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[PUBLIC—No. 10—73D CONGRESS]
[H.R. 3835]
AN ACT
To relieve the existing national economic emergency by increasing agricultural
purchasing power, to raise revenue for extraordinary expenses incurred by
reason of such emergency, to provide emergency relief with respect to agricultural indebtedness, to provide for the orderly liquidation of joint-stock
land banks, and for other purposes.

Be it enacted by the Senate and House of Representatives
United States of America in Congress assembled,

of the

T I T L E I—AGKICULTURAL ADJUSTMENT
DECLARATION OF EMERGENCY

That the present acute economic emergency being in part the consequence of a severe and increasing disparity between the prices of
agricultural and other commodities, which disparity has largely
destroyed the purchasing power of farmers for industrial products,
has broken down the orderly exchange of commodities, and has seriously impaired the agricultural assets supporting the national credit
structure, it is hereby declared that these conditions in the basic
industry of agriculture have affected transactions in agricultural
commoaities with a national public interest, have burdened and
obstructed the normal currents of commerce in such commodities,
and render imperative the immediate enactment of title I of this Act.
DECLARATION OF POLICY

SEC. 2. I t is hereby declared to be the policy of Congress—
(1) To establish and maintain such balance between the production and consumption of agricultural commodities, and such marketing conditions therefor, as will reestablish prices to farmers at a
level that will give agricultural commodities a purchasing power
with respect to articles that farmers buy, equivalent to ;the purchasing power of agricultural commodities in the base period. The base
period in the case of all agricultural commodities except tobacco
shall be the prewar period, August 1909-July 1914. I n the case of
tobacco, the base period shall be the postwar period, August 1919July 1929.
(2) To approach such equality of purchasing power by gradual
correction of the present inequalities therein at as rapid a rate as is
deemed feasible in view of the current consumptive demand in
domestic and foreign markets.
(3) To protect the consumers' interest by readjusting farm production at such level as will not increase the percentage of the
consumers' retail expenditures for agricultural commodities, or
products derived therefrom, which is returned to the farmer, above
the percentage which was returned to the farmer in the prewar
period, August 1909-July 1914.



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P A E T 1—COTTON O P T I O N CONTEACTS
SEC. 3. The Federal F a r m Board and all departments and other
agencies of the Government, not including the Federal intermediate
credit banks, are hereby directed—
(a) To sell to the Secretary of Agriculture at such price as may
be agreed upon, not in excess of the market price, all cotton now
owned by them.
(b) To take such action and to make such settlements as are necessary in order to acquire full legal title to all cotton on which money
has been loaned or advanced by any department or agency of the
United States, including futures contracts for cotton or which is
held as collateral for loans or advances and to make final settlement
of such loans and advances as follows:
(1) I n making such settlements with regard to cotton, including
operations to which such cotton is related, such cotton shall be taken
over by all such departments or agencies other than the Secretary
of Agriculture at a price or sum equal to the amounts directly or
indirectly loaned or advanced thereon and outstanding, including
loans by the Government department or agency and any loans senior
thereto, plus any sums required to adjust advances to growers to
90 per centum of the value of their cotton at the date of its delivery
in the first instance as collateral to the department or agency
involved, such sums to be computed by subtracting the total amount
already advanced to growers on account of pools of which such
cotton was a part, from 90 per centum of the value of the cotton to
be taken over as of the time of such delivery as collateral, plus
unpaid accrued carrying charges and operating costs on such cotton,
less, however, any existing assets of the borrower derived from net
income, earnings^ or profits arising from such cotton, and from
operations to which such cotton is related; all as determined by the
department or agency making the settlement.
(2) The Secretary of Agriculture shall make settlements with
respect to cotton held as collateral for loans or advances made by
him on such terms as in his judgment may be deemed advisable,
and to carry out the provisions of this section, is authorized to
indemnify or furnish oonds to warehousemen tor lost warehouse
receipts and to pay the premiums on such bonds.
When full legal title to the cotton referred to in (b) has been
acquired, it shall bo sold to the Secretary of Agriculture for the
purposes of this section, in the same manner as provided in ( a ) .
(c) The Secretary of Agriculture is hereby authorized to purchase
the cotton specified m paragraphs (a) and (b).
SEC. 4. The Secretary of Agriculture shall have authority to
borrow money upon all cotton in his possession or control and
deposit as collateral for such loans the warehouse receipts for such
cotton.
SEC. 5. The Reconstruction Finance Corporation is hereby authorized and directed to advance money and to make loans to the Secretary of Agriculture to acqxiire such cotton and to pay the classing,
carrying, and merchandising costs thereon, in such amounts and
upon such terms as may be agreed upon by the Secretary and the
Reconstruction Finance Corporation, with such warehouse receipts
as collateral security: Provided, however, That in any instance



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where it is impossible or impracticable for the Secretary to deliver
such warehouse receipts as collateral security for the advances and
loans herein provided to be made, the Reconstruction Finance
Corporation may accept in lieu of all or any part thereof such other
security as it may consider acceptable for the purposes aforesaid,
including an assignment or assignments of the equity and interest
of the Secretary in warehouse receipts pledged to secure other
indebtedness. The amount of notes, bonds, debentures, and other
such obligations which the Reconstruction Finance Corporation is
authorized and empowered to issue and to have outstanding at any
one time under existing law is hereby increased by an amount
sufficient to carry out the provisions of this section.
SEC. 6. (a) The Secretary of Agriculture is hereby authorized to
enter into option contracts with the producers of cotton to sell to
any such producer an amount of cotton to be agreed upon not in
excess of the amount of reduction in production of cotton by such
producer below the amount produced by him in the preceding crop
year, in all cases where such producer agrees in writing to reduce
the amount of cotton produced by him in 1933, below his production
in the previous year, by not less than 30 per centum, without increase
in commercial fertilization per acre.
(b) To any such producer so agreeing to reduce production the
Secretary of Agriculture shall deliver a nontransferable-option
contract agreeing to sell to said producer an amount, equivalent to
the amount of his agreed reduction, of the cotton in the possession
and control of the Secretary.
(c) The producer is to have the option to buy said cotton at the
average price paid by the Secretary for the cotton procured under
section 3, and is to have the right at any time up to January 1, 1934,
to exercise his option, upon proof that he has complied with his
contract and with all the rules and regulations of the Secretary of
Agriculture with respect thereto, by taking said cotton upon payment by him of his option price and all actual carrying charges on
such cotton; or the Secretary may sell such cotton for the account of
such producer, paying him the excess of the market price at the date
of sale over the average price above referred to after deducting all
actual and necessary carrying charges: Provided, That in no event
shall the producer be held responsible or liable for financial loss
incurred in the holding of such cotton or on account of the carrying
charges therein: Provided further, That such agreement to curtail
cotton production shall contain a further provision that such cotton
producer shall not use the land taken out of cotton production for
the production for sale, directly or indirectly, of any other nationally
produced agricultural commodity or product.
(d) If any cotton held by the Secretary of Agriculture is not
disposed of under subsection (c), the Secretary is authorized to enter
into similar option contracts with respect to such cotton, conditioned
upon a like reduction of production in 1934, and permitting the
roducer in each case to exercise his option at any time up to
anuary 1, 1935.
SEC. 7. The Secretary shall sell the cotton held by him at his
discretion, but subject to the foregoing provisions: Provided, That

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he shall disposo of all cotton held by him by March 1, 1936:
Provided further, That the Secretary shall have authority to enter
into additional option contracts for so much of such cotton as is not
necessary to comply with the provisions of section 6, in combination
with benefit payments as provided for in part 2 of this title.
PART 2—COMMODITY BENEFITS
GENERAL POWERS

SEC. 8. I n order to effecuate 1 the declared policy, the Secretary
of Agriculture shall have power—
(1) To provide for reduction in the acreage or reduction in the
production for market, or both, of any basic agricultural commodity,
through 'agreements with producers or by other voluntary methods,
and to provide for rental or benefit payments in connection therewith
or upon that part of the production of any basic agricultural commodity required for domestic consumption, in such amounts as the
Secretary deems fair and reasonable, to be paid out of any moneys
available for such payments. Under regulations of the Secretary of
Agriculture requiring adequate facilities for the storage of any
non-perishable agricultural commodity on the farm, inspection and
measurement of any such commodity so stored, and the locking and
sealing thereof, and such other regulations as may be prescribed
by the Secretary of Agriculture for the protection of such commodity
and for the marketing thereof, a reasonable percentage of any benefit
payment may be advanced on any such commodity so stored. I n any
such case, such deduction may be made from the amount of the
benefit payment as the Secretary of Agriculture determines will
reasonably compensate for the cost of inspection and sealing, but
no deduction may be made for interest.
(2) To enter into marketing agreements with processors, associations% of producers, and others engaged in the handling, in the
current *of interstate or foreign commerce of any agricultural commodity or product thereof, after* due notice and opportunity for
hearing to interested parties. The making of any such agreement
shall not be held to be in violation of any of the antitrust laws of
the United States, and any such agreement shall be deemed to be
lawful: Provided, That no such agreement shall remain in force
after the termination of this Act. For the purpose of carrying out
any such agreement the parties thereto shall-be eligible for loans
from the Reconstruction Finance Corporation under section 5 of the
Reconstruction Finance Corporation Act. Such loans shall not be
in excess of such amounts as may be authorized by the agreements.
(3) To issue licenses permitting processors, associations of producers, and others to engage in the handling, in the current of
interstate or foreign commerce, of any agricultural commodity or
product thereof, or any competing commodity or product thereof.
Such licenses shall be subject to such terms and conditions, not in
conflict with existing Acts of Congress or regulations pursuant thereto, as may be necessary to eliminate unfair practices or charges that
prevent or tend to prevent the effectuation of the declared policy and
the restoration of normal economic conditions in the marketing of
1

So in original.




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such commodities or products and the financing thereof. THe Secretary of Agriculture may suspend or revoke any such license, after due
notice and opportunity for hearing, for violations of the terms or
conditions thereof. Any order of the Secretary suspending or
revoking any such license shall be final if in accordance with law.
Any such person engaged in such handling without a license as
required by the Secretary under this section shall be subject to a fine
of not more than $1,000 for each day during which tne violation
continues.
(4) To require any licensee under this section to furnish such
reports as to quantities of agricultural commodities or products
thereof bought and sold and the prices thereof, and as to trade
practices and charges, and to keep such systems oi accounts, as may
be necessary for the purpose of part 2 of this title.
(5) No person engaged in the storage in a public warehouse of
any basic agricultural commodity in the current of interstate or
foreign commerce, shall deliver any such commodity upon which
a warehouse receipt has been issued and is outstanding, without
prior surrender and cancellation of such warehouse receipt. Any
person violating any of the provisions of this subsection shall, upon
conviction, be punished by a fine of not more than $5,000, or by
imprisonment for not more than two years, or both. The Secretary
of Agriculture may revoke any license issued under subsection (3) of
this section, if he finds; after due notice and opportunity for hearing,
that the licensee has violated the provisions of this subsection.
PROCESSING TAX

SEC. 9. (a) To obtain revenue for extraordinary expenses incurred
by reason of the national economic emergency, there shall be levied
processing taxes as hereinafter provided. When the Secretary of
Agriculture determines that rental or benefit payments are to be
made with respect to any basic agricultural commodity, he shall
proclaim such determination, and a processing tax shall be in effect
with respect to such commodity from the beginning of the marketing
year therefor next following the date of such proclamation. The
processing tax shall be levied, assessed, and collected upon the first
domestic processing of the commodity, whether of domestic production or imported, and shall be paid by the processor. The rate
of tax shall conform to the requirements of subsection (b). Such
rate shall be determined by the Secretary of Agriculture as of the
date the tax first takes effect, and the rate so determined shall, at
such intervals as the Secretary finds necessary to effectuate the
declared policy, be adjusted by him to conform to such requirements.
The processing tax shall terminate at the end of the marketing year
current at the time the Secretary proclaims that rental or benefit
payments are to be discontinued with respect to such commodity.
The marketing year for each commodity shall be ascertained and
prescribed by regulations of the Secretary of Agriculture: Provided,
That upon any article upon which a manufacturers' sales tax is
levied under the authority of the Revenue Act of 1932 and which
manufacturers' sales tax is computed on the basis of weight, such
manufacturers' sales tax shall be computed on the basis of the weight




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of said finished article less the weight of the processed cotton
contained therein on which a processing tax has been paid.
(b) The processing tax shall be at such rate as equals the difference between the current average farm price for the commodity and
the fair exchange value of the commodity; excej)t that if the Secretary has reason to believe that the tax at such rate will cause such
reduction in the quantity of the commodity or products thereof
domestically consumed as to result in the accumulation of surplus
stocks of the commodity or products thereof or in the depression of
the farm price of the commodity, then he shall cause an appropriate
investigation to be made and afford due notice and opportunity for
hearing to interested parties. If thereupon the Secretary finds that
such result will occur, then the processing tax shall be at such rate
as will prevent such accumulation of surplus stocks and depression
of the farm price of the commodity. In computing the current
average farm price in the case of wheat, premiums paid producers
for protein content shall not be taken into account.
(c) F o r the purposes of part 2 of this title, the fair exchange
value of a commodity shall be the price therefor that will give the
commodity the same purchasing power, with respect to articles
farmers buy, as such commodity had during the base period specified in section 2; and the current average farm price and the fair
exchange value shall be ascertained by the Secretary of Agriculture
from available statistics of the Department of Agriculture.
(d) As used in part 2 of this title—
(1) I n case of wheat, rice, and corn, the term "processing"
means the milling or other processing (except cleaning and drying)
of wheat, rice, or corn for market, including custom milling for toll
as well as commercial milling, but shall not include the grinding or
cracking thereof not in the form of flour for feed purposes only.
(2) I n case of cotton, the term "processing" means the spinning, manufacturing, or other processing (except ginning) of cotton ; and the term " cotton " shall not include cotton linters.
(3) I n case of tobacco, the term " processing " means the manufacturing or other processing (except drying or converting into
insecticides and fertilizers) of tobacco.
(4) I n case of hogs, the term " processing " means the slaughter
of hogs for market.
(5) I n the case of any other commodity, the term "processing"
means any manufacturing or other processing involving a change
in the form of the commodity or its preparation for market, as
defined by regulations of the Secretary of Agriculture; and in
prescribing such regulations the Secretary shall give due weight
to the customs of the industry.
(e) When any processing tax, or increase or decrease therein,
takes effect in respect of a commodity the Secretary of Agriculture,
in order to prevent pyramiding of the processing tax and profiteering in the sale of the products derived from the commodity, shall
make public such information as he deems necessary regarding
(1) the relationship between the processing tax and the price paid
to producers of the commodity, (2) the effect of the processing tax
upon prices to consumers of products of the commodity, (3) the
relationship, in previous periods, between prices paid to the pro


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ducers of the commodity and prices to consumers of the products
thereof, and (4) the situation in foreign countries relating to prices
paid to producers of the commodity and prices to consumers of the
products thereof.
MISCELLANEOUS

SEC. 10. (a) The Secretary of Agriculture may appoint such
officers and employees, subject to the provisions of the Classification
Act of 1923 and Acts amendatory thereof, and such experts as are
necessary to execute the functions vested in him by this title; and
the Secretary may make such appointments without regard to the
civil service laws or regulations: Provided, That no salary in excess
of $10,000 per annum shall be paid to any officer, employee, or expert
of the Agricultural Adjustment Administration, which the Secretary shall establish in the Department of Agriculture for the administration of the functions vested in him by this title. Title I I of the
Act entitled "An Act to maintain the credit of the United States
Government", approved March 20, 1933, to the extent that it provides for the impoundment of appropriations on account of reductions in compensation, shall not operate to require such impoundment
under appropriations contained in this Act.
(b) The Secretary of Agriculture is authorized to establish, for
the more effective administration of the functions vested in him by
this title, State and local committees, or associations of producers,
and to permit cooperative associations of producers, when in his
judgment they are qualified to do so, to act as agents of their members and patrons in connection with the distribution of rental or
benefit payments.
(c) The Secretary of Agriculture is authorized, with the approval
of the President, to make such regulations with the force and effect
of law as may be necessary to carry out the powers vested in him
by this title, including regulations establishing conversion factors
for any commodity and article processed therefrom to determine
the amount of tax imposed or refunds to be made with respect
thereto. Any violation of any regulation shall be subject to such
penalty, not in excess of $100, as may be provided therein.
(d) The Secretary of the Treasury is authorized to make such
regulations as may be necessary to carry out the powers vested in
him by this title.
(e) The action of any officer, employee, or agent in determining
the amount of and in making any rental or benefit payment shall
not be subject to review by any officer of the Government other
than the Secretary of Agriculture or Secretary of the Treasury.
(f) The provisions of this title shall be applicable to the United
States and its possessions, except the Philippine Islands, the Virgin
Islands, American Samoa, the Canal Zone, and the island of Guam.
(g) No person shall, while acting in any official capacity in the
administration of this title, speculate, directly or indirectly, in any
agricultural commodity or product thereof, to which this title applies, or in contracts relating thereto, or in the stock or membership
interests of any association or corporation engaged in handling,
processing, or disposing of any such commodity or product. Any
person violating this subsection shall upon conviction thereof be



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fined not more than $10,000 or imprisoned not more than two years,
or both.
(h) For the efficient administration of the provisions of part 2
of this title, the provisions, including penalties, of sections 8, 9,
and 10 of the Federal Trade Commission Act, approved September
26, 1914, are made applicable to the jurisdiction, powers, and duties
of the Secretary in administering the provisions of this title and to
any person subject to the provisions of this title, whether or not a
corporation. Hearings authorized or required under this title shall
be conducted by the Secretary of Agriculture or such officer or
employee of the Department as he may designate for the purpose.
The Secretary may report any violation of any agreement entered
into under part 2 of this title to the Attorney General of the United
States, who shall cause appropriate proceedings to enforce such
agreement to be commenced and prosecuted in the proper courts of
the United States without delay.
COMMODITIES

SEC. 11. As used in this title, the term " basic agricultural commodity " means wheat, cotton, field corn, hogs, rice, tobacco, and milk
and its products, and any regional or market classification, type, or
grade thereof; but the Secretary of Agriculture shall exclude from
the operation of the provisions of this title, during any period, any
such commodity or classification, type, or grade thereof if he finds,
upon investigation at any time and after due notice and opportunity
for hearing to interested parties, that the conditions of production,
marketing, and consumption are such that during such period this
title can not be effectively administered to the end of effectuating
the declared policy with respect to such commodity or classification,
type, or grade thereof.
APPROPRIATION

SEC. 12. (a) There is hereby appropriated, out of any money in
the Treasury not otherwise appropriated, the sum of $100,000,000
to be available to the Secretary of Agriculture for administrative
expenses under this title and for rental and benefit payments made
with respect to reduction in acreage or reduction in production for
market under part 2 of this title. Such sum shall remain available
until expended.
(b) I n addition to the foregoing, the proceeds derived from all
taxes imposed under this title are hereby appropriated to be available to the Secretary of Agriculture for expansion of markets and
removal of surplus agricultural products and the following purposes
under part 2 of this title: Administrative expenses, rental and benefit payments, and refunds on taxes. The Secretary of Agriculture
and the Secretary of the Treasury shall jointly estimate from time
to time the amounts, in addition to any money available under subsection ( a ) , currently required for such purposes; and the Secretary
of the Treasury shall, out of any money in the Treasury not otherwise appropriated, advance to the Secretary of Agriculture the
amounts so estimated. The amount of any such advance shall be
deducted from such tax proceeds as shall subsequently become available under this subsection.



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10.]

(c) The administrative expenses provided for under this section
shall include, among others, expenditures for personal services and
rent in the District of Columbia and elsewhere, for law books and
books of reference, for contract stenographic reporting services, and
for printing and paper in addition to allotments under the existing
law. The Secretary of Agriculture shall transfer to the Treasury
Department, and is authorized to transfer to other agencies, out of
funds available for administrative expenses under this title, such
sums as are required to pay administrative expenses incurred and
refunds made by such department or agencies in the administration
of this title.
T E R M I N A T I O N OF ACT

SEC. 13. This title shall cease to be in effect whenever the President finds and proclaims that the national economic emergency in
relation to agriculture has been ended; and pending such time the
President shall by proclamation terminate with respect to any basic
agricultural commodity such provisions of this title as he finds are
not requisite to carrying out the declared policy with respect to such
commodity. The Secretary of Agriculture shall make such investigations and reports thereon to the President as may be necessary to
aid him in executing this section.
SEPARABILITY OF PROVISIONS

SEC. 14. If any provision of this title is declared unconstitutional,
or the applicability thereof to any person, circumstance, or commodity is held invalid the validity of the remainder of this title and the
applicability thereof to other persons, circumstances, or commodities
shall not be affected thereby.
SUPPLEMENTARY REVENUE PROVISIONS
EXEMPTIONS AND COMPENSATING TAXES

SEC. 15. (a) If the Secretary of Agriculture finds, upon investigation at any time and after due notice and opportunity for hearing to
interested parties, that any class of products of any commodity is
of such low value compared with the quantity of the commodity
used for their manufacture that the imposition of the processing
tax would prevent in wThole or in large part the use of the commodity in the manufacture of such products and thereby substantially
reduce consumption and increase the surplus of the commodity, then
the Secretary of Agriculture shall so certify to the Secretary of the
Treasury, and the Secretary of the Treasury shall abate or refund
any processing tax assessed or paid after the date of such certification with respect to such amount of the commodity as is used in the
manufacture of such products.
(b) No tax shall be required to be paid on the processing of any
commodity by or for the producer thereof for consumption by his
own family, employees, or household; and the Secretary Df Agriculture is authorized, by regulations, to exempt from the payment o£
the processing tax the processing of commodities by or for the producer thereof for sale by him where, in the judgment of the Secretary, the imposition of a processing tax with respect thereto is
unnecessary to effectuate the declared policy.
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(c) Any person delivering any product to any organization for
charitable distribution or use shall, if such product or the commodity from which processed, is under this title subject to tax,
be entitled to a refund of the amount of any tax paid under this
title with respect to such product so delivered.
(d) The Secretary of Agriculture shall ascertain from time to
time whether the payment of the processing tax upon any basic
agricultural commodity is causing or will cause to the processors
thereof disadvantages in competition from competing commodities
by reason of excessive shifts in consumption between such commodities or products thereof. If the Secretary of Agriculture finds, after
investigation and due notice and opportunity for hearing to interested parties, that such disadvantages in competition exist, or will
exist, he shall proclaim such finding. The Secretary shall specify
in this proclamation the competing commodity and the compensating
rate of tax on the processing thereof necessary to prevent such
disadvantages in competition. Thereafter there shall be levied,
assessed, and collected upon the first domestic processing of such
competing commodity a tax, to be paid by the processor, at the rate
specified, until such rate is altered pursuant to a further finding
under this section, or the tax or rate thereof on the basic agricultural
commodity is altered or terminated. I n no case shall the tax imposed
upon such competing commodity exceed that imposed per equivalent
unit, as determined by the Secretary, upon the basic agricultural
commodity.
(e) During any period for which a processing tax is in effect with
respect to any commodity there shall be levied, assessed, collected,
and paid upon any article processed or manufactured wholly or in
chief value from such commodity and imported into the United
States or any possession thereof to which this title applies, from
any foreign country or from any possession of the United States
to which this title does not apply, a compensating tax equal to the
amount of the processing tax in effect with respect to domestic
processing at the time of importation: Provided,, That ail taxes
collected under this subsection upon articles coming from the possessions of the United States to which this title does not apply shall
not be covered into the general fund of the Treasury of the United
States but shall be held as a separate fund and paid into the Treasury
of the said possessions, respectively, to be used and expended by the
governments thereof for the benefit of agriculture. Such tax shall
be paid prior to the release of the article from customs custody or
control.
FLOOR STOCKS

SEC. 16. (a) Upon the sale or other disposition of any article
processed wholly or in chief value from any commodity with respect
to which a processing tax is to be levied, that on the date the tax
first takes effect or wholly terminates wTith respect to the commodity,
is held for sale or other disposition (including articles in transit)
by any person, there shall be made a tax adjustment as follows:
(1) Whenever the processing tax first takes effect, there shall be
levied, assessed, and collected a tax to be paid by such person equivalent to the amount of the processing tax which would be payable




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with respect to the commodity from which processed if the processing
had occurred on such date.
(2) Whenever the processing tax is wholly terminated, there shall
be refunded to such person a sum (or if it has not been paid, the
tax shall be abated) in an amount equivalent to the processing tax
with respect to the commodity from which processed.
(b) The tax imposed by subsection (a) shall not apply to the
retail stocks of persons engaged in retail trade, held at the date the
processing tax first takes effect; but such retail stocks shall not
be deemed to include stocks held in a warehouse on such date, or
such portion of other stocks held on such date as are not sold or
otherwise disposed of within thirty days thereafter. The tax refund
or abatement provided in subsection (a) shall not apply to the retail
stocks of persons engaged in retail trade, held on the date the
processing tax is wholly terminated.
EXPORTATIONS

SEC. 17. (a) Upon the exportation to any foreign country (including the Philippine Islands, the Virgin Islands, American Samoa,
and the island of Guam) of any product with respect to which a tax
has been paid under this title, or of any product processed wholly
or in chief value from a commodity with respect to which a tax
has been paid under this title, the exporter thereof shall be entitled
at the time %of exportation to a refund of the amount of such tax.
(b) Upon the giving of bond satisfactory to the Secretary of the
Treasury for the faithful observance of the provisions of this title
requiring the payment of taxes, any person shall be entitled, without
payment of the tax, to process for such exportation any commodity
with respect to which a tax is imposed by this title, or to hold for
such exportation any article processed wholly or in chief value
therefrom.
EXISTING

CONTRACTS

SEC. 18. (a) If (1) any processor, jobber, or wholesaler has, prior
to the date a tax with respect to any commodity is first imposed
under this title, made a bona fide contract of sale for delivery on or
after such date, of any article processed wholly or in chief value from
such commodity, and if (2) such contract does not permit the
addition to the amount to be paid thereunder of the whole of such
tax, then (unless the contract prohibits such addition) the vendee
shall pay so much of the tax as is not permitted to be added to the
contract price.
(b) Taxes payable by the vendee shall be paid to the vendor at
the time the sale is consummated and shall be collected and paid to
the United States by the vendor in the same manner as other taxes
under this title. I n case of failure or refusal by the vendee to pay
such taxes to the vendor, the vendor shall report the facts to the
Commissioner of Internal Revenue who shall cause collections of
such taxes to be made from the vendee.
COLLECTION OF TAXES

SEC. 19. (a) The taxes provided in this title shall be collected by
the Bureau of Internal Revenue under the direction of the Secretary



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of the Treasury. Such taxes shall be paid into the Treasury of the
"EJnited States.
(b) All provisions of law, including penalties, applicable with
respect to the taxes imposed by section 600 of the Revenue Act of
1926, and the provisions of section 626 of the Revenue Act of 1932,
shall, in so far as applicable and not inconsistent with the provisions
of this title, be applicable in respect of taxes imposed by this title:
Provided, That the Secretary of the Treasury is authorized to permit
postponement, for a period not exceeding ninety days, of the
payment of taxes covered by any return under this title.
(c) I n order that the payment of taxes under this title may not
impose any immediate undue financial burden upon processors or
distributors, any processor or distributor subject to such taxes shall
be eligible for loans from the Reconstruction Finance Corporation
under section 5 of the Reconstruction Finance Corporation Act.
TITLE II—AGRICULTURAL CREDITS
PART 1—AMENDMENTS TO FEDERAL FARM LOAN A C T
ISSUANCE OF BONDS BY LAND BANKS
SECTION 21. Section 32 of the Federal Farm Loan Act, as amended
(U.S.C., title 12, sec. 991), is amended by adding at the end thereof
the following new paragraph:
" Until such time as the F a r m Loan Commissioner determines that
Federal farm-loan bonds (other than those issued under this paragraph) are readily salable in the open market at a yield not in excess
of 4 per centum per annum, but in no case more than two years after
this paragraph takes effect, Federal land banks may issue farm-loan
bonds as authorized under this Act, for the purpose of making new
loans, or for purchasing mortgages or exchanging bonds for mortgages as provided in paragraph ' Second ' of section 13 of this Act.
The aggregate amount of the bonds issued under this paragraph
shall not exceed $2,000,000,000, and such bonds shall be issued in such
denominations as the Farm Loan Commissioner shall prescribe, shall
bear interest at a rate not in excess of 4 per centum per annum, and
shall be fully and unconditionally guaranteed as to interest by the
United States, and such guaranty shall be expressed on the face
thereof. I n the event that it shall appear to the F a r m Loan Commissioner that the issuing bank or banks will be unable to pay upon
demand, when clue, the interest on any such bonds, the Secretary of
the Treasury shall, upon the request of the Commissioner, pay the
amount thereof, which is hereby authorized to be appropriated out
of any money in the Treasury not otherwise appropriated. Upon
the payment of such interest by the Secretary of the Treasury the
amount so paid shall become an obligation to the United States of
the issuing bank or banks and shall bear interest at the same rate
as that borne by the bonds upon which the interest has been so paid.
After the expiration of one year from the date this paragraph takes
effect, if in the opinion of the. Farm Loan Commissioner any part of
the proceeds of the bonds authorized to be issued under this paragraph is not required for the purpose of making new loans or for
purchasing mortgages or exchanging bonds for mortgages as herein




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provided, such bonds may be issued within the maximum limit herein
specified for the purpose of refinancing any outstanding issues of
Federal farm-loan bonds; but no such bonds shall be issued after
two years from the date this paragraph takes effect for the purpose
of such refinancing. Any borrower who obtains a loan from a
Federal land bank after the date this paragraph takes effect may, at
any time after the expiration of five years from the date such loan
was made, tender to such bank on any regular installment date, bonds
issued under this paragraph in an amount not to exceed the unpaid
principal of his loan, and the bonds so tendered shall be accepted
by the bank at par in payment of any part of such unpaid principal."
P U R C H A S E , REDUCTION, A N D R E F I N A N C I N G OF F A R M MORTGAGES

SEC. 22. Paragraph " Second " of section 13 of the Federal F a r m
Loan Act, as amended, is amended by adding at the end thereof the
following new sentence:
" I n order to reduce and/or refinance farm mortgages, to invest
such funds as may be in its possession in the purchase of first
mortgages on farm lands situated within the Federal land-bank
district within which it is organized or for which it is acting, or to
exchange farm-loan bonds for any duly recorded first mortgages on
farm lands executed prior to the date this paragraph, as amended,
takes effect, at a price which shall not exceed in each individual
case the amount of the unpaid principal of the mortgage on the date
of such purchase or exchange, or 50 per centum of the normal value of
the land mortgaged and 20 per centum of the value of the permanent
insured improvements thereon as determined upon an appraisal
made pursuant to this Act, whichever is the smaller: Provided, That
any mortgagor whose mortgage is acquired by a Federal land bank
under this paragraph shall be entitled to have his farm-mortgage
indebtedness refinanced in accordance with the provisions of sections
7 and 8 of this Act on the basis of the amount paid by the bank for
his mortgage."
EXTENSION OF LOANS

SEC. 23. Paragraph " T e n t h " of section 13 of the Federal F a r m
Loan Act, as amended (U.S.C., title 12, sec. 781), is amended by
adding at the end thereof the following: " The terms of any such
extension shall be such as will not defer the collection of any
obligation due by any borrower which, after investigation by the
oank of the situation of such borrower, is shown to be within his
capacity to meet. I n the case of any such extension made prior to
the expiration of five years from the date this paragraph as amended
takes effect, or in the case of any deferment of principal as provided
in paragraph ' T w e l f t h ' of section 12 of this Act, it shall be the
duty of the Secretary of the Treasury, on behalf of the United
States, upon the request of the Federal land bank making the
extension, and with the approval erf the F a r m Loan Commissioner,
to subscribe at such periods as the Commissioner shall determine,
to the paid-in surplus of such bank an amount equal to the amount
of all such extensions and deferments made by the bank during the
preceding period. Such subscriptions shall be subject to call, in
whole or in part, by the bank with the approval of the Commissioner



1-1

fruE. JO.]

fipon thirty days' notice. To enable the Secretary of the Treasury
to make such subscriptions to the paid-in surplus of the Federal
land banks, there is hereby authorized to be appropriated the sum
of $50,000,000, to be immediately available and remain available
until expended. Upon payment to any Federal land bank of the
amount of any such subscription, such bank shall execute and deliver
a receipt therefor to the Secretary of the Treasury in form to be
prescribed by the F a r m Loan Commissioner. The amount of any
subscriptions to the paid-in surplus of any such bank may be repaid
in whole or in part at any time in the discretion of the bank and
with the approval of the F a r m Loan Commissioner, and the Commissioner may at any time require such subscriptions to be repaid
in whole or in part if in his opinion the bank has resources available
therefor."
REDUCTION OF I N T E R E S T ON LOANS A N D D E F E R M E N T OF PRINCIPAL,

SEC. 24. Section 12 of the Federal Farm Loan Act, as amended
(U.S.C., title 12, sees. 771-772), is amended by adding at the end
thereof the following new paragraph:
" Twelfth. Notwithstanding the provisions of paragraph c Second,'
the rate of interest on any loans on mortgage made through national
farm-loan associations or through agents as provided in section 15,
or purchased from joint-stock land banks, by any Federal land
bank, outstanding on the date this paragraph takes effect or made
through national farm-loan associations within two years after
such date, shall not exceed 4% per centum per annum for all interest
payable on installment dates occurring within a period of five years
commencing sixty days after the date this paragraph takes effect;
and no payment of the principal portion of any installment of any
such loan shall be required during such five-year period if the borrower shall not be in default with respect to any other condition or
covenant of his mortgage. The foregoing provisions shall apply
to loans made by Federal land banks through branches, except that
the rate of interest on such loans for such five-year period shall
be 5 per centum in lieu of 4% per centum. The Secretary of the
Treasury shall pay each Federal land bank, as soon as practicable
after October 1, 1933, and after the end of each quarter thereafter,
such amount as the Farm Loan Commissioner certifies to the Secretary of the Treasury is equal to the amount by which interest payments on mortgages held by such bank have been reduced, during
the preceding quarter, by reason of this paragraph; but in any case
in which the Farm Loan Commissioner finds that the amount of
interest payable by such bank during any quarter has been reduced
by reason of the refinancing of bonds under section 32 of this Act,the amount of the reduction so found shall be deducted from the
amount payable to such bank under this paragraph. No payments
shall be made to a bank with respect to any period after June 30,
1938. There is authorized to be appropriated, out of any money
in the Treasury not otherwise appropriated, the sum of $15,000,000
for the purpose of enabling the Secretary of the Treasury to make
payments to Federal land banks which accrue during the fiscal year
ending June 30, 1934, and such additional amounts as may be necessary to make payments accruing during subsequent fiscal years.



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10.]

INCREASE OF A M O U N T OF LOANS TO BORROWERS

SEC. 25. Paragraph " Seventh " of section 12 of the Federal F a r m
Loan Act, as amended (U.S.C., title 12, sec. 771) (relating to the
limitations as to amount of loans), is amended by striking out
" $25,000 " and inserting " $50,000, but loans to any one borrower
shall not exceed $25,000 unless approved by the F a r m Loan
Commissioner."
DIRECT

LOANS

SEC. 26. Section 7 of the Federal Farm Loan Act, as amended,
is amended by striking out the last paragraph and inserting in lieu
thereof the following new paragraphs:
" Whenever it shall appear to the Farm Loan Commissioner that
national farm-loan associations have not been formed in any locality
in the continental United States, or that the farmers residing in
the territory covered by the charter of a national farm-loan association are unable to apply to the Federal land bank of the district for
loans on account of the inability of the bank to accept applications
from such association, the F a r m Loan Commissioner shall authorize
said bank to make direct loans to borrowers secured by first mortgages on farm lands situated within any such locality or territory.
Except as herein otherwise specifically provided, all provisions of
this Act applicable with respect to loans made through national
farm-loan associations shall, insofar as practicable, apply with
respect to such direct loans, and the F a r m Loan Commissioner is
authorized to make such rules and regulations as he may deem
necessary with respect to such direct loans.
" The rate of interest on such direct loans made at any time by any
Federal land bank shall be one-half of 1 per centum per annum
in excess of the rate of interest charged to borrowers on mortgage
loans made at such time by the bank through national farm-loan
associations.
" Each borrower who obtains a direct loan from a Federal land
bank shall subscribe and pay for stock in such bank in the sum of
$5 for each $100 or fraction thereof borrowed. Such stock shall
be held by such Federal land bank as collateral security for the loan
of the borrower and shall participate in all dividends. Upon full
payment of the loan such stock shall, if still outstanding, be canceled at par, or, in the event that such stock shall have become
impaired, at the estimated value thereof as approved by the F a r m
Loan Commissioner, and the proceeds thereof shall be paid to the
borrower.
" Each such borrower may covenant in his mortgage that, whenever there are ten or more borrowers who have obtained from a
Federal land bank direct loans under the provisions of this section
aggregating not less than $20,000, and who reside in a locality which
may, in the opinion of the Farm Loan Commissioner, be conveniently
covered by the charter of and served by a national farm-loan association, he will unite with such other borrowers to form a national
farm-loan association. Such borrowers shall organize the association subject to the requirements and the conditions specified in this
section, so far as the same may be applicable, and in accordance with




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rules and regulations of the Farm Loan Commissioner. As soon as
the organization of the association has been approved by the Farm
Loan Commissioner, the stock in the Federal land bank held by
each of the members of such association shall be canceled at par, and
in lieu thereof the bank shall issue in the name of the association an
equal amount of stock in said bank, which stock shall be held by said
bank as collateral security as provided in this section with respect
to other loans through national farm-loan associations. Thereupon
there shall be issued to each such member an amount of capital
stock in the association equal to the amount which he previously
held in said bank, which stock shall be held by said association as collateral security as provided in section 8 of this Act. The board of
directors of said association shall adopt a resolution authorizing
and directing its secretary-treasurer on behalf of said association to
endorse, and thereby become liable for the payment of, the mortgages taken from its charter members by the Federal land bank.
When it shall appear to the satisfaction of the F a r m Loan Commissioner that all the foregoing conditions have been complied with,
and upon the granting of the charter by the Farm Loan Commissioner, the interest rate paid by each charter member of such association whose loan is in good standing shall, beginning with his
next regular installment date, be reduced to the rate of interest paid
by borrowers on new loans made through national farm-loan associations in the same Federal land-bank district at the time the said
loan was made to such charter member.
" Charges to be paid by applicants for direct loans from a Federal
land bank shall not exceed amounts to be fixed by the Farm Loan
Commissioner and shall in no case exceed the charges which may
be made to applicants for loans and borrowers through national
farm-loan associations under the provisions of sections 11 and 13
of this Act."
LOANS TO RECEIVERS

S E C 27. Any receiver appointed by the Federal Farm Loan Board
pursuant to section 29 of the Federal F a r m Loan Act, as amended,
or any receiver appointed by a district court of the United States,
is authorized, for the purpose of paying taxes on farm real estate
owned by the bank or securing the mortgages held by it, with the
approval of the F a r m Loan Commissioner, to borrow from the
Reconstruction Finance Corporation and to issue receiver's certificates against the assets of such bank as security for any loan received
from the Corporation under this section, and such certificates shall
constitute a prior lien on such assets. The Reconstruction Finance
Corporation is authorized to make loans to such receivers for the purposes of this section.
FEDERAL

FARM-LOAN

BONDS

AS SECURITY FOR
RESERVE B A N K S

ADVANCES

BY

FEDERAL

S E C 28. The eighth paragraph of section 13 of the Federal Reserve
Act, as amended, is amended by inserting before the period at the
end thereof a comma and the following: " or by the deposit or pledge




[PUB.

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ip.J

of bonds issued pursuant to the paragraph added to section 32 of the
Federal Farm Loan Act, as amended by section 21 of the Emergency
Farm Mortgage Act of 1933."
PART 2—JOINT-STOCK LAND BANKS
LIMITATIONS ON ISSUE OF BONDS AND LENDING

SEC. 29. After the date of enactment of this Act, no joint-stock
land bank shall issue any tax-exempt bonds or make any farm loans
except such as are necessary and incidental to the refinancing of
existing loans or bond issues or to the sale of any real estate now
owned or hereafter acquired by such bank.
LOANS TO J O I N T - S T O C K LAND B A N K S "TO PROVIDE FOR ORDERLY L I Q U I D A T I O N

S E C 30. (a) The Eeconstruction Finance Corporation is authorized and directed to make available to the F a r m Loan Commissioner,
out of the funds of the Corporation, the sum of $100,000,000, to ba
used, for a period not exceeding two years from the date of enactment of this Act, for the purpose of making loans to the joint-stock
land banks organized and doing business under the Federal F a r m
Loan Act, as amended, at a rate of interest not to exceed 4 per
centum per annum, payable annually. Such loans shall be made
upon application therefor by such banks and upon compliance with
the requirements of this section. The amount which may be loaned
hereunder to any such bank shall not exceed an amount having the
same proportion to the said $100,000,000 as the unpaid principal of
the mortgages held by such bank on the date of enactment of this
Act bears to the total amount of the unpaid principal of the mortgages held by all the joint-stock land banks on such date.
(b) Any joint-stock land bank applying for a loan under this
section shall deliver to the F a r m Loan Commissioner as collateral
security therefor first mortgages or purchase-money mortgages on
farm lands, first mortgages on farm real estate owned by the bank
in fee simple, or such other collateral as may be available to said
bank, including sales contracts and sheriff's certificates on farm
lands. The real estate upon which such collateral is based shall be
appraised by appraisers appointed under the Federal Farm Loan
Act, as amended, and the borrowing bank shall be entitled to borrow
not to exceed 60 per centum of the normal value of such real estate as
determined by such appraisal. Fees for such appraisals shall be
paid by tliQ applicant banks in such amounts as may be fixed by the
Farm Loan Commissioner. No such loan shall be made until the
applicant bank, under regulations to be prescribed by the Farm
Loan Commissioner, (1) shall have agreed to grant to each borrower
then indebted to the bank under the terms of a first mortgage a
reduction to 5 per centum per annum in the rate of interest specified in such mortgage, beginning at his next regular installment date
occurring more than sixty days after the elate of enactment of this
Act, and (2) shall have agreed to the satisfaction of the Commissioner that during a period of two years from the date of enactment
of this Act the bank will not proceed against the mortgagor on
account of default in the payment of interest or principal due under




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the terms of its mortgage and will not foreclose its mortgage unless
the property covered by such mortgage is abandoned by the mortgagor or unless, in the opinion of the Commissioner, such foreclosure is necessary for other reasons. . Such loans shall be made to
aid the orderly liquidation of any such bank in accordance with such
plan as may be approved by the Farm Loan Commissioner. Before
any such plan is approved by the Commissioner he shall be satisfied
that the plan carries out the purposes of this section and that such
part of the proceeds of the loan as is devoted to settlements with
bondholders will be used only to effect an equitable settlement with
all bondholders. After the plan has been approved by the Commissioner he shall require the bank to mail a copy thereof to all its
known bondholders and to publish a notice setting forth its provisions in at least three newspapers having general circulation.
LOANS BY T H E F A R M LOAN COMMISSIONER TO J O I N T - S T O C K LAND B A N K S
FOR E M E R G E N C Y PURPOSES

SEC. 31. (a) Out of the funds made available to him under section 30, the Farm Loan Commissioner is authorized to make loans,
in an aggregate amount not exceeding $25,000,000, at a rate of interest
not to exceed 4 per centum per annum, to any joint-stock land bank
for the purpose of securing the postponement for two years from
the date of the enactment of this Act of the foreclosure of first mortgages held by such banks on account of (1) default in the payment
of interest and principal due under the terms of the mortgage, and
(2) unpaid delinquent taxes, excluding interest and penalties, which
may be secured by the lien of said mortgage: Provided, That during
the period of postponement of foreclosure such bank shall charge
the mortgagor interest at a rate not exceeding 4 per centum per
annum on the aggregate amount of such delinquent taxes and
defaulted interest and principal with respect to which loans are
made pursuant to this section. The amount loaned to any joint-stock
land bank under this section shall be made without reappraisal:
Provided, That the amount loaned with respect to any mortgage on
account of unpaid principal shall not exceed 5 per centum of the
total unpaid principal of such mortgage, and the total amount
loaned to any such land bank with respect to any mortgage shall not
exceed 25 per centum of the total unpaid principal of such mortgage.
(b) No such loan shall be made with respect to any mortgage
unless the F a r m Loan Commissioner is satisfied that the mortgagor,
after exercising ordinary diligence to pay his accrued delinquent
taxes, and meet accrued interest and principal payments, has
defaulted thereon; and unless the bank shall have agreed to the satisfaction of the Farm Loan Commissioner that during such two-year
period the bank will not foreclose such mortgage unless the property covered thereby is abandoned by the mortgagor or unless in
the opinion of the F a r m Loan Commissioner such foreclosure is
necessary for other reasons.
(c) Each such loan shall be secured by an assignment to the Farm
Loan Commissioner of the lien of the taxes and/or of the bank's
mortgage with respect to which the loan is made: Provided, That
the part of each such lien so assigned representing the interest and
principal due and unpaid in any such mortgage which has been




r?uB. 10 ]

19

assigned to the farm loan registrar shall be subordinate to the
existing lien of the bank for the balance of the indebtedness then or
thereafter to become due under the terms of such mortgage; but the
Farm Loan Commissioner may require the bank to furnish additional collateral as security for such loan, if such collateral is
available to the bank.
(cl) The Farm Loan Commissioner is authorized to make such
rules and regulations as may be necessary to carry out the purposes
of this section and to make the relief contemplated immediately
available.
PART 3—LOANS TO FARMERS BY FARM LOAN COMMISSIONER
REDUCTION OF DEBTS AND REDEMPTION OF FORECLOSED FARMS

SEC. 32. The Reconstruction Finance Corporation is authorized
and directed to allocate and make available to the F a r m Loan Commissioner the sum of $200,000,000, or so much thereof as may be
necessary, to be used for the purpose of making loans as hereinafter
provided to any farmer, secured by a first or second mortgage upon
the whole or any part of the farm property, real or personal,
including crops, of the farmer. The amount of the mortgage given
by any farmer, together with all prior mortgages or other evidences
of indebtedness secured by such farm property of the farmer, shall
not exceed 75 per centum of the normal value thereof, as determined
upon an appraisal made pursuant to the Federal Farm Loan Act, as
amended; nor shall a loan in excess of $5,000, be made to any one
farmer. Every mortgage made under this section shall contain
an agreement providing for the repayment of the loan on an amortization plan by means of a fixed number of annual or semiannual
installments, sufficient to cover (1) interest on unpaid principal at
a rate not to exceed 5 per centum per annum and (2) such pa}^ments
equal in amount to be applied on principal as will extinguish the
debt within an agreed period of not more than ten years or, in the
case of a first or second mortgage secured wholly by real property
and made for the purpose of reducing and refinancing an existing
mortgage within an agreed period no greater than that for which
loans may be made under the Federal Farm Loan Act, as amended,
from the date the first payment on principal is due: Provided, That
during the first three years the loan is in effect payments of interest
only may be required if the borrower shall not be in default with
respect to any other condition or covenant of his mortgage. No
loan shall be made under this section unless the holder of any prior
mortgage or instrument of indebtedness secured by such farm property arranges to the satisfaction of the Farm Loan Commissioner
to limit his right to proceed against the farmer and such farm
property for default in payment of principal. Loans under this
section shall be made for the follov^ing purposes only: (1) Refinancing, either in connection with proceedings under chapter V I I I
of the Bankruptcy Act of July 1, 1898, as amended (relating
to agricultural compositions and extensions) r or otherwise, any
indebtedness, secured or unsecured, of the farmer,, (2) providing
working capital for his farm operations, and (3) enabling any
farmer to redeem and/or repurchase farm property owned by him




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prior to foreclosure which has been foreclosed at any time between
July 1, 1931, and the date of the enactment of this Act, or which is
foreclosed after the enactment of this Act. The provisions of paragraph " Ninth " of section 13 of the Federal Farm Loan Act, as
amended (relating to charges to applicants for loans and borrowers
from the Federal land banks), shall, so far as practicable, apply to
loans made under this section. As used in this section, the term
" farmer " means any individual wTho is bona fide engaged in farming
operations, either personally or through an agent or tenant, or the
principal part of whose income is derived from farming operations,
and includes a personal representative of a deceased farmer.
REGULATIONS

SEC. 33. The Farm Loan Commissioner is authorized to make
such rules and regulations, and to appoint, employ, and fix the compensation of such officers, employees, attorneys, and agents as may
be necessary to carry out the purposes of this title and to make the
relief contemplated by this title immediately available, without
regard to the provisions of other laws applicable to the employment
and compensation of officers and employees of the United States:
Provided, That no salary or compensation in excess of $10,000 shall
be paid to any person employed under the terms of the foregoing
section.
F A C I L I T I E S OF FEDERAL L A N D B A N K S A N D N A T I O N A L F A R M LOAN ASSOCIAT I O N S MADE AVAILABLE

SEC. 34. The Federal land banks and the national farm loan
associations are authorized, upon request of the F a r m Loan Commissioner, to make available to him their services and facilities to aid
in administering the provisions of this title.
PENALTIES

SEC. 35. Any person who shall knowingly make any material false
representation for the purpose of obtaining any loan under part 3
of this title, or in assisting in obtaining any such loan, shall, upon
conviction thereof, be fined not more than $1,000, or imprisoned not
more than six months, or both.
PART 4—REFINANCING OF AGRICULTURAL IMPROVEMENT DISTRICT
INDEBTEDNESS FOR THE BENEFIT OF FARMERS
LOANS BY RECONSTRUCTION FINANCE CORPORATION

SEO. 36. The Reconstruction Finance Corporation is authorized
and empowered to make loans as hereinafter provided, in an aggregate amount not exceeding $50,000,000; to drainage districts, levee districts, levee and drainage districts, irrigation districts, and similar
districts, duly organized under the laws of any State, and to political
subdivisions of States, which prior to the date of enactment of this Act,
have completed projects devoted chiefly to the improvement of lands
for agricultural purposes. Such loans shall be made for the purpose of




JPUB. 10.J

21

enabling any such district.or political subdivision (hereafter referred
to as the " borrower ") to reduce and refinance its outstanding indebtedness incurred in connection with any such project, and shall be
subject to the same terms and conditions as loans made under section
5 of the Reconstruction Finance Corporation Act, as amended; except
. that (1) the term of any such loan shall not exceed forty years; (2)
each such loan shall be secured by refunding bonds issued to the
Corporation by the borrower which are a lien on the real property
within the project or on the amount of the assessments levied on
such property by the borrower pursuant to State law, or by such
other collateral as may be acceptable to the Corporation; (3) the
borrower shall agree not to issue during the term of the loan any
bonds so secured except with the consent of the Corporation; (4)
the borrower shall pay to the Corporation, until all bonds of the
borrower held by the Corporation are retired, an amount equal to
the amount by wnich the assessments againjst the real property within
the project collected by the borrower exceed the costs of operation
and maintenance of the project and interest on its outstanding obligations; and (5) the borrower shall agree, to the satisfaction of the
Corporation, to reduce the outstanding indebtedness to the borrower
of the landowners within such project by an amount corresponding
to that by which the indebtedness of the borrower is reduced by
reason of the operation of this section, to distribute the amount of
such reduction among such landowners on a pro rata basis, to cancel
and retire its outstanding bonds in an aggregate amount equal to
the amount of the reduction so distributed, and to permit the Corporation, in the case of the payment of the bonds of the borrower
or the liquidation of such project, to participate in such payment
or in the proceeds of such liquidation on the basis of the face amount
of the bonds so retired plus the face amount of the bonds held by
the Corporation as security for the loan. No loan shall be made
under this section until the Reconstruction Finance Corporation (A)
has caused an appraisal to be made of the property securing and/or
underlying the outstanding bonds of the applicant, (B) has determined that the project of the applicant is economically sound, and
(C) has been satisfied that an agreement has been entered into
between the applicant and the holders of its outstanding bonds under
which the applicant will be able to purchase or refund such bonds
at a price determined by the Corporation to be reasonable after
taking into consideration the average market price of such bonds
over tne six months' period ending March 1, 1933, and under which
a substantial reduction will be brought about in the amount oi the
outstanding indebtedness of the applicant.
SEC. 37. The Reconstruction Finance Corporation, upon request
of the Secretary of the Interior, is authorized and empowered to
advance from funds made available by section 2 of the Act of
January 22, 1932 (47 Stat.L. 5), to the reclamation fund created
by the Act of June 17, 1902 (32 Stat.K 388), such sum or sums
as the Secretary of the Interior may deem necessary, not exceeding
$5,000,000, for the completion of projects or divisions of projects
now under construction, or projects approved and authorized. Funds
so advanced shall be repaid out of any receipts and accretions accruing to the reclamation fund within such time as may be fixed by




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the Reconstruction Finance Corporation, not exceeding five years
from the date of advance, with interest at the rate of 4 per centum
per annum. Sums so advanced may be expended in the same way
as other moneys in the reclamation fund.
PART 5—INCREASE OF LENDING POWER OF RECONSTRUCTION FINANCE
CORPORATION

SEC. 38. I n order to provide funds to carry out the purposes'of
this title, the amount of notes, debentures, bonds, or other such obligations which the Reconstruction Finance Corporation is authorized
and empowered under section 9 of the Reconstruction Finance Cororation Act, as amended, to have outstanding at any one time, is
ereby increased by $300,000,000.

I

PART 6—FUNCTIONS OF FARM LOAN COMMISSIONER UNDER EXECUTIVE
ORDERS

SEC. 39. If and when any executive order heretofore transmitted
to the Congress pursuant to title I V of part I I of the Legislative
Appropriation Act of 1933, as amended, shall become effective, all
functions, powers, authority, and duties conferred upon or vested in
the F a r m Loan Commissioner by this title shall be held and exercised by him subject to all the terms and conditions in any such
Executive order the same as if such functions, powers, authority, and
duties were specifically named in such Executive order or orders.
PART 7—MISCELLANEOUS
PERFECTING ORGANIZATION FARM CREDIT ADMINISTRATION

SEC. 40. The Governor of the F a r m Credit Administration is
authorized, in carrying out the powers and duties now or hereafter
vested in him or the F a r m Credit Administration by law or under
any Executive order made under title I V of part I I of the Legislative Appropriation Act of 1933, as amended, to establish, and to fix
the powers and duties of, such divisions, agencies, corporations, and
instrumentalities as he may deem necessary to the efficient functioning
of the F a r m Credit Administration and the successful execution of
the powers and duties so vested in the Governor and the Farm Credit
Administration. This section shall not be construed to restrict the
authority of the President under title I V of such Act, as amended:
Provided, That no salary or compensation shall be paid to any officer, agent, or other person employed under this section in excess
of $10,000 per annum.
LOANS TO F R U I T GROWERS

SEC. 41. That in making loans to owners of groves and orchards,
including citrus-fruit groves and other fruit groves and orchards,
the Federal land banks, the farm land banks, and all Government
agencies making loans upon such character of property may, in
appraising the property offered as security, give a reasonable and




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23

fair valuation to the fruit trees located arid growing upon said
property and constituting a substantial part of its value.
PART 8—SHORT TITI^E

SEC. 42. This title may be cited as the " Emergency
Mortgage Act of 1933."

Farm

TITLE I I I — F I N A N C I N G — A N D
EXERCISING POWER CONFERRED BY
SECTION 8 or ARTICLE I OF THE CONSTITUTION: T O COIN M O N E T
AND TO REGULATE THE VALUE THEREOF

SEC. 43. Whenever the President finds, upon investigation, that
(1) the foreign commerce of the United States is adversely affected
by reason of the depreciation in the value of the currency of any
other government or governments in relation to the present standard
value of gold, or (2) action under this section is necessary in order
to regulate and maintain the parity of currency issues of the United
States, or (3) an economic emergency requires an expansion of credit*
or (4) an expansion of credit is necessary to secure by international
agreement a stabilization at proper levels of the currencies of various
governments, the President is authorized, in his discretion—
(a) To direct the Secretary of the Treasury to enter into agreements with the several Federal Reserve banks and with the Federal
Reserve Board whereby the Federal Reserve Board will, and it is
hereby authorized to, notwithstanding any provisions of law or
rules and regulations to the contrary, permit such reserve banks
to agree that they will, (1) conduct, pursuant to existing law,
throughout specified periods, open market operations in obligations
of the United States Government or corporations in which the
United States is the majority stockholder, and (2) purchase directly
and hold in portfolio for an agreed period or periods of time
Treasury bills or other obligations of the United States Government
in an aggregate sum of $3,000,000,000 in addition to those they may
then hold, unless prior to the termination of such period or periods
the Secretary shall consent to their sale. No suspension of reserve
requirements of the Federal Reserve banks, under the terms of section 11(c) of the Federal Reserve Act, necessitated by reason of
operations under this section, shall require the imposition of the
graduated tax upon any deficiency in reserves as provided in said
section 11(c). Nor shall it require any automatic increase in the
rates of interest or discount charged by any Federal Reserve bank,
as otherwise specified in that section. The Federal Reserve Board,
with the approval of the Secretary of the Treasury, may require
the Federal Reserve banks to take such action as may be necessary,
in the judgment of the Board and of the Secretary of the Treasury,
to prevent undue credit expansion.
(b) If the Secretary, when directed by the President, is unable
to secure the assent of the several Federal Reserve banks and the
Federal Reserve Board to the agreements authorized in this section,
or if operations under the above provisions prove to be inadequate
to meet the purposes of this section, or if for any other reason




24

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10.1

additional measures are required in the judgment of the President
tc meet such purposes, then the President is authorized—
(1) To direct the Secretary of the Treasury to cause to be issued
in such amount or amounts as he may from time to time order,
United States notes, as provided in the Act entitled "An Act to
authorize the issue of United States notes and for the redemption
of funding thereof and for funding the floating debt of the United
States", approved February 25, 1862, and Acts supplementary
thereto and amendatory thereof, in the same size and of similar £olor
to the Federal Reserve notes heretofore issued and in denominations
of $1, $5, $10, $20, $50, $100, $500, $1,000, and $10,000; but notes
issued under this subsection shall be issued only for the purpose of
meeting maturing Federal obligations to repay sums borrowed by
the United States and for purchasing United States bonds and
other interest-bearing obligations of the United States: Provided,
That when any such notes are used for such purpose the bond or
other obligation so acquired or taken up shall be retired and canceled. Such notes shall be issued at such times and in such amounts
as the President may approve but the aggregate amount of such
notes outstanding at any time shall not exceed $3,000,000,000. There
is hereby appropriated, out of any money in the Treasury not otherwise appropriated, an amount sufficient to enable the Secretary of
the Treasury to retire and cancel 4 per centum annually of such
outstanding notes, and the Secretary of the Treasury is hereby
directed to retire and cancel annually 4 per centum of such outstanding notes. Such notes and all other coins and currencies heretofore or hereafter coined or issued by or under the authority of
the United States shall be legal tender for all debts public and
private.
(2) By proclamation to fix the weight of the gold dollar in grains
nine tenths fine and also to fix the weight of the silver dollar in
grains nine tenths fine at a definite fixed ratio in relation to the gold
dollar at such amounts as he finds necessary from his investigation
to stabilize domestic prices or to protect the foreign commerce
against the adverse effect of depreciated foreign currencies, and
to provide for the unlimited coinage of such gold and silver at
the ratio so fixed, or in case the Government of the United States
enters into an agreement with any government or governments
under the terms of which the ratio between the value of gold and
other currency issued by the United States and by any such government or governments is established, the President may fix the weight
of the gold dollar in accordance with the ratio so agreed upon, and
such gold dollar, the weight of which is so fixed, shall be the standard
unit of value, and all forms of money issued or coined by the United
States shall be maintained at a parity with this standard and it
shall be the duty of the Secretary of the Treasury to maintain such
parity, but in no event shall the weight of the gold dollar be fixed
so as to reduce its present weight by more than 50 per centum.
SEC. 44. The Secretary of the Treasury, with the approval of the
President, is hereby authorized to make and promulgate rules and
regulations covering any action taken or to be taken by the President under subsection (a) or (b) of section 43.




fPUB. 10.1

25

SEC. 45. (a) The President is authorized, for a period of six
months from the date of the passage of this Act, to accept silver in
payment of the whole or any part of the principal or interest now
due, or to become due within six months after such date, from any
foreign government or governments on account of any indebtedness
to the United States, such silver to be accepted at not to exceed the
price of 50 cents an ounce in United States currency. The aggregate value of the silver accepted under this section shall not exceed
$200,000,000.
(b) The silver bullion accepted and received under the provisions
of this section shall be subject to the requirements of existing law
and the regulations of the mint service governing the methods of
determining the amount of pure silver contained, and the amount
of the charges or deductions, if any, to be made; but such silver
bullion shall not be counted as part of the silver bullion authorized
or required to be purchased and coined under the provisions of
existing law.
(c) The silver accepted and received under the provisions of this
section shall be deposited in the Treasury of the United States, to
be held, used, and disposed of as in this section provided.
(d) The Secretary of the Treasury shall cause silver certificates
to be issued in such denominations as he deems advisable to the
total number of dollars for which such silver was accepted in payment of debts. Such silver certificates shall be used by the Treasurer
of the United States in payment of any obligations of the United
States.
(e) The silver so accepted and received under this section shall
be coined into standard silver dollars and subsidiary coins sufficient,
in the opinion of the Secretary of the Treasury, to meet any demands
for redemption of such silver certificates issued under the provisions
of this section, and such coins shall be retained in the Treasury for
the payment of such certificates on demand. The silver so accepted
and received under this section, except so much thereof as is coined
under the provisions of this section, shall be held in the Treasury
for the sole purpose of aiding in maintaining the parity of such certificates as provided in existing law. Any such certificates or reissued certificates, when presented at the Treasury, shall be redeemed
in standard silver dollars, or in subsidiary silver coin, at the option
of the holder of the certificates: Provided, That, in the redemption
of such silver certificates issued under this section, not to exceed one
third of the coin required for such redemption may in the judgment
of the Secretary of the Treasury be made in subsidiary coins, the
balance to be made in standard silver dollars.
(f) When any silver certificates issued under the provisions of this
section are redeemed or received into the Treasury from any source
whatsoever, and belong to the United States, they shall not be
retired, canceled, or destroyed, but shall be reissued and paid out
again and kept in circulation; but nothing herein shall prevent the
cancelation and destruction of mutilated certificates and the issue
of other certificates of like denomination in their stead, as provided
by law.
(g) The Secretary of the Treasury is authorized to make rules and
regulations for carrying out the provisions of this section.




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IPUB.10.)

SEC. 46. Section 19 of the Federal Reserve Act, as amended, is
amended by inserting immediately after paragraph (c) thereof the
following new paragraph:
" Notwithstanding the foregoing provisions of this section, the
Federal Reserve Board, upon the affirmative vote of not less than
five of its members and with the approval of the President, may
declare that an emergency exists by reason of credit expansion, and
may by regulation during such emergency increase or decrease from
time to time, in its discretion, the reserve balances required to be
maintained against either demand or time deposits."
Approved May 12 th 1933





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102