^htn-- \ 3 ^^ "^m m Ik W'^^^^^J&V ^m:> ^SsiSv^l £«> »'^;«. i ',.~-'^fiirf- ^l^^y^^M^'"!^^' ^v ■t; ;-"v Cornell University Library HG2051.U5A5 1916 Rural credits bill.Comparative print, sh 3 1924 014 007 318 fctate College of aigrlculture St Cornell Wnibersfltp 3lbaca, A. 9. Uftrarp 64th Congress 1 qt^tvt . mij, j Document Ut Session \ bl^WAlli. | ^^ 444 RURAL CREDITS BILL COMPARATIVE PRINT SHOWING S. 2986 A BILL TO PROVIDE CAPITAL FOR AGRICULTURAL DEVELOPMENT, TO CREATE A STANDARD FORM OF INVESTMENT BASED UPON FARM MORTGAGE, TO EQUAI.- IZE RATES OF INTEREST UPON FARM LOANS, TO FURNISH A MARKET FOR UNITED STATES BONDS, TO PROVIDE FOR THE INVESTMENT OF POSTAL SAVINGS DEPOSITS, TO CREATE GOVERNMENT DEPOSITARIES AND FINANCIAL AGENTS FOR THE UNITED STATES, AND FOR OTHER PURPOSES AS PASSED BY THE SENATE AND AS PASSED BY THE HOUSE OF REPRESENTATIVES WASHINGTON GOVERNMENT PRINTING OFFICE int LIBRARY AMR 18 1946 DEPT. OF = ; ECON* '""^ ^ SUBMITTED BY MR. HOLLIS. In the Senate of the United States, May 16 {calendar day, May 17), 1916. Ordered, That there be printed as a Senate Document, in parallel columns, a comparative print of the bill (S. 2986) "To provide capital for agricultural development, to create a standard form of investment based upon farm mortgage, to equaUze rates of interest upon farm loans, to furnish a market for United States bonds, to provide for the investment of postal savings deposits, to create Government depositaries and financial agents for the United States, and for other purposes," showing the bill as passed by the Senate and the biU as passed by the House of Representatives. Attest: James M. Bakee, Secretary. 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/cu31924014007318 RURAL CREDITS BILL. A bill 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 provide for the investment of postal savings deposits, to create Government depositaries and financial agents for the United States, and for other purposes. AS PASSED BY SENATE. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the short title of this Act shall be "The Federal farm loan Act." Its administration shall be under the direction and control of the Federal Farm Loan Board hereinafter created. AS PASSED BY HOUSE. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the short title of this Act shall be "The Federal farm loan Act." Its administration shall be uader the direction and control of the Federal Farm Loan Board hereinafter created. DEFINITIONS. Sec. 2. That wherever the term "first mortgage" is used in this Act it shall be held to include such classes of first liens on farm lands as sl^all be approved by the Federal Farm Loan Board, and the credit instruments secured thereby. The term "farm loan bonds" shall be held to include aU bonds secured by collateral deposited with a farm loan registrar under the terms of this Act; they shall be distinguished by the addi- tion of the words "limited," "unlimited," or "joint stock," as the case may be. FEDERAL FARM LOAN BOARD. Sec. 3. That there shall be estab- lished at the seat of government in the Department of the Treasury a bureau charged with the execution of this Act and of all Acts amendatory thereof, to be known as the Federal Farm Loan Bureau, under the general supervision of a Federal Farm Loan Board DEFINITIONS. Sec. 2. That wherever the term "first mortgage" is used in this Act it shall be held to include such classes of first liens on farm lands as shall be approved by the Federal Farm Loan Board, and the credit instrxunents secured thereby. The term "farm loan bonds" shall be held to include all bonds sec>ired by collateral deposited with a farm loan registrar under the terms of this Act; and such bonds shall be distinguished by the addi- tion of the words "Federal," or "joint stock," as the case may be. FEDERAL FARM LOAN BOARD. Sec. 3. That there shall be estab- lished at the seat of government a Federal Farm Loan Board, which shall be charged with the execution of this Act and of all Acts amendatory thereof. Said The BtTRAL CREDITS BILL. AS PASSED BY SENATE. Federal Farm Loan Board shall con- sist of five members, including the Secretary of the Treas- who shall be a member ex officio, and four members to be appointed by the President 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 shaU 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 AS PASSED BY HOUSE. Federal Farm Loan Board shaU con- sist of three members, who shall be appointed by the President of the United States, by and with the advice and consent of the Senate. . Not more than two of said members shall be appointed from one political party . They shaJl be citizens of the United States and shall devote their entire time to the business of the Federal Farm Loan Board and shall each receive an annual salary of $7,500, payable monthly, together with actual necessary traveling expenses. One member of said board shall be desig- nated by the President by the President shall be designated by him to serve for to serve for two three years, years. one for four years. PUBAL CREDITS BILL. AS PASSED BY SENATE. 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 chairman and the active evecutive officer of said board. Each mem- ber of the Federal Farm Loan Board shall within fifteen days after notice of his appointment 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 place to be fixed by the Secretary of the Treasury No member of the Federal Farm Loan Board shall be an officer or director of any institution, association, or partner- ship engaged in banking Before entering upon his duties as a member of the Federal Farm Loan Board, each member shall certify under oath to the President that he is ehgible under this sec- tion. r The President shall have the power, by and with the advice and consent of the Senate, to fill any vacancy occurring in the member- ship of the Federal Farm Loan Board; if such vacancy shall be filled during the recess of the Senate a commission shall be grant- ed which shall expire thirty days after the Senate con- venes AS PASSED BY HOUSE. one for six years, and one for nine years, and thereafter each member so appointed shall serve for a term of nine 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 chairman and the active executive officer of said board. Each mem- ber of the Federal Farm Loan Board shall within fifteen days after notice of his appointment 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 place to be fixed by the chairman of said board. No member of the Federal Farm Loan Board shall , during his continuance in office, be an officer or director of any other institution, association, or partner- ship 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 Board each member shall certify under oath to the President that he is ehgible under this sec- tion. The President shall have the power, by and with the advice and consent of the Senate, to fill any vacancy occurring in the member- ship of the Federal Farm Loan Board; if such vacancy shall be filled during the recess of the Senate a commission shall be grant- ed which shall expire at the end of their next session. BUBAL CEEDITS BILL, AS PASSED BY SENATE. The Federal Farm Loan Board shall appoint a farm loan registrar in each land bank district to re- ceive apphcations for issues of farm loan bonds and to perform such other services as are prescribed by this Act. It shall also appoint one or more land bank AS PASSED BY HOUSE. The Federal Farm Loan Board shall appoint a farm loan registrar in each land bank district to re- ceive apphcations for issues of farm loan bonds and to perform such other services as are prescribed by this Act. It shall also appoint one or more appraisers for each land bank dis- appraisers for each land bank dis- trict and as many trict and as many special appraisers examiners as it shall deem necessary. Farm as it shall deem necessary. Farm loan registrars. loan registrars. land bank appraisers, and special appraisers appointed under this section, shall be pubhc officials and shall have no connection with or interest in any institution, association, or partner- ship engaged in banking The salaries and expenses of the Federal Farm Loan Board, and of farm loan registrars and special appraisers authorized under this section, shaU be paid out of any moneys in the Treasury of the United States not otherwise appropriated. Land bank appraisers shall receive such conipensation as the Federal Farm Loan Board shall fix, and shall be paid by the appraisers, and examiners appointed under this section shall be pubhc officials and shall , during their continuance in office, have no cormection with or interest in any other institution, association, or partner- ship engaged in banking or in the business of making land- mortgage loans or selling land mortgages: Provided, That this limi- tation shall not apply to persons employed by the board temporarily to do specisd work. The salaries and expenses of the Federal Farm Loan Board, and of farm loan registrars and exanuners authorized under this section, shall be paid by the United States. Appraisers shall receive such compensation as the Federal Farm Loan Board shaJl fix, and shall be paid by the BUBAL CBBDITS BILL. AS PASSED BY SENATE. Federal land banks, and the joint stock land banks which they serve, in such propor- tion and in such manner as the Federal Farm Loan Board shaJl order. The Federal Farm Loan Board shall be authorized and empowered to employ such attorneys, experts, assistants, clerks, laborers, and other employees as it may deem necessary to conduct the business of said board. All salaries and fees authorized in this section and 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 Farm Loan Board. All such attorneys, experts, assistants, clerks, laborers, and other employees, and all regis- trars AS PASSED BY HOUSE. Federal land banks and the joint stock land banks , created under this Act, which they serve, in such propor- tion and in such manner as the Federal Farm Loan Board shall order. The Federal Farm Loan Board shall be authorized and empowered to employ such attorneys, experts, assistants, clerks, laborers, and other employees as it may deem necessary to conduct the business of said board. All salaries and fees authorized in this section and not otherwise provided for shaU be fixed in advance by said board and shall be paid in the same manner as the salaries of the Federal Farm Loan Board. All such attorneys, experts, assistants, clerks, laborers, and other employees, and all regis- trars and appraisers, shall be appointed without regard to the provisions of the Act of January sixteenth, eight- een hundred and eighty-three (vol- ume twenty- two. United States Statutes at Large, page four hun- dred and three), and amendments thereto, or any rule or regulation made in pursuance thereof: Pro- vided, That nothing herein shall prevent the President from placing said employees in the classified service. Every Federal land bank shall semiannually submit to the Federal Farm Loan Board a schedule show- ing the salaries or rates of compen- sation paid to its ofl&cers and em- ployees, and said board shall have power to disapprove such schedule, or any item in it, and to alter any or all salaries therein shown. The Federal Farm Loan Board shall annually make a full report of its operations to the Speaker of the House of Kepresentatives, who shall cause the same to be printed for the information of the Congress. The Federal Farm Loan Board shall from time to time require examinations and reports of condi- tion of all , exammers, and appraisers shall be appointed without regard to the provisions of the Act of January sixteenth, eight- een hundred and eighty-three (vol- ume twenty-two, United States Statutes at Large, page four hun- dred and three), and amendments thereto, or any rule or regulation made in pursuance thereof: Pro- vided, That nothing herein shall prevent the President from placing said positions in the classified service. The Federal Farm Loan Board shall from time to time require examinations and reports of conui- tion of all RURAL CREDITS BILL. AS PASSED BY SENATJE. associations and banks established under the provi- sions of this Act, and shall publish consolidated statements of the re- sults thereof. It shall cause to be made appraisals of farm lands as provided by this Act, and shall pre- pare and publish amortization tables which shall be used by- associations and banks under its supervision. It shall by suitable rules and regu- lations require aU offenses and de- linquencies under this Act to be forthwith reported to it and to the United States district attorney for the district in which any such offense or deUnquency shall occur, and shall institute immediate pro- ceedings in the proper court for the prosecution of any person commit- ting an offense under any provision of this Act. The Federal Farm Loan Board shall prescribe a form for the state- ment of condition of associations and AS PASSED BY HOUSE. land banks established under the provi- sions of this Act, and shall publish consolidated statements of the re- sults thereof. It shah cause to be made appraisals of farm lands as provided by this Act, and shall pre- pare and pubHsh amortization tables which shall be used by national farm loan associations and land banks organized under this Act. The Federal Farm Loan Board shall prescribe a form for the state- ment of condition of national farm loan associations and land banks imder its supervision, which banks imder its supervision, which shall be filled out quarterly by each shall be filled out quarterly by each such association or bank and trans- such association or bank and trans- mitted to said board. mitted to said board. It shall be the duty of the Federal Farm Loan Board to prepare from time to time bulletins setting forth the principal features of this Act and to distribute the same, particu- larly to the press, to agricultural journals, and to farmers' organiza- tions; to prepare and distribute in the same manner circulars setting forth the principles and advantages of amortized farm loans and the protection afforded debtors under this Act, instructing farmers how to organize and conduct farm loan associations, and advising investors of the merits and advantages of farm loan bonds; and to dissemi- nate in its discretion information EXJBAL CREDITS BILL. AS PASSED BY SENATE. for the further instruction of farmers regarding the methods and princi- ples of cooperative credit and organ- ization. Said Farm Loan Board is hereby authorized to use a reason- able portion of the organization fund provided in section thirty-six of this Act for the objects specified in this paragraph, and is instructed to lay before the Congress at each session its recommendations for fur- ther appropriations to carry out said objects. AS PASSED BY HOUSE. POWERS OF FEDERAL FARM LOAN BOARD. This section number 20 in the Senate bill will be found on page 52. For cross reference and comparison only it is inserted here. Sec. 20. That the Federal Farm Loan Board shall have 'power — • (a) To organize and charter Fed- 'eral land ianks, TMtional farm loan associations, and joint stocTc land hanJcs subject to the provisions of this Act, and in its discretion to authorize them to increase their capital stoclc. (6) To review and alter at its discretion the rate of interest to be charged by Federal land banks for loans made by them under the pro- visions of this Act, said rates to be uniform so far as practicable. (c) To grant or refuse to Federal land banks, or joint stock land banks, authority to make any specific issue of farm loan bonds. (d) To make rules and regula- tions respecting the charges made to borrowers on loans under this Act for expenses in appraisal, ex- amining title, drawing legal papers, recording, and similar services. (e) To require reports and state- ments of condition and to make ex- aminations of all banks or associ- ations doing business under the provisions of this Act. (f) To prescribe the form and terms of farm loan bonds, and the form, terms, and penal sums of all POWERS OF FEDERAL FARM LOAN BOARD. Sec. 4. That the Federal Farm Loan Board shall have power — (a) To organize and charter Fed- eral land banks, and to charter national farm loan associations, and joint stock land banks, as hereinafter defined, subject to the provisions of this Act. (b) To review and alter at its dis- cretion the rate of interest to be charged by Federal land banks for loans made by them under the pro- visions of this Act, said rates to be uniform so far as practicable. (c) To grant or refuse to Federal land banks, or joint stock land banks, authority to make any spe- cific issue of farm loan bonds. (d) To make rules and regulations respecting the charges made to bor- rowers on loans under this Act for expenses in appraisal, determina- tion of title, and recording. (e) To prescribe the form and terms of farm loan bonds, and the form, terms, and penal sum of all 42564— S. Doc. 444, 64r-l- RURAL CREDITS BILL. 10 AS PASSED BY SENATE. surety bonds required under this Act and of such other surety hands as they shall deem necessary, such surety bonds to cover financial loss as well as faithful performance of duty. (g) To require Federal land banks to pay forthwith to any Federal land oanTc their equitable propor- tion of any sums advanced by said land bank to pay the coupons of any other land bank, basing said required payments on the amount of farm loans issued by each land bank and actually outstanding at the time of such remiirement. (h) To exercise general super- visory authority over the Federal land banks, the national farm loan associations, and the joint stock land banks herein provided for. AS PASSED BY HOUSE. surety bonds required under this Act and of such other surety bonds as they shall deem necessary, such surety bonds to cover financial loss as well as faithful performance of duty. (f) To suspend or to remove for cause any district director or any registrar, appraiser, examiner, or other official appointed by said board under authority of section three of this Act; the cause of such suspension or removal to be com- municated forthwith in writing by the Federal Farm Loan Board to the person suspended or removed, and m case of a district director to the proper farm land bank. (g) To make application to the Secretary of the Treasury for tem- porary deposits, as follows: If at any time a Federal land bank, the fair value of whose assets is at least equal to the total of its liabilities, shall find that it may soon be without funds, immediately available, sufficient to meet its obli- gations with respect to the payment, when required, of the principal of or the interest on bonds issued under this Act, or of both principal and interest, it may make application to the Federal Farm Loan Board for a temporary deposit by the Secretary of the Treasury of the sum needed to make such payment during the period for which its funds, imrnedi- ately available, will be insufiicient, setting forth in its application such information as the Federal Farm Loan Board may require. If after investigation the Federal Farm Loan Board approves said applica- tion it shall give notice thereof to the Secretary of the Treasury, stat- ing the sum required, the period for which needed, and such other facts as may be necessary. Thereupon the Secretary of the Treasury may deposit such sum, or from time to time so much thereof as may be re- KUKAL CREDITS BILL. 11 AS PASSED BY SENATE. (i) To exercise such incidental 'powers as shall he necessary or requisite to fulfill their duties and carry out the purposes of this Act. federal land banks. Sec. 4. That as soon as practicable the Federal Farm Loan Board shall divide the continental United States, excluding Alaska, into twelve districts, which shall be known as Federal land bank dis- tricts, and may be designated by number. Said districts shall be apportioned with due regard to the farm loan needs of the country, but no such district shall contain a fractional part of any State. They AS PASSED BY HOUSE. quired, with said Federal land bank, to be expended under the direction of the Federal Farm Loan Board for the purposes for which the applica- tion for such deposit was approved. Any sum^so deposited shall bear a rate of interest fixed by the Secre- tary of the Treasury, not to exceed the current rate charged for other Government deposits, and shall be repaid as may be required, but not later than the expiration of the period fixed by the Secretary of the Treasury. To secure the repay- ment of any such deposit, together with the payment of the interest thereon, said Federal land bank shall issue to the Secretary of the Treasury its certificate of indebted- ness: Provided, That the aggregate of all such deposits in any one Federal land bank by the Secretary of the Treasury shall not exceed, in any fiscal year or at one time, the sum of $500,000. (h) To exercise such incidental powers as shall be necessary or requisite to fulfiU their duties and carry out the purposes of this Act. federal land banks. Sec. 5. That as soon as practicable the Federal Farm Loan Board shall divide the continental United States, -excluding Alaska, into twelve districts, which shall be known as Federal land bank dis- tricts, and may be designated by number. Said districts shall be apportioned with due regard to the farm loan needs of the country, but no such district shall contain a fractional part of any State. Said districts may be readjusted from time to may be readjusted from time to time ' time. and their number may be increased by the Federal Farm Loan Board: Provided, That - in In no case shall a Federal land bank be established with less than no case shall a Federal land bank be established with less than $500,000 capital stock. $750,000 capital stock. BtJEAL CEEDITS BILL. 12 AS PASSED BY SENATE. The Federal Farm Loan Board shall establish in each Federal land bank district a Federal land bank, with its principal office located in such city within the district as said board shall designate. Each 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 estab- lish branches within the land bank district. Each Federal land bank shall be temporarily managed by five directors appointed by the Federal Farm Loan Board. Said directors 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 compensation as the Federal Farm Loan Board shall fix. They shall choose from their number, by majority vote, a presi- dent, a vice president. AS PASSED BYiHOUSE. The Federal Farm Loan Board shall establish in each Federal land bank district a Federal land bank, with its principal office located in such city within the district as said board shall designate. Each Federal 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 estab- lish branches within the land bank district. Each Federal land bank shall be temporarily managed by three directors appointed by the Federal Farm Loan Board. Said directors 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 compensation as the Federal Farm Loan Board shall fix. They shall choose from their number, by majority vote, a presi- dent, a vice president, and a secretary, and a . treasurer. They are further au- thorized and empowered to employ such attorneys, experts, assistants, clerks, laborers, and other employ- ees as they may deem nacessary, and to fix their compensation, subject to the approval of the Federal J^'arm Loan Board. Said temporary directors shall, under their hands, forthwith make an organization certificate, which shall specifically state : First. The name assumed by such bank. Second. The district within which its operations are to be carried on, and the particular city in which its principal office is to be located. Third. The amount of capital stock and the number of shares into which the same is to be divided. a secretary, who shall also act as treasurer. They are further au- thorized and empowered to employ such attorneys, experts, assistants, clerks, laborers, and other employ- ees as they may deem necessary and to fix their compensation, subject to the approval of the Federal Farm Loan Board. Said temporary directors shall, under their hands, forthwith make an organization certificate, which shaU specifically state: First. The name assumed by such bank. Second. The district within which its operations are to be carried on, and the particular city in which its principal office 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 permit an increase of its capital stock from BUBAL OEEDITS BILL. 13 AS PASSED BY SENATE. Fourth. The fact that the certifi- cate is made to enable such persons to avail themselves of the advan- tages of this Act. The organization certificate shall be acknowledged before a judge of some court of record or notary public, and shall be, together with the acknowledgment thereof, authenticated by the seal of such court or notary, transmitted to the Farm Loan Com- missioner, who shall record and care- fully preserve the same in his 6fB.ce, where it shall be at all times open to public inspection. The Federal Farm Loan Board is authorized to direct such changes in or additions to any such organ- ization certificate as it may deem necessary or expe- dient. Upon duly making and filing such organization certificate the bank shall become, as from the date of the execution of its organization certifi- cate, a body corporate, and as such, and in the name designated in the organization certificate, it shall have power — First. To adopt and use a cor- porate seal. Second. "To have succession until it is dissolved by Act of Congress or under the provisions of this Act. Third. To make contracts. Fourth. To sue and be sued, com- plain and defend, in any court of law or equity, as fuUy as natural persons. Fifth. To elect or appoint direct- ors, and by its board of directors to AS PASSED BY HOUSE. time to time for the purpose of pro- viding for the issue of shares to national farm loan associations and stockholders who may secure loans through agents of Federal land banks in accordance Avith thejpro- visions of this Act. Fourth. The fact that the certifi- cate is made to enable such persons to avail themselves of the advan- tages of this Act. The organization certificate shall be acknowledged before a judge or clerk of some court of record or notary public, and, together with the acknowledgment thereof, authenticated by the seal of such court or notary, shall be transmitted to the Farm Loan Com- missioner, who shall record and care- fully preserve the same in his office, where it shall be at all times open to public inspection. The Federal Farm Loan Board is authorized to direct such changes in or additions to any such organ- ization certificate , not inconsistent with this Act, as it may deem necessary or expe- dient. Upon duly making and filing such organization certificate the bank shall become, as from the date of the execution of its organization certifi- cate, a body corporate, and as such, and in the name designated in the organization certificate, it shall have power — First. To adopt and use a cor- porate seal. Second. To have succession until it is dissolved by Act of Congress or under the provisions of this Act. Third. To make contracts. Fourth. To sue and be sued, com- plain , interplead, and defend, in any court of law or equity, as fully as natural persons. I^'ifth. To elect or appoint direct- ors, and by its board of directors to EUEAL CBEDITS BILL. 14 AS PASSED BY SENATE. elect a president and a vice presi- dent, appoint a secretary and a treasurer and other officers and em- Eloyees, define their duties, require onds of them and fix the penalty thereof; by action of its board of directors dismiss such officers and employees, or any of them, at pleas- ure and appoint others to fill their places. Sixth. To prescribe, by its board of directors, subject to the supervi- sion and regulation of the federal Farm Loan Board, by-laws not in- consistent with law, regulating the manner in which its stock shall be transferred, its directors elected, its officers elected or appointed, its Eroperty transferred, its general usiness conducted, and the privi- leges granted to it by law exercised and enjoyed. Seventh. To exercise, by its board of directors or duly authorized offi- cers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business herein described. After the subscriptions to stock in any Federal land bank by na- tional farm loan associations, here- inafter authorized, shall have reached the siun of $100,000, the officers of said land bank shall be elected and appoiated AS PASSED BY HOUSE. elect a president and a vice presi- dent, appoint a secretary and a treasurer and other officers and em- Kloyees, define their duties, require onds of them, and fix the penalty thereof; by action of its board of directors dismiss such officers and employees, or any of them, at pleas- ure and appoint others to fill their places. Sixth. To prescribe, by its board of directors, subject to the supervi- sion and regulation of the Federal Farm Loan Board, by-laws not in- consistent with law, regulating the manner in which its stock shall be transferred, its directors elected, its officers elected or appointed, its Eroperty transferred, its general usiness conducted, and the privi- leges granted to it by law exercised and enjoyed. Seventh. To exercise, by its board of directors or duly authorized offi- cers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business herein described. After the subscriptions to stock in any Federal land bank by na- tional farm loan associations, here- inafter created, shall have reached the sum of 1100,000, the officers and directors, of said land bank shall be chosen as hereinafter provided and shall, upon becoming duly qualified, take over the man- agement of said land bank from the temporary officers appointed and chosen under this section. The board of directors of every Federal land bank shall be selected as hereinafter specified and shall consist of as herein provided and shall, upon becoming duly qualified, take over the man- agement of said land bank from the temporary officers ^ selected under this section. The board of directors of every Federal land bank shall be selected as hereinafter specified and shall consist of five members, each holding office for three years. nme members, each holding office for three years. EUEAL CKEDITS BILL. 15 AS PASSED BY SENATE. Three of said directors shall be known as local directors, and shall be chosen by and be representative of na- tional farm loan associations; and the remaining two AS PASSED BY HOUSE. Six of said directors shall be known as local directors, and shall be chosen by and be representative of na- tional farm loan associations; and the remaining three directors shall be known as district directors shall be known as district du-ectors, and shall be appointed by directors, and shall be appointed by the Federal Farm Loan Board and the Federal Farm Loan Board and represent the pubhc interest. represent the public interest. Farm loan associations hmited and farm loan associations unhm- ited shall, respectively, have repre- sentation on the board of directors in proportion to the amount of un- paid principal on loans made to their members by the land bank and ac- tually outstanding three months before each election. If the amount unpaid on the principal of loans outstanding in either division shall amoimt to less than $1,000,000, aU associations in the district shall vote together for all three local directors. Two months before each election At least two months before the date specified by the Federal Farm Loan Board for the first election the farm loan commissioner shall the Farm Loan Commissioner shall determine the proportional repre- sentation of each division as herein prescribed, and shall allot to each division its respective proportion of the three local directors. He shall forthwith notify each farm loan association in writing that such election is to be held, giving the number of directors to 6 elected by each division, and requesting each association to nominate one candidate for each director to be voted for in its division. Within ten days of the receipt of such notice each association shall notify each national farm loan association in writing that such election is to be held, fiving the number of directors to e 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 KURAL CREDITS BILL. 16 AS PASSED BY SENATE. forward its nominations to said Farm Loan Commissioner. Said commissioner shall prepare a list of ■ candidates for local directors, the ten persons receiving the highest num- ber of votes in each division from farm loan associations making such nominations to be placed on the list for such division. AS PASSED BY HOUSE. forward its nominations to said Farm Loan Commissioner. Said commissioner shall prepare a list of candidates for local directors consisting of the twenty- persons receiving the highest num- ber of votes from national farm loan associations making such nomihations At least One month before said election said Farm Loan Commissioner shall mail to each association the list for its division. The directors of each association shall cast the vote of said association for as many candi- dates on said list as there are va- cancies to be filled, and shall for- ward said vote to the Farm Loan Commissioner within ten days after said list of candidates is received by them. The candidates receiving the highest number of votes from associations making choice in each division, shall be elected respectively as local directors. In case of a tie the Farm Loan Commissioner shall determine the choice. The Federal Farm Loan Board shall designate one of the district directors to serve for two years and to act as chairman of the board of directors. one month before said election said Farm Loan Commissioner shall mail to each national farm loan association the list of candidates. The directors of each national farm loan association shaU cast the vote of said association for as many candi- dates on said Hst as there are va- cancies to be fiUed, and shall for- ward 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 local directors. In case of a tie the Farm Loan Commissioner shall determine the choice. The Federal Farm Loan Board shall designate one of the district directors to serve for three years and to act as chairman of the board of directors. EUEAL CREDITS BILL. 17 AS PASSED BY SENATE. The other district director shall AS PASSED BY HOUSE. It shall designate one of said di- rectors to serve for a term of two years and one to serve for a term of one year. After serve for a term of one year. After the first appointments each di- the first appointments each di- rector rector district shall be appointed for a term of two shall be appointed for a term of three years. At the first regular meeting of the board of directors of each Federal land bank it shall be the duty of the local directors to designate one of the local directors whose term of office shall expire in one year from the date of such meeting, one whose term of office shall expire in two years from said date, and one whose term of office shall expire in three years from said date. In making such designations an equitable allotment shall be made between directors chosen in the two divisions in accordance with the proportional representation deter- mined by the farm loan commis- sioner. Thereafter every director of a Fed- eral land bank chosen as herein- before provided shall hold office for a term of three years. Vacancies that may occur in the board of directors shall be filled in the manner provided for the original selection of such directors. Directors of Federal land banks shall have been for at least two years residents of the district for which they are appointed or elected, and at least one district director shall be experienced in practical farming and actually engaged at the time of his appointment in 42564— S. Doc. 444, 64-1 3 years. At the first regular meeting of the board of directors of each Federal land bank it shall be the duty of the local directors to designate two of the local directors whose term of office shall expire in one year from the date of such meeting, two whose term of office shall expire in t"^o years from said date, and two whose term of office shall expire in three years from said date. Thereafter every director of a Fed- eral land bank chosen as herein- before provided shall hold office for a term of three years. Vacancies that may occur in the board of directors shall be filled for the unexpired term in the manner provided for the original selection of such directors. Directors of Federal land banks shall have been for at least two years residents of the district for which they are appointed or elected, and at least one district director shall be experienced in practical farming and actually engaged at the time of his appointment in RURAL CREDITS BILL. 18 AS PASSED BY SENATE. farming operations within the dis- trict. No director of a Federal land bank shall act as an officer, director, or em- ployee of any other bank. Directors of Federal land banks shall receive, in addition to any compensation otherwise providedf, a reasonable allowance for neces- sary expenses in attending meet- ings of their respective boards, to be paid by the respective Federal land banks. Any compensation that may be provided by boards of directors of Federal land banks for directors, officers, or employees shall be subject to the approval of the Federal Farm Loan Board. AS PASSED BY HOUSE. farming operations within the dis- trict. No director of a Federal land bank shall , during his continuance in office, act as an officer, director, or em- ployee 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 compensation otherwise provided, a reasonable allowance for neces- sary expenses in attending meet- ings of their respective boards, to be paid by the respective Faderal land banks. Any compensation that may be provided by boards of dhectors of Federal land banks for directors, 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 business, a subscribed capital of not less than $500,000. The Federal Farm Loan Board is authorized to prescribe the times and conditions of the payment of subscriptions to capital stock, to reject any sub- scription in its discretion, and to require subscribers to furnish ade- quate security for the payment thereof. The capital stock of each Federal land bank shall be divided into shares of $5 each, and may be sub- scribed for and held by any indi- 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 transferred or hypothecated, and the certifi- cates tnerefor shall so state. capital stock of federal land banks. Sec. 6. That every Federal land bank shall have, before beginning business, a subscribed capital of not less than 1750,000. The Federal Farm Loan Board is authorized to prescribe the terms, conditions , and time of the payment of subscriptions to capital stock, to reject any sub- scription in its discretion, and to require subscribers to furnish ade- quate security for the payment thereof. The capital stock of each Federal land bank shall be divided into shares of $5 each, and may be sub- scribed for and held by any indi- 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 transferred or hypothecated, and the certifi- cates therefor shall so state. EUEAL CREDITS BILL. 19 AS PASSED BYiSENATE. Stock owned by the Government of the United States in Federal land banks shall receive no divi- dends, but all other stock shall share in dividend distributions with- out preference. Each farm loan association and the Gov- ernment of the United States shall be entitled to one vote for each share of stock held by it in deciding all questions at meetings of share- holders, and no other shareholder ' shall be permitted to vote. Stock owned by the United States shall be voted by the Farm Loan Com- missioner, as directed by the Fed- eral Farm Loan Board. It shall be the duty of the Federal Farm Loan Board, as soon as prac- ticable 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 district. If within ninety days after the opening of said books any part of the minimum capitalization of $500,000 herein prescribed for Federal land banks shall remain unsubscribed, it shaU be the duty of the Secretary of the Treasury to subscribe the balance thereof on behaK of the United States, said subscription to be subject to call in whole or in part by the board of directors of said land bank upon thirty days' notice with the approval of the Federal Farm Loan Board; and the Secretary of the Treasury is hereby authorized and directed to take out shares cor- responding to the unsubscribed bal- ance as called, and to pay for the same out of any moneys in the Treasury not otherwise appropri- ated. After the ASiPASSEDpY HOUSE. Stock owned by the Government of the United States in Federal land banks shall receive no divi- dends, but aU other stock shall share in dividend distributions with- out preference. Each national farm loan association and the Gov- ernment of the United States shall be entitled to one vote for each share of stock held by it in deciding all questions at meetings of share- ■ holders, and no other shareholder shall be permitted to vote. Stock owned by the United States shall be voted by the Farm Loan Com- missioner, as directed by the Fed- eral Farm Loan Board. It shall be the duty of the Federal Farm Loan Board, as soon as prac- ticable 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 district . If within ninety days after the opening of said books any part of the minimum capitalization of $750,000 herein prescribed for Federal land banks shall remain unsubscribed, it shall be the duty of the Secretary of the Treasury to subscribe the balance thereof on behalf of the United States, said subscription to be subject to caU in whole or in part by the board of directors of said land bank upon thirty days' notice subject to the approval of the Federal Farm Loan Board; and the Secretary of the Treasury is hereby authorized and directed to take out shares cor- responding to the unsubscribed bal- ance as called, and to pay for the same out of any moneys in the Treasury not otherwise appropri- ated. : Provided, That no payments from the Secretary of the Treasury shall be made on subscriptions to the stock of any Federal land bank until applications for loans shall have been received from at least ten national farm loan associations. After BUEAL CREDITS BILL. 20 AS PASSED BY SENATE. subscriptions to capital stock, exclusive of Government subscrip- tions, shall amount to $500,000 in any Federal land bank, said bank shall apply semiannually to the payment and retirement of stock held by the United States, one-quarter of aU sums thereafter subscribed to capital stock, imtil aU stock held therein by the United States is retired at par. AS PASSED BY HOUSE. subscriptions to capital stock, by national farm-loan associa- tions shall amount to $750,000 in any Federal land bank, said bank shall apply semiannually to the payment and retirement of the shares of stock which were is- sued to represent the subscriptions to the original capital twenty-five , per centmn of aJl sums thereafter subscribed to capital stock \mtil all such original capital stock is retired at par. At least twenty per centum of the capital stock of any Federal land bank which is paid in by national farm loan associations shall consist of cash in the vaults of said land bank or of deposits in member banks of the Federal reserve systein or of investments in negotiable interest-bearing securities, approved by the Federal Farm Loan Board : Provided, That not less than five per centum of such capital stock shall be invested in bonds of the United States. Whenever capital stock of any Federal land bank or joint stock land bank to the amount of $100,000 is paid in, at least ten per centum thereof, and at least ten per centum of any further payment amounting to $100,000, shall "be invested in bonds of the United States, not later than two years after such pay- ment. government depositaries. Sec. 6. That all Federal land banks and joint-stock land banks organized under this Act, when designated for that purpose by the Secretary of the Treasxu-y, shall be depositaries of public money, except receipts from customs, under government agencies. Sec. 7 That aU Federal land banks and joint-stock land banks organized under this Act, EUKAL CREDITS BILL. 21 AS PASSED BY SENATE. such regulations as may be pre- scribed by said Secretary; and they may also be employed as financial agents of the Government; and they shall perform aU such reasonable duties, as depositaries of public money and AS PASSED BY HOUSE. shall perform all reasonable duties, as financial agents of the Govern- financial agents of the Govern- ment ment , as may be required of them. And that the Secretary of the Treasury shall require of the Secretary of the Treasury may require of the Federal land banks and joint them, stock land banks thus designated satisfactory secmity, by the deposit of United States bonds or other- wise, for the safekeeping and prompt payment of the pubhc money de- posited with them, and for the faithful performance of their duties as financial agents of the Govern- ment. No Government fimds de- posited under the provisions of this section shall be invested in mort- gage loans. NATIONAL FARM LOAN ASSOCIA- TIONS. Sec. 7. That corporations, to be known as national farm loan associations, may be organized by persons desiring to borrow money on farm mortgage security under the terms of tms Act. Such persons shall enter into articles of associa- tion which shall specify in general terms the object for wmch each association is formed and the ter- ritory within which its operations are to be carried on, and which may contain any other NATIONAL FARM LOAN ASSOCIA- TIONS. Sec. 8. That corporations, to be known as national farm loan associations, may be organized by persons desiring to borrow money on farm mortgage security under the terms of tms Act. Persons desiring to form such an association shall enter into articles of associa- tion which shall specify in general terms the object for wmch the association is formed and the ter- ritory within which its operations are to be carried on, and which may contain any other provisions, provision, ETJEAL CBEDITS BILL. 22 AS PASSED BY SENATE. not inconsistent with law, which the association may see fit to adopt for the regulation of its business and the conduct of its affairs. Said articles shall be signed by the per- sons uniting to form the associa- tion, and a copy thereof shaU be forwarded to the Federal land bank for the district, to be filed and pre- served in its office. Every farm loan association shall elect, in the manner prescribed for the elec- tion of directors of national banking associations, a board of not less than five directors, who shaU hold office for the same period and under the same conditions as directors of na- tional banking associations. It shall be the duty of said board of directors to choose in such manner as they may prefer a secretary-treas- urer, who shall receive such compensation as said board of directors shall determine. The board of directors shaU elect a {)resident, a vice president, and a oan committee of three members. The directors and all ofiicers except the secretary-treasm-er shall serve without compensation, unless the payment of salaries to them shall be approved by the Federal Farm Loan Board. All officers and directors shall, during their term of office, be bona fide residents of the territory within which the association is authorized to do business It shall be the duty of the secre- tary-treasurer of every farm loan association to act as cus- todian of its funds and to deposit the same in such bank as the board of directors may designate, to pay over to borrowers all sums received for their accoimt from the Federal land bank upon first mortgage as in this Act prescribed, and to meet all other obligations of the association, AS PASSED BY HOUSE. not inconsistent with law, which the association may see fit to adopt for the regulation of its business and the conduct of its affairs. Said articles shall be signed by the per- sons uniting to form the associa- tion, and a copy thereof shall be forwarded to the Federal land bank for the district, to be filed and pre- served in its office. Every national farm loan association shall elect, in the manner prescribed for the elec- tion of directors of national banking associations, a board of not less than five directors, who shaU hold office for the same period and under the same conditions as directors of na- tional banking associations. It shall be the duty of said board of directors to choose in such manner as they may prefer a secretary-treas- urer, who may receive such compensation as said board of directors shall determine. The board of directors shall elect a president, a vice president, and a loan committee of three members. The directors and all officers except the secretary-treasurer shall serve without compensation, unless the payment of salaries to them shall be approved by the Federal Farm Loan Board. AH officers and directors except the secretary-treasm-er shall, during their term of office, be bona fide residents of the territory within which the association is authorized to do business , and shall be shareholders of the association. It shall be the duty of the secre- tary-treasurer of every national farm loan association to act as cus- todian of its funds and to deposit the same in such bank as the board of directors may designate, to pay over to borrowers all sums received for their account from the Federal land bank upon first mortgage as in this Act prescribed, and to meet all other obligations of the association, BTTBAL CBEDITS BILL. 23 AS PASSED BY SENATE. subject to the orders of the board of directors and in accordance with the by-laws of the association. Said secretary-treasurer shall like- wise collect, receipt for, and trans- mit to the Federal land bank all payments of interest, amortization mstallments, or principal arising out of loans made through the asso- ciation. He shall be the custodian of the .securities, records, papers, cer- tificates of stock, and all documents relating to or bearing upon the con- duct of the affairs of the association. He shall fm-nish a suitable surety bond to be prescribed and approved by the Federal Farm Loan Board for the proper performance of the duties imposed upon him under this Act, which shall cover prompt col- lection and transmission of funds. He shall make a quarterly report to the Federal Farm Loan Board upon forms to be provided for that piu:- pose. Upon request from said board said secretary-treasm-er shall furnish information regarding the condition of the farm loan association for which he is acting, and he shall carry out all duly authorized orders of said board. He shall assure himself from time to time that the loans made through the farm loan association of which he is an officer are appUed 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 comply with the terms of his application or mortgage. He shall also ascertain and report to said bank th* amount of any de- linquent taxes on mortgaged land and the name of the delinquent. The reasonable expenses of the secretary-treasurer, the loan com- mittee, and other officers and agents of farm loan associations, and the sal- ary of the secretary-treasurer. AS PASSED BY HOUSE. subject to the orders of the^board of directors and in accordance with the by-laws of the association. Saidf secretary-treasurer shall hke- wise collect, receipt for, and trans- mit to the Federal land bank all payments of interest, amortization installments, or principal arising out of loans made through the asso- cia tion. He shall be the custodian of the securities, records, papers, cer- tificates of stock, and all documents relating to or bearing upon the con- duct of the affairs of the association. He shall furnish a suitable surety bond to be prescribed and approved by the Federal Farm Loan Board for the proper performance of the duties imposed upon him under this Act, which shall cover prompt col- lection and transmission of funds. He shall make a quarterly report to the Federal Farm Loan Board upon forms to be provided for that pur- Eose. Upon request from said oard said secretary-treasurer shall furnish information regarding the condition of the national farm loan association for which he is acting, and he shall carry out all duly authorized orders of said board. He shall assure himself from time to time that the loans made through the national farm loan association of which he is an officer are applied to the purposes set forth in the apphcation of the borrower as approved, and shall forthwith report to the land bank of the district any failure of any borrower to comply with the terms of his application or mortgage. He shall also ascertain and report to said bank the amount of any de- linquent taxes on land mortgaged to said bank and the name of the delinquent. The reasonable expenses of the secretary-treasurer, the loan com- mittee, and other officers and agents of national farm loan associations, and the sal- ary of the secretary-treasurer, BUBAL OEEDITB BILL. 24 AS PASSED BY SENATE. shall be paid from the general funds of the association, and the board of directors is authorized to set aside such sums as it shall deem requisite for that purj)ose and for other ex- penses of said association. When no such funds are available, the board of directors may levy an assessment on members and prospective members of the as- sociation in proportion to the amount of loans granted or apphed for by them, which may be repaid as soon as funds are available, or it may se- cure an advance from the Federal land bank of the district, to be re- paid with interest at the rate of six per centum per annum, from divi- dends belonging to said association. Said Federal land bank is hereby authorized to make such advance and to deduct such repayment. The salary of the secretary-treas- urer may be increased or reduced by the Federal Farm Loan Board in its discretion. Ten or more natviral persons who are the owners, or about to become the owners, of farm land qualified as security for a mortgage loan under section twelve of this act, may imite to form a national farm loan associa- tion. They shall organize subject to the requirements and the condi- tions specified in this section and in section four of this act, so far as the same may be applicable: Provided, That the board of directors may consist of five members only, and instead of a sec- retary and a treasurer there shall be a secretary-treasurer, who need not be a shareholder of the association. When the articles of association are forwarded to the Federal land bank of the district as provided in this section, they shall be accompa- nied by the written report of the loan committee as requu-ed in sec- tion AS PASSED BY HOUSE. may be paid from the general funds of the association, and the board of directors is authorized to set aside such sums as it shall deem requisite for that purpose and for other ex- penses of said association. When no such funds are available, the board of directors may levy an assessment on members in proportion to the amount of stock held by each. which may be repaid as soon as funds are available, or it may se- cure an advance from the Federal land bank of the district, to be re- paid with interest at the rate of six per centum per annum, from divi- dends belonging to said association. Said Federal land bank is hereby authorized to make such advance and to deduct such repayment. Ten or more natural persons who are the owners, or about to become 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 loan associa- tion. They shall organize subject to the requirements and the condi- tions specified in this section and in section five of this act, so far as the same may be applicable: Provided, That the board of directors may consist of five members only, and instead of a sec- retary and a treasurer there shall be a secretary-treasurer, who need not be a shareholder of the association. When the articles of association are forwarded to the Federal land bank of the district as provided in this section, they shall be accompa- nied by the written report of the loan committee as required in sec- tion twenty ten EUBAL CREDITS BILL. 25 AS PASSED BY SENATE. of this Act, and by an affidavit stat- ing that each of the subscribers is the owner, or is about to become the owner, of farm land qualified under section twelve of this Act as the basis of a mortgage loan; that the loan desired by each person is not more than $10,000, nor less than $200 and that the aggregate of the de- sired loans is not less than $20,000; that said affidavit is accompanied by an amount in cash equal to five per centum of the ag- gregate sum desired on mortgage loan which is intended as the initial con- tribution of said association to the capital stock of said Federal land bank; and that a temporary organization of said association has been formed by the election of a board of direc- tors, a loan committee, and a secre- tary-treasurer who subscribes to said affidavit, giving his residence and post-offioe address. Upon receipt of such articles of association, with the accompanying affidavit and cash, AS PASSED BY HOUSE. of this Act, and by an affidavit stat- ing that each of the subscribers is the owner, or is about to become the owner, of farm land qualified under section twelve of this Act as the basis of a mortgage loan; that the loan desired by each person is not more than $10,000, nor less than and that the aggregate of the de- sired loans is not less than $20,000; that said affidavit is accompanied by a subscription to stock in the Fed- eral land bank equal to five per centum of the ag- gregate sum desired on mortgage loans ; and that a temporary organization of said association has been formed by the election of a board of direc- tors, a loan committee, and a secre- tary-treasurer who subscribes to said affidavit, giving his residence and post-office address. Upon receipt of such articles of association, with the accompanying affidavit and stock subscription the directors of said Federal land the directors of said Federal land bank bank See matter at end of this paragraph. shall shall send an appraiser to investigate the solvency and character of the applicants and the value of their lands, and shall then determine whether in their judg- determine whether in their judg- ment a charter should be granted to ment a charter should be granted to such association, such association. and they shall send a representative to investigate the solvency and character of the applicants and the value of their lancfe. They shall forward such articles of association and the accompanying affidavit to the Federal Farm Loan Board with their recommendation. 42564— S. Doc. 444, 64-1 4 See matter above. They shall forward such articles of association and the accompanying affidavit to the Federal Farm Loan Board with their recommendation. EtJEAL CREDITS BILL. 26 AS PASSED BY SENATE. If said recommendation is unfavor- able, the charter shall be refused. and the cash accompanying the ap- plication shall be returned to the applicants without deduction. If said recommendation is favor- able, the Federal Farm Loan Board shall thereupon grant a charter to the applicants therefor, designating the territory in which such associa- tion may make loans, and shall for- ward said charter to said applicants through said Federal land bank: Provided, That said Farm Loan Board may for good cause shown in any case refuse to grant a charter. Upon receipt of its charter such farm loan association shall be au- thorized and empowered to receive from the Federal land bank of the district sums to be loaned to its members under the terms and con- ditions of this Act. Whenever any farm loan association shall desire to secure for any member a loan on first mortgage from the Federal land bank of its district it shall subscribe for , and pay for in cash, capital stock of said land bank to the amount of five per centum of such loan. Such capital stock shall be held by said land bank as collateral security for the payment of said loan, but said association shall be paid any dividends accruing and payable on said capital stock while it is out- standing. Such stock may, in the discretion of the directors. AS PASSED BY HOUSE. If said recommendation is unfavor- able, the charter shall bo refused. If said recommendation is favor- able, the Federal Farm Loan Board shall thereupon grant a charter to the applicants therefor, designating the territory in which such associa- tion may make loans, and shall for- ward said charter to said applicants 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. Upon receipt bf its charter such national farm loan association shall be au- thorized and empowered to receive from the Federal land bank of the district sums to be loaned to its members under the terms and con- ditions of this Act. Whenever any national farm loan association shall desire to secure for any member a loan on first mortgage from the Federal land bank of its district it shall subscribe for capital stock of said land bank to 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 capital stock shall be held by said land bank as collateral security for the payment of said loan, but said association shall be paid any dividends accruing and payable on said capital stock while it is out- standing. Such stock may, in the discretion of the directors, and with the approval of the Fed- eral Farm Loan Board, be paid off at par and retired. be paid off at par and retired BITRAL CREDITS BILL. 27 AS PASSED BY SENATE. In such case the AS PASSED BY HOUSE. proportional to any reduction which may^be made injthe principal sum loaned to the member; and the directors shall pay off at par and re- tire such stock outstanding when the loan shall have been fuUy repaid. In such f^, cases the national farm loan association shall pay off at farm loan association shall pay off at par and retire the corresponding par and retire the corresponding share or shares of its stock which were issued shares of its stock which were issued when said land bank stock was when said land bank stock was issued subscribed. National farm loan associations may be organized with limited or with unlimited liabihty, and each shall be designated as a national farm loan association limited, or a national farm loan association un- limited, as the case may be. Asso- ciations with limited liabihty may be also designated as division A as- sociations; associations with unlim- ited liability as division B associa- ' tions. CAPITAL STOCK OF NATIONAL FARM LOAN ASSOCIA- TIONS. Sec. 8. That the shares in national farm loan associations shall be of the par value of $5 each. Every shareholder shall be enti- tled to one vote on each share of stock held by him at aU elections of directors and in deciding aU. ques- tions at meetings of shareholders: Provided, That the maximum num- ber of votes which may be cast by any one shareholder shall be ten. No persons but borrowers on farm land mortgages shall be members or shareholders of capital STOCK AND SPECIAL PROVISIONS OF NATIONAL FARM LOAN ASSOCIA- TIONS. Sec. 9. That the shares in national farm loan associations shall be of the par value of ■JS each. Every shareholder shall be enti- tled to one vote on each share of stock held by him at all elections of directors and in deciding all ques- tions at meetings of shareholders: Provided, That the maximum num- ber of votes which may be cast by any one shareholder shall be twenty No persons but borrowers on farm land mortgages shall be members or shareholders of • national KUBAL CREDITS BILL. 28 AS PASSED BY SENATE. farm loan associations. Any person desiring to borrow on farm land mortgage through a farm loan association shall deposit with the secretary-treasurer thereof for the purchase of its stock at par an amount equal to five per centum of the face of the desired loan. If the loan is granted, the applicant therefor shall, thereupon become the owner of one share of capital stock in said loan associa- tion for each $100 of the face of his loan, which shall be paid off at par and retired tipon full payment of said loan. Said capital stock shall be held by said association as collateral secu- rity for the payment of said loan, but said borrower shall be paid any dividends accruing and payable on said capital stock while it is out- standing. Such stock may at any time, in the discretion of the directors and with the permission of the directors of the land bank, be paid off at par and retired. In such case the holder of said stock shall be credited with the par value thereof, and if said par value shall exceed the amount then due on his loan, the balance shall be paid to him in cash. Every farm loan association formed under this Act shall by its articles of asso- ciation provide for an increase of its capital stock from time to time for the purpose of securing additional -loans for its members and pro- AS PASSED BY HOUSE. farm loan associations. Any person desiring to borrow on farm land mortgage through a national fatm loan association' shall subscribe for shares of stock in such farm loan association to an amount equal to five per centum of the face of the desired loan, said subscription to be paid in cash upon the granting of the loan. If the loan is granted, the applicant shaU, upon full payment therefor^ become the owner of one share of capital stock in said loan associa- tion for each $100 of the face of his loan. or any fractional part thereof. Said capital stock shall be held by said association as collateral secu- rity for the payment of said loan, but said borrower shall be paid any dividends accruing and payable on said capital stock while it is out- standing. Every national farm loan association formed under this Act shall by its articles of asso- ciation provide for an increase of its capital stock from time to time for the purpose of securing loans for its members and pro- EtTKAL CREDITS BILL. 29 AS PASSED BY SENATE. viding for the issue of shares to borrowers in accordance with the provisions of this Act. Such in- creases shall be included in the quarterly reports to the Federal Farm Loan Board. Any farm loan association formed under this Act may reduce its cap- ital stock to any sum not below five per centum of the unpaid principal of mortgages indorsed by it. NATIONAL PAEM LOAN ASSOCIATIONS: SPECIAL PMO VISIONS. This section, number 15 in Senate bill, will be found on page 43. For cross reference and compari- son only it is duplicated here. Sec. 15. That any •person who shall become a shareholder of any national farm loan association shall he entitled to borrow money on farm land mortgage upon filing his application in accordance with sec- tion seven and otherwise complying with the terms of this Act whenever the Federal land ianlc of the .district has funds available for that pur- pose, unless said land bank or the Federal Farm Loan Board shall, in its discretion, otherwise determine. Such member may, at his option, pay the expenses for ^appraisal, ex- amining title, drawing legal papers, recording and similar services, or he may require such expenses to be advanced by the Federal land banjc making the loan, in which case said expenses may be made a part of the face of the loan and paid off in amortization payments. Such ad- dition to the loan shall not be per- mitted ' to increase said loan above the fifty per centum limited in sec- tion twelve. Any person who shall borrow from a Federal land bank for the purpose of purchasing a farm for a home under the provisions of sec- tion twelve of this Act may, at his option, borrow from the Federal lavd bank such sum as is needed to pay for Ms required shares of stock m the farm loan association, and such sum may be borrowed m ad- dition to the amount permitted to be borrowed under the provisions of said section twelve. Subject to rules and regulations prescribed by the Federal Farm AS PASSED BY HOUSE. viding for the issue of shares to borrowers in accordance with the provisions of this Act. Such in- creases shall be included in the quarterly reports to the Federal Farm Loan Board. Any person whose application for membership is accepted by a national farm loan association shall be entitled to borrow money on farm land mortgage upon filing his application in accordance with sec- tion eight and otherwise complying with the terms of this Act whenever the Federal land bank of the district has funds available for that pur- pose, unless said land bank or the Federal Farm Loan Board shall, in its discretion, otherwise determine. Any person desiring to secure a loan through a national farm loan association under the provisions of this Act may, at his option, borrow from the Federal land bank through such association the 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: Pro- vided, however. That such addition to the loan shall not be permitted to increase said loan above the sixty per centum limited in section twelve. EUKAL CREDITS BILL. 30 AS PASSED BY SENATE. Loan Board, any national farm loan association sTmll he entitled to re- tain as a commission from each in- terest payment on any loan indorsed by it, not to exceed one-quarter of one per centum semiannually upon the unpaid principal of said loan, any amounts so retained as commis- sions to ie deducted from dividends payable to such farm loan associa- tion from the Federal land bank, and to borrow from the land banlc of the district, at a rate of interest not to exceed six per centum per an- num,, sums aggregating one-fourth of its total stocJc holdings in said land bank. DIVISION A. NATIONAL FARM LOAN ASSOCIATIONS LIMITED. Sec. 9. That Shareholders of every division A association shall be held individually responsible, equally and ratably, and not one for another, for all con- tracts, 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 repre- sented by their shares. After a charter has been granted to a division A association, any natural person who is the owner, or about to become the owner, of farm land qualified under section twelve of this Act as the basis of a mortgage loan, and who desires to borrow on a mortgage of such farm land, may become a mem- ber of a division A association by a two-thirds votes of the directors upon subscribing for , and paying for in cash, one share of the capital stock of such association for each $100 of the face of his proposed loan AS PASSED BY HOUSE. He shall at the same time file with the secretary-treasurer his applica- tion for a mortgage loan, gimng the particulars required by section twelve of this Act. If membership is refused to any applicant under this section, or if the loan applied for is for any reason Shareholders of every national farm loan association shall be held individually responsible, equally and ratably, and not one for another, for all con- tracts, 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 repre- sented by their shares. After a charter has been granted to a national farm loan association, any natural person who is the owner, or about to become the owner, of farm land qualified under section twelve of this Act as the basis of a mortgage loan, and who desires to borrow on a mprtgage of such farm land, may become a mem- ber of the association by a two-thirds vote of the directors upon subscribing for one share of the capital stock of such association for each $100 of the face of his proposed loan or any fractional part thereof. He shall at the same time file with the secretary-treasurer his applica- tion for a mortgage loan, givmg the particulars required by section twelve of this Act. If membership is refused to any applicant under this section, or if the loan applied for is for any reason ETJBAL CREDITS BILL. 31 AS PASSED BY SENATE. AS PASSED BY HOUSE. rejected, the sum deposited hy him rejected, the sum deposited by him shall le returned. shall be retuBned , less such deductions as may be au- thorized hy regulations of the Fed- eral Farm Loan Board \ DIVISION B. NATIONAL FARM LOAN ASSOCIATIONS UNLIMITED. Sec. 10. That the members of every division B association shall be held individually responsible, equally and ratably, one for an- otner, for all contracts, debts and engagements of such association, and the articles of association and the charter of every such associa- tion shall distinctly state that the liabiUty of each member is unlim- ited. Every member of a division B association shall sign an agreement to be individually liable for aU con- tracts, debts and engagements ol such association, and to pay his equitable proportion of any con- tract, debt or engagement of such association to any member who shall be obliged to answer individu- ally therefor. After a charter has been granted to a division B association, any natural person who is the owner, or about to become the owner, of farm land qualified under section twelve of this Act as the basis of a mort- gage loan, and who desires to bor- row on a mortgage of such farm land, may become a provisional member of a division B association by unanimous vote of the directors upon subscribing for, and paying for in cash, one share of the capital stock of such association for each SI 00 of the face of his proposed loan. 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. The secretary-treasurer shall thereupon notify each member of such asso- ciation of the application for mem- bership, giving the name and post- office address of the applicant, and the amount he desires to borrow, describing briefly the land proposed to be mortgaged. Unless at least one-fifth ol the members of such association shall file with said sec- retary-treasurer within ten days of the mailing of such notice written objection to the application, it shall be granted, and the applicant shall without deduction. BUEAL CREDITS BILL. 32 AS PASSED BY SENATE. thereupon become a regular mem- ber; but his admission to member- ship shall not entitle him to borrow any sum in excess of the amount to which the appraisal of his property shall entitle him. If membership is refused to any applicant under this section, or if the loan applied for is for any reason rejected, the sum deposited by him shall be re- turned, less such deductions as may be authorized by regulations of the Federal Farm Loan Board. APPRAISAL. This section, number 19 in Senate bill, will be found on page 50. For oomparison and reference only it is duplicated here. Sec. 19. That whenever an ampli- cation for a mortgage loan is made to a division A or a division B association, it shall he first referred to the loan committee provided for in section seven of this Act. Said loan committee shall examine the land which is of- fered as security for the desired loan and shall maJce a detailed written report signed by all three members, giving the appraisal of said land as determined by them, and such other information as may be required by rules and regulations to be prescribed by the Federal Farm Loan Board. No loan shall be approved by the directors unless said loan committee agrees unanimously upon a favorable report. The written report of said loan committee shall be submitted to the Federal land banlc, 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 appli- cation which it accompanies, but tJiey shall not be bound by said appraisal. Before any mortgage loan is made by any Federal land bank, or joint stock land bank, it shall refer the application and written report of the loan committee to one or more of the land bank AS PASSED BY HOUSE. APPRAISAL. Sec. 10. That whenever an appli- cation for a mortgage loan is made to a national farm loan association, it shall be first referred to the loan committee provided for in section eight of this Act. Said loan committee shall , examine the land which is offered as security for the desired loan and shall make a detailed writ- ten report signed by all three mem- bers, giving the appraisal of said land as determined by them, and such other information as may be required by rules and regulations to be prescribed by the Federal Farm Loan Board. No loan shall be ap- proved by the directors unless said loan committee agrees upon a favorable report. The written report of said loan committee shall be submitted to the Federal land bank. and the directors of said land bank shall examine said written report when they pass upon the loan appli- cation which it accompanies, but they shall not be bound by said appraisal. Before any mortgage loan is made by any Federal land bank, or joint- stock land bank, it shall refer the application and written report of the loan committee to one or more of the appraisers appointed under the au- BUKAL CREDITS BILL. 33 AS PASSED BY SENATE. appraisers appointed wtvder the au- thority of section three of this Act, and such appraiser or appraisers shall investigate and make a written report upon the land offered as security for said loan. No such loan shall ie made'iy said land hank unless said written report is favorable. Whenever any Federal land hank, or joint stock land hank, shall desire to issue farm loan honds under the provisions of section twenty-two of this Act, the Federal Farm Loan Board shall refer the application of such land hank to one or more of the special appraisers appointed under the authority of section three of this Act. Such special appraiser or appraisers shall make such exam- ination and appraisal of the mort- gages offered as collateral security for such honds as the Federal Farm Loan Board shall direct, and shall make a written report to said hoard. No issue of farm loan honds shall he authorized unless the Federal Farm Loan Board shall approve such issue in writing. Forms for appraisal reports for farm loan associations and land hanks shall he prescribed by the Federal Farm Loan Board. Land bank appraisers and special appraisers shall make such exam- inations and appraisals and con- duct such investigations, concern- ing farm loan honds and first mort- gages, as the Federal Farm Loan Board shall direct. No borrower under this Act shall he eligible as an appraiser under this section, hut borrowers may act as members of a loan committee in any case where they are not per- sonally interested in the loan under consideration. When any member of a loan committee or of a hoard of directors is interested, directly or indirectly, in a loan, a majority of the hoard of directors shall ap- point a substitute to act in his place in passing upon such loan. POWERS OF NATIONAL FARM LOAN ASSOCIATIONS. Sec. 11. That every national farm loan association shall have power: First. To indorse, and thereby become liable for the payment of, mortgages taken from its share- holders by the Federal land bank of its district. Second. To receive from the Fed- eral land bank of its district funds 42564— S. Doc. 444, 64-1 5 AS PASSED BY HOUSE. thority of section three of this Act, and such appraiser or ap- pfraisers shall investigate and make a written report upon the land offered as security for said loan. No such loan shall be made by said land bank unless said written report is favorable. No borrower under this Act shall be eligible as an appraiser under this section, but borrowers may act as members of a loan committee in any case where they are not person- ally 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 majority of the board of directors of any na- tional farm loan association shall appoint a substitute to act in his place in passing upon such loan. powers of NATIONAL FARM LOAN ASSOCIATIONS. Sec. 11. That every national farm loan association shall have power: First. To indorse, and thereby become liable for the payment of, mortgages taken from its share- holders by the Federal land bank of its district. Second. To receive from the Fed- eral land bank of its district funds BUBAL CBEDITS BILL. 34 AS PASSED BY SENATE. advanced by said land bank, and to deliver said funds to its share- holders on receipt of first mortgages qualified under section twelve of this Act. Third. To acquire and dispose of such property, real or personal, as may be necessary or convenient for the transaction of its business. Fourth. Against deposits of cur- rent funds, to issue certificates in any amount, bearing interest at not to exceed four per centum per an- num after six days from date, con- vertible into farm loan bonds when presented at the Federal land bank of the district in any multiple of $25. Such deposits, when received, shall be forthwith transmitted to said land bank, and be invested by it in the purchase of farm loan bonds issued by a Federal land bank or in first mortgages as defined by this Act. The mortgages thus taken may be hypothecated with the farm loan registrar of the dis- trict against an issuance of farm loan bonds as provided for in sec- tion twenty-two and section twenty- four of this Act, but such bonds when received either by purchase or for issuance shall not be delivered or issued except in exchange for and upon presentation for redemption and cancellation of an equal amount of convertible certificates issued by a farm loan association, any differ- ence under $25 in such exchange being adjusted in cash. When thus redeemed and canceled, such cer- tificates shall be returned to the farm loan association which issued them. AS PASSED BY HOUSE. advanced by said land bank, and to deliver said funds to its share- holders on receipt of first mortgages qualified under section twelve of this Act. Third. To acquire and dispose of such property, real or personal, as may be necessary or convenient for the transaction of its business. Fourth. Against deposits of cur- rent funds, to issue certificates for $20 and $50, or any multiple of either, convertible into Federal farm loan bonds; such deposits to be forthwith transmitted to the Fed- eral land bank of the district. The land bank shall, as soon as practi- cable after the receipt of any money so deposited with any national farm loan association, forward to such association Federal farm loan bonds of a par value equal to the amount received from such asso- ciation. Such association shall hold such bonds in trust, to redeem its outstanding convertible certificates and shall not deliver them except in exchange and upon presentation for redemption and cancellation of an equal amount of such convertible certificates. When such certificates are redeemed by the association RURAL CREDITS BILL. 35 AS PASSED BY SENATE. RESTRICTIONS ON LOANS BASED ON FIRST MORTGAGES. Sec. 12. That no Federal land bank organized under this Act shall make loans except upon the follow- ing terms and conditions : First. Said loans shall be secured 'by duly recorded first mortgages on farm land within the land-bank dis- trict in which the bank shall be situated. Second. Every such mortgage shall contain an agreement for the pay- ment of a fixed number of semian- nual or annual installments suffi- cient to provide for an agreed rate of interest during the term and for the payment of the principal dur- ing and at the end of the term, on what is known as the amortization plan. Third. Every such mortgage shall run for a period of at least five years and not exceeding sixty years. Fourth. Every mortgage loan made under this Act, for whatever period, shall provide for its extin- guishment, at the option of the bor- rower, in whole or in part, at any date set for the payment of interest after five years irom the date upon which said loan was made, as fol- lows: (a;) By the tender at their face value of farm loan bonds issued by the land bank holding such mort- gage, all unmatured coupons being attached to said bonds. (b) By advance payments in cash in sums of $100, or any multiple thereof. In such case the Federal land bank receiving such payments shaU purchase for its own account, and credit at par upon the mort- gage, farm loan bonds in suitable amoimts; said land bank may call, as may be necessary, farm loan bonds in suitable amounts, and when such calls shall have become effective shall credit such payments on such mortgage : AS PASSED BY HOUSE. issuing them they shall be canceled. Such association may charge the holder of such certificates the actual expense incurred in forwarding the bonds from the land bank to the association, together with accrued interest. Such accrued interest, if collected, to be forwarded to the Federal land bank. RESTRICTIONS ON LOANS BASED ON FIRST MORTGAGES. Sec. 12. That no Federal land bank organized under this Act shall make loans except upon the follow- ing terms and conditions : First. Said loans shall be secured by duly recorded first mortgages on farm land within the land-bank dis- trict in which the bank is situated. BURAL CREDITS BILL. 36 AS PASSED BY SENATE. AS PASSED BY HOUSE. Second. Every such mortgage shall contain an agreement pro- viding for the repayment of the loan on an amortization plan by means of a fixed number of annual or semiannual installments sufficient to cover, first, a charge on the loan, which shall not exceed the interest rate in the last series of farm-loan bonds issued by the land bank making the loan ; second, a charge for administration and profits which shall not exceed one per centum per annum on the outstanding loan, which two charges combined shall constitute the interest rate on the mortgage ; and, third, such amounts to be applied on the principal as will extinguish the debt within an agreed period, not less than five years nor more than thirty-six years: Provided, That after five years from the date upon which a loan was made additional payments in sums of $25 or any multiple thereof for the reduction of the principal or the payment of the entire principal due may be made on any regular installment date under the rules and regulations of the Federal Farm Loan Board: And 'provided further, That before any farm loan bonds shall have been issued by any land bank the interest rate may be determined in the discretion of said land bank subject to the provisions and limitations of this Act. Provided, That farm loan bonds of any Federal land bank, tendered or purchased under the foregoing two paragraphs to exitinguish the whole or any part of a mortgage loan, shall bear the rate of interest current on farm loan bonds issued by such bank at the time such mortgage loan was made. Fifth. No loan on mortgage shall be made under this Act at a rate of interest exceeding six per centum per annum, exclusive of amortization payments. Sixth. Third. The rate of interest charged for such loans shall not exceed six per centum per annum. Fourth. Such loans may be made for the Such loans may be made for the following purposes and for no other : following purposes and for no other : (a) To provide for the purchase of (a) To provide for the purchase of agricultural land. land for agricultural uses. EUBAL CREDITS BILL. 37 AS PASSED BY SENATE. (b) To provide for the purchase of equipment , fertilizers, and live stock necessary for the proper and reasonable operation of the farm; the term "equipment" to be defined by the Federal Farm Loan Board. (c) To provide buildings and for the improvement of farm lands; the term "improvement" to be defined by the Federal Farm Loan Board. (d) To liquidate indebtedness of the owner of the land mortgaged, existing at the time of the orgamza- tion of the first national farm loan association established in or for the county in which the land mortgaged is situated, or indebtedness subse- quently incurred for one of the pur- poses above mentioned. Seventh. No such loan shall exceed fifty per centum of the value of the land mortgaged, said value to be ascertained by ap- praisal, as provided in section nineteen of this Act. In making said ap- praisal the actual earning power of said land shall be a principal factor. AS PASSED BY HOUSE. (b) To provide for the purchase of equipment and live stock necessary for the proper and reasonable operation of the farm; the term "equipment" to be defined by the Federal Farm Loan Board. (c) To provide buildings and for the improvement of farm lands; the term "improvement" to be defined by the Federal Farm Loan Board. (d) To hquidate indebtedness of the owner of the land mortgaged, existing at the time of the organiza- tion of the first national farm loan association estabhshed in or for the county in which the land mortgaged is situated, or indebtedness subse- quently incurred for one of the pur- poses mentioned. in this section. Fifth. No such loan shall exceed sixty per centum of the value of the land mortgaged and twenty per centum of the value of the permanent, insured improve- ments thereon, said value to be ascertained by ap- praisal, as provided in section ten of this act. In making said ap- praisal the value of the land for agricultural purposes shall be the basis of ap- praisal and the earning power of said land shall be a factor. KUEAL CREDITS BILL. 38 AS PASSED BY SENATE. A reappraisal may be permitted at any time in the discretion of the Federal land bank, and such addi- tional loan may be granted as such reappraisal will warrant under the provisions of this paragraph. Whenever the amount of the loan apphed for exceeds the amount that may be loaned under the appraisal as herein Umited, such loan may be granted to the amount permitted under the terms of this paragraph without requiring a new application or appraisal. Eighth. No such loans shall be made to any person who is not at the time, or who does not in his application state his intention to become within six months AS PASSED BY HOUSE. A reappraisal may be permitted at any time in the discretion of the Federal land bank, and such addi- tional loan may be granted as such reappraisal will warrant under the provisions of this paragraph. Whenever the amount of the loan applied for exceeds the amount that may be loaned under the appraisal as herein limited, such loan may be granted to the amount permitted under the terms of this paragraph without requiring a new application or appraisal. Sixth. No such loan shall be made to any person who is not at the time, or shortly to become, engaged in the cultivation of the engaged in the cultivation of the farm mortgaged. In case of the sale farm mortgaged. In case of the sale of the mortgaged land, of the mortgaged land, the Federal land bank may, in its discretion, declare the mortgage thereon due and payable, or permit said mortgage to be assumed by the purchaser. if the purchaser is not ehgible to borrow under the provision of this Act, the entire amount of said loan at the option of the Federal Land Bank shall become due and payable; or if the purchaser is eligi- ble to borrow all excess of the loans above 110,000 shall be due and payable. In case of the death of the mort- gagor, his heir or heirs, or his legal representative or representatives, shall have the option, within sixty days of such death, to assume the mortgage obUgations of the deceased and carry on the mortgaged farm. Ninth. The amount of loans to any one bor- rower shall in no case exceed a maximum of $10,000 In case of the death of the mort- gagor, his heir or heirs, or his legal representative or representatives, shall have the option, within sixty days of such death, to assume the mortgage and stock obligations of the deceased on the mortgaged farm. Seventh. The amount of loans to any one bor- rower shall in no case exceed a maximum of 110,000 RUEAL CREDITS BILL. 39 AS PASSED BY SENATE. , nor shall any loan be for a less sum than $200. Tenth. Every applicant for a loan under the terms of this Act shall make applica- tion on a form to be prescribed for that purpose by the Federal Farm Loan Board, and such applicant shall state the objects to which the proceeds of said 'loan are to be appUed, and shall afford such other information as may be required. AS PASSED BY HOUSE. Eighth. Every applicant for a loan under the terms of this Act shall make applica- tion on a form to be prescribed for that purpose by 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. Eleventh. Every borrower shall Ninth. Every borrower shall pay simple interest on defaulted pay- ments at the rate of ten per centum per annum, and by express cove- nant in his mortgage deed shall undertake to pay when due all undertake to pay when due a,ll taxes, liens, judgments, or premiums on insurance and also all taxes and local assessments which may be lawfully assessed against the land mortgaged. assessments which may be lawfully assessed against the land mortgaged. Taxes, liens, judgments, or assess- ments not paid when due, and paid by the mortgagee, shall become a part of the mortgage debt and shall bear simple interest at the rate of ten per centum per annum. Twelfth. Every borrower who shall be grant- ed a loan under the provisions of this Act shall enter into an agreement, in form and under conditions to be pre- scribed by the Federal Farm Loan Board, that if the whole or any por- tion of his loan shall be expended for purposes other than those specified in his original application, or if the borrower shall fail to comply with the terms of his application, or be in default in respect to any. condi- tion or covenant of the mortgage, the whole of said of the mortgage, the whole of said loan shall, at the option of the loan shall, at the option of the Tenth. Every borrower who shall be grant- ed a loan under the provisions of this Act shall enter into an agreement, in form and under conditions to.be pre- scribed by the Federal Farm Loan Board, that if the whole or any por- tion of his loan shall be expended for purposes other than those specified in his original application, or if the borrower shall be in tion default in respect to any oondi- mortgagee, become due and payable bank holding same, become due and payable RTJBAL CREDITS BILL. 40 AS PASSED BY SENATE. forthwith: Provided, That the borrower may- use part of said loan to repay any sum borrowed to pay for his stock in the farm loan association, and the land bank holding such mortgage may permit said loan to be used for some other purpose specified in this sec- tion. Funds transmitted to farm loan associations by Federal land banks to be loaned to its members shall be in current funds, or farm loan bonds, at the option of the borrower. AS PASSED BY HOUSE. Provided, That the borrower may use part of said loan to repay any sum borrowed to pay for his stock in the national farm loan association, and the land bank holding such mortgage may permit said loan to be used for some other purpose specified in this sec- tion. Eleventh. That no loan or the mortgage securing same shall be impaired or invalidated by reason of the exercise of any power by any Federal land bank or national farm loan association in excess of the powers herein granted or any limita- tions thereon. POWERS OF FEDERAL LAND BANKS. POM'BRS OF FEDERAL LAND BANKS. Sec. 13. That every Federal land bank shall have power, subject to the Hmitations and requirements of this Act — First. To issue, subject to the approval of the Federal Farm Loan Board, and to sell farm loan "bonds of the kinds authorized in this Act, to buy the same for its own account, and to retire the same at or before maturity. Second. To invest such funds as may be in its possession in the pur- chase of qualified first mortgages on farm lands situated within 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 registrar for the district, to be by him held as collateral security for farm loan bonds, first mortgages upon farm land quahfied under section twelve of this Act, and to empower farm loan associations, or duly authorized agents, to collect and immediately pay over to said land bank the dfues, interest, amortiza- tion installments and other sums Sec. 13. That every Federal land bank shall have power, subject to the limitations and requirements of this Act — First. To issue, subject to the approval of the Federal Farm Loan Board, and to sell farm loan bonds of the kinds authorized in this Act, to buy the same for its own account, and to retire the same at or before maturity. Second. To invest such funds as may be in its possession in the pur- chase of qualified first mortgages on farm lands situated within the Federal land bank district within which it is organized Third. To receive and to deposit in trust with the fai-m loan registrar for the district, to be by him held as collateral security for farm loan bonds, first mortgages upon farm land qualified under section twelve of this Act, and to empower national farm loan associations, or duly authorized agents, to collect and immediately pay over to said land bank the dues, interest, amortiza- tion installments and other sums BUBAL OEEDITS BILL. 41 AS PASSED BY SENATE. AS PASSED BY HOUSE. payable under the terms, condi- payable under the terms, condi- tions, and covenants of the mort- tions, and covenants of the mort- gages and of the bonds secured gages and of the bonds secured thereby. thereby. Fourth. To receive and to set apart for expenses and profits the excess of interest payments on indorsed mortgages above the in- terest payments on farm loan bonds for which said mortgages are held as collateral security, said excess of interest ia no case to be more than one per centum of the amount of principal remaining unpaid on said mortgages. Fifth. To acquire and dispose of — (a) Such property, real or per- sonal, as may be necessary or convenient for the transaction of its business, which, however, may be in part leased to others for revenue purposes. (b) Parcels of land acquired in satis- faction of debts or purchased at sales under judgments, decrees, or mortgages neld by it. But no such bank shall hold title and possession of any real estate pur- chased or acquired to secure any debt due to it, for a longer period than five years, except with the special approval of the Federal Farm Loan Board in writing. Sixth. To deposit its securities, and its current funds subject to check, with any Federal reserve bank, or with any member bank of the Federal Re- serve System, and to receive in- terest on the same as may be agreed. Seventh. To accept deposits of securities or of current funds from 42564— S. Doc. 444, 64r-l 6 Fourth. To acquire and dispose of — (a) Such property, real or per- sonal, as may be necessary or convenient for the transaction of its business, which, however, may be in part leased to others for revenue purposes. (b) Parcels of land mortgaged to it as security. (c) Parcels of land acquired in satis- faction of debts or purchased at sales imder judgments, decrees, or mortgages held by it. But no such bank shall hold title and possession of any real estate pur- chased or acquired to secure any debt due to it, for a longer period than five years, except with the special approval of the Federal Farm Loan Board in writing. Fifth. To deposit its securities, and its current funds subject to check, with any member bank of the Federal Re- serve System, and to receive in- terest on the same as may be agreed. Sixth. To accept deposits of securities or of current funds from national RUEAL CREDITS BILL. 42 AS PASSED BY SENATE. AS PASSED BY HOUSE. farm loan associations holding its farm loan associations holding its shares, but to pay no interest on shares, but to pay no interest on such deposits. such deposits. Eighth. To borrow money, to give security therefor, and to pay interest thereon. Ninth. Seventh. To buy and sell United States To buy and sell United States bonds. bonds. Tenth. To hold in trust farm loan bonds to an amount equal to the outstanding convertible certifi- cates issued by the farm loan associations of the district and for the redemption thereof, as provided in the fourth paragraph of section eleven of this act. Eighth. To charge borrowers, under rules and regulations pro- mulgated by the ' Federal Farm Loan Board, reasonable fees not exceeding the actual cost of ap- Eraisal and determination of title, legal fees and recording charges imposed by law in the State where the land to be mortgaged is located may also be included m the preliminary costs of negotiating mortgage loans. The borrower may, at his option, pay such fees or he may require them to be advanced by the Federal land bank making the loan, in which case said ex- penses shall be made a part of the face of the loan and paid off in amortization payments. Such addi- tion to the loan shall not be per- mitted to increase said loan above the limitations provided in section twelve. RESTRICTIONS RESTRICTIONS OF ON FEDERAL LAND BANKS. Sec. 14. That no Federal land bank shall have power — First. To accept deposits of cur- rent funds payable upon demand except from its own stockholders, or to transact any banking or other business not expressly authorized by the provisions of this act. Second. To loan on first mort- fjage except through national farm oan associations as provided in section FEDERAL LAND BANKS. Sec. 14. That no Federal land bank shall have power — First. To accept deposits of cur- rent funds payable upon demand except from its own stockholders, or to transact any banking or other business not expressly authorized by the provisions of this act. Second. To loan on first mort- gage except through national farm loan associations as provided in section BUBAL CBEDITS BILL. 43 AS PASSED BY SENATE. seven of this Act, or through agents as provided in section seventeen. Third. To accept any mortgages on real estate except first mortgages created subject to all limitations imposed by section twelve of this Act, and those taken as additional security for existing loans. Fourth. To issue or obligate itself for outstanding farm loan bonds in excess of twenty times the amount of its capital and surplus, or to receive from any national farm loan association additional mortgages when the principal re- maining unpaid upon mortgages already received from such associa- tion shall exceed twenty times the amount of its capital stock owned by such association. AS PASSED BY HOUSE. eight of this Act, or through agents as provided in section fifteen. Third. To accept any mortgages on real estate except first mortgages created subject to all hmitations imposed by section twelve Fourth. To issue or obligate itself for outstanding farm loan bonds in excess of twenty times the amount of its capital or to receive from any national farm loan association additional mortgages when the principal re- maining unpaid upon mortgages already received from such associa- tion shall exceed twenty times the amount of its capital stock owned by such association. Fifth. To demand or receive, Fifth. To demand or receive, under any form or pretense, any under any form or pretense, any commission or charge not specifi- commission or charge not specifi- cally authorized in this Act. cally authorized in this Act. This pi'ovision shall also apjjly to joint stock land banks. NATIONAL FAKM LOAN ASSOCIATIONS: SPECIAL PROVISIONS. Sec. 15. That any person who shall become a shareholder of any national farm loan association shall be entitled to borrow money on farm land mortgage upon filing his application in accordance with sec- tion seven and otherwise complyiiig with the terms of this Act whenever the Federal land bank of the district has funds available for that pur- pose, imless said land bank or the Federal Farm Loan Board shall, in its discretion, otherwise determine. (This matter is in section 4 of House bill and will bo found on page 29. For cross refereuce and compari- son only it is duplicated here.) Any person whose application for memhersliip is accepted hy a national farm loan association shall he entitled to borrow money on farm land mortgage upon filing his appli- cation in accordance with section eight and otherwise complying with the terms of this Act whenever the Fed- eral land iank of the district has funds available for that purpose, unless said land bank or the Federal Farm Loan Board shall, in its dis- cretion, otherwise determine, RURAL CREDITS BILL. 44 AS PASSED BY SENATE. Such member may, at his option, pay the ex- penses for . appraisal, examining title, drawing legal papers, record- ing and similar services, or he may require such expenses to be advanced by the Federal land bank making the loan, in which case said expenses may be made a part of the face of the loan and paid off in amortization payments. Such addition to the loan shall not be permitted to increase said loan above the fifty per centum limited in section twelve. Any person who shall borrow from a Federal land bank for the Eurpose of purchasuig a farm for a ome under the provisions of sec- tion twelve of this Act may, at his option, borrow from the Federal land bank such sum as is needed to pay for his required shares of stock in the farm loan association, and such sum may be borrowed in ad- dition to the amount permitted to be borrowed under the provisions of said section twelve. AS PASSED BY HOUSE. Any person desiring to secure a loan through a national farm loan association under the provisions of this Act may, at his option, horrow from the Federal land hank through such association the 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: Pro- vided, however, That such addition to the loan shall not be permitted to in- crease said loan above the sixty per centum limited in section twelve. Subject to rules and regulations prescribed by the Federal Farm Loan Board, any national farm loan association shall be entitled to re- tain as a commission from each m- terest payment on any loan indorsed by it, not to exceed one-quarter of one per centum semiannually upon the unpaid principal of said loan, any amounts so retained as commis- sions to be deducted from dividends payable to such farm loan associa- tion from the Federal land bank, and to borrow from the land bank of the district, at a rate of mterest not to exceed six per centum per an- num, sums aggregating one^lourth of its total stock holdings m said land bank. UNLIMITED DEPARTMENT. Sec. 16. That the Federal Farm Loan Board is authorized and di- rected to create in each Federal land bank a special department for the issue of farm loan bonds unlunited. BUBAL CBEDITS BILL. 45 AS PASSED BY SENATE. to be known as the unlimited depart- ment, and also to set apart from time to time for the purposes of said unlimited department such portion of the capital stock of said bank, not exceeding one-half, as its needs may require. Whenever an unlimited department is created in any land bank there shall also be established a limited department, which shall carry on all business of said bank which is not assigned to the unlim- ited department. The transactions in the unlimited department of any Federal land bank shall be kept separate, and its earnings and reserves shall consti- tute separate funds, which, together with the capital stock set apart for said department, shall be primarily, applied to satisfy its obligations. The salaries and expenses of said land bank shall be borne by said un- limited department i© the propor- tion which the amount of its out- standing loans bears to the total amount of the outstanding loans of said bank. Mortgages taken by the unhm- ited deparlSment, and those taken by the limited department, shall be re- spectively segregated and handled separately for all purposes. AU mortgages belonging to the unUm- ited department of any land bank, whether or not the same have been pledged with the farm loan registrar, shall be security for the payment of every farm loan bond unlimited is- sued by said land bank; and all mortgages belonging to the hmited department of any land bank, whether or not the same have been pledged with the farm loan registrar, shall be security for the payment of every farm loan bond limited issued by said land bank. AS PASSED BY HOUSE. agents of federal land banks. agents of federal land banks. Sec. 17. Sec. 15. That whenever That whenever after this Act shall have been in effect one year it shall appear to the Federal Farm Loan Board that national farm loan associations have not been formed, and are not Ukely to be formed, in any locality, because of it shall appear to the Federal Farm Loan Board that national farm loan associations have not been formed, and are not likely to be formed, in any locality, because of some BITEAL CBEDITS BILL. 46 AS PASSED BY SENATE. peculiar local conditions, said board may, in its discretion, authorize Federal land banks t(\ make loans on farm lands through, agents approved by said board. Such loans shall be subject to the same conditions and restrictions as if the same were made through farm-loan associations, and each borrower shall contribute five per centum of the amount of liis loan to the capital of the Federal land bank, and shall become the owner of as much capital stock of the land bank as such contribution shall warrant. No other agcmt than a duly incorporated bank, trust company AS PASSED BY HOUSE. peculiar local conditions, said board may, in its discretion, authorize Federal land banks to make loans on farm lands through agents approved by said board. Such loans shall be subject to the same conditions and restrictions as if the same were made through national farm-loan associations, and each borrower shall contribute five per centum of the amount of his loan to the capital of the Federal land bank, and shall become the owner of as much capital stock of the land bank as such contribution shall warrant. No agent other than a duly incorporated bank, trust company. or mortgage institution, chartered by the Fed- eral Government or by the State in which it has its principal office, shall be employed under the provisions of this section. Federal land banks may pay to such agents not to exceed one-half of one per centum per annum upon the unpaid principal of said loan, such payment to be deducted from dividends payable to the borrower on his stock in the Federal land bank. Actual expenses paid hj borrow- ers for appraisal, examining title, drawing legal papers, recording, and similar services, may be added to the face of the loan and paid off in amor- tization payments. Such addition mortgage company, or savings institution, chartered by the Fed- eral Government or the State ia which it has its principal office, shall be employed under the provisions of this section. Federal land banks may pay to such agents the actual expense of appraising the land offered as security for a loan, examining and certifying the title thereof, and making, executing, and recording 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. BUBAL CBEDITS BILL, 47 AS PASSED BY SENATE. to the loan shall not be permitted to increase said loan above the fifty per centum Timited in section twelve. Said agents, when reaiiired by the Federal land banks, shall collect and forward to such banks without charge all interest and amortization payments on loans indorsed by them. Any agent negotiating any such loan shall indorse the same and become liable for the payment thereof, and for any default by the mortgagor, on the same terms and under the same penalties as if the loan had been originally made by said agent as principal and sold by said agent to said land bank, but the aggregate of the unpaid principal of mortgage loans received from any such agent shall not ex- ceed ten times its capital and surplus. If at any time the district repre- sented by any agent under the pro- visions of this section shall, in the judgment of the Federal Farm Loan Board, be adequately served by national farm loan associations, no further loans shall be negotiated therein by agents under this section. AS PASSED BY HOUSE. Actual expenses paid to agents under the provisions of this sectjon may be added to the face of the loan and paid off in amortization pay- ments as provided in subsection eight of section thirteen of this Act. Said agents, when required by the Federal land banks, shall collect and forward to such banks without charge all interest and amortization payments on loans indorsed by them. Every agent negotiating any such loan shaU make a report and an appraisal of the land upon which application is made for the loan on blanks furnished by the Federal land bank, and such report and appraisal shall be referred to an appraiser as required in section ten of this Act, and no loan shall be made by the land bank unless the report of the appraiser is favorable. Every loan made under the pro- visions of this section shall be made to the applicant upon such forms and under such regulations as shall be prescribed by the Federal Farm Loan Board. If at any time the district repre- sented by any agent under the pro- visions of this section shall, in the 1'udgment of the Federal Farm Loan Joard, be adequately served by national farm loan associations, no further loans shall be negotiated therein by agents under this section. BUBAL CREDITS BILL, 48 AS PASSED BY SENATE. DIVISION C. joint stock land banks. Sec. 18. That corporations, to be known as joint stock land banks, for carry- ing on the business of lending on farm mortgage security and issuing farm loan bonds, may be formed by any number of natural persons not less than ten. They shall be organized subject to the require- ments 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 may consist of more than five members. Shareholders of every joint stock land bank organized under this Act shall be held individually responsi- ble, equally and ratably, and not one for another, for all contracts, debts, and engagements of such 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 be sub- ject to all the restrictions and con- ditions imposed on Federal land banks by this Act, so far as such re- strictions and conditions are appH- cable: Provided, however. That the Government of the United States shall not purchase or subscribe for any of the capital stock of any such bank; and each shareholder of any such bank shall have the same vot- ing privileges 'as holders of shares in national banking associations. No joint stock land bank shall have power to issue or obUgate itseK for outstanding farm loan bonds in excess of fifteen times the amount of its capital and surplus, or to receive AS PASSED BY HOUSE. joint stock land banks. Sec. 16. That corporations, to be known as joint stock land banks, for carry- ing on the business of lending on farm mortgage security and issuing farm loan bonds, may be formed by any number of natural persons not less than ten. They shall be organized subject to the require- ments and under the conditions set forth in section five 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 less than five members. Shareholders of every joint stock land bank organized under this Act shall be held individually responsi- ble, equally and ratably, and not one for another, for all contracts, debts, and engagements of such 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 be sub- ject to aU the restrictions and con- ditions imposed on Federal land banks by this Act, so far as such re- strictions and conditions are appli- cable: Provided, however, That the Government of the United States shall not purchase or subscribe for any of the capital stock of any such bank; and each shareholder of any such bank shall have the same vot- ing privileges as holders of shares in national banking associations. No joint stock land bank shall have power to issue or obligate itself for outstanding farm loan bonds in excess of fifteen times the amount of its capital and surplus, or to accept deposits deposits RUBAL CREDITS BILL. 49 or to transact any banking or other business not expressly authorized by the provisions of this Act. No joint .stock land bank shall be authorized to do business until cap- ital stock to the amount of at least 1250,000 has been subscribed , one-half thereof paid in cash and the balance subject to gall by the board of directors, and a charter has been issued to it by the Federal Farm Loan Board. In States having populations ex- ceeding two millions, the capital stock of joint stock land banks shall be not less than $500,000. No joint stock land bank shall is- sue any bonds until after the capital stock is entirely paid up. Farm loan bonds issued by joint stock land banks shall be so en- graved as to be readily distinguished in form and color from farm loan bonds issued under this Act by Federal land banks, and shall otherwise bear such distinguishing marks as the Federal Farm Loan Board shall direct. Joint stock land banks shall not be subject to the provisions of sections twelve, twenty, or twenty- three of this Act as to interest rates on mortgage loans or farms loan bonds, nor to the provisions of the paragraphs designated first, sixth, eighth, ninth, and twelfth of section twelve as to restrictions on mortgage loans: Provided, how- ever, That no loans shall be made in excess of fifty per centum of the appraised value of the mortgaged lands, and aU loans shall be • secured by first mortgages on farm 42564— S. Doc. 444, 64r-l 7 of current funds payable upon demand or to transact any banking or other business not expressly authorized by the provisions of this Act. No joint stock land bank shaU be authorized to do business until cap- ital stock to the amount of at least $250,000 has been subscribed and paid in cash and a charter has been issued to it by the Federal Farm Loan Board. Farm loan bonds issued by joint stock land banks shall be so en- graved as to be readily distinguished in form and color from farm loan bonds issued by Federal land banks, and shall otherwise bear such distinguishing marks as the Federal Farm Loan Board shall direct. Joint stock land banks shaU not be subject to the provisions of subsection (b) of section four of this Act as to interest rates on mortgage loans or farm loan bonds, nor to the provisions of subsections one, four, six, seven, and ten of section twelve as to restrictions on mortgage loans: Provided, how- ever, That no loans shall be made which are not secured by first mortgages on farm EUEAL CREDITS BILL. 50 AS PASSED BY SENATE. land within the State in which such joint stock land bank has its principal office or within some State contiguous to such State. Joint stock land banks shall in no case charge interest on farm loans exceeding by more than one per centum the rate of interest estab- lished for the last series of farm loan bonds issued by them. Each joint stock land bank organ- ized under this Act shall have au- thority to issue bonds based upon mortgages taken by it in accordance with the terms of this Act. Such bonds shall be in form prescribed by the Federal Farm Loan Board, and it shall be stated in such bonds that such bank is organized under section eighteen of this Act, is under Federal super- vision, and operates under the pro- visions of this Act. Farm loan bonds issued by joint stock land banks shall be called joint stock bonds. APPRAISAL. Sec. 19. That whenever an appli- cation for a mortgage loan is made to a division A or a division B association, it shall be first re- ferred to the loan committee pro- vided for in section seven of this Act. Said loan committee shall examine the land which is offered as security for the desired loan and shall make a detailed AS PASSED BY HOUSE. lands within the State in which such joint stock land bank has its principal office Such joint stock land banks shall be subject to all other restrictions on mortgage loans imposed on Federal land banks in section twelve of this Act. Joint stock land banks shall in no case charge interest on farm loans exceeding by more than one per centum the rate of interest estab- lished for the last series of farm loan bonds issued by them. Joint stock land banks shall in no case demand or receive, under any form or pretense, any commission or charge not specifically authorized in this Act. Each joint stock land bank organ- ized under this Act shall have au- thority to issue bonds based upon mortgages taken by it in accordance with the terms of this Act. Such bonds shall be in form prescribed by the Federal Farm Loan Board, and it shall be stated in such bonds that such bank is organized under section sixteen of this Act, is under Federal super- vision, and operates under the pro- visions of this Act. APPRAISAL. Tills section, number 10 in House bill, will be found on page 32. For cross reference and comparison only it is duplicated here. Sec. 10. That whenever an appli- cation for a mortgage loan is made to a natioiwlfarm loan association, it shall le. first referred to the loan committee provided for in section eight of this Act. Said loan committee shall examine the land which ^ is offered as security for the desired loan and shall malce a detailed BUBAL CBEDITS BILL. 51 AS PASSED BY SENATE. written report signed by all three members, giving the appraisal of said land as determined by them, and such other information as may be required by rules and regulations to be prescribed by the Federal Farm Loan Board. No loan shall be approved by the directors unless said loan conunittee agrees unanimously upon a favorable report. The written report of said loan committee shall be submitted to the 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 applica- tion which it accompanies, but they shallnot be bound by said appraisal. Before any mortgage loan is made by any Federal land bank, or joint stock land bank, it shall refer the apphcation and written report of the loan committee to one or more of the land bank appraisers appelated imder the au- thority of section three of this Act, and such appraiser or appraisers shall iavestigate and make a written report upon the land offered as security for said loan. No such loan shall be made by said land bank imJess said written report is favorable. "Whenever any Federal land bank, or joint stock land bank, shall desire to issue farm loan bonds imder the provisions of section twenty-two of this Act, the Federal Farm Loan Board shall refer the apphcation of such land bank to one or more of the special appraisers appointed under the authority of section three of this Act. Such special appraiser or appraisers shall make such exam- ination and appraisal of the mort- gages offered as collateral security for such bonds as the Federal Farm Loan Board shall direct, and shall make a written report to said board. No issue of farm loan bonds shall be authorized unless the Federal Farm Loan Board shall approve such issue in writing. Forms for appraisal reports for farm loan associations and land AS PASSED BY HOUSE. vyritten report signed by all three members, giving the appraisal of said land as determined by them and such other information as may be required by rules and regulation's to be nrescribed by the Federal Farm Loan Board. No loan shaU be approved by the directors unless said loan committee agrees upon a favorable report. The written report of said loan committee shall be submitted to the Federal land bank, and the directors of said land banic shall examine said written report when they pass upon the loan applica- tion which it accompanies, hut they shall not be bound by said appraisal. Before any mortgage loan is made by any Federal land bank, or joint- stock land bank, ii shall refer the application and written report of the loan committee to one or more of the appraisers appointed under the au- thority of section three of this Act, and such appraiser or appraisers shall investigate and make a written report upon the land offered as security for said loan. No such loan shall be made by said land bank unless said written report is favorable. This paragrapli is identical with matter at the end of Sec. 17 m the House bill and can be (ovmd on page 56. EUEAL CREDITS BILL. 52 AS PASSED BY SENATE. banks shall be prescribed by the Federal Farm Loan Board. §■' Land bank appraisers and special appraisers shall makejjlsuch exam- inations and appraisals and con- duct such investigations, concern- ing farm loan bonds and first mort- gages, as the Federal Farm Loan Board shall direct. No borrower under this Act shall be eligible as an appraiser under this section, but borrowers may act as members of a loan committee in any case where they are not per- sonally interested in the loan tmder consideration. When any member of a loan committee or of a board of directors is interested, directly or indirectly, in a loan, a majority of the board of directors shall ap- point a substitute to act in his place in passing upon such loan. POWERS OF FEDERAL FARM LOAN BOARD. AS PASSED BY HOUSE. No horrower under this Act shall he eligible as an appraiser under this section, but borrowers may act as members of a loan committee in any case where they are not persoTi- ally 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 majority of the board of directors of any na- tional farm loan association shall appoint a substitute to act in his place in passing upon such loan. POWERS OF FEDERAL FARM LOAN BOARD. This section, number 4 in House bill, will be found on page 9. For cross reference and comparison only it is inserted here. Sec. 20. That the Federal Farm Loan Board shall have power — (a) To organize and charter Fed- eral land banks, national farm loan associations, and joint stock land banks subject to the provisions of this Act, and in its discretion to authorize them to increase their capital stock. (b) To review and alter at its discretion the rate of interest to be charged by Federal land banks for loans made by them under the pro- visions of this Act, said rates to be uniform so far as practicable. (c) To grant or refuse to Federal land banks, or joint stock land banks, authority to make any specific issue of farm loan bonds. (d) To make rules and regula- tions respecting the charges made to borrowers on loans under this Act for expenses in appraisal, examining title. Sec. 4. That the Federal Farm Loan Board shall have power — (a) To organize and charter Fed- eral land banks, and to charter national farm loan associations, and joint stock land banks, as herein- after defined, subject to the provisions of this Act (b) To review and alter at its discretion the rate of interest to be charged by Federal land banks for loans made by them under the pro- visions of this Act, said rates to be uniform so far as practicable. (c) To grant or refuse to Federal land banks, or joint stock land banks, authority to make any specific issue of farm loan bonds. (d) To make rules and regulations respecting the charges made to bor- rowers on loans under this Act for expenses in appraisal, determination of title, RURAL CREDITS BILL. 53 AS PASSED BY SENATE. drawing legal papers, recording, and similar services. (e) To reqtiire reports and state- ments of condition and to make ex- aminations of all banks or associ- ations doing business under the provisions of this Act. (f) To prescribe the form and terms of farm loan bonds, and the form, terms, and penal sums of aU surety bonds required under this Act and of such other surety bonds as they shall deem necessary, such surety bonds to cover financial loss as well as faithful performance of duty. (g) To require Federal land banks to pay forthwith to any Federal land bank their equitable propor- tion of any sums advanced by said land bank to pay the coupons of any other land bank, basing said required i)ayments on the amount of farm oans issued by each land bank and actually outstanding at the time of such requirement. AS PASSED BY HOUSE. avd recording. (e) To prescribe the form and terms of farm loan bonds, and (he form, terms, and penal sum of all surety bonds required under this Act and of such other surety bonds as they shaTl deem necessary, such surety bonds to cover firuincial loss as well as faithful performance of duty. if) To suspend or to remove for cause any district director or any registrar, appraiser, examiner, or other official appointed by said board under authority of section three of this Act; the cause of such suspension or removal to be com- municated forthwith in writing by the Federal Farm Loan Board to the person suspended or removed, and in case of a district director to the proper farm land bank. (g) To maTce application to the Secretary of the Treasury for temr- porary deposits, as follows: If at any time a Federal land bank, the fair value of whose assets is at least equal to the total of its liabilities, shall find that it may soon be without funds, immediately available, sufficient to meet its obli- gations with respect to thepajjment, when required, of the principal of or the interest on bonds issued under this Act, or of both principal and interest, it may make application to the Federal Farm Loan Board for a temporary deposit by the Secretary of the Treasury of the sum needed to make such payment during the period for which its funds, immedi- ately available, wiU be insufficient, sett%ng forth in its application such information as the .Federal Farm Loan Board may require. If after RURAL CREDITS BILL. 54 AS PASSED BY SENATE. (h) To exercise general super- visory authority over tlie Federal land banks, the national farm loan associations, and the joint stock land banks herein provided for. (i) To exercise such incidental powers as shall be necessary or requisite to fulfill their duties and carry out the purposes of this Act. AS PASSED BY HOUSE. investigation the Federal Farm Loan Board approves said applica- tion it shall give notice thereof to the Secretary of the Treasury, stat- inxj_ the sum required, the period for which needed, and such other facts as may he necessary. Thereupon the Secretary of the Treasury may deposit such sum, or from time to time so much thereof as may he re- quired, with said Federal land hank, to he expended under the direction of the Federal Farm Loan Board for the purposes for which the applica- tion for such deposit was approved. Any sum so deposited shall hear a rate of interest fixed hy the Secre- tary of the Treasury, not to exceed the current rate charged for other Government deposits, and shall he repaid as may he required, hut not later than the expiration of the period fixed hy the Secretary of the Treasury. To secure the repay- ment of any such deposit, together with the payment of the interest thereon, said Federal land hank shall issue to the Secretary of the Treasury its certificate of indebted- ness: Provided, That the aggregate of all such deposits in any one Federal land hank hy the Secretary of the Treasury shall not exceed, in any fiscal year or at one time, the sum of $500,000. (h) To exercise such incidental powers as shall he necessary or requisite to fulfill their duties and carry out the purposes of this Act. APPLICATIONS FOR BONDS. FARM LOAN APPLIOATIC Sec. 21. Sec. 17. That any That any Federal land bank. land bank. or joint stock land bank, BONDS. which shall have voted to issue farm loan bonds or joint stock bonds under this Act, shall make written apphcation to the Federal Farm Loan Board, through the farm Joan which shall have voted to issue farm loan bonds under this Act, shall make written application to the Federal Farm Loan Board, through the farm loan BUBAL CBEDITS BILL. 55 AS PASSED BY SENATE. registrar of the district, for approval of such issue. With said applica- tion said land bank shall tender to said farm loan registrar as collateral security first mortgages on farm lands qualified under tiie provisions of section twelve, or section seventeen of this Act, or United States Gov- ernment bonds, not less in aggre- fate amount than the sum of the onds proposed to be issued. Said bank shall furnish with such mort- gages a schedule containing a de- scription thereof and such further information as may be prescribed by the Federal Farm Loan Board. Upon receipt of such apphcation said farm loan registrar shall verify said schedule and shall transmit said apphcation and said schedule to the Federal Farm Loan Board, giving such further information pertaming thereto as he may pos- sess. The Federal Farm Loan Board shall forthwith cause one or more special appraisers to make such investigation and ap- praisement of the securities tendered as it shall deem wise, and upon re- ceiving a report from said special appraiser or AS PASSED BY HOUSE. registrar of the district, for approval of such issue. With said applica- tion said land bank shall tender to said farm loan registrar as collateral security fijst mortgages on farm lands qualified under uxe provisions of section twelve, section fifteen, or section sixteen of this Act, or United States Gov- ernment bonds, not less in aggre- gate amount than the sum of the bonds proposed to be issued. Said bank shall furnish with such mort- gages a schedule containing a de- scription thereof and such further information as may be prescribed by the Federal Farm Loan Board. Upon receipt of such application said farm loan registrar shall verify said schedule and shall transmit said application and said schedule to the Federal Farm Loan Board, giving such further information pertaining thereto as he may pos- sess. The Federal Farm Loan Board shall forthwith cause one or more examiners to make such investigation and ap- praisement of the securities tendered as it shall deem wise, and upon re- ceiving a written report from said examiner or appraisers it shall grant in whole or in part, or reject entirely, such application. The Federal Farm Loan Board shall promptly transmit its decision as to any issue of farm loan bonds to the land bank applying for the same and to the farm loan registrar of the district. Said registrar shall furnish, in writing, such informa- tion regarding any issue of farm loan bonds as the Federal Farm Loan Board may at any time require. examiners it shall grant in whole or in part, or reject entirely, such application. The Federal Farm Loan Board shall promptly transmit its decision as to any issue of farm loan bonds to the land bank applying for the same and to the farm loan registrar of the district. Said registrar shall furnish, in writing, such informa- tion regarding any issue of farm loan bonds as the Federal Farm Loan Board may at any time require. BUBAL OEEDITS BILL. 56 AS PASSED BY SENATE. (This paragraph is identical with matter near the (Snd of See. 19 ol Senate bill and is on page 51.) issue of faem loan bonds. Sec. 22. That whenever any farm loan registrar shall receive from the Federal Farm Loan Board notice that it has approved any issue of farm loan bonds under the provi- sions of section twenty-one he shall forthwith take such steps as may be necessary, in accordance with the provisions of this Act, to insure the prompt execution of said bonds and AS PASSED BY HOUSE. No issue of farm loan bonds shall be authorized unless the Federal Farm Loan Board shall approve such issue in writing. issue of farm loan bonds. Sec. 18. That whenever any registrar shall receive farm loan from the Federal Farm Loan Board notice that it has approved any issue of farm loan bonds under the provi- sions of section seventeen he shall forthwith take such steps as may be necessary, in accordance _ with the provisions of this Act, to insure the prompt execution of said bonds and shall deliver the deUvery of the same to the land bank applying the same to the land bank applying therefor. therefor. Whenever the Federal Farm Loan Board shall reject entirely any ap- phcation for an issue of farm loan bonds, the first mortgages and bonds tendered to the farm loan registrar as collateral security thei'e- for shall be forthwith returned to said land bank by him. Whenever the Federal Farm Loan Board shall approve an issue of farm loan bonds, the farm loan registrar having the custody of the first mortgages and bonds tendered as collateral security for such issue of bonds shall retain in his custody those first mortgages and bonds which are to be held as collateral security, and shall return to the bank owning the same any of said mortgages and bonds which are not to be held by him as collateral se- curity. The land bank which is to issue said farm loan bonds shall transfer to said registrar, by assign- ment, in trust, all first mortgages and bonds which are to be held by said registrar as collateral security, said assignment providing for the right of redemption at any time by payment as provided in this Act and reserving Whenever the Federal Farm Loan Board shall reject entirely any ap- phcation for an issue of farm loan bonds, the first mortgages and United States bonds tendered to the farm loan registrar as collateral security there- for shall be forthwith returned to said land bank by him. Whenever the Federal Farm Loan Board shall approve an issue of farm loan bonds, the farm loan registrar having the custody of the first mortgages and bonds tendered as collateral security for such issue of bonds shall retain in his custody those first mortgages and bonds which are to be held as collateral security, and shall return to the bank owning the same any of said mortgages and bonds which are not to be held by him as collateral se- curity. The land bank which is to issue said farm loan bonds shall transfer to said registrar, by assign- ment, in trust, all first mortgages and bonds which are to be held by said registrar as collateral security, said assignment providing for the right of redemption at any time by payment as provided in this Act. The land bank shall have BUBAL CBEDITS BILL. 57 AS PASSED BY HOUSE. the right of substitution of other mortgages quahfied under section twelve or section seventeen of this Act. Said mortgages and bonds shall be deposited m such deposit vault or bank as the Federal Farm Loan Board shall approve, subject to the control of said regis- trar and in his name as trustee for the bank issuing the farm loan bonds and for the prospective hold- ers of said farm loan bonds. No mortgage shall be accepted by a farm loan registrar from a Federal land bank as part of an offering to secm-e an issue of farm loan bonds, either originally or by substitution, except first mortgages made sub- ject to the conditions prescribed in said sections twelve or seventeen. It shall be the duty of each farm loan registrar to see that the farm loan bonds dehvered by him and outstanding do not exceed the amount of collateral sectuity pledged therefor. Such registrar may, in his discretion, temporarily accept in place of mortgages withdrawn. United States Government bonds , farm loan bonds, or cash. The Federal Farm Loan Board may, at any time, call upon any land bank for additional security to pro- tect the bonds issued by it. form op farm loan bonds. Sec. 23. That all bonds provided for in this Act shall 42564— S. Doc. 444, 64r-l 8 AS PASSED BY HOUSE. the right to substitute other mortgages quahfied under section twelve , section fifteen, or section sixteen of this Act. Said mortgages and bonds shall be deposited m such deposit vault or bank as the Federal Farm Loan Board shall approve, subject to the control of said regis- trar and in his name as trustee for the bank issuing the farm loan bonds and for the prospective hold- ers of said farm loan bonds. It shall be the duty of each farm loan registrar to see that the farm loan bonds dehvered by him and outstanding do not exceed the amount of collateral security pledged therefor. Such registrar may, in his discretion, temporarily accept United States Government bonds or cash in place of mortgages withdrawn. The Federal Farm Loan Board may, at any time, call upon any land bank for additional security to pro- tect the bonds issued by it. foem of farm loan bonds. Sec. 19. That bonds provided for in this Act shall EUBAL CREDITS BILL. 58 AS PASSED BY SENATE. De issued under the authority and by the direction of the Federal Farm Loan Board. They shall be issued in denominations of $25, $50, $100, $500, and $1,000; they shall run for specified minimum and maximum periods, subject to be paid and retired at the option of the land bank at any time after ten years from the date of their issue. They shall have interest coupons attached, payable semiannually, and shall be issued in series of not less than $50,000, whose amount and term shall be fixed by the Federal Farm Loan Board. They shall bear a rate of interest not to exceed five per centum per annum. The Federal Farm Loan Board shall prescribe rules and regulations concerning the form of farm loan bonds, and the circumstances and manner in which farm loan bonds shall be paid and retired under the provisions of this Act. Farm loan bonds shall be de- Uvered through the registrar of the district to the bank applying for the same. AS PASSED BY HOUSE. be issued in denominations of $20, $50, $100, $500, $1,000; they shall run for specified minimum and maximum periods, subject to pajTnent and retirement, at the option of the land bank, at any time after five years from the date of their issue. They shall have interest coupons attached, payable semiannually, and shall be issued in series of not less than $50,000, the amount and terms to be fixed by the Federal Farm Loan Board. They shall bear a rate of interest not to exceed five per centum per annum. The Federal Farm Loan Board shall prescribe rules and regulations concerning the circumstances and manner in which farm loan bonds shall be paid and retired under the provisions of this Act. In order to furnish farm loan bonds for delivery at the Federal land banks and joint-stock land banks, the Secretary of the Treas- ury is hereby authorized to prepare suitable bonds in such form, subject to the provisions of this Act, as the EUKAL CBEDITS BILL. 59 AS PASSED BY SENATE. AS PASSED BY HOUSE. Federal Farm Loan Board may ap- prove, such bonds when prepared to be held in the Treasury subject to delivery upon order of the Federal Farm Loan Board. The engraved plates, dies, bed-pieces, and so forth, executed in connection therewith shall remain in the custody of the Secretary of the Treasury. Any ex- penses incurred in the preparation, custody, and delivery of such farm loan bonds shall be paid by the Sec- retary of the Terasury from any funds in the Treasury not otherwise appropriated : Provided, however, That the Secretary shall be reim- bursed for such expenditures by the Federal Farm Loan Board through assessment upon the farm-land banks in proportion to the work executed. In order to furnish suitably en- graved bonds for delivery to Federal land banks and joint-stock land banks, the Comptroller of the Cur- rency shall, under the direction of the Secretary of the Treasury, cause plates and dies to be engraved in the best manner to guard against counterfeits and fraudulent altera- tions, and shall have printed there- frc(m and numbered such quantities of sulh bonds of the denominations of $25, $50, $100, $500 and $1,000 as may be required to supply such land banks. Such bonds shall be in form and tenor as directed by the Federal Farm Loan Board under the provisions of this Act and shall bear the distinctive numbers and names of the several land banks by which they are issued. They may be exchanged into registered bonds of any amount, and reexchanged into coupon bonds, at the option of the holder, under rules and regula- tions to be prescribed by the Fed- eral Farm Loan Board. When such bonds have been pre- pared they shall be deposited in the Treasury or in the subtreasury or mint of the United States nearest the place of business of each land bank, and shall be held for the use of such bank, subject to the order of the farm loan registrar of the district. The plates and dies to be pro- cured by the Comptroller of the Currency for the printing of such bonds shall remain under his con- trol and direction, and the expenses necessarily incurred in executing the laws relating to the preparation of such bonds and all other expenses RURAL CREDITS BILL. 60 AS PASSED BY SENATE. incidental to their issue and retire- ment shall be paid by the land banks. The Federal Farm Loan Board shall levy semiannually against the respective Federal land banks and joiat stock land banks, ia proportion to the issue of bonds by each, a sufficient amount to cover such expenses. The examination of plates, dies, bed pieces, and so forth, and regu- lations relating to such examination of plates, dies, and so forth, of national bank notes provided lor in section fifty-one hundred and sev- enty-four. Revised Statutes, are hereby extended to include bonds herein provided for. Any appropriation heretofore made out of the general fund of the Treasury for engraving plates and aies, for the purchase of distinctive paper, or to cover any other expense m connection with the printing of paper currency, and any distinctive paper that may be on hand at the time of the passage of this Act may be used in the discretion of the Sec- retary of the Treasury for the pur- poses of this Act, and should the appropriations heretofore made be insufficient ^o meet the requirements of this Act, the Secretary is hereby authorized to use so much of any funds in the Treasury not otherwise appropriated as may be required for the purpose of furnishing the bonds aforesaid, adequate reim- bursement being duly made therefor under the provisions of this section. SPECIAL PROVISIONS OF FARM LOAN BONDS. Sec! 24. That AS PASSED BY HOUSE. SPECIAL PROVISIONS OF FARM LOAN BONDS. Sec. 20. That the formjof farm loan bonds issued under this Act shall be prepared by the Federal Farm Loan Board. The form of farm loan bonds issued by a Federal land bank shall include, among other provisions, a copy of this sec- tion of this Act, and a statement that the assets of all the Federal land banks are jointly and severally liable for the payment of each bond, and shall further state the physical basis of such bonds in farm lands, and such other information as may be prescribed by the Federal Farm Loan Board. Each bond shall also contain a certificate in the face thereof, signed by the Farm Loan Commissioner, to the effect that this bond has the ap- proval in form and issue of the Fed- eral Farm Loan Board>nd is legal BUBAL CBEDITS BILL. 61 AS PASSED BY SENATE. each Federal land bank shall be AS PASSED BY HOUSE. . and regular in all respects. It shall be signed by the president of the bank issuing the same and attested by its secretary. Each land bank shall be held to be bound in all respects by the acts of bound in all respects by the acts of its its officers in signing and issuing farm loan bonds, and by the acts of the Federal Farm Loan Board in authorizing their issue. Every Federal land bank issuing farm loan bonds shall be primarily liable therefor, and shall also be liable, upon presentation of farm loan bond coupons, for interest pay- ments due upon any farm loan bonds issued by other Federal land banks and remaining unpaid in con- sequence of the default of such other land banks; and every such bank shall likewise be liable for such por- tion of the principal of farm loan bonds so issued as shall not be paid after the assets of any such other land banks shall have been liqui- dated and distributed: Provided, That such losses, if any, either of interest or of principal, shall be as- sessed by. the Federal Farm Loan Board against solvent land banks liable therefor in proportion to the amoimt of farm loan bonds which each may have outstanding at the time of such assessment. Every Federal land bank shall by appropriate action of its board of directors, duly recorded in its min- utes, obligate itself to become liable on farm loan bonds as provided in this section. president m signmg farm loan bonds, and by the acts of the Federal Farm Loan Board in authorizing their issue. There shall appear in the face of each farm loan bond provided for in this Act the statement that such bond is not taxable by National, State, or municipal authority. Every Federal land bank issuing farm loan bonds shall be primarily liable therefor, and shall also be liable, upon presentation of farm loan bond coupons, for interest pay- ments due upon any farm loan bonds issued by other Federal land banks and remaining unpaid in con- sequence of the default of such other land banks; and every such bank shall likewise be liable for such por- tion of the principal of farm loan bonds so issued as shall not be paid after the assets of any such other land banks shall have been liqui- dated and distributed: Provided, That such losses, if any, either of interest or of principal, shall be as- sessed by the Federal Farm Loan Board against solvent land banks hable therefor in proportion to the amount of farm loan bonds which each may have outstanding at the time of such assessment. Every Federal land bank shall by appropriate action of its board of directors, duly recorded in its min- utes, obUgate itself to become Uable on farm loan bonds as provided in this Section. EURAL CREDITS BILL. 62 AS PASSED BY SENATE. Every farm loan bond issued by'a Federal land bank shall be signed by its president and attested by its secretary, and shall contain in the face thereof a certificate signed by the farm loan commissioner to the effect that it is issued under the authority of the Federal farm loan Act, has the approval in form and issue of the Federal Farm Loan Board, and is legal and regular in all respects; that it is not taxable by National, State, municipal, or local authority; that it is issued against collateral security of Government bonds, or first mortgages on farm lands, indorsed by farm loan associ- ations having double or unlimited liability of meir members, as the case may be, and at least equal in amornit to the bonds issued; and that all Federal land banks, stating the approximate amount of their aggregate capital and surplus, are liable for the payment of each bond. AS PASSED BY HOUSE. APPLICATION OF AMOKTIZATION AND INTEREST PAYMENTS. APPLICATION OP AMORTIZATION AND INTEREST PAYMENTS. Sec 25. That whenever any Federal land bank, or joint stock land bank, shall receive any interest, amortization or other payments upon any first mortgage or bond pledged as collateral security for the issue of farm loan bonds, it shall forthwith notify the farm loan regis- trar of the items so received. Said registrar shall forthwith cause such payment to be duly credited upon any mortgage entitled to such credit. Whenever any such mortgage is paid in full, said registrar shall cause the same to be canceled and deliv- ered to the proper land bank for transmission to the original maker thereof, or his heirs, administrators Sec. 21. That whenever any Federal land bank, or joint stock land bank, shall receive any interest, amortization or other payments upon any first mortgage pledged as collateral security for the issue of farm loan bonds, it shall forthwith notify the farm loan regis- trar of the items so received. Said registrar shall forthwith cause such payment to be duly credited upon the mortgage entitled to such credit. Whenever any such mortgage is paid in full, said registrar shall cause the same to be canceled and deliv- ered to the proper land bank , which shall promptly satisfy and discharge the lien of record and transmit such canceled mortgage to the original maker thereof, or his heirs, administrators , executors, or assigns. or assigns. BXJEAL CREDITS BILL. 63 AS PASSED BY SENATE. Upon written application by any Federal land bank, or joint stock land bank, to the farm loan regis- trar, it may be permitted, in the dis- cretion of said registrar, to withdraw any mortgages or bonds pledged as collateral security under this Act, and to substitute therefor other mortgages or United States Govern- ment bonds not less in amount than the mortgages or bonds desired to be withdra\m, such substituted mortgages being qualified under sec- tion twelve or section seventeen of this Act. Whenever any farm loan bonds, or coupons or interest payments of such bonds, aredue under their terms, they shall be payable at the land bank by which they were issued, in gold or lawful money, and upon payment shall be duly canceled by said bank. At the discretion of the Federal Farm Loan Board, payment of any farm loan bond or coupon or interest payment may, however, be author- ized to be made at any Federal land bank, any joint stock land bank, or any other bank, under rules and regulations to be prescribed by the Federal Farm Loan Board. When any land bank shall sur- render to the proper farm loan reg- istrar any farm loan bonds of any Series, canceled or uncanceled, said land bank shall be entitled to with- draw first mortgages and bonds pledged as collateral security for any of said series of farm loan bonds to an amount equal to the farm loan bonds so surrendered, and it shall be the duty of said registrar to per- mit and direct the delivery of such mortgages and bonds to such land bank. Interest payments on hypothe- cated first mortgages shall be at the disposal of the land bank pledging the same, and shall be available for the payment of coupons and the interest of farm loan bonds as they become due. Whenever any bond matures, or the interest on any registered bond is due, or the coupon on any coupon bond matures, and the same shall be presented for payment as pro- vided in this act, the fuU face value thereof shall be paid to the holder. Amortization or other payments on the principal of first mortgages held AS PASSED BY HOUSE. Whenever any farm loan bonds, or coupons or interest payments of such bonds, are due under their terms,they shall be payable at the land bank by which they were issued, in gold or lawful money, and upon payment shall be duly canceled by said bank. At the discretion of the Federal Farm Loan Board, payment of any farm loan bond or coupon or interest payment may, however, be author- ized to be made at any Federal land bank, any joint stock land bank, or any other bank, under rules and regulations to be prescribed by the Federal Farm Loan Board. When any land bank shall sur- render to the proper farm loan reg- istrar any farm loan bonds of any series, canceled or uncanceled, said land bank shall be entitled to with- draw first mortgages and bonds pledged as collateral security for any of said series of farm loan bonds to an amount equal to the farm loan bonds so surrendered, and it shall be the duty of said registrar to per- mit and direct the delivery of such mortgages and bonds to such land bank. Interest payments on hypothe- cated first mortgages shall be at the disposal of the land bank pledging the same, and shall be available for the payment of coupons and the interest of farm loan bonds as they become due. Whenever any bond matures, or the interest on any registered bond is due, or the coupon on any coupon bond matuijes, and the same shall be presented for payment as pro- vided in this act, the full face value thereof shall be paid to the holder. Amortization and other payments on the principal of first mortgages held EUEAL CREDITS BILL. 64 AS PASSED BY SENATE. AS PASSED BY HOUSE. by a farm loan registrar as collateral security for the issue as collateral security for the issue of farm loan bonds shall of farm loan bonds shall constitute a trust fund in the hands be applied by of the Federal land bank or joint stock land bank receiving the same, and shall be applied or employed as follows: In the case of a Federal land bank — (a) To pay off farm loan bonds issued by said bank as they mature. (b) To purchase farm loan bonds issued by said bank or by any other Federal land bank. (c) To loan on first mortgages on farm lands within the land bank district, qualified under this Act as collateral security for an issue of farm loan bonds. (d) To purchase United States Government bonds. (e) To convert said payments into gold or lawful money. In the case of a joint stock land bank — (a) To pay off farm loan bonds issued by said bank as they mature. (b) To purchase farm loan bonds. (c) To loan on first mortgages on farm lands within the State in which it has its principal office. (d) To purchase United States Government bonds. (e) To convert said payments into gold or lawful money. The farm loan bonds, first mort- gages. Government bonds, or gold or lawful money, constituting the trust fund afore- said. the Federal land bank or joint stock land bank receiving the same as follows: In the case of a Federal land bank — (a) To pay off farm loan bonds issued by said bank as they mature. (b) To purchase at or below par farm loan bonds issued by said bank or by any Federal land bank. (c) To loan on first mortgages on farm lands within the land bank district, quahfied under this Act as collateral security for an issue of farm loan bonds. (d) To purchase United States Government bonds. In the case of a joint stockland bank — (a) To pay off farm loan bonds issued by said bank as they mature. (b) To purchase at or below par farm loan bonds. (c) To loan on first mortgages on farm lands within the State in which it has its principal office. (d) To purchase United States Government bonds. The farm loan bonds, first mort- gages, Government bonds, or gold or lawful money. BUBAL CBEDITS BILL. 65 AS PASSED BY SENATE. shall be forthwith deposited with the farm loan registrar as substi- tuted collateral security in place of the sums paid on the principal of indorsed mortgages held by him in trust. Federal land banks, in the order of their applications, shall have a preference over other subscribers in purchasing the whole or any part of an issue of farm loan bonds. Every Federal land bank, or joint stock land bank, shall notify the farm loan registrar of the dis- position of all payments made on the principal of^ mortgages held as collateral security for an issue of farm loan bonds, and said registrar is authorized, at his discretion, to order any of such payments, or the proceeds thereof, wherever depos- ited or however invested, to be immediately transferred to his ac- count as trustee aforesaid. AS PASSED BY HOUSE. shall be forthwith deposited with the farm loan registrar as substi- tuted collateral security in place of the sums paid on the principal of indorsed mortgages held by him in trust. RESEEVE and dividends of land banks. Sec. 26. That every Federal land bank, and every joint stock land bank, shall out of its net earnings, semiannually carry to reserve ac- count twenty-five per centum thereof until said reserve account shall show a credit balance equal to twentjr per centum of the outstanding coital stock of said land bank. Whenever said reserve shall have been impaired, said balance of twenty per centum shall be fully restored before any dividends are paid. After said re- serve has reached the sum of twenty per centum of the outstanding capi- tal stock, five per centum of the net earnings shall be annually added thereto. For the period of two years from the date when any de- fault occurs in the payment of the interest, amortization installments, or principal on any first mortgage, by both mortgagor and indorser, the amount so defaulted shall be carried to a suspense account, and at the end of the two-year period specified, 42564— S. Doc. 444, 64-1 9 eeserves and dividends of land banks. Sec. 22. That every Federal land bank, and every joint stock land bank, shall semiannually carry to reserve ac- count twenty-five per centum of its net earnings until said reserve account shall show an aggregate balance equal to twenty per centum of the outstanding capital stock of said land bank. Whenever said reserve shall have been impaired, said balance of twenty per centum shall be fully restored before any dividends are paid. After said re- serve has reached the sum of twenty per centum of the outstanding capi- tal stock, five per centum of the net earnings shall be annually added thereto. For the period of two years from the date when any de- fault occurs in the payment of the interest, amortization installments, or principal on any first mortgage, by both mortgagor and indorser, the amount so defaulted shall be carried to a suspense account, and at the end of the two-year period specified. RUKAL CREDITS BILL. 66 AS PASSED BY SENATE. AS PASSED BY HOUSE. unless collected, shall bo debited to unless collected, shall be debited to reserve account. reserve account. Every Federal land bank shall maintain a special reserve fund. Such fund shall be created by de- ducting from the subscription which is made to the capital of the land bank on account of every amortized mortgage loan, a sum equal to five per centum of the annual interest income on the face of such loan Tintil the said special reserve fund shall amount to .the maximum sum of $150,000. Each Federal land bank shall supply, as far as practicable from this special reserve fund all pay- ments of interest and amortization installments on all mortgage loans where defaults are carried to sus- pense account as provided in this section. No national farm loan association shall be declared insolvent by the Federal Farm Loan Board during the period in which all the install- ments of interest and amortization on its indorsed mortgage loans are fidly paid from this special reserve f imd : Provided, That payments from such special reserve fund shall not be made on any one loan for a longer period than two years. The special reserve fund provided in this section shall be used for no purpose other than to make such payments as are herein specifically authorized and when recovery is made by any land bank of any moneys paid from its special reserve fund, the total amount of said moneys so recovered shall be paid into the special reserve fund. If the full amount is not recovered and it is debited to reserve as pro- vided in this section, full reim- bursement to the special reserve fund shall be made from the fund so debited. Whenever the net earnings of any Federal land bank, or joint stock land bank, after deducting the twenty-five per After deducting the twenty-five centum or the five per centum per centum or the five per centum hereinbefore directed to be deducted hereinbefore du-ected to be de- for credit to reserve account, ducted for credit to reserve account. shall amount to two per centum upon the face value of the capital stock of such land bank then out- standing, said land bank may, at its discretion, any land bank shall BUBAL CBEDITS BILL. 67 AS PASSED BY SENATE. declare a dividend to she.reholders of the whole or any part of the balance of said net earnings. RESERVE AND DIVIDENDS OF NA- TIONAL FARM LOAN ASSOCIATIONS. Sec. 27. That every national farm loan association shall, out of its net earnings, semiannually carry to reserve account a sum not less than twenty-five per centum of such net earnings until said reserve ac- count shall show a credit balance equal to twenty per centum of the outstanding capital stock of said association. Whenever said reserve shall have been impaired, said credit balance of twenty per centum shall be fully restored before any dividends are paid. After said reserve has reached said sum of twenty per centum, five Eer centum of the net earnings shall e annually added thereto. Whenever the net earnings of any farm loan association, after de- ducting the twenty-five per centum or the five per centum hereinbefore directed to be credited to reserve account, shall amount to two per centum upon the face value of the capital stock of such association then outstanding, said association may, at its discretion, declare a dividend to shareholders of the whole or any part of the balance of said net earnings. The reserve of each farm loan association shall be invested in ac- cordance with rules and regulations to be prescribed by the Federal Farm Loan Board. Whenever any farm loan associa- tion shall be voluntarily liquidated a sum equal to its reserve account as herein required snaU be paid to and become the property of the Federal land bank in which such loan association may be a share- holder. defaulted LOANS. Sec. 28. That if there shall be default under the terms of any in- dorsed first mortgage held by a Federal land bank under the pro- visions of this Act, the national farm loan association or agent through which said mortgage was received by said Federal land bank shall be notified of said default. Said asso- ciation or agent shall thereupon be required, within thirty days after such notice, to make good said AS PASSED BY HOUSE. declare a dividend to shareholders of the whole or any part of the balance of its net earnings. BTJRAL CREDITS BILL. 68 AS PASSED BY SENATE. default, either by payment of the amount unpaid thereon in cash, or by the substitution of an equal amount of farm loan bonds issued by said land bank, with aU unma- tured coupons attached. exemption from taxation. Seo. 29. That every Federal land bank and every national farm loan associa- tion, including the capital stock and reserve or surplus therein and the income derived therefrom, shall be exempt from Federal, State, mimicipal and local taxation, except taxes upon real estate held, purchased, or taken by said bank or association imder the provisions of section eleven and section thirteen of this Act. First mortgages executed to Federal land banks, or to joint stock land banks, and farm loan bonds issued under the provisions of this Act, shall be deemed and held to be in- strumentaHties of the Government of the United States, and as such they and the income derived there- from shall be exempt from Federal, State, mimicipal and local taxation. AS PASSED BY HOUSE. exemption from taxation. Seo. 23. That every Federal land bank and every national farm loan associa- tion, including the capital stock and reserve or surplus therein and the income derived therefrom, shall be exempt from Federal, State, and local taxation, except taxes upon real estate held, purchased, or taken by said bank or a-ssociation under the provisions of section eleven and section thirteen of this Act. First mortgages executed to Federal land banks, or to joint stock land banks. mider the provisions of this Act, shall be deemed and held to be in- strumentalities of the Government of the United States, and as such they and the income derived there- from shall be exempt from Federal, State, and local taxation. Farm loan bonds issued under the provisions of this Act and the income derived therefrom shall be exempt from Federal, State, and local taxation. Nothing herein shall prevent aQ the shares in any joint stock bank from beiQg included in the valua- tion of the personal property of the owner or holder of such shares, in assessing taxes imposed by author- ity of the State within which the bank is located; but such assess- ment and taxation shall be in man- ner and subject to the conditions and limitations contained in section fifty-two hundred and nineteen of the Eevised Statutes with reference to the shares of national banking associations. Nothing herein shall be construed to exempt the real property of joint stock banks from either State, EUBAL CREDITS BILL. 69 AS PASSED BY SENATE. investment in farm loan bonds. Sec. 30. AS PASSED BY HOUSE. county, or municipal taxes, to the same extent, according to its value, as other real property is taxed. investment in farm loan bonds. Sec. 24. That farm loan bonds issued under That farm loan bonds issued imder the provisions of this Act by Fed- the provisions of this Act by Fed- ■ eral land banks eral land banks shall be a lawful investment for all fiduciary and trust funds, and may be accepted as security for all pub- lic deposits. Any or joint stock land banks shall be a laAvful investment for all fiduciary and trust funds, and may be accepted as secmrity for all pub- Uc deposits. Any member bank of the Federal reserve system bank of the Federal Keserve System may buy or sell farm may buy or seU farm , loan bonds issued by Federal land banks under the authority of this Act ; any member bank of said system may accept time drafts against a deposit of such bonds as security; acceptances of a member bank thus made, or the direct obligations of such bank maturing wimin sixty days, when accompanied by such farm loan bonds as collateral secur- ity not less in face value than the amount of such direct obligation, shall be eligible for discovmt by the Federal reserve bank of its district. land bonds issued under th§ authority of this Act. Any Federal Reserve Bank may buy and sell farm loan bonds issued under this Act to the same extent and subject to the same limitations placed upon the purchase and sale by said banks of State, county, dis- trict, and mimicipal bonds imder subsection (b) of section fourteen of the Federal reserve Act approved December twenty-third, nineteen hundred and thirteen. Section nine of the Act of June twenty-fifth, nineteen hundred and ten, entitled "An Act to estabUsh postal savings depositaries for de- positing savings at interest, with the security of the Government for repayment thereof, and for other EUEAL CREDITS BILL. 70 AS PASSED BY SENATE. Eurposes" (volume thirty-six, Tinted States Statutes at Large, page eight hundred and foiu'teen), shall be, and the same is hereby, amended by adding a new para- graph at the close of said section, to read as follows: "Federal farm loan bonds authorized by the Fed- eral Farm Loan Board and issued by any Federal land bank may be purchased by the trustees, in Heu of United States bonds or other securities, for the purpose of invest- ing postal savings deposits under the provisions of this section. When- ever funds shall be withdrawn from postal savings depositaries for in- vestment, the trustees are hereby authorized to purchase Federal farm loan bonds in the open market or from any Federal land bank au- thorized to issue the same: Pro- vided, That in no case shall such farm loan bonds be purchased at more than par nor shaU more than thirty per centum of the postal savings deposits be invested at any one time in farm loan bonds as herein provided." STATE LEGISLATION. Sec. 31. That it shall be the duty of the farm loan commissioner to make examination of the laws of every State of the United States and to inform the Federal Farm Loan Board as rapidly as may be whether in his judgment the laws of each State relating to the conveying and recording of land titles, and the foreclosure of mortgages or other instruments securing loans, as well as providing homestead and other exemptions and granting the power to waive such exemptions as re- spects first mortgages, are such as to assure to the holder thereof ade- quate safeguards against loss in the event of default on loans secured by any such mortgages. Pending the making of such ex- amination in the case of any State, the Federal Farm Loan Board may declare first mortgages on farm lands situated within such State ineligible as the basis for an issue of farm loan bonds; and if said ex- amination shall show that the laws of any such State afford insufficient protection to the holder of first mortgages of the kinds provided in this Act, the said Federal Farm Loan Board may declare said first AS PASSED BY HOUSE. STATE LEGISLATION. This section, number 27 in House bill, will be found on page 74. For cross reference and comparison only it is duplicated here. Sec. 27. That it shall ie the duty of the Farm Loan Commissioner to malce examination of the laws of every State of the United States and to inform the Federal Farm Loan Board as rapidly as may be whether in his judgment the Jaws of each State relating to the con- veying and recording of land titles, and the foreclosure of mortgages or other instruments securing loans, as well as providing homestead and other exemptions and granting the power to waive such exemptions as respects first mortgages, are such as to assure the holder thereof ade- quate safeguards against loss in the event of default on loans secured ly any such mortgages. Pending the maHng of such ex- amination in the case of any State, the Federal Farm Loan Board may declare first mortgages on farm lands situated within such State in- eligible as the basis for an issue of farm loan bonds; and if said exami- nation shall show that the laws of any such State afford insufficient protection to the holder of first mortgages of the Tcinds provided in this act, the said Federal Farm Loan Board may declare said first mort- RURAL CREDITS BILL. 71 AS PASSED BY SENATE. mortgages on land situated in such State ineligible during the continu- ance of the laws in question. In making his examination of the laws of the several States and forming his conclusions thereon said farm loan commissioner may call upon the office of the Attorney Generju of the United States for any needed legal advice or assistance, or may employ special counsel in any State where he considers such action necessary. At the request of the executive of any State the Federal Farm Loan Board shall prepare a statement setting forth in what respects the requirements of said board can not be complied with under the existing laws of such State. AS PASSED BY HOUSE. gages on land situated in such State ineligible during the continuance of the laws in question. In malcing his examination of the laws of the sev-. eral States and forming his conclu- sions thereon said Farm Loan Com- missioner may call upon the office of the Attorney General of the United States for any needed legal advice or assistance, or may employ special counsel in any State where he con- siders such action necessary. At the request of the executive of any State me Federal Farm Loan Board shall prepare a statement setting forth in what respects the requirements of said hoard can not ie complied with under the existing laws of such State. examinations. Sec. 32. That the Federal Farm Loan Board shall appoint as many land bank examiners as in its judgment may be required to make careful exami- nations of the banks and associa- tions permitted to do business under •this Act. Said examiners shall be subject to the same requirements, responsi- bilities, and penalties as are appli- cable to national bank examiners under the national bank Act, the Federal reserve Act, and other pro- visions of law. Said examiaers shall be required to examine the condition of every national farm loan association and report the same to the farm loan commissioner at least once each year, and to examine and report the condition of every Federal land bank and joint EXAMINATIONS. Sec. 25. That the Federal Farm Loan Board shall appoint as many examiners as in its judgment may be required to make careful exami- nations of the banks and associa- tions permitted to do business imder this Act. Said examiners shall be subject to the same requirements, responsi- bilities, and penalties as are appli- cable to national bank examiners under the national bank Act, the Federal reserve Act, and other pro- visions of law. Whenever directed by the Federal Farm Loan Board, said examiners shall examine the condition of any national farm loan association and report the same to the Farm Loan Commissioner, and shall examine and report the condition of every Federal land bank and joint BUBAL OEEDITS BILL. 72 AS PASSED BY SENATE. AS PASSED BY HOUSE. stock land bank at least twice each stock land bank at least twice each year. year. Said examiners shall receive sala- Said examiners shall receive sala- ries to be fixed by the Federal Farm ries to be fixed by the Federal Farm Loan Board. which shall be paid by the Secretary of the Treasury out of any money in the Treasury not otherwise appro- priated. Loan Board. DISSOLUTION AND APPOIN TMEN T RECEIVERS. OF This section, number 35 in Senate bill, will be found on page 79. For cross reference and compari- son only it is duplicated here. Sec. 35. That wpon becoming satisfied that any national farm loan asso- ciation hMs refused to TnaTce good defaulted mortgages, as required by section twenty-eight of this Act, or upon receiving satisfactory evidence that any such association has failed to meet its outstanding obligations of any description whatever when due, and is in default, the Federal Farm Loan Board may forthwith declare such association insolvent and appoint a receiver and require of him such bond and security as it deems proper. Such receiver, under the direction of the Federal Farm Loan Board, shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to it, and, with the approval of the Federal Farm Loan Board, or upon the order of a court of record of com- petent jurisdiction, may sell or compound all bad or doubtful, debts, and, on a like approval or order, may sell all the real and per- sonal property of such association, on such terms as the Federal Farm Loan Board or said court shall di- rect. Such receiver shall pay over all money so collected to the Treasurer of the United States, subject to the order of the Federal Farm Loan Board, and shall DISSOLUTION AND APPOINTMENT OF RECEIVERS. Sec. 26. That upon receiving satisfactory evidence that any national farm loan asso- ciation has failed to meet its outstanding obhgations of any description, subject to the limitations of this Act, the Federal Farm Loan Board niay forthwith declare such association insolvent and appoint a receiver and require of him such bond and security as it deems proper. Such receiver, under the direction of the Federal Farm Loan Board, shall take possession of the books, records, and assets of every description of such association, collect aU debts, dues, and claims belonging to it, and, with the approval of the Federal Farm Loan Board, or upon the order of a court of record of com- petent jurisdiction, may seU or compound all bad or doubtful debts, and, on a Uke approval or order, may sell all the real and per- sonal property of such association, on such terms as the Federal Farm Loan Board or said court shall di- rect. Such receiver shall pay over all money so collected to the Treasurer of the United States, subject to the order of the Federal Farm Loan Board, and BURAi CEEDITS BILL. 73 AS PASSED BY SENATE. also make report to said hoard of all This acts avd proceedings. Upon de- fault of any obligation, Federal land hanks and ■ joint stock land hanks may he declared insolvent and placed in the hands of a receiver AS PASSED BY HOUSE. also make report to said board of all his acts and proceedings. Upon default of any obligation, Federal land banks and joint stock land banks may be declared insolvent and placed in the hands of a receiver, to be appointed hy the Federal Farm Loan Board, by the Federal Farm Loan Board, and j^roceedings shall thereupon he had %n accordance with the provi- sions of this section regarding na- tional farm loan associations. If any national farm loan asso- ciation shall he declared insolvent and a receiver shall he appointed therefor hy the Federal Farm Loan Board, the stock held hy it in the Federal land hank of its district shall he canceled without impair- ment of its liability; and all pay- ments on such stock, with accrued dividends, if any, since the date of the last dividend, shall he first ap- plied to all debts of the insolvent farm loan association to the Fed- eral land bank and the balance, if any, shall he paid to the receiver of said farm loan association: Pro- vided, That in estimating said debts contingent liabilities incurred by farm loan associations under the provisions of this Act on account of default of principal or inter- est of indorsed mortgages shall be estimated and included as a debt, and said contingent liabilities shall he determined hy agreement between the receiver and the Fed- eral land hank of the district, sub- ject to the approval of the Federal Farm Loan Board, and if said re- ceiver and said land hank can not agree, then by the decision of the farm loan commissioner, and the amount thus ascertained shall he deducted in accordance with the provisions of this section from the amount otherwise due the said farm loan association for said can- celed stock. Whenever the capital stock of a Federal land bank shall be reduced, the hoard of di- rectors shall cause to he executed a ceHificate to the Federal Farm Loan Board, showing such reduc- tion of capital stock, and if said reduction shall be due to the in- solvency of a farm loan associa- solvency of a tion, the amdunt repaid to such association. 42564— S. Doc. 444, 64-1 10 and proceedings shall thereupon be had in accordance with the pro- visions of this section regarding national farm loan associations. If any national farm loan associ- ation shall be declared insolvent and a receiver shall be appointed therefor by the Federal Farm Loan Board, the stock held by it in the Federal land bank of its district shall be canceled without impair- ment of its hability; and all pay- ments on such stock, with accrued dividends, if any, since the date of the last dividend, shall be first ap- plied to all debts of the insolvent farm loan association to the Fed- eral land bank and the balance, if any, shall be paid to the receiver of said farm loan association: Pro- vided, That in estimating said debts contingent liabiUties incurred by national farm loan associations under the provisions of this Act on account of default of principal or inter- est of indorsed mortgages shall be estimated and included as a debt, and said contingent liabilities shall be determined by agreement between the receiver and the Fed- eral land bank of the district, sub- ject to the approval of the Federal Farm Loan Board, and if said re- ceiver and said land bank can not agree, then by the decision of the Farm Loan Commissioner, and the amount thus ascertained shall be deducted in accordance with the provisions of this section from the amount otherwise due the said national farm loan association for said can- celed stock. Whenever the capital stock of a Federal land bank shall be reduced, the board of di- rectors shall cause to be executed a certificate to the Federal Farm Loan Board, showing such reduc- tion of capital stock, and, if said reduction shall be due to the in- BUBAL CBEDITS BILL. 74 AS PASSED BY SENATE. AS PASSED BY HOUSE. national farm loan association, also showing the amount repaid to such associa- tion. No national farm loan association, No national farm loan association, Federal land bank or joint stock Federal land bank or joint stock land hank shall land bank shall he dissolved without go into voluntary liquidation with- out the written consent of the Federal the written consent of the Federal Farm, Loan Board. Farm Loan Board. STATE LEGISLATION. This section, number 31 in Senate bill, will be lound on page 70. J or cross reference and comparison only it is duplicated here. Sec. si. That it shall be the duty of the farm loan commissioner to make examination of the laws of every State of the United States and to inform the Federal Farm Loan Board as rabidly as may he whether in his judgment the laws of each State relating to the conveying arid recording of land titles, and the foreclosure of mortgages or other instruments securing loans, as well as providing homestead and other 'exemptions and granting the power to waive such exemptions as re- spects first mortgages, are such as to assure to the holder thereof ade- quate safeguards against loss in the event of default on loans secured hy any such mortgages. ' Pending the making of such ex- amination in the case of any State, the Federal Farm Loan Board may declare first mortgages on farm lands situated within such State ineligible as the basis for an issue of farm loan bonds, and if said ex- amination shall show that the laws of any such State afford insufficient protection to the holder of first mortgages of the kinds provided m this Act, the said Federal Farm Loan Board may declare said first mortgages on land situated in such State ineligible during the continu- ance of the laws in question. In making his examination of the laws of the several States and forming his conclusions thereon said farm loan commissioner may call upon the office of the Attorney General of the United States for any needed legal advice or assistance, or may employ special counsel in any State where he considers sucJi action necessary. STATE LEGISLATION. Sec. 27. That it shall be the duty of the Farm Loan Commissioner to make examination of the laws of every State of the United States and to inform the Federal Farm Loan Board as rapidly as may be whether in his judgment the laws of each State relating to the con- veying and recording of land titles, and the foreclosure of mortgages or other instruments securing loans, as well as providing homestead and other exemptions and granting the power to waive such exemptions as respects first mortgages, are such as to assure the holder thereof ade- quate safeguards against loss in the event of default on loans secured by any such mortgages. Pending the making of such ex- amination in the case of any State, the Federal Farm Loan Board may declare first mortgages on farm lands situated within such State in- ehgible as the basis for an issue of farm loan bonds; and if said exami- nation shall show that the laws of any such State afford insufficient protection to the holder of first mortgages of the kinds provided in this Act, the said Federal Farm Loan Board may declare said first mort- gages onland situated in such State ineligible during the continuance of the laws in question. In making his examination of the laws of the sev- eral States and forming his conclu- sions thereon said Farm Loan Com- missioner may call upon the office of the Attorney General of the United States for anv needed legal advice or assistance, or may employ special counsel in any State where he con- siders such action necessary. RUEAL CREDITS BILL, 75 AS PASSED BY SENATE. • At the request of the executive of any State the Federal Farm Loan Board shall prepare a statement setting forth in what respects the requirements of said hoard can not he complied with under the existing laws of such State. PENALTIES. Sec. 33. That any applicant for a loan from a national farm loan associa- tion, Federal land bank, or joint stock land bank who shall knowingly make any false statement in his application for such loan, and any member of a loan committee or any appraiser pro- vided for in this Act who shall will- fully overvalue any land offered as security for loans under this Act, shall be deemed guilty of a misdemeanor and shall De imprisoned not exceed- ing one year or fined not more than $5,000, or both. Any examiner appointed under this Act who shall accept a loan or gratuity from any bank or association examined by him, or from any person connected with any such bank or association in any capacity, shall be deemed guilty of a misde- meanor, and shall be imprisoned not exceeding one year or fined not more than .15,000, or both, and may be fined a further sum equal to the money so loaned or gratuity given, and shall forever thereafter be disqualified from hold- ing office as an examiner under the provisions of this Act. No exam- iner AS PASSED BY HOUSE. At the request of the executive of any State the Federal Farm Loan Board shall prepare a statement setting forth in what respects the re- quirements of said board can not be comphed with under the existing laws of such State. penalties. Sec. 28. That any applicant for a loan under this Act who shall knowingly make any false statement in his application for such loan, and any member of a loan committee or any appraiser pro- vided for in this Act who shall will- fully overvalue any land offered as security for loans under this Act, shall be punished by a fine of not exceeding $5,000, or by imprisonment not ex- ceeding one year, or both. Any examiner appointed under this Act who shall accept a loan or gratuity from any land bank or national farm loan association examined by him, or fromfany person connected with any such bank or association in any capacity, shall be punished by a fine of not exceeding $5,000, or by imprisonment not ex- ceeding one year, or both, and may be fined a further sum equal to the money so loaned or gratuity given, and shall forever thereafter be disqualified from hold- ing office as an examiner under the provisions of this Act. No exam- iner while holding such office. EUBAL CREDITS BILL. 76 AS PASSED BY SENATE. shall perform any other service for compensation while holding such office, for any bank or banking or loan association, or for any person con- nected therewith in any capacity. Any person who shall falsely make, forge, or counterfeit, or cause or procure to be falsely made, forged, or counterfeited, or willingly aid or assist in falsely making, forging, or counterfeiting any bond, coupon, or paper in imitation of, or purporting to be in imitation of, the bonds or coupons issued by any bank or association, now or hereafter au- thorized and acting under the laws of the United States; or any person who shall pass, utter, or publish, or attempt to pass, utter, or publish any false, forged, or coimterfeited bond, coupon, or paper purporting to be issued by any such bank or association, knowing the same to be falsely made, forged, or counter- feited; or whoever shall falsely alter, or cause or procure to be falsely altered, or shall willingly aid or assist in falsely altering any such bond, coupon, or paper, or shall pass, utter, or publish as true any falsely altered or spurious bond, coupon, or paper issued, or purport- ing to have been issued, by any such bank or association, knowing the same to be falsely altered or spu- rious, shall be deemed guilty of a misdemeanor and shall be fined not exceeding $5,000 or imprisoned not exceeding AS PASSED BY HOUSE. shall perform for compensation any other service for any bank or banking or loan association, or for any person con- nected therewith in any capacity. Any person who shall falsely make, forge, or counterfeit, or cause or procure to be falsely made, forged, or counterfeited, or willingly aid or assist in falsely making, forging, or counterfeiting any bond, coupon, or paper in imitation of, or purporting to be in imitation of, the bonds or coupons issued by any land bank or national farm loan association, now or hereafter au- thorized and acting under the laws of the United States ; or any person who shall pass, utter, or publish, or attempt to pass, utter, or publish any false, forged, or counterfeited bond, coupon, or paper purporting to be issued by any such bank or association, knowing the same to be falsely made, forged, or counter- feited ; or whoever shall falsely alter, or cause or procure to be falsely altered, or shall wiUingly aid or assist in falsely altering any such bond, coupon, or paper, or shall pass, utter, or publish as true any falsely altered or spurious bond, coupon, or paper issued, or purport- ing to have been issued, by any such bank or association, knowing the same to be falsely altered or spu- rious, shall be punished by a fine of not exceeding $5,000 or by imprisonment not exceeding RURA.L CREDITS BILL. 77 AS PASSED BY SENATE. five years, or both. Other than the usual salary or dkector's fee paid to any officer, director, or employee of a national farm loan association, a Federal land bank, or a joint stock land bank, and other than a reasonable fee paid W such association or bank to any officer, director, attorney, or employee for services rendered, no officer, director, attorney, or em- ployee of an association or bank organized under this Act shall be a beneficiary of or receive, directly or indirectly, any fee, commission, gift, or oth^r consideration for or in connection with any transaction or business of such association or bank. No bank or association organized under this Act shall charge or receive any fee, commission, bonus^ gift, or other consideration not herein specific- ally authorized. No examiner, pub- lic or private, shall disclose the names of borrowers to other than the proper officers of a farm loan association or land bank without first having obtained ex- press permission in writing from the Farm Loan Commissioner or from the board of directors of such asso- certain or bank, except when ordered to do so by a court of competent jurisdiction or by direc- tion of the Congress of the United States, or of either House thereof, or any committee of Congress AS PASSED BY HOUSE. fifteen years, or both. Other than the usual salary or director's fee paid to any officer, director, or employee of a national farm loan association, a Federal land bank, or a joint stock land bank, and other than a reasonable fee paid by such association or bank to any officer, director, attornev, or employee for services rendered, no officer, director, attorney, or em- ployee of an association or bank organized under this Act shall be a beneficiary of or receive, directly or indirectly, any fee, commission, gift, or other consideration for or in connection with any transaction or business of such association or bank. No land bank or national farm loan association organized under this Act shall charge or receive any fee, commission, bonus, gift, or other consideration not herein specific- ally authorized. No examiner, pub- lic or private, shall disclose the names of borrowers to other than the proper officers of a national farm loan association or land bank without first having obtained ex- press permission in writing from the Farm Loan Commissioner or from the board of directors of such asso- ciation or bank, except when ordered to do so by a court of competent jurisdiction or by direc- tion of the Congress of the United States, or of either House thereof, or any committee of Congress or of either House duly authorized. Any person violating any provision of this paragraph shall be punished by a fine of not exceeding $5,000 or by imprisonment not exceeding one year, or both. Any person connected in any ca- pacity with any of either House duly authorized. Any person violating any provision of this paragraph shall be punished by a fine of not exceeding $5,000 or by imprisonment not exceeding one year, or both. Any person connected in any ca- pacity with any RURAL CREDITS BILL. 78 AS PASSED BY SENATE. farm loan association, Federal land bank, or joint stock land bank, who embezzles, abstracts, or wiUfully misapplies any moneys, funds, or credits thereof, or who without authority from the directors draws any order, assigns any note, bond, draft, mortgage, judgment, or decree thereof, or who makes any false entry in any book, report, or statement of such association or land bank with intent in either case to defraud such insti- tution or any other company, body politic or corporate, or any indi- vidual person, or to deceive any officer of a farm loan association or land bank or any agent appointed to examine into the affairs of any such associa- tion or bank, and every person who with like intent aids or abets any officer, clerk, or agent in any viola- tion of this section, shall be deemed guilty of a misdemeanor and shall be, fined not exceeding $5,000 or AS PASSED BY HOUSE. national farm loan association, Federal land bank, or joint stock land bank, who embezzles, abstracts, or willfully misappHes any moneys, funds, or credits or who without authority from the directors draws any order, assigns any note, bond, draft, mortgage, judgment, or decree or who makes any false entry in any book, report, or statement of such association or land bank with intent in either case to defraud such insti- tution or any other company, body poHtic or corporate, or any indi- vidual person, or to deceive any officer of a national farm loan association or land bank or any agent appointed to examine into the affairs of any such associa- tion or bank, and every person who with Uke intent aids or abets any officer, clerk, or agent in any viola- tion of this section, shall be imprisoned punished by a fine of not exceeding $5,000 or by irftprisonment not exceeding five years, or both. not exceeding five years, or both. * Any person who shall deceive, defraud, or impose upon, or who shall attempt to deceive, defraud, or impose upon, any person, firm, or corporation by making any false pretense or representation regard- ing the character, issue, security, or terms of any farm loan bond, or coupon, issued under the terms of this Act; or by falsely pretending or representing that any farm loan bond, or coupon, issued imder the terms of this Act by .one class of land banks is a farm loan bond, or coupon, issued by another class of banks; or by f a sely pretending or representing that any farm loan BUBAL CEEDITS BILL. 79 AS PASSED BY SENATE. bond, or coupon, issued under the terms of this Act, or anything con- tained in said farm loan bond, or coupon, is anything other than, or different from, what it purports to be on the face of said bond, or coupon, shall be deemed guilty of a misdemeanor, and shall be fined not exceeding S5,000 or imprisoned not exceeding five years, or both. GOVERNMENT DEPOSITS. Sec. 34. That the Secretary of the Treasury is authorized, upon the request of the Federal Farm Loan Board, to make advances or deposits for the temporary use of any Federal land bank, out of any money in the Treasury not other- wise appropriated. Such Federal land bank shall issue to the Secre- tary of the Treasm-y a certificate of indebtedness for any such advance or deposit, bearing interest at the rate of two per centum per annum, to be secured by farm loan bonds or other collateral, to the satisfac- tion of the Secretary of the Treas- ury. Any such certificate shall be redeemed and paid by such land bank at the discretion of the Secre- tary of the Treasury. The aggre- gate of all svuns so advanced or de- posited by the Secretary of the Treasury in any fiscal year shall not exceed the sum of $6,000,000 at any one time. AS PASSED BY HOUSE. The subject matter being the same'as in'section 4 o f the House bill and will be found ontpage 10. If at any time a Federal land hank, the fair value of whose assets is at least equal to the total of its liabilities, shall find that it may soon he without funds, immediately available, suffi- cient to meet its obligations with re- spect to the payment, when required, of the principal of or the interest on bonds issued under this Act, or of both principal and interest, it may malce application to the Federal Farm Loan Board for a temporary deposit by the Secretary of the Treasury of the sum needed to mxiTce such pay- ment during the period for which its funds, immediately available, will be insufficient, setting forth in its appli- cation such information as the Fed- eral Farm Loan Board may require. If after investigation the Federal Farm Loan Board approves said application it shall give notice thereof to the Secretary of the Treasury, stat- ing the sum required, the period for which needed, and such other facts as may be necessary. Thereupon the Secretary of the Treasury may deposit such sum, or from time to time so much thereof as may be required, with said Federal land bank, to be expended under the direction of the Federal Farm Loan Board for the purposes for which the application for such de- posit was approved. Any sum so deposited shall bear a rate of interest fixed by the Secretary of the Treasury, not to exceed the current rate charged for other Government deposits, and shall he repaid as may be required, hut not later than the expiration of the period fixed by the Secretary of the Treasury. To secure the repayment of any such deposit, together with the payment of tM interest thereon, said Federal land bank shall issue to the Secretary of the Treasury its certifi- cate of indebtedness: Provided, That the aggregate of all such deposits in any one Federal land hank by the Secretary of the Treasury shall not exceed, in any fiscal year or at one time, the sum of $500,000. KUBAL CEEDITS BILL. 80 AS PASSED BY SENATE. DISSOLUTION AND APPOINTMENT OF RECEIVERS. Sec. 35. That upon becoming satisfied that any national farm loan associa- tion has refused to make good defaulted mortgages, as required by section twenty-eight of this Act, or upon receiving satisfactory evidence that any such association has failed to meet its outstanding obligations of any description AS PASSED BY HOUSE. DISSOLUTION AND APPOINTMENT OF RECEIVERS. This section, number 26 In House bill, will be lound on page 72. For cross reference and comparison only it is duplicated here. Sec. 26. That upon receiving satisfactory evidence that any national farm loan associa- tion has failed to meet its outstanding ol- ligations of any description, whateverwhen due, and is in default, subject to the limitations of this Act, the Federal Farm Loan Board may forthwith declare such association insolvent and appoint a receiver and require of him such bond and se- curity as it deems proper. Such receiver, under the direction of the Federal Farm Loan Board, shall take possession of the books, rec- ords, and assets of every description of such association, coUect all debts, dues, and claims belonging to it and, with the approval of the Fed- eral Farm Loan Board, or upon the order of a court of record of com- petent jurisdiction, may sel or co m- pound all bad or doubtful debts, and, on a like approval or order, may sell all the real and personal property of such association, on such terms as the Federal Farm Loan Board or said court shall direct. Such receiver shall pay over all money so collected to the Treasurer of the United States, subject to the order of the Federal Farm Loan Board, and shall also make report to said board of all his acts and proceedings. Upon default of any obligation. Federal land banks and joint stock land banks may be declared insolvent and placed in the hands of a receiver by the Federal Farm Loan Board, and proceedings shall thereupon be had in accordance with the pro- visions of this section regarding national farm loan associations the Federal Farm Loan Board may forthwith declare such association insolvent and appoint a receiver and require of him such bond and se- curity as it deems proper. Such receiver, under the direction of the Federal Farm Loan Board, shall talce possession of the hooJcs, rec- ords, and assets of every description of such association, collect all debts, dues, and claims belonging to it, and, with the approval of the Fed- eral Farm Loan Board, or upon the order of a court of record of com- petent jurisdiction, may sell or com- pound all bad or doubtful debts, and, on a like approval or order, may sell all the real and personal property of such association, on such terms as the Federal Farm Loan Board or said court shall direct. Such receiver shall pay over all money so collected to the Treasurer of the United States, subject to the order of the Federal Farm Loan Board, and also malce report to said board of all his acts and proceedings. Upon default of any obligations, Federal land banks and joint stock land banks may be declared insolvent and placed in the hands of a receiver, to be appointed by the Federal Farm, Loan Board, and proceedings shall thereupon be had in accordance with the pro- visions of this section regarding national farm, loan associations. KUKAL CREDITS BILL. 81 AS PASSED BY SENATE. If any national farm loan associa- tion shall be declared insolvent and a receiver shall be appointed there- for by the Federal Farm Loan Board, the stock held by it in the Federal land bank of its district shall be canceled without impair- ment of its liability; and aU pay- ments on such stock, with accrued dividends, if any, since the date of the last dividend, shall be first ap- plied to all debts of the insolvent farm loan association to the Federal land bank and the balance, if any, shall be paid to the receiver of said farm loan association: Provided, That in estimating said debts con- tingent liabilities mcurred by farm loan associations under the provisions of this Act on account of default of principal or interest of indorsed mortgages shall be esti- mated and included as a debt, and said contingent liabilities shall be determined by agreement between the receiver and the Federal land bank of the district, subject to the approval of the Federal Farm Loan Board, and if said receiver and said land bank can not agree, Jthen by the decision of the farm loan com- missioner, and the amount thus ascertained shall be deducted in accordance with the provisions of this section from the amount other- wise due the said farm loan association" for said can- celed stock. Whenever the capital stock of a Federal land bank shall be reduced, the boa:rd of directors shall cause to be executed a cer- tificate to the Federal Farm Loan I5oard, showing such reduction of capital stock, and if said reduction shall be due to the insolvency of a farm loan association, the amount repaid to such asso- ciation. No national farm loan association. Federal land bank or joint stock land bank shall be dissolved without the written consent of the Federal Farm Loan Board. 42564— S. Doc. 444, 64-1 11 AS PASSED BY HOUSE. If any national farm loan associa- ation shall be declared insolvent and a receiver shall he appointed therefor iy the Federal Farm Loan Board, the stock held hy it in the Federal land bank of its district shall be canceled without impair- ment of its liability; and all pay- ments on such stock, with accrued dividends, if any, since the date of the last dividend, shall be first ap- plied to all debts of the insolvent farm loan association to the Federal land bank and the balance, if any, shall be paid to the receiver of said farm loan association: Provided, That in estimating said debts con- tingent liabilities incurred by national farm loan associations under the provisions of this Act on account of default of principal or interest of indorsed mortgages shall be esti- mated and. included, as a debt, and said contingent liabilities shall be determined by agreement between the receiver and the Federal land bank, of the district, subject to the approval of the Federal Farm Loan Board, and if said receiver and said land bank can not agree, then by the decision of the Farm Loan Com- missioner, and the ainount thus as- certained shall be deducted in ac- cordance with the provisions of this section from, the amount otherwise due the said nMtional farm loan association for said can- celed stock. Whenever the capital stock of a Federal land bank shall be reduced, the board of directors shall cause to be executed a certificate to the Federal Farm Loan Board, show- ing such reduction of capital stock, and, if said reduction sliall be due to the insolvency of a national farm, loan association, also showing the amount repaid to such asso- ciation. No national far I) I loan association, Federal land hank or joint stock land hank shall go into voluntary liquidation without the written consent of the Federal Farm Loan Board. BUEAL CREDITS BILL. 82 AS PASSKD BY SENATE. organization expenses. Sec. 36. That the sum of $100,000, or so much thereof as may be necessary, is hereby appropriated, out of any money in the Treasury not otlier- wise appropriated, to be expended under the direction of the Federal Farm Loan Board, for the purpose of carrying into effect the provi- sions of this Act. AS PASSED BY HOUSE. organization expenses. Sec. 29. That the sum of $100,000, or so much thereof as may be necessary, is hereby appropriated, out of any money in the Treasury not other- wise appropriated, to be expended under the direction of the Federal Farm Loan Board, for the purpose of carrying into effect the provi- sions of this Act. LIMITATION OF COURT DECISIONS. LIMITATION OF COURT DECISIONS. Sec. 37. That if any clause, sentence, para- graph, or part of this Act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the re- mainder of this Act, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judg- ment shall have been rendered. Sec. 30. That if any clause, sentence, para- graph, or part of this Act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the re- mainder of this Act, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly 'involved in the controversy in which such judg- ment shall have been rendered. repealing clause. Sec. 38. That all Acts or parts of Acts incon- sistent with this Act are hereby rcipealed, and this Act shall take eff,ect upon its passage. The right to amend, alter, or repeal this Act is hereby expressly reserved. ^"An Act to provide capital for agri- *cultural development, to create Istandard forms of investment based ' upon farm mortgage, to equahze rates of interest upon farm loans, to furnish a market for United States bonds, to provide for the investment of postal savings deposits to create Government depositaries and financial agents for the United States, and for other purposes." Passed the Senate May 3 (calen- dar day, May 4), 1916. Attest: James M. Baker, Secretary. repealing clause. Sec. 31. That all Acts or parts of Acts incon- sistent with this Act are hereby repealed, and this Act shall take effect upon its passage. The right to amend, alter, or repeal this Act is hereby expressly reserved. Amend the title so as to read: "An Act to provide capital for agri- cultural development, to create standard forms 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 financial agents for the United States, and for other purposes." Passed the House of Representa- tives with amendments May 15, 1916. South' Trimble, Clerk. JeAYLORD BROS. Inc. Syracuse, N. Y. Stockton, Cilit. ■m- "*."•. *^^ ■ r . W ' ' ' 'S .• "iiiait "-"' V-•»■-•"^*6^• .C^'^^.-:::/>; ^ ir- ^^■^^^ , / t<- *■_«, jr.^' >> fiiliSilliiflt i^#> ^^fe. ^'' -^- ' ill