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[P u b lic —

No. 75— 73d C o n g r e s s ]
[H.R. 5790]
AN ACT

To provide for organizations within the Farm Credit Administration to make
loans for the production and marketing of agricultural products, to amend
the Federal Farm Loan Act, to amend the Agricultural Marketing Act, to
provide a market for obligations of the United States, and for other purposes.

Be it enacted ~by the Senate and House of Representatives of the
United States of America in Congress assembled,
TITL E I
S e c tio n
1933.”

1. This Act shall be known as the “ Farm Credit Act of

E S T A B L IS H M E N T

P R O D U C T IO N

C R E D IT

C O R P O R A T IO N S

AND

BANKS

FOR

C O O P E R A T IV E S

Sec. 2. The Governor of the Farm Credit Administration, here
inafter in this Act referred to as the “ governor ”, is authorized and
directed to organize and charter twelve corporations to be known
as “ Production Credit Corporations ” and twelve banks to be known
as “ Banks for Cooperatives.” One such corporation and one such
bank shall be established in each city in which there is located a
Federal land bank. The directors of the several Federal land banks
shall be ex officio the directors of the respective Production Credit
Corporations and Banks for Cooperatives. Such directors shall have
power, subject to the approval of the governor, to employ and fix the
compensation of such officers and employees of such corporations
and banks as may be necessary to carry out the powers and duties
conferred upon such corporations and banks under this Act.
CHARTERS AN D

BYLAW S

Sec. 3. The charters of the Production Credit Corporations and
the Banks for Cooperatives shall be granted by the governor upon
application of the directors of the Federal land bank of the proper
district, and applications and charters shall be in such form as the
governor shall prescribe. The directors shall have power, subject
to the approval of the governor, to adopt such bylaws as may be
necessary for the conduct of the business of the corporations and
banks.
C A P I T A L O F P R O D U C T IO N C R E D IT C O R P O R A T IO N S

S ec. 4. The capital stock of each Production Credit Corporation
shall be in such amount as the governor determines is required for
the purpose of meeting the credit needs of the district to be served
by such corporation, and such amount may be increased or decreased
from time to time by the governor in accordance with such credit

[ P u b . 75.]

needs. Such capital stock shall be divided into shares of $100 each.
The initial capital stock of each such'corporation shall be $7,500,000,
which shall be subscribed for by the governor and held by him on
behalf of the United States. Payments on subscriptions to stock
by the governor shall be subject to call in whole or in part by the
board of directors of the corporation with the approval of the
governor. The governor shall make such payments out of the
revolving fund created in section 5. The stock ownership of the
United States in such corporation shall be evidenced by such means
as the governor shall determine.
R E V O L V IN G

FUND

AND

A P P R O P R IA T IO N

S ec . 5. (a) There is hereby created a revolving fund of not to
exceed $120,000,000 which shall be made up as follows :

(1) The Reconstruction Finance Corporation is authorized and
directed to make available to the Governor of the Farm Credit
Administration all unobligated balances of the following funds and
all sums heretofore returned or released to the corporation from such
funds :
(A) Any balances of funds for, and ail collections on loans
by, the Secretary of Agriculture pursuant to section 2 of the
Reconstruction Finance Corporation Act, as amended;
(B) All collections on loans made or to be made pursuant to
the Act of February 4, 1933 (Public, Numbered 327, Seventysecond Congress) ;
(C) All balances of funds authorized and directed to be made
available to the Secretary of Agriculture by such Act and not
used for loans pursuant thereto; and
(D) Any balances of the funds originally directed to be allo
cated and made available to the Secretary of Agriculture by
such Acts except as expended pursuant to subsection (e) of
section 201 of the Emergency Relief and Construction Act of
1932.
(2) There are hereby made available to the Governor of the Farm
Credit Administration all unobligated balances of appropriations
and funds available thereunder to enable the Secretary of Agricul
ture to make advances or loans under the following Acts and resolu
tions, and all repayments of such advances and loans : March 3, 1921
(41 Stat. 1347), March 20, 1922 (42 Stat. 467), April 26, 1924 (43
Stat. 110), February 28, 1927 (44 Stat. 1251), February 25, 1929
(45 Stat. 1306), as amended May 17, 1929 (46 Stat. 3), March 3,
1930 (46 Stat. 78, 79), December 20,1930 (46 Stat. 1032), as amended
February 14, 1931 (46 Stat. 1160), and February 23, 1931 (46 Stat.
1276), and Public Resolution Numbered 11, Seventy-second Congress,
approved March 3, 1932.
(3) There is hereby authorized to be appropriated the sum of
$40,000,000 out of any money in the Treasury not otherwise
appropriated.
(b)
There is hereby authorized to be appropriated the sum of
$2,000,000, which shall remain available until expended, for all neces
sary administrative expenses in connection with the establishment
and supervision of the Production Credit Corporations and the
Production Credit Associations.

[P u b . 75.]

(c) The authority of the Governor of the Farm Credit Adminis
tration to allocate and expend opt of the funds covered by subsection
(a) of this section such amounts as he shall deem necessary for sal
aries, expenses, and all other administrative expenditures in the
execution of the functions for which such funds have hitherto been
available shall not be deemed to be restricted by this section.
(d) The authority to make loans during the calendar year 1933
pursuant to the Act of February 4, 1933 (Public Numbered 327,
Seventy-second Congress), as amended, out of funds made available
by that Act shall not be deemed to be restricted by this section.
ST O C K O W N E R S H I P O F P R O D U C T IO N
C R E D IT

C R E D IT C O R P O R A T IO N S I N

P R O D U C T IO N

A S S O C IA T IO N S

Sec. 6. (a) Each Production Credit Corporation shall have power
to invest its funds in stock of production credit associations as
provided in this section. Such corporation is authorized to subscribe
and pay for class A stock in each Production Credit Association
located in the district served by such corporation in amounts
sufficient to maintain the amount of class A stock held by it and other
holders of class A stock equal, as nearly as may be, to 20 per centum
of the volume of loans made or to be made by such association, as
estimated by the corporation, but at no time shall the amount of
class A stock outstanding be less than $5,000 except with the consent
of the association. Notwithstanding the provisions of the preceding
sentence, (1) the governor, under rules and regulations prescribed by
him, may permit a Production Credit Corporation to maintain the
class A holdings of stock by the corporation and other investors at
such amount, in excess of 20 per centum of such loans, as may be
necessary, and (2) the corporation may at any time require the
association to retire and cancel stock held by the corporation in such
association, if, in the judgment of the corporation, the association
has resources available therefor.
(b) Under such rules and regulations as may be prescribed by the
governor and subject to such restrictions and limitations as he may
prescribe, each Production Credit Corporation is authorized to
subscribe and pay for stock in production credit associations not
organized under this Act if such associations are controlled by
cooperative associations as defined in section 55. Only stock which is
preferred as to assets on liquidation and is entitled to participate in
dividend distributions without discrimination may be subscribed for.
The amount of the stock subscribed for by any Production Credit
Corporation in any such association shall not at any one time exceed
75 per centum of the total paid-in capital of such association.
(c) The amount of the excess of earnings on stock held by the
corporation above amounts necessary to pay operating expenses and
restore losses and impairment of capital, if any, of the corporation
shall be devoted to the creation and maintenance of a surplus equal
to at least 25 per centum of the paid-in capital of the corporation.
The amount of the surplus shall be invested as the governor shall
prescribe in direct obligations of the United States or in class A
stock of Production Credit Associations, or both.
(d) The amount of such excess of earnings not required in order
to comply with the provisions of subsection (c) shall be paid into

[P u b . 75.}

the revolving fund heretofore authorized. Stock held by the gover
nor in the Production Credit Corporation shall be retired upon
such payment in an amount equal to the amount of such payment.
T IT L E II — PRODUCTION CREDIT ASSO CIATION S
ESTABLISHMENT OF PRODUCTION

CREDIT ASSOCIATIONS

S e c t i o n 20. The governor is authorized and directed to organize
and charter corporations to be known as “ Production Credit
Associations.” Such associations may be organized by ten or more
farmers desiring to borrow money under the provisions of this
title. Such individuals shall enter into articles of incorporation
which shall specify in general terms the objects for which the asso
ciation is formed and the powers to be exercised by it in carrying
out the functions conferred upon it by this Act. Such articles shall
be signed by the individuals uniting to form the association and a
copy thereof shall be forwarded to the Production Credit Corpora
tion of the district, and such copy shall be filed and preserved in
its office. The governor may, for good cause shown, deny a charter
to such individuals. Upon the approval of such articles by the
governor, the association shall become as of the date of such approval
a body corporate. The governor shall have power, under rules and
regulations prescribed by him, or by prescribing the terms of the
charter of the association, or both, to provide for the organization,
management, and conduct of the business of the association; and the
power of the governor shall extend to prescribing the amount of the
stock of such association; fixing the territory within which its opera
tions may be carried on; fixing the method of election and appoint
ment of, and the amount and payment of the compensation of,
directors, officers, and employees; fixing the maximum amount of
individual loans which may be made; prescribing the conditions
under which the stock may be retired; and providing for the con
solidation of two or more such associations. The governor may,
at any time, direct such changes in the charter of any such asso
ciation as he finds necessary in accomplishing the purposes of this
title. Bylaws of any such association may be adopted by the direc
tors but shall not be valid unless approved by the governor.
STOCK OF PRODUCTION CREDIT ASSOCIATIONS

S ec . 21. The stock of such associations shall be divided into shares
of $5 each; and there shall be two classes of such stock: (1) Class
A stock which is to be held by Production Credit Corporations, and
which may be purchased and held by investors, and (2) class B
stock which may be purchased only by farmer borrowers from the
association and individuals eligible to become borrowers. Class B
stock only shall be entitled to voting rights but each holder of such
stock shall be entitled to no more than one vote. No class B stock,
or any interest therein or right to receive dividends thereon, shall
be transferred by act of parties or operation of law except to another
farmer borrower or an individual eligible to become a borrower, and
then only with the approval of the directors of the association. Each
holder of class B stock, within two years after he has ceased to be

I P u b . 75.]

a borrower, shall exchange such class B stock at the fair book value
(not to exceed par) thereof, as determined by the association, for
class A stock. All stock shall share in dividend distributions with
out preference, but the directors of the association may, in their
discretion, apply the amount of any dividend payable to a holder
of class B stock to any indebtedness of such holder to the association.
Class A stock shall be preferred as to assets of the association upon
liquidation. During such time as any Production Credit Corporation
is a holder of any stock of any such association, the appointment
or election of directors, the secretary-treasurer, and the loan com
mittee of such association shall be subject to the approval of the
president of the Production Credit Corporation and during such
time any such director, secretary-treasurer, or other officer may, at
any time, be removed by the president of the Production Credit
Corporation.
E A R N IN G S

O F P R O D U C T IO N

C R E D IT A S S O C I A T I O N S

Sec. 22. Each Production Credit Association shall, at the end of
its fiscal year, apply the amount of its earnings in excess of operat
ing expenses during such fiscal year, first, to making up any losses
in excess of its reserve for bad and doubtful debts; second, to the
restoration of the amount of the impairment, if any, of capital; third,
to the creation and maintenance of a reserve account for bad and
doubtful debts, the amount of which account shall be prescribed by
the Production Credit Corporation; and fourth, to the creation and
maintenance of a guaranty fund equal to at least 25 per centum of
the paid-in capital of the association. Any sums remaining may,
with the approval of the Production Credit Corporation, be devoted
to the payment of dividends but no rate of dividend in excess of 7
per centum per annum shall be paid. Sums in the guaranty fund
herein provided for shall be invested subject to such rules and regu
lations as may be prescribed by the Production Credit Corporation.
Sec. 23. Each Production Credit Association shall, under such
rules and regulations as may be prescribed by the Production Credit
Corporation of the district with the approval of the governor, invest
its funds and make loans to farmers for general agricultural pur
poses, but such part of its funds as is represented by the guaranty
fund provided for in section 22 shall not be devoted to making loans
to farmers. Such loans shall be made on such terms and conditions,
at such rates of interest, and with such security as may be prescribed
by the Production Credit Corporation. No loan shall be made for
a less amount than $50, nor shall any one borrower be indebted to
the association at any one time in an amount in excess of 20 per
centum of the capital and guaranty fund of the association or, if the
loan is secured by collateral approved by the Corporation, in an
amount in excess of 50 per centum of the capital and guaranty fund,
but loans may be made to any borrower in an amount in excess of 50
per centum of the capital and guaranty fund if the loan is approved
by the Production Credit Commissioner of the Farm Credit Admin
istration. Borrowers shall be required to own, at the time the loan
is made, class B stock in an amount equal in fair book value (not
to exceed par), as determined by the association, to $5 per $100 or
fraction thereof of the amount of the loan. Such stock shall not be

[ P u b . 75.1

canceled or retired upon payment of the loan but may be transferred
or exchanged as provided in section 21.
S ec . 24. Production Credit Associations doing business under this
Act are authorized to borrow from, and rediscount paper with, Fed
eral Intermediate Credit Banks subject to the restrictions, limita
tions, and conditions applicable under title I I of the Federal Farm
Loan Act, as amended (U.S.C., title 12, ch. 8). Except with the
approval of the Governor, Production Credit Associations shall not
have the power to borrow from or rediscount paper with any other
bank or agency.
T IT L E I I I — CENTRAL B A N K FOR COOPERATIVES
E S T A B L IS H M E N T

BANK

S e c t i o n 30. The governor is authorized and directed to organize
and charter a corporation to be known as the “ Central Bank for
Cooperatives ” with its principal office in the District of Columbia
and such other offices as in the opinion of the governor may be
necessary.
B OARD O F

CENTRAL

BANK

S ec. 31. (a) The board of directors of the Central Bank for
Cooperatives shall consist of seven members, one of whom shall be
the Cooperative Bank Commissioner of the Farm Credit Administra
tion, who shall be chairman of the board of directors. The other
six directors shall be appointed by the governor, of whom the successsors of three first appointed shall be appointed from nominees
selected by borrowers as provided in subsection (b). The terms of
the directors first appointed shall be for one, two, and three years
as designated by the governor at the time of appointment and their
successors shall hold their offices during a term of three years, but
a director appointed to fill a vacancy shall hold his office for the
unexpired term of the director whose place he is selected to fill.
Any appointed director may at any time be removed for cause by
the governor. No compensation shall be paid any director as a
director of the corporation but the corporation, subject to the
approval of the governor, may allow directors a reasonable per diem
and expenses.
(b) The successors of three of the directors first appointed shall
be selected one each year by the governor from among individuals
nominated by borrowers (except Banks for Cooperatives). The
governor shall, not less than sixty days prior to the end of the term
of any director whose successor is to be appointed from among
nominees as herein provided, or as soon as practicable after a
vacancy occurs in the office of such director other than by the expira
tion of his term, cause notice of the vacancy to be sent to each bor
rower eligible to vote for nominees. Each such borrower shall be
eligible to cast one vote. The governor shall not count any ballot
received after the expiration of thirty days after the sending of
notice. From those (not exceeding three) receiving the highest
number of votes, as shown by his count, the governor shall appoint
the director.

[Pub . 75.]

PO W ER S OF C H A I R M A N

AND

BOARD

Sec. 32. The chairman of the board of the corporation shall be the
executive officer of the corporation and the powers of the board of
directors shall be such powers as may be prescribed in the charter
and bylaws.
C A P IT A L S T O C K

OF C E N T R A L B A N K

S ec. 33. The capital stock of the central bank shall be in such
amount as the governor determines is required for the purpose of
meeting the credit needs of eligible borrowers from the bank under
this title, and the governor may from time to time increase or decrease
such amount, subject to the limitations contained in sections 35 and
37, in accordance with such needs. The stock of such bank shall be
divided into shares of $100 each. Out of the revolving fund created
under section 6 of the Agricultural Marketing Act, as amended, the
governor, on behalf of the United States, shall subscribe for and
make payments for stock in the Central Bank and such payments
shall be subject to call in whole or in part by the chairman of the
board of the Central Bank with the approval of the governor.
L E N D IN G PO W ER OF C E N T R A L B A N K

Sec. 34. The Central Bank is authorized to make loans to cooper
ative associations, as defined in the Agricultural Marketing Act, as
amended, including amendments made in Title V of this Act, for
any of the purposes and subject to the conditions and limitations
set forth in such Act, as so amended, and to make loans, by way of
discount or otherwise and subject to such terms and conditions as
may be prescribed by the chairman of the board of the Central Bank,
to Banks for Cooperatives established under section 2 of this Act.
S T O C K S U B S C R IP T IO N S O F B O R R O W E R S F R O M C E N T R A L B A N K

(a) Cooperative associations borrowing from the Central
Bank shall be required to own, at the time the loan is made, an
amount of stock of the bank equal in fair book value (not to exceed
par), as determined by the bank, to $100 per $2,000 or fraction
thereof of the amount of the loan. Upon discharge of the loan the
stock held by the borrowing association shall be retired and canceled
and the association shall be paid therefor, or in case the stock sub
scription is included in the amount of the loan there shall be credited
on the final payment of the loan, an amount equal to the amount paid
for the stock or loaned to subscribe for the stock, as the case may be,
minus the pro rata impairment, if any, of capital and guaranty fund
of the Central Bank, as determined by the chairman of the board
of the Central Bank.
(b) In any case in which a cooperative association applying for
a loan is not authorized, under the law of the State in which it is
organized, to subscribe for stock in the Central Bank, the bank shall,
in lieu of stock subscription, require the borrowing association to pay
into a guaranty fund, or the bank may retain out of the amount of
the loan and credit to the guaranty fund, an amount equal to the
amount which the borrowing association would have been required
to own in stock if such association had been authorized to hold such
Sec. 35.

[ P u b . 75 ]

stock. Upon discharge of its loan, the provisions of the last sen
tence of subsection (a) shall apply with respect to sums of such asso
ciation in the guaranty fund in the same manner as if such sums were
represented by stock.
E A R N IN G S A N D

R ESER VES OF C E N T R A L B A N K

Sec. 36. The Central Bank for Cooperatives shall, at the end of
its fiscal year, apply the amount of its earnings in excess of operat
ing expenses during such fiscal year, first, to making up any losses
incurred; second, to the restoration of the amount of the impairment,
if any, of capital and guaranty fund as determined by the chairman
of the board; and at least 25 per centum of the remainder of such
excess of earnings shall be applied to the creation and maintenance
of a surplus equal to at least 25 per centum of the amount of the
capital and guaranty fund. Any sums remaining may, with the
approval of the chairman of the board, be devoted to the payment
of dividends. Subscribers to the guaranty fund shall be entitled to
dividends in the same amounts as subscribers to stock. No rate of
dividend in excess of 7 per centum per annum shall be paid. Divi
dends on stock held by the governor, when paid, shall be credited to
the revolving fund created under section 6 of the Agricultural
Marketing Act, as amended.
deben tu r es

of c en tr al

b a n k

S ec. 37. The Central Bank is authorized to issue debentures, but
the amount of debentures which may be outstanding may not exceed
at any one time five times the paid-in capital and surplus of the
bank. Such debentures shall be issued at such times and subject to
such terms and conditions as the board of directors shall determine
but shall bear such interest rates as may be fixed by the chairman of
the board. Such debentures shall be secured by collateral which
shall be at least equal in value to the amount of debentures outstand
ing and which shall consist of cash, direct obligations of the United
States, or notes or other obligations discounted or purchased or rep
resenting loans made under section 34. The provisions of law
applicable to the preparation and issue of Federal intermediate
credit bank debentures shall, so far as applicable, govern the prepara
tion and issue of debentures issued under this section. The governor
shall appoint a custodian of such collateral who shall have power
subject to such rules and regulations as the governor may prescribe
to approve and accept substitutions of collateral.
D IV I S I O N OF L E N D I N G A U T H O R I T Y OF C E N T R A L A N D

R E G I O N A L B A N K S FO R

C O O P E R A T IV E S

S ec. 38. The governor shall, by regulation or by prescribing the
terms of the charters issued to the Central Bank for Cooperatives
and the Banks for Cooperatives, or both, provide such limitations, as
between the two types of banks, on the classes of borrowers to which
loans may be made and the amount of the loans which may be made
to individual borrowers, as will best insure the absence of duplica
tion of effort by the two types of banks and will secure the greatest
efficiency in extending the benefits of this title and Title IV to
borrowers.

IP u b . 75.]

T IT L E IV — BAN KS FOE COOPERATIVES
STOCK

OF B A N K S

S e c t i o n 40. The capital stock of each .Bank for Cooperatives estab
lished under section 2 shall be in such amount as the governor deter
mines is required for the purpose of meeting the credit needs of
eligible borrowers from the bank under this title, and such amount
may be increased or decreased from time to time by the governor in
accordance with such needs. Such stock shall be divided into shares
of $100 each. Out of the revolving fund created under section 6 of
the Agricultural Marketing Act, as amended, the governor, on behalf
of the United States, shall make payments for stock in the banks
and such payments shall be subject to call in whole or in part by the
board of directors of the bank with the approval of the governor.
L E N D I N G P O W E R O F B A N K S FO R C O O P E R A T IV E S

Sec. 41. The Banks for Cooperatives are authorized to make loans
to cooperative associations for any of the purposes and subject to
the conditions and limitations set forth in the Agricultural Mar
keting Act, as amended, including amendments made by Title V of
this Act, and subject to such terms and conditions as may be pre
scribed by the board of the bank with the approval of the governor.
STOCK

S U B S C R IP T IO N S

AND

E A R N IN G S

AND

R ESE R VE S

Sec. 42. The provisions of sections 35 and 36 shall apply in the
case of Banks for Cooperatives in the same manner and to the same
extent as such provisions are applicable to the Central Bank for
Cooperatives, except that powers conferred on the chairman of the
board of the Central Bank shall be exercised by the boards of
directors of the Banks for Cooperatives, subject to the approval of
the governor.
R E T I R E M E N T OF

STOCK

S ec. 43. The governor may at any time require any such bank to
retire and cancel stock held by the governor in such bank, if, in the
judgment of the governor, the bank has resources available therefor,
and amounts received by the governor in any such case shall be
credited to the revolving fund created under section 6 of the
Agricultural Marketing Act, as amended.

TITLE V — AMENDMENTS TO AG RICULTURAL M AR K ET
ING ACT
S e c t i o n 50. (a) The following provisions of the Agricultural Mar
keting Act, as amended, are hereby repealed :
(1) Section 3 (relating to Advisory Commodity Committees) ;
(2) Paragraph (4) of section 5 (relating to powers of the Farm
Board to investigate overproduction) ;
(3 ) Paragraph (5) of section 5 (relating to miscellaneous investi
gations by the Farm Board) ;
(4) Paragraph (3 ) of subsection (a) of section 7 (relating to
loans to assist in forming clearing house associations) ;
Pub.

N o. 75------ 2

[P ub . 75.]

(5) Paragraph (4) of subsection (a) of section 7 (relating to
education in the advantages of cooperative marketing) ;
(6) Paragraph (5) of subsection (a) of section 7 (relating to
loans to enable cooperatives to advance a greater share of the market
price of commodities than is practicable under other credit facilities) ;
(7) Section 10 (authorizing the Farm Board to assist in forming
clearing house associations) ; and
(8) Section 11 (authorizing the Farm Board to enter into price
insurance agreements).
(b)
The repeal of section 7 (a) (5) shall not be construed to pro
hibit the extension, renewal, or refinancing of any loan made there
under and outstanding on the date of the enactment of this Act, but
loans to extend, renew, or refinance any such loan shall bear interest
rates as determined under section 8 (a) of the Agricultural Market
ing Act as amended by section 54 of this Act.
Sec. 51. Paragraph (1) of subsection (a) of section 7 of the Agri
cultural Marketing Act, as amended, is amended to read as follows :
“ (1) the effective merchandising of agricultural commodities and
food products thereof and the financing of its operations ;”
Sec. 52. Paragraph (2) of subsection (a) of section 7 of the Agri
cultural Marketing Act, as amended, is amended to read as follows :
“ (2) the construction or acquisition by purchase or lease, or
refinancing the cost of such construction or acquisition, of physical
marketing facilities for preparing, handling, storing, processing, or
merchandising agricultural commodities or their food products;”
S ec. 53. Subsection (c) of section 7 of the Agricultural Marketing
Act, as amended, is amended to read as follows :
“ (c) Loans for the construction or acquisition by purchase or
lease of physical facilities, or for refinancing the cost of such con
struction or acquistion,1 shall be subject to the following conditions :
“ (1) No such loan shall be made in an amount in excess of 60
per centum of the value of the facilities.
“ (2) No loan for the purchase or lease of such facilities shall be
made unless the Governor of the Farm Credit Administration finds
that the purchase price or rent to be paid is reasonable.”
S ec . 54. Subsection (a) of section 8 of the Agricultural Marketing
A c t is amended to read as follows :

“ (a) Loans to any cooperative association shall bear such rates
of interest as the Governor of the Farm Credit Administration shall
by regulation prescribe, but in no case shall the rate be less than
3 per centum per annum or more than 6 per centum per annum on
the unpaid principal. In fixing such rates of interest, the governor
shall fix such rates as he deems the needs of the lending agencies
require and in the case of loans made for the purposes of section
7 (a) (1) the rate shall, as nearly as practicable, conform to a rate
1 per centum per annum in excess of the Federal Intermediate Credit
Bank discount rate at the time the loan is made, and in the case of
loans made for the purposes of section 7 (a) (2) the rate of interest
shall, as nearly as practicable, conform to the prevailing rate on
mortgage loans made to members of national farm-loan associations
at the time the loan is made.”

1 So in original.

[P ub . 75.J

S ec. 55. Subsection (a) of section 15 of the Agricultural Market
ing Act, as amended, is amended to read as follows:
44(a) As used in this Act the term 4cooperative association 5 means
any association in which farmers act together in collectively process
ing, preparing for market, handling and/or marketing the farm
products of persons so engaged and also means any association in
which farmers act together in collectively purchasing, testing,
grading, and/or processing their farm supplies: Provided, hoivever,
That such associations are operated for the mutual benefit of the
members thereof as such producers or purchasers and conform to
one or both of the following requirements:
“ First. That no member of the association is allowed more than
one vote because of the amount of stock or membership capital he
may own therein; and
“ Second. That the association does not pay dividends on stock
or membership capital in excess of 8 per centum per annum.
“And in any case to the following:
“ Third. That the association shall not deal in the products of or
supplies for non-members to an amount greater in value than such
as are handled by it for members.”

T IT L E V I— PROVISIONS COMMON TO CORPORATIONS
CREATED UNDER ACT
g en er al

corporate

pow ers

S e c tio n 60. The Central Bank for Cooperatives, and the Produc
tion Credit Corporations, the Production Credit Associations, and
the Banks for Cooperatives, organized under this Act, shall have
succession, until dissolved in accordance with this or any other Act
of Congress; shall have power to sue and be sued in any court, to
adopt and use a corporate seal, to make contracts, to acquire, hold,
and dispose of real and personal property necessary and incident to
the conduct of their business, to prescribe fees and charges (which in
any case shall be subject to the rules and regulations prescribed by
the governor) for loans and other services; and shall have such other
powers necessary and incident to carrying out their powers and
duties under this or any other Act of Congress as may be provided
by the governor in their charters or in any amendments thereto.
Each such bank, association, or corporation shall, for the purposes
of jurisdiction, be deemed a citizen of the State or District within
which its principal office is located. No district court of the United
States shall have jurisdiction of any action or suit by or against any
Production Credit Corporation or Production Credit Association
upon the ground that it was incorporated under this Act or that
the United States owns a majority of the stock in it, nor shall any
district court of the United States within the land bank district served
by such association or corporation have jurisdiction by removal or
otherwise of any suit by or against any such association or cor
poration except in cases by or against the United States or by or
against any officer of the United States and except in cases by or
against any receiver of any such corporation or association appointed
in accordance with section 65.

[P u b . 75.J

E X A M IN A T IO N S

S ec. 61. A t least once each year and at such other times as the
governor deems necessary, the Central Bank for Cooperatives, and
each Production Credit Corporation, Production Credit Association,
and Bank for Cooperatives, organized under this Act, shall be
examined by examiners designated by the governor. The governor
shall assess the cost of such examinations against the bank, associa
tion, or corporation examined, which shall pay such costs to the
governor. The amounts so assessed and unpaid shall be a prior lien
on all assets of the bank, association, or corporation examined except
on assets pledged to secure loans.
F IS C A L

AGENTS

OF U N IT E D

STATES

Sec. 62. The Central Bank for Cooperatives, the Production Credit
Corporations, Production Credit Associations, and Banks for Coop
eratives, organized under this Act, when designated for that purpose
by the Secretary of the Treasury, shall act as fiscal agents of the
United States Government and when acting as such shall perform
such duties as shall be prescribed by the Secretary of the Treasury.
S ec. 63. The Central Bank for Cooperatives, and the Production
Credit Corporations, Production Credit Associations, and Banks for
Cooperatives, organized under this Act, and their obligations, shall
be deemed to be instrumentalities of the United States, and as such,
any and all notes, debentures, bonds, and other such obligations
issued by such banks, associations, or corporations shall be exempt
both as to principal and interest from all taxation (except surtaxes,
estate, inheritance, and gift taxes) now or hereafter imposed by the
United States or by any State, Territorial, or local taxing authority.
Such banks, associations, and corporations, their property, their
franchises, capital, reserves, surplus, and other funds, and their
income, shall be exempt from all taxation now or hereafter imposed
by the United States or by any State, Territorial, or local taxing
authority; except that any real property and any tangible personal
property of such banks, associations, and corporations shall be
subject to Federal, State, Territorial, and local taxation to the same
extent as other similar property is taxed. The exemption provided
herein shall not apply with respect to any Production Credit Asso
ciation or its property or income after the stock held in it by the
Production Credit Corporation has been retired, or with respect to
the Central Bank for Cooperatives, or any Production Credit Cor
poration or Bank for Cooperatives, or its property or income after
the stock held in it by the United States has been retired.
UNLAW FUL

ACTS

AND

P E N A L T IE S

S ec. 64. (a) Whoever makes any material representation know
ing it to be false, or whoever willfully overvalues any property or
security, for the purpose of influencing in any way the action of the
Farm Credit Administration or any division, officer, or employee
thereof, or of any corporation organized under this Act, or in which
a Production Credit Corporation organized under this Act holds
stock, or of any regional agricultural credit corporation established

[P u b . 75.]

pursuant to subsection (e) of section 201 of the Emergency Relief
and Construction Act of 1932,i upon any application, advance, dis
count, purchase or repurchase agreement, or loan, or any change
or extension of any of the same, by renewal, deferment of action
or otherwise, or the acceptance, release, or substitution of security
therefor, shall be punished by a fine of not more than $5,000, or by
imprisonment for not more than two years, or both.
(b) Whoever (1) falsely makes, forges, or counterfeits any note,
debenture, bond, or other obligation, coupon, or paper in imitation of
or purporting to be a note, debenture, bond, or other obligation,
coupon, or paper issued by the Farm Credit Administration or
by any corporation referred to in subsection (a) of this section; or
(2) passes, utters, or publishes, or attempts to pass, utter, or publish,
any false, forged, or counterfeited note, debenture, bond, or other
obligation, coupon, or paper, purporting to have been issued by
the Farm Credit Administration or by any such corporation, know
ing the same to be false, forged, or counterfeited; or (3) falsely
alters any note, debenture, bond, or other obligation, coupon, or
paper issued or purporting to have been issued by the Farm Credit
Administration or by any such corporation; or (4) passes, utters,
or publishes, or attempts to pass, utter, or publish, any of the same
as true, knowing it to be falsely altered or spurious, shall be punished
by a fine of not more than $10,000, or by imprisonment for not more
than five years, or both.
(c) Whoever, being an employee, officer, or agent of the Farm
Credit Administration or connected in any capacity with any cor
poration referred to in subsection (a) of this section, (1) embezzles,
abstracts, purloins, or willfully misapplies any moneys, funds,
securities, or other things of value, whether belonging to the Farm
Credit Administration or such corporation or pledged or otherwise
intrusted to the same; or (2) with intent to defraud the United
States, or any such corporation, or any other body politic or cor
porate, or any individual, or to deceive any officer, auditor, or exam
iner of the Farm Credit Administration or of any such corporation,
makes any false entry in any book, report, or statement of or to the
Farm Credit Administration or any such corporation, or draws any
order, or issues, puts forth, or assigns any note, debenture, bond, or
other obligation, or draft, mortgage, judgment, or decree thereof;
or (3) with intent to defraud the United States or any corporation
referred to in subsection (a) of this section, participates or shares
in or receives directly or indirectly any money, profit, property, or
benefits through any transaction, loan, commission, contract, or any
other act of any such corporation, shall be punished by a fine of not
more than $10,000, or by imprisonment for not more than five years,
or both.
(d) Whoever knowingly, with intent to defraud the United
States or any corporation referred to in subsection (a) of this seer
tion, shall conceal, remove, dispose of, or convert, to his own use or
to that of another, any property mortgaged or pledged to, or held
by, the Farm Credit Administration, or any such corporation, as
security for any obligation, shall be punished by a fine of not more
than $5,000, or by imprisonment for not more than two years, or both.

[P u b . 75.1

(e) The provisions of sections 112, 113, 114, 115, 116, and 117 of
the Criminal Code of the United States (U.S.C., title 18, secs. 202 to
207, inclusive), in so far as applicable, are extended to apply to con
tracts or agreements made by the Farm Credit Administration, its
divisions, officers, and employees, and by the corporations referred
to in subsection (a) of this section, which, for the purposes hereof,
shall be held to include advances, loans, discounts, and purchase and
repurchase agreements ; extensions and renewals thereof ; and accept
ances, releases, and substitutions of security therefor.
(f) Whoever conspires with another to accomplish any of the
acts made unlawful by the preceding provisions of this section shall,
on conviction thereof, be subject to the same fine or imprisonment,
or both, as is applicable in the case of conviction for doing such
unlawful act.
L IQ U ID A T IO N

Sec. 65. Upon default of any obligation of any Production Credit
Corporation, Production Crédit Association, or regional Bank for
Cooperatives, such bank, association, or corporation may be declared
insolvent and placed in the hands of a receiver by the governor and
proceedings shall thereupon be had in accordance with the provisions
of law relating to the insolvency of national farm-loan associations.
Any such bank, association, or corporation may, with the consent of
the governor, liquidate voluntarily, but only in accordance with such
rules and regulations as the governor may prescribe.
S ec. 66. No director, officer, or employee of the Central Bank for
Cooperatives, or of any Production Credit Corporation, Production
Credit Association, or Bank for Cooperatives shall be paid compen
sation at a rate in excess of $10,000 per annum. No officer or em
ployee of the Farm Credit Administration engaged in carrying out
the provisions of titles I to V I, inclusive, of this Act shall be
paid compensation at a rate in excess of $10,000 per annum.

TITLE V II— AMENDMENTS TO FED ER AL FARM
LOAN ACT
S e c tio n 70. Effective January 1,1934, the fourteenth paragraph of
section 4 of the Federal Farm Loan Act, as amended (U .S .C ., title
12, sec. 683), is amended by adding after the first sentence the fol
lowing: “ Not more than one director of a Federal land bank may
serve the bank or the Farm Credit Administration as an officer or
employee. Except with the approval of the Farm Loan Commis
sioner, no director (other than the director who may be an officer or
emploj^ee) shall receive compensation or allowances for any services
rendered any Federal land bank in his capacity as director for more
than thirty days in any one calendar year exclusive of the period for
which compensation is paid for attendance at directors5 meetings.”
Sec. 70a. (a) Effective one year after the enactment of this Act,
section 4 of the Federal Farm Loan Act, as amended, is amended as
follows :
(1) The ninth paragraph of such section (U.S.C., title 12, sec.
678) is amended to read as follows:
“ The board of directors of every Federal land bank shall be
selected as hereinafter specified and shall consist of seven members.
Three of said directors shall be known as local directors of whom

[ P u b . 75.J

one shall be chosen by and be representative of national farm-loan
associations and borrowers through agencies, one shall be chosen by
and be representative of Production Credit Associations organized
under the Farm Credit Act of 1933, and one shall be chosen by and
be representative of borrowers from regional Banks for Cooperatives
organized under the Farm Credit Act of 1933. Three of the seven
directors shall be known as district directors and shall be appointed
by the Governor of the Farm Credit Administration of whom two
shall represent the public interest and one shall represent national
farm-loan associations and borrowers through agencies and such
director shall be a borrower from a Federal land bank. The terms of
office of local and district directors shall be three years.”
(2) The tenth paragraph of such section (U.S.C., title 12, sec.
679) is amended to read as follows:
“At least two months before an election of a local director the
Land Bank Commissioner shall cause notice in writing to be sent
to those entitled to nominate candidates for such local director. In
the case of an election of a director to represent national farm-loan
associations and borrowers through agencies, such notice shall be
sent to all national farm-loan associations and borrowers through
agencies in the district ; in the case of an election to represent
Production Credit Associations, such notice shall be sent to all
Production Credit Associations in the district; and in the case of a
director to represent borrowers from Banks for Cooperatives, such
notice shall be sent to all cooperatives which are borrowers at the
time of sending notice. Within ten days of receipt of such notice
those entitled to nominate the director shall forward nominations
of residents of the district to the Land Bank Commissioner. The
Land Bank Commissioner shall, from such nominations, then pre
pare a list of candidates for such local director consisting of the ten
nominees receiving the highest number of votes.”
(3) The eleventh paragraph of such section (U.S.C., title 12, sec.
680) is amended to read as follows:
“At least one month before the election of a local director the
Land Bank Commissioner shall mail to each person or organization
entitled to elect the local director the list of the ten candidates nom
inated in accordance with the tenth paragraph of this section. In
the case of an election of a director to represent national farm-loan
associations and borrowers through agencies, the directors of each
farm-loan association shall cast the vote of such association for one
of the candidates on the list. In voting under this section each such
association shall be entitled to cast a number of votes equal to the
number of stockholders of such association and each borrower
through agencies shall be entitled to cast one vote. In voting under
this section each Production Credit Association shall be entitled to
cast a number of votes equal to the number of the class B stockhold
ers of such associations. In voting under this section each cooper
ative which is a holder of stock in a Bank for Cooperatives (except
the Governor of the Farm Credit Administration) shall be entitled
to cast one vote. The votes shall be forwarded to the Land Bank
Commissioner and no vote shall be counted unless forwarded to
him within ten days after the list of candidates is received. In case
of a tie the Land Bank Commissioner shall determine the choice.

[P u b . 75.]

The nominations from which the list of candidates is prepared, and
the votes of the respective voters, as counted, shall be tabulated and
preserved and shall be subject to examination by any candidate for
at least one year after the results of the election is announced.”
(4)
The sixth and seventh sentences of the twelfth paragraph of
such section (U.S.C., title 12, sec. 681) are amended to read as
follows: “ The Governor of the Farm Credit Administration shall
select a director at large for the district who shall hold his office
during a term of three years. Such seventh director may be removed
by the Governor of the Farm Credit Administration at any time.”
(b) Subsection (a) shall apply only to the appointment or elec
tion of the successors of directors of land banks whose regular terms
expire after the effective date of such subsection. The successors of
the first local director whose regular term so expires shall be elected
by and be representative of Production Credit Associations and the
successors of the second local director whose regular term so expires
shall be elected by and be representative of borrowers from Banks
for Cooperatives. The successors of the third local director whose
regular term so expires shall be elected by and be representative of
national farm-loan associations and borrowers through agencies.
Sec. 71. Paragraph “ Sixth” of section 14 of the Federal Farm
Loan Act, as amended, is amended to read as follows:
“ Sixth. To accept as additional security for any loan to any bor
rower under this Act, or any installment on any such loan, any
personal property which is exempt from execution upon judgment
under the laws of the State in which the land with respect to which
the mortgage is given is situated.”
S ec. 72. Notwithstanding the provisions of the fourth paragraph
of section 9 of the Federal Farm Loan Act, as amended (U.S.C., title
12, sec. 744), the shareholders of national farm-loan associations
shall not be held individually responsible for any contract, debt, or
engagement of such association entered into after the date of the
enactment of this Act, but this section shall not be construed to
relieve any other liability with respect to stock held by such share
holders.
Sec. 73. Paragraph “ Second ” of section 12 of the Federal Farm
Loan Act, as amended (U.S.C., title 12, sec. 771), is amended by
inserting after “ exceeding ” where it appears the second time a
comma and the following: “ except with the approval of the
Governor of the Farm Credit Administration,”.
S ec. 74. The first sentence of paragraph “ Sixth ” of section 12 of
the Federal Farm Loan Act, as amended (U.S.C., title 12, sec. 771),
is amended to read as follows:
“ No such loan shall be made to any person who is not at the time,
or shortly to become, engaged in farming operations or to any other
person unless the principal part of his income is derived from farm
ing operations.”
S ec. 75. (a) Paragraph “ Fourth” of section 14 of the Federal
Farm Loan Act, as amended (U.S.C., title 12, sec. 791), is amended
by inserting after “ bonds” the following: “ (including consolidated
bonds issued on its behalf)
(b)
Section 21 of the Federal Farm Loan Act, as amended, is
amended by striking out of the fourth and tenth paragraphs thereof

IP u b . 75.J

(U.S.C., title 12, secs. 874 and 880) the word “ indorsed” wherever
the same appears in said paragraphs.
S ec. 76. (a) Section 201(b) of the Federal Farm Loan Act, as
amended (U.S.C., title 12, sec. 1022), is amended to read as follows:
“ (b) Such institutions shall be established in the same cities as
the twelve Federal Land Banks. The directors of the several Fed
eral Land Banks shall be ex officio directors of the several Federal
Intermediate Credit Banks hereby provided for and shall have
power, subject to the approval of the Governor of the Farm Credit
Administration, to employ and fix the compensation of such officers
and employees of such Federal Intermediate Credit Banks as may
be necessary to carry on the business authorized by this title.”
(b) Paragraph (1) of subsection (a) of section 202 of the Fed
eral Farm Loan Act, as amended (U.S.C., title 12, sec. 1031), is
amended to read as follows :
“ (1) To discount for, or purchase from, any national bank,
and/or any State bank, trust company, agricultural credit corpor
ation, incorporated livestock loan company, savings institution,
cooperative bank, credit union, cooperative association of agricul
tural producers, organized under the laws of any State or of the
Government of the United States, and/or any other Federal Inter
mediate Credit Bank, with its endorsement, any note, draft, bill of
exchange, debenture, or other such obligation the proceeds of which
have been advanced or used in the first instance for any agricultural
purpose or for the raising, breeding, fattening, or marketing of
livestock; and to make loans or advances direct to any such organ
ization, secured by such obligations ; and to discount for, or purchase
from, any Production Credit Association organized under the Farm
Credit Act of 1933 or any production credit association in which a
Production Credit Corporation organized under such Act holds
stock, with its endorsement, any note, draft, bill of exchange, deben
ture, or other such obligation presented by such association, and to
make loans and advances direct to any such association secured by
such collateral as may be approved by the Governor of the Farm
Credit Administration ; ”
(c) Paragraph (3) of subsection (a) of section 202 of the Fed
eral Farm Loan Act, as amended (U.S.C., title 12, sec. 1031), is
amended to read as follows:
“ (3) To make loans or advances direct to any cooperative asso
ciation organized under the laws of any State and composed of per
sons engaged in producing, or producing and marketing, staple
agricultural products, or livestock, if the notes or other such obliga
tions representing such loans are secured by warehouse receipts,
and/or shipping documents covering such products, and/or mort
gages on livestock, and/or such other collateral as may be approved
by the Governor of the F arm Credit Administration : Provided, That
no such loan or advance, when secured only by warehouse receipts
and/or shipping documents, and/or mortgages on livestock, shall
exceed 75 per centum of the market value of the products covered by
said warehouse receipts and/or shipping documents, or of the live
stock covered by said mortgages; and to accept drafts or bills of
exchange issued or drawn by any such association when secured

[Pub . 75.]

by warehouse receipts and/or shipping documents covering staple
agricultural products as herein provided.55
Sec. 77. After the date of the enactment of this Act, no national
agricultural credit corporation shall be formed under the provisions
of the title II of the Agricultural Credits Act of 1923.
Sec. 78. Section 31 of the Federal Farm Loan Act, as amended
(U.S.C., title 12, sec. 986), is amended by adding at the end thereof
a new paragraph, as follows:
“ Any mortgagee who shall knowingly make any false statement
in any paper, proposal, or letter, relating to the sale of any mortgage,
to any Federal land bank under the provisions of section 13 of this
Act, as amended, or any appraiser provided for in this Act who shall
willfully overvalue any land securing such mortgage, shall be
punished by a fine of not exceeding $5,000 or by imprisonment not
exceeding one year, or both.”
Sec. 79. Section 13 of the Federal Farm Loan Act, as amended
(U.S.C., title 12, sec. 781), is amended by adding at the end thereof
the following new paragraph:
“ Fourteenth. To enter into agreements with national farm-loan
associations of the district under the terms of which losses incurred
and gains realized on account of the disposition of lands covered
by a defaulted mortgage indorsed by such association will be
shared equally by the bank and the association.55
TITLE V III— MISCELLANEOUS
S e c t i o n 80. (a) After the date of the enactment of this Act, the
office of Farm Loan Commissioner shall be known as the office of the
Land Bank Commissioner and the Farm Loan Commissioner shall
be known as the Land Bank Commissioner. The provisions of the
third paragraph of section 3 of the Federal Farm Loan Act, as
amended (U.S.C., title 12, sec. 653), prescribing a term of office of
eight years shall not apply to incumbents hereafter appointed to the
office of Land Bank Commissioner.
(b)
There shall be in the Farm Credit Administration three com
missioners who shall be known, respectively, as the Production
Credit Commissioner, the Cooperative Bank Commissioner, and the
Intermediate Credit Commissioner. Such commissioners shall be
appointed by the President, by and with the advice and consent of
the Senate. They shall receive an annual salary of $10,000, payable
monthly, together with actual necessary traveling expenses. Such
commissioners shall perform such duties as may be assigned to them
by law or by the governor of the Farm Credit Administration.
Sec. 81. The signature of the Land Bank Commissioner on
Federal farm-loan bonds shall be attested by any Deputy Land Bank
Commissioner.
Sec. 82. The authority and powers conferred upon the governor
under this Act shall not be construed to be in substitution for
authority and powers conferred upon him under existing law but
shall be construed to be supplementary to such authority and powers.
S ec. 83. This Act shall not be construed to repeal subsection (e)
of section 201 of the Emergency Relief and Construction Act of
1932.

[ P u b . 75.]

S ec. 84. The Reconstruction Finance Corporation is authorized,
with the approval of the Governor of the Farm Credit Administra
tion, to reduce the capital of any Regional Agricultural Credit Cor
poration by such action as may be suitable for the purpose. The
funds made available by any such reduction shall constitute a revolv
ing fund, all or any part of which shall be available for use from
time to time by the Reconstruction Finance Corporation for the pur
pose of increasing, with the approval of the Governor of the Farm
Credit Administration, the capital of any Regional Agricultural
Credit Corporation.
Sec. 85. The Farm Credit Administration shall have a seal, as
adopted by the governor, which shall be judicially noticed.
Sec. 86. Subdivision (a) of section 10 of the Act entitled “An
Act to relieve the existing national economic emergency by increasing
agricultural purchasing power, to raise revenue for extraordinary
expenses incurred by réason 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 pur
poses,” approved May 12, 1933, is amended by inserting before the
period at the end of the first sentence a colon and the following:’
“ And provided further, That the State Administrator appointed to
administer this Act in each State shall be appointed by the President,
by and with the advice and consent of the Senate.”
S ec. 87. I f any provision of this Act, or the application thereof
to any person or circumstances, is held invalid, the remainder of
the Act, and the application of such provisions to other persons or
circumstances, shall not be affected thereby.
Sec. 88. The right to alter, amend, or repeal this Act is hereby
expressly reserved.
Approved, June 16, 1933, 1 :10 p. m.

Full text of Farm Credit Act of 1933

FRASER