Full text of Federal Farm Mortgage Corporation Act

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[P u b l i c —

No.

88— 73d C on gress]

[H.R. 6670]
AN ACT
T o provide for the establishment of a corporation to aid in the refinancing of
farm debts, and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That there is
hereby established a corporation to be known as the “ Federal Farm
Mortgage Corporation ”, hereinafter in this Act referred to as the
“ corporation.” The principal office of the corporation shall be
located in the District of Columbia and the management of the
corporation shall be vested in a board of directors consisting of the
Secretary of the Treasury, or an officer of the Treasury designated
by him, the Governor of the Farm Credit Administration, herein­
after in this Act referred to as the “ Governor ”, and the Land Bank
Commissioner. The directors shall receive no additional compensa­
tion for their services as directors of the corporation, but may be
allowed actual necessary traveling and subsistence expenses when
engaged in the business of the corporation outside of the District
of Columbia. The Governor shall be the chairman of the board of
directors. The directors shall have power to adopt such bylaws,
rules, regulations, and amendments thereto as they deem necessary
for the conduct of the business of the corporation authorized under
this Act. The directors shall have power, without regard to the
provisions of other laws applicable to the employment and com­
pensation of officers and employees of the United States, to employ
and fix the compensation and duties of such agents, officers, and
employees of the corporation as may be necessary to carry out the
powers and duties conferred upon the corporation by this Act,
to require bonds of them and fix the penalties thereof and dismiss
them at pleasure, and to prescribe the manner in which the obliga­
tions of the corporation shall be incurred and its expenses allowed
and paid, but the rates of compensation of such agents, officers, and
employees of the corporation shall not exceed the rates of compensa­
tion prescribed for comparable duties by the Classification Act of
1923, as amended. '
S ec . 2. The corporation shall have succession until dissolved by
Act of Congress; shall have power to sue and be sued in any court,
to adopt and use a corporate seal, to make contracts, and to acquire,
hold, and dispose of real and personal property necessary and inci­
dent to the conduct of its business; and shall have such other powers
as may be necessary and incident to carrying out its powers and
duties under this Act. The corporation-shall be entitled to the free
use of the United States mails in the same manner as the executive
departments of the Government. The corporation, with the consent
of any board, commission, independent establishment, or executive
department of the Government, may avail itself of the use of infor­
mation, services, facilities, officers, agents, and employees thereof,
in carrying out the provisions of this Act.




S ec . 3. The capital of the corporation shall be in the sum of
$200,000,000, which shall be subscribed by the Governor on behalf
of the United States in such amounts and at such times as he deems
necessary for the purposes of the corporation. For the purpose of
such capital subscription, the funds and proceeds thereof made avail­
able to the Land Bank Commissioner under section 32 of the Emer­
gency Farm Mortgage Act of 1933 and the mortgages taken by the
Commissioner and the credit instruments secured thereby are hereby
transferred to the corporation.
S e c . 4. (aj With the approval of the Secretary of the Treasury,
the corporation is authorized to issue and have outstanding at any
one time bonds in an aggregate amount not exceeding $2,000,000,000.
Such bonds shall be in such forms and denominations, shall have
such maturities, shall bear such rates of interest, shall be subject to
such terms and conditions, and shall be issued in such manner and
sold at such prices, as may be prescribed by the corporation, with
the approval of the Secretary of the Treasury. Such bonds shall
be fully and unconditionally guaranteed both as to interest and prin­
cipal by the United States and such guaranty shall be expressed on
the face thereof, and such bonds shall be lawful investments, and
may be accepted as security, for all fiduciary, trust, and public funds
the investment or deposit of which shall be under the authority or
control of the United States or any officer or officers thereof. In
the event that the corporation shall be unable to pay upon demand,
when due, the principal of, or interest on, such bonds, the Secretary
of the Treasury shall pay to the holder the amount thereof which
is hereby authorized to be appropriated, out of any moneys in the
Treasury not otherwise appropriated, and thereupon to the extent
of the amount so paid the Secretary of the Treasury shall succeed to
all the rights of the holders of such bonds. The Secretary of the
Treasury, in his discretion, is authorized to purchase any bonds of
the corporation issued hereunder, and for such purpose the Secretary
of the Treasury is authorized to use as a public debt transaction the
proceeds from the sale of any securities hereafter issued under the
Second Liberty Loan Act, as amended, and the purposes for which
securities may be issued under such Act, as amended, are extended
to include any purchases of the corporation’s bonds hereunder. The
Secretary of the Treasury may, at any time, sell any of the bonds of
the corporation acquired by him under this section. All redemp­
tions, purchases, and sales by the Secretary of the Treasury of the
bonds of the corporation shall be treated as public debt transactions
of the United States. Such bonds shall be fully and adequately
secured by such assets of the corporation and in such manner as shall
be prescribed by its board of directors. The corporation shall have
power to purchase such bonds in the open market at any time and
at any price. On such terms and conditions as may be agreed upon,
the corporation may exchange such bonds, upon application of any
Federal land bank for consolidated farm loan bonds of equal face
value issued under the Federal Farm Loan Act, as amended, and may
exchange such consolidated farm loan bonds held by it for bonds of
the corporation of e<jual face value.

(b)
The corporation is further authorized to purchase from time
'to time, for cash, such consolidated farm-loan bonds at such prices




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3

and upon such terms as may be approved by the board of directors
of the corporation, to make loans to Federal land banks on the
security of such consolidated bonds, and to invest its funds in mort­
gage loans made under section 32 of the Emergency Farm Mortgage
Act of 1933, as amended.
(c)
In order to furnish bonds for delivery by the Federal Farm
Mortgage Corporation, the Secretary of the Treasury is hereby
authorized to prepare suitable bonds in such form, subject to the
provisions of this Act, as the board of directors may approve, such
bonds when prepared to be held in the Treasury subject to delivery
upon order of the corporation. The engraved plates, dies, bedpieces, and so forth, executed in connection therewith shall remain
in the custody of the Secretary of the Treasury. The corporation
shall reimburse the Secretary of the Treasury for any expenditures
made in the preparation, custody, and delivery of such bonds.
S e c . 5. After ninety days after the enactment of this Act, no Fed­
eral land bank shall issue any bonds under the provisions of the last
paragraph of section 32 of the Federal Farm Loan Act, as amended,
subject to the guarantee of interest on such bonds by the United
States except for the purpose of refinancing any bond which is or
has been issued subject to such guarantee of interest.
S e c . 6. Direct loans made under section 7 of the Federal Farm
Loan Act, as amended (U.S.C., Sup. V II, title 12, sec. 723), may, at
the option of the Federal land bank, be made in bonds of the Federal
Farm Mortgage Corporation.
S ec . 7. The thirteenth paragraph of section 12 of the Federal
Farm Loan Act, as amended (U.S.C., Sup* V II, title 12, sec. 772),
is amended to read as follows:
“Amounts transmitted to farm loan associations by Federal land
banks to be loaned to its members shall, at the option of the bank,
be in current funds or Federal Farm Mortgage Corporation bonds,
or, at the option of the borrower, in farm loan bonds.”
S ec . 8. (a) Section 13 of the Federal Farm Loan Act, as amended
(U.S.C., Sup. V II, title 12, sec. 781), is amended by inserting at the
end thereof the following new paragraphs:
“ Fifteenth. To exchange farm loan bonds for Federal Farm Mort­
gage Corporation bonds of equal face value, and to purchase Federal
S'arm Mortgage Corporation bonds at or below par.
“ Sixteenth. To exchange Federal Farm Mortgage Corporation
bonds for farm loan bonds of equal face value.”
(b) The seventh paragraph of section 22 of the Federal Farm
Loan Act, as amended (U.S.C., title 12, sec. 897), is amended by
adding the following after the first subparagraph (d) thereof:
“ (e) To purchase Federal Farm Mortgage Corporation bonds.”
S ec . 9. Section 32 of the Emergency Farm Mortgage Act of 1933
(U.S.C., Sup. V II, title 12, sec. 1016) is amended by inserting at the
end thereof the following: “ Until February 1, 1936, the Land Bank
Commissioner shall, in his name, make loans under this section on
behalf of the Federal Farm Mortgage Corporation, either in cash or
in bonds of the corporation at his election, but no such loans shall
be made by him after February 1, 1936, except for the purpose of
refinancing loans previously made by him under this section. Not
to exceed $600,000,000 of the bonds and proceeds thereof issued




4:

[P ub . 88.]

under section 4 of the Federal Farm Mortgage Corporation Act are
hereby made available for the purposes of this section, in addition
to the amounts transferred to such corporation under section 3 of
such Act.”
S ec . 10. Section 32 of the Emergency Farm Mortgage Act of 1933
is amended by striking out “ $5,000” and inserting in lieu thereof
«

500.”

11. Section 62 of the Farm Credit Act of 1933 (relating to
fiscal agents of the United States) (U.S.C., Sup. V II, title 12, sec.
1138b) is amended by inserting after “Associations,” the following:
“ the Federal Farm Mortgage Corporation,”.
S ec . 12. (a) The corporation, including its franchise, its capital,
reserve^, and surplus, and its income shall be exempt from all taxa­
tion now or hereafter imposed by the United States, by any Terri­
tory, dependency, or possession thereof, or by any State, county,
municipality, or local taxing authority; except that any real prop­
erty of the corporation shall be subject to State, Territorial, county,
municipal, or local taxation to the same extent according to its value
as other real property is taxed.
(b) Mortgages executed to the Land Bank Commissioner and
mortgages held by the corporation, and the credit instruments
secured thei'eby, and bonds issued by the corporation under the
provisions of this Act, shall be deemed and held to be instrumen­
talities of the Government of the United States, and as such they
and the income derived therefrom shall be exempt from Federal,
State, municipal, and local taxation (except estate, inheritance, and
gift taxes).
S e c . 13. Section 64 of the Farm Credit Act of 1933 (relating to
unlawful acts and penalties) (U.S.C., Sup. V II, title 12, sec. 1138d)
is amended by inserting after “ Farm Credit Administration ” whereever such phrase appears a comma and the following: “ any Fed­
eral intermediate credit bank, or the Federal Farm Mortgage
Corporation,”.
S e c . 14. Paragraph (2) of subsection (a) of section 5 of the Farm
Credit Act of 1933 (U.S.C., Sup. VII, title 12, sec. 11311) is amended
by striking out the period at the end thereof and inserting a comma
and the following: “ and the notes or other obligations evidencing
such advances and loans and the security therefor are hereby trans­
ferred to the Governor of the Farm Credit Administration.
S ec . 15. (a) Section 5 of the Farm Credit Act of 1933 (U.S.C.,
Sup. V II, title 12, sec. 1131i) is amended by inserting at the end
thereof the following new subsection:
“ (e) The amount of all balances, collections, and appropriations
allocated under subsection (a) to the revolving fund created there­
under, which is in excess of $120,000,000, is hereby made available
to the Governor of the Farm Credit Administration for the estab­
lishment of a revolving fund of not to exceed $40,000,000. Out of
such revolving fund, the Governor is authorized to allocate and, with
the approval of the Secretary of the Treasury, to expend such
amounts as he deems necessary for subscriptions to the capital stock
and/or paid-in surplus of Federal Intermediate Credit Banks.”
(b)
The first sentence of section 205 of the Federal Farm Loan
Act (U.S.C., Sup. VII) title 12, sec. 1061), as amended, is amended
S ec .




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88.]

5

by striking out the period at the end thereof and inserting in lieu
thereof a comma* and the following: “ which amount may be
increased from time to time with the approval of the Governor of
the Farm Credit Administration”.
(c)
Section 205 of the Federal Farm Loan Act (U.S.C., title 12,
sec. 1061), as amended, is further amended by adding at the end
thereof the following: “ With the approval of the Secretary of the
Treasury, the Governor of the Farm Credit Administration is
hereby authorized to subscribe from time to time to the capital stock
and/or paid-in surplus of any Federal Intermediate Credit Bank
on behalf of the United States, in such amounts as he may determine
are necessary for the purpose of meeting the credit needs of eligible
borrowers from the bank, and the amount of the capital stock and
paid-in surplus of such bank 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 and subscriptions to
-such paid-in surplus shall be made in multiples of $100 out of the
revolving fund created under subsection (e) of section 5 of the
Farm Credit Act of 1933, as amended. The Governor on behalf of
the United States shall make payment for stock and paid-in surplus
of such bank and such payment shall be subject to call in whole or
in part by the board of directors of the bank, with the approval of
the Governor.”
S e c . 16. (a) The first sentence of the eighth paragraph of section
13 of the Federal Reserve Act, as amended, is further amended by
inserting before the semicolon after the words u section 13 (a) of
this A c t” a comma and the following: “ or by the deposit or pledge
of Federal Farm Mortgage Corporation bonds issued under the
Federal Farm Mortgage Corporation Act.”
(b) Paragraph (b) of section 14 of the Federal Reserve Act, as
amended (U.S.C., title 12, secs. 353-358), is further amended by
inserting after the words “ bonds and notes of the United States”
a comma and the following: “ bonds of the Federal Farm Mortgage
Corporation having maturities from date of purchase of not
exceeding six months.”
S ec . 17. (a) If 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 provision to other persons
or circumstances, shall not be affected thereby.
(b)
The right to alter, amend, or repeal this Act is hereby
expressly reserved.
S ec . 18. This Act may be cited as the “ Federal Farm Mortgage
Corporation A c t”.
Approved, January 31, 1934.