payable on said capital stock while it is outstanding. Such stock may, in the discretion of the directors ofla??ar"^dmJt'b>nd with the approval of the Federal Farm Loan Board, be paid when loans are paid. On at par and retired, and it shall be so paid off and retired upon Sec. 9. FARM LOAN ASSOCIATIONS— SPECIAL PROVISIONS. 11 fuH payment of the mortgage loan. In such case the national farm(.ij^s^'=j**^''°g^'^*jj|: loaa association shall pay off at par and retire the corresponding sponding stock at par. shares of its stock which were issued when said land bank stock was federal land bank issued. The capital stock of a Federal land bank shall not be re- stock can not be re- duced to an amount less than five per centum of the principal of pe^ent of outstmmng the outstanding farm loan bonds issued by it. °°^^^- CAPITAL STOCK OF NATIONAL FARM LOAN ASSOCIATIONS. Sec. 8. That the shares in national farm loan associations shall be ^^^ ™'"« °' ^•'^''^^ of the par value of $5 each. Every shareholder shall be entitled to one vote on each share of ^^^^^^^f ^'J^J^ Ji°^^^ stock held by him at all elections of directors and in deciding all limited to 20 votes. questions at meetings of shareholders: Provided, That the maxi- muxn number of votes which may be cast by any one shareholder shall be twenty. No persons but borrowers on farm land mortgages shall be members ^ Members and siiare- rJ^iii j!j.-ii! 1 ■ P ° A 1 holders confined to bor- er shareholders 01 national farm loan associations. Any person de- rowers. siring to borrow on farm land mortgage through a national farm loan association-shall make apphcation for membership and shall subscribe lo^'^SusT^i^"^* f" for shares of stock in such farm loan association to an amount equal membersbip and sub- , j2 , i?jij? j?ji I'll -1 1 .,-^, scribe to stock m asao- to five per centum 01 the face 01 the desired loan, said subscription to elation to extent ot 5 be paid in cash upon the granting of the loan. If the application for p«™nt of desired loan. membership is accepted and the loan is granted, the applicant shall, upon fuU payment therefor, become the owner of one share of capital stJck^paif ^o'r.'^ap^^- stock in said loan association for each $100 of the face of his loan, or ^^^^eSe?^™"*'^ any major fractional part thereof. Said capital stock shall be paid off at par and retired upon full paypaent of said loan. Said capital jg^™^ "''d'^ofl^'^ta stock shall be held by said association as collateral security for the meam^iiie^is held S payment of said loan, but said borrower shall be j)aid any dividends rower"?Md^^'£ loan OTanted; to be borrow from the Federal land bank through such association thetlon— ^ ^"^ '^ sum necessary to pay for shares of stock subscribed for by him in the national farm loan association, such sum to be made a part of the face of the loan and paid off in amortization payments: Provided, loi^^^^ J'- ^^l^ Tuywever, That such addition to the loan shall not be permitted to maximumiimit. increase said loan above the limitation imposed in subsection fifth of section twelve. Subiect to rules and regulations prescribed by the Federal Farm. Associations may re- _ *> T . ■ i°jr 1 '^ ■ ,■ ■^•Lii-u i-iiij **m from interest ool- Loan Board, any national farm loan association shall be entitled to lected commission not retain as a commission from each interest payment on any loan i^^r'^'^nt'^m^n* indorsed by it an amount to be determined by said board not to^^iy- exceed one-eighth of one per centum semiannually upon the unpaid 12 Sec. 10. APPEAISAL. principal of said loan, any amounts so retained as commissions to be Deducted from fu- deducted from dividends payable to sucH farm loan association by stock 1iild'in°Fede?ai *^® Federal land bank, and to make application to the land bank of land bank; may borrow the district for loans not exceeding in the aggregate one-fourth of STo^furm* otXk its total stock holdings in said land bank. The Federal land banks holdings. shall have power to make such loans to associations applying therefor and to charge interest at a rate not exceeding six per centum per amium. Shareholders of asso- Shareholders of every national farm loan association shall be held awe'iOTiteTebte'toex: individually responsible, equally and ratably, and not one for an- tent of stock severally otj^er, for all contracts, debts, and engagements of such association to the extent of the amount of stock owned by them at the par value thereof, in addition to the amount paid in and represented by their shares. Any natural person After a charter has been granted to a national farm loan associa- oTmqlaiifledlandmiy ^^°T^> ^W natural pcrsou who is the owner, or about to become the become member upon owncr, of farm land qualified under section twelve of this Act as the anS'°borrow on mqr™ basis of a mortgage loau, and who desires to borrow on a mortgage toKrto ffirteSt^o?! o^ s^^'i farm land, may become a member of the association by a per cent of desired loan, two-thirds votc of the directors upon Subscribing for one share of the capital stock of such association for each $100 of the face of his pro- posed loan or any major fractional part thereof. He shall at the same time file with the secretary-treasurer his application for a mortgage loan, giving the particulars required by section twelve of this Act. APPRAISAL. mM^^'erofereedtiiX ^^°- ^^- That whenever an apphcation for a mortgage loan is wmmittee. made to a national farm loan association, it shall be first referred to the loan committee provided for in section seven of this Act. Said loan committee shall examine the land which is offered as security mi?™exSSS™"aLd^ ^-°^ ^^^ desired loan and shall make a detailed written report signed make appraisal and by all three members, giving the appraisal of said land as determined writtenreport. ^y. ^jj^gj^^ ^^^ such Other information as may be required by rules and regulations to be prescribed by the Federal Farm Loan Board. approve°"oan™uniMs No loan shall be approved by the directors unless said loan com- fa^bir'^ "^"* '^ mittee agrees upon a favorable report. Report and appraisal The written report of Said loan committee shall be submitted to the submittedtoiandbank federal land bank, together with the application for the loan, and the directors of said land bank shall- examine said written report when they pass upon the loan apphcation which it accompanies, but they shall not be boimd by said appraisal. Land bank must Before any mortgage loan is made by any Federal land bank, or report'^foTand'blSk joint stock land bank, it shall refer the apphcation and written report tKndVeport''ww?h of the loan conunittee to one or more of the land bank appraisers must be fevoiabie if appointed Under the authority of section three of this Act, and such loan is made. appraiser or appraisers shall investigate and make a written report upon the land offered as security for said loan. No such loan ^all be made by said land bank unless said written report is favorable. sorfffiby^FSi?^ Fonus for appraisal reports for farm loan associations and land Board. banks shall be prescribed by the Federal Farm Loan Board. Farm Loan Board to Land bank appraisers shall make such examinations and apprais- pr'Lfeersl^totofMtilalals and conduct such investigations, concerning farm loan bonds and fion and examination, first mortgages, as the Federal Farm Loan Board shall direct. Borrower not eiigi- No borrower imder this act shall be ehgible as an appraiser under Say^emSbOT^hom tHs section, but borrowers may act as members of a loan commit- toSt"f '"'"* °°**^® ^ ^^y ^^^® ^^®^® *^®y ^^® ^ot personally interested in the loan under consideration. When any member of a loan committee or of a board of directors is interested, directly or indirectly, in a loan a Sec. 12. KESTRICTIONS ON LOANS. 13 majority of the board of directors of any national farm loan associa- tion shall appoint a substitute to act in his place in passing upon substitute on loan anr-Vi 1r>nTi r a r committee may be ap- SUCn loan. pointed by directors. POWERS OE liTATIONAL FARM LOAN ASSOCIATIONS. Sec. 11. That every national farm loan association shall havOy^^™ '"*" assooiar power: First. To indorse, and thereby become liable for the payment of, ^^^ indorse mort- mortgages taken from its shareholders by the Federal land bank of ^ °*^' its district. Second. To receive from the Federal land bank of its district funds ^"^?^ '"""^ '™™ advanced by said land bank, and to deliver said funds to its share- Pay over funds to holders on receipt of first mortgages qualified imder section twelve of ''«™^ers. this Act. Third. To acquire and dispose of such property, real or personal, 9™ property re- as may be necessary or convenient for the transaction of its business. "^""^ "'^ ^ usmess. Fourth. To issue certificates against deposits of current funds bg^,^g*^'g5.°52f''„°J^ bearing interest for not longer than one year at not to exceed four per vertiwe into farm loan centum per annum after six days from date, convertible into farm °° ^' loan bonds when presented at the Federal land bank of the district in the amount of $25 or any multiple thereof. Such deposits, when Funds thus, arising received, shall be forthwith transmitted to said land bank, and be in- gag^™OT°*farm ™oMi vested by it in the purchase of farm loan bonds issued by a Federal l^^_^^ Federal land land bank or in first mortgages as defined by this Act. EESTEIOTIONS ON LOANS BASED ON FIEST MORTGAGES. Sec, 12. That no Federal land bank organized under this Act shall make loans except upon the following terms and conditions: First. Said loans shall be secured by duly recorded first mortgages i^ans must be se- on farm land within the land bank district in which the bank is situ- ^glf oif la™ Snds ofpf^ within district: joint ""^ • , T-, 1 , in,. , .1- stock banks exempted. Second. iLvery such mortgage shall contam an agreement providmg Mortgages must con- fer the repayment of the loan on an amortization plan by means of pa^lntTn^ammtizai a fixed number of annual or semiannual installments sufficient to*^°°P'^°- cover, first, a charge on the loan, at a rate not exceeding the interest intcrestrateonmort- rate in the last series of farm loan bonds issued by the land bank mak- mfre'than°i''percent ing the loan; second, a charge for administration and profits at a rate p|Jj °'OT™aTii°*ioln not exceeding one per centum per annum on the unpaid principal, said tonds. two rates combined constituting the interest rate on the mortgage; and, third, such amounts to be applied on the principal as will extm- instaUment to in- guish the debt within an agreed period, not less than five years nor to"xti^ishdebTXr more than forty years : Provided, That after five years from the date tS^t^S, ?^ Lr'^^^i , . , i"' "^ • 1 1 T,.' 1 , ■ •' J! mr.1- out withm 40 years, at upon which a loan is made additional payments m sums oi $25 or any option oi borrower. multiple thereof for the reduction of the principal, or the payment of Principal may be the entire principal, may be made on any regular installment date yea?s with^'^y instau- under the rules and regulations of the lederal Farm Loan Board : ™™*- And provided further, That before the first issue of farm loan bonds by any land bank the interest rate on mortgages may be determined in gag6s'Stde*pr?o°?o°is- the discretion of said land bank subject to the provisions and hmita-^'^J^"^™'^™''^! tions of this Act. bank. Third. No loan on mortgage shall be made under this Act at a rate mStga^lmultnote™ of interest exceeding six per centum per annum, exclusive of amorti-ceede per cent per an- .. J. num. zation payments. Fourth. Such loans may be made for the foUowiag purposes and for gj?™^''®?^.gO^{,oa^s^^ no other: bants exempted. (a) To provide for the purchase of land for agricidtural uses. tuSi us™^ '" *^^°'^' (b) To provide for the purchase of equipment, fertiUzers and live Buy equipment, ter- stock necessary for the proper and reasonable operation of the inort-""^®"'"™^*™!'' 14 Sec. 12. RESTRICTIONS ON LOANS. gaged 'farm; the term "equipment" to be defined by the Federal Farm Loan Board. Provide buildings (c) To provide buildings and for the improvement of farm lands; and improvements. ^^^ ^^^ "improvement^' to be defined by the Federal Farm Loan Board. ne?s^^S^edt?^ty (d) To liquidate indebtedness of the owner of the land mortgaged, eeSsTf^i'^ wwch prc^ existing at the time of the organization of the first national farm loan used. ° °^ "^^ association established in or for the county in which the land mort- gaged is situated, or indebtedness subsequently incurred for purposes mentioned in this section. nofexleldM^r'^mt ^if*^- No such loau shaU exceed fifty per centum of the value of liidfanda? ^^"^ of the land mortgaged and twenty per centum of the value of the per- pwHiMMnt ^inmrove- maucnt, insuTcd improvements thereon, said value to be ascertamed to beL*T°' ' by appraisal, as provided in section ten of this Act. In making said Appraisal deter- appraisal the value of the land for agricultural purposes shall be the ^e "aiid^'e^i' ^asis of appraisal and the earning power of said land shall be a prin- power of lands. cipalfactor. Reappraisal. ^ reappraisal may be permitted at any time in the discretion of the Federal land bank, and such additional loan may be granted as such reappraisal will warrant under the provisions of this paragraph. ^if°^ ^^'Jd^jA'"^ Whenever the amount of the loan applied for exceeds the amoimt applied %o?"™vritiiou^ that may be loaned under the appraisal as herein limited, such loan new appraisal. ^^^ ^^ granted to the amount permitted under the terms of this paragraph without requiring a new appUcation or appraisal. gage'STiutirationTf Sixth. No such loau shallbe made to any person who is not at the land mortgaged. time, or shortly to become, engaged in the cultivation of the farm emp°ea!'°*^'"'''°''" mortgaged. In case of the sale of the mortgaged land, the Federal Mortgages assumed land bank may permit said mortgage and the stock interests of the ''tomTordTatiiie ai "^^ndor to be assumed by the purchaser. In case of the death of the representativls of hm- mortgagor, his heir or heirs, or his legal representative or representa- obiiSttoS.^'""^ "' ti'^es, shall have the option, within sixty days of such death, to assume the mortgage and stock interests of the deceased. and''''noo mSiSllS Seventh. The amount of loans to any one borrower shall in no loan to any borrower, case excced a maximum of $10,000, nor shall any loan be for a less exi^ri^ted.*'"'' ^^"^ sum_ than $100. Applicant must state Eighth. Every applicant for a loan under the terms of this Act pmrpOTete which''p^ shall make appucation on a form to be prescribed for that purpose ceeds of loan are to be hy the Federal Farm Loan Board, and such applicant shall state the objects to which the proceeds of said loan are to be applied, and shall afford such other information as may be required. caSt'Tper wnttotor- Ninth. Every borrower shall pay simple interest on defaulted pay- est^ ments at the rate of eight per centum per annum, and by express dertSetopayautaSes coveuant in his mortgage deed shall undertake to pay when due all ^H ° uttpaJd^'become *^^^^) ^^^s, judgments, Or assessments which may be lawfully part of mortgage debt asscsscd agaiost the land mortgaged. Taxes, hens, judgments, or teest.^ * ^^ **"* ™' assessments not paid when due, and paid by the mortgagee, shall become a part of the mortgage d.ebt and shall bear simple interest at Buildings must be ^^^ ^^*® oi eight per ccntum per annum. Every borrower shall under- kept insured, take to keep insured to the satisfaction of the Federal Farm Loan Board all buildings the value of which was a factor in determining the mJrtT M ^buf" mo^ amouut of the loan. Insurance shall be made payable to the mort- Seo/may require in- gagce as its interest may appear at time of loss, and, at the option of fjy^hnii "™ "^ ^^ the mortgagor and subject to general regulations of the Federal Farm Loan Board, sums so received may be used to pay for reconstruction of the buildings destroyed. If proceeds^ of^^an Tenth. Every borrower who shall be granted a loan under the pro- thaa^^eed(joint>stock visions of this Act shaU enter into an agreement, in form and imder banks being «=^«mpt- conditions to be prescribed by the Federal Farm Loan Board, that if the whole or any portion of his loan shall be expended for purposes Sec. 13. POWERS OF FEDERAL LAND BANKS. 15 other than those specified in his original application, or if the bor- ,^4't^''"'"^^'' *>« ™ ^^ rower shaJl be in default in respect to any condition or covenant of the mortgage, the whole of said loan shall, at the option of the mortgagee, iJ^^ ^^^ ^^ ™'' become due and payable forthwith '.Proinfiet?, That the borrower may ' use part of said loan to pay for his stock in the farm loan association, tisea^J'piS-oii^^irook and the land bank holding such mortgage may permit said loan to ^^^ '°' member- be used for any purpose specified ia subsection fourth of this section. Eleventh. Ttiat no loan or the mortgage securing the same shall be Exercise otunauthor- impaired or invahdated by reason of the exercise of any power by any jf^mt'topattViudfty Federal land bank or national farm loan association in excess of the ot mortgage. powers herein granted or any limitations thereon. Funds transmitted to farm loan associations by Federal land re^ZZ^^VX^ banks to be loaned to its members shall be in current fimds, or farm ""'^""'oan bonds. loan bonds, at the option of the borrower. POWERS OF FEDEEAL LAND BANKS. Sec. 13. That every Federal land bank shall have power, subject p^^^' ^""^ ''*°^= to the limitations and requirements of this Act — First. To issue, subject to the approval of the Federal Farm Loan Jd'^Ji^kTm loS Board, and to seU farm loan bonds of the kinds authorized in this ''^^ ■?"?*? same. Act, to buy the same for its own account, and to retire the same at or before matiirity. Second. To invest such funds as may be in its possession in the ga^e^^i"Jmi^Sait- purchase of qualified first mortgages on farm lands situated within uatei in district, the Federal land bank district within which it is organized or for which it is acting. Third. To receive and to deposit in trust with the farm loan reg- ^^^J^^^ ^ygjf^^^lj'gt istrar for the district, to be by him held as collateral security fortrar, as Beom-ity for farm loan bonds, first mortgages upon farm land quahfied under *'™'^ '^^™' section twelve of this Act, and to empower national farm loan asso- ^^^ ^^^^^ assoda- ciations, or duly authorized agents, to collect and inunediately pay tions and agents to over to said land banks the dues, interest, amortization installments menta tSwem!"* ^^^' and other sums payable under the terms, conditions, and covenants of the mortgages and of the bonds secured thereby. Fourth. To acquire and dispose of — (a) Such property, real or personal, as may be necessary or con- , May buy, aeii, or ■ J. ± fi J. J.- jr-j. ■!_ • T ■ 1- 1. ■!_ lease property required venient lor the transaction ot its busmess, which, however, may be lor its business. in part leased to others for revenue purposes. (b) Parcels of land acquired in satisfaction of debts or purchased q^ea''|^^ salisfection at sales imder judgments, decrees, or mortgages held by it. But no or part payment oi such bank shall hold title and possession of any real estate purchased longer thm five yeara or acquired to secure any debt due to it, for a, longer period than five J2j^j°2^P|F^^*"^^^ years, except with the special approval of the Federal Farm Loan Board. Board in writing. Fifth. To deposit its securities, and its current funds subject to anySembTbanklnd check, with any member bank of the Federal Reserve System, and to receive interest there- receive interest on the same as may be agreed. ™' Sixth. To accept deposits of securities or of current funds from ,,„'1*?„?°P^Jp*^?'<'="? . Tp T-t ^ . ,, TIT ., 1 1,, from farm loan associ- national farm loan associations holdmg its shares, but to pay no ations. interest on such deposits. Seventh. To borrow money, to give security therefor, and to pay May borrow money. interest thereon. Eighth. To buy and sell United States bonds. stSbonis™ ^"^^^ Ninth. To charge applicants for loans and borrowers, under rules May charge appii- and regulations promulgated by the Federal Farm Loan Board, rea- S;plm°/ taoSrred*'ta sonable fees not exceeding the actual cost of appraisal and determina- °°??!fi°^ A"L,-*P" «,.,, T ij 1 T T •^ 11 1 • i^ praisal and deterrruna- tion of title. Legal lees and recordmg charges imposed by law m the tion ottitie. State where the land to be mortgaged is located may also be included 16 Sec. 15. AGENTS OF FEDERAL LAND BANKS. ^^T^Z^\^Z.sZ^ tlie preliminary costs of negotiating mortgage 1°^^^;^ /^f. ^^^I Se included aVpart of rower may pay such fees and charges or ne may arrange witn tne ISSSrtkaui'n""' ""^ "^Federal land bank making the loan to advance the same, m which case said expenses shall be made a part of the face ot the loan and paid off in amortization payments. Such addition to the loan shall not be permitted to increase said loan above the limitations provided m sec- tion twelve. RESTRICTIONS ON FEDERAL LAND BANKS. Sec. 14. That no Federal land bank shall have power— Can not accept de- First. To accept deposits of current funds payable upon demand ?t°Soid«ror trS except from its own stockholders, or to transact any bankmg or p^LhTautTorSed. *"'' Other businessnot expressly authorized by the provisions of this Act. i^i^hr°^i?affiooi^ Second. To loan on first mortgage except through national farm tioSsVagrarts.^°°^loan associations as provided in section seven ana section eight of tbis Act, or through agents as provided in section fifteen. Only first mortgages Third. To acccpt any mortgages on real estate except first mort- ISgToans'r^Xlddi: gages Created subject to all hmitations imposed by section twelve of tionai security. tiiig ^gt, and those taken as additional security for existing loans. Farmioanbondsiim- Fourth. To issue OT obUgate itself for outstanding farm loan bonds ca^aVaidT^ius"^ in excess of twenty tunes the amount of its capital and surplus, or frOT^iMm'iom'Ml^ *° receive from any national farm loan association additional mort- ciation .limited to gages when the principal remaining unpaid upon mortgages already SS°ors& '*^ ^°^^' received from such association shall exceed twenty times the amount of its capital stock owned by such association. No commission or Fifth. To demand or receive, ' under any form or pretense, any Syluttiomwi.^"''^'^ commission or charge not specifically authorized in this Act. AGENTS OF FEDERAL LAND BANKS. Agents of land banks Seo. 15. That whenever, after this Act shall have been in effect ^wonij^f'^'^ one year, it shaU appear to the Federal Farin Loan Board that national farm loan associations have not been formed, and are not likely to be formed, in a.nj locality, because of peculiar local con- ditions, said board may, m its discretion, authorize Federal land banks to make loans on farm lands through agents approved by said board. Loans through agents Such loaus shaU be subject to the same conditions and restrictions subject to same con- £^g jf tj^g same Were made through national farm loan associations, ditions as to associa- i i i i n j. -l °i j2 j. j j.i L tions. Borrowers and each borrower shall contribute five per centum of the amount ^reiSefteSk to Fed- of his loau to the capital of the Federal land bank, and shall become era! imd banii to ex- the owner of as much Capital stock of the land bank as such contri- tent of 5 per cent of ^ , . in . -^ loan. bution shall warrant. Agencies limited to No agent Other than a duly incorporated bank, trust company, S^id byltete'*"^ mortgage company, or savings institution, chartered by the State in wmch it has its principal office, shall be employed under the pro- visions of this section. Expenses connected Federal land banks may pay to such agents the actual expense of be'pa"^o"?gSTso appraising the land offered as security for a loan, examinmg and SSr^e de°duotS^rom ^^''■ti^y™? *^® *^*^® thereof, and makmg, executing, and recording borrower's future di^-i- the mortgage papers ; and in addition may allow said agents not to ^^'^^' exceed one-half of one per centum per annum upon the unpaid principal of said loan, such commission to be deducted from dividends payable to the borrower on his stock in the Federal land bank. Expenses paid agents Actual expenses paid to agents under the provisions of this sec- Stid°ofl^by*amortS: tion shall be added to the face of the loan and paid off in amortization tion. payments subjeict to the limitations provided in subsection ninth of section thirteen of this Act. Sec. 16. JOINT STOCK LAND BANKS. 17 Said agents, when required by the Federal land banks, shall coUect arid lemft^ymentera and forward to such banks without charee aU interest and amortiza- loans, when required, .•„ , 1 .J i-lji° without charge. tion payments on loans mdorsed by them. Any agent negotiating any such loan shall mdorse the same and andlTc^mXbieupon become hable for the payment thereof, and for any default by the mortgages received mortgagor, on the same terms and under the same penalties as if the ga°^s not^'o^epee^ten loan nad been originally made by said agent as principal and sold ^«^„^g°'^' "^p"^' by said agent to said land bank, but the aggregate of the unpaid principal of mortgage loans received from any such agent shall not exceed ten times its capital and surplus. If at any time the district represented by any agent under the tj.4^^ay 'be^TsMn- provisions of this section shall, in the 'judgment of the Federal unu^ by Farm Loan Farm Loan Board, be adequately served by national farm loan "^ ' associations, no further loans shall be negotiated therein by agents under this section. JOINT STOCK LAND BANKS. Sec. 16. That corporations, to be known as joint stock land banks, i,^*ormed by lo"? for carrjdng on the business of lending on farm mortgage security more persons under and issuing farm loan bonds, may be formed by any number of gai^fatiolf re*q''?ir'e^- natural persons not less than ten. They shall be organized subject ™™'^- to the requirements and under the conditions set forth in section four of this Act, so far as the same may be applicable: Provided, That the board of directors of every joint stock land bank shall consist of not Minimum number oi less than five members. ^""'"^ ^'"■ Shareholders of every joint stock land bank organized under this^^shar|ti°''^^s'^^nlir' Act shall be held individually responsible, equally and ratably, and for ^idebteSss o^ not one for another, for aU contracts, debts, and engagements of such h^^gs?**''^*"'^**"''^ bank to the extent of the amount of stock owned by them at the par value thereof, in addition to the amount paid in and represented by their shares. Except as otherwise provided, joint stock land banks shall have Except otherwise the powers of, and be subject to all the restrictions and conditions powers^andumttatiaus imposed on. Federal land banks by this Act, so far as such restrictions ^ I'ederaiiand tanks. and conditions are applicable: Provided, however, That the Govern- united states can not ment of the United States shall not purchase or subscribe for any of jtog^"''* *° "^p"^^ the capital stock of any such bank; and each shareholder of any such shareholders have bank shall have the same voting privileges as holders of shares in of'stOTk!' '""^ "^^ ^^^^^ national banking associations. No joint stock land bank shaU. have power to issue or obligate Banks can not issue itself for outstanding farm loan bonds in excess of fifteen times the more^ than^^w" MnSf amount of its capitaland siut)1us, or to receive deposits or to transact capital and surplus, nor 1 1 . ^ ,1 1 . ^ ' \ 1 A • t -i ,1 receive deposits nor any banking or other busmess not expressly authorized by the pro- transact business not visions of this Act. expressly authorized. No joint stock land bank shall be authorized to do business until s25o'ooo"Se-hau^"!^ capital stock to the amount of at least 1250,000 has been subscribed, incash.'bataice^u^ect one-half thereof paid in cash and the balance subject to call by the*""*"' board of directors, and a charter has been issued to it by the Federal Farm Loan Board. No joint stock land bank shall issue any bonds until after the ^*°* ""?^* ^^ p^i