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owned by nonproducers and in no case unless the bylaws of the cooperative association provide for the retirement of stock owned therein by nonproducers or for the conversion of such voting stock to nonvoting stock; except that mutual fire insurance companies shall not be required to have provisions in their bylaws for the retirement or conversion of stock owned by nonproducers, and loans may be made to such associations provided not more than twenty-five percent of their voting stock is owned by nonproducers. (Secs. 13, 14, 49 Stat. 317; 12 U.S.C., Sup., 1134j, 1134c) [Loan guide, subj. 110, Dec. 2, 1935]

71.15 Loans for refinancing certificates of indebtedness and preferred stock. The banks for cooperatives should not make loans to an association for the purpose of retiring members' certificates of indebtedness, other such instruments representing proprietary interests, or preferred stock, except in cases where such instruments have definite due dates and/or bear interest or are subject to dividends at burdensome rates, and in no case unless the cooperative is adequately capitalized otherwise. The banks for cooperatives should not relieve the stockholders of cooperative associations from their responsibility to properly capitalize their associations.

In cases where it appears desirable for a cooperative association to refinance certificates of indebtedness bearing interest and having definite due dates, the banks for cooperatives should urge the associations to exchange the certificates of indebtedness for capital stock or other proprietary claims of ownership without definite due date and preferably without a definite rate of interest; if a definite rate of interest is specified, it should not be cumulative.

In the event that an application for a loan is made to a bank for cooperatives and the bank would be precluded from making it because of the policy stated herein and the bank feels that circumstances are such that the loan should be made, a statement of the facts, together with the recommendations, should be forwarded to the Cooperative Bank Commissioner, with the request that an exception to the policy be made. (Secs. 13, 14, 49 Stat. 317; 12 U.S.C., Sup., 1134j, 1134c) [Loan Guide, subj. 115, Dec. 14, 1935]

Subchapter G-Regional Agricultural Credit
Corporations

PART 90-TERRITORY

Section 90.1 Territory served. A borrower is expected to make application to, and receive loans and advances from, the regional agricultural credit corporation (either its main office or any branch office) doing business in the farm credit district in which he is located. (Sec. 201 (e), 47 Stat. 713; 12 U.S.C. 1148) [RACC Bull. 1, Oct. 1, 1932]

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91.4 Qualification as lending agencies 91.10 Interest rate.
re wool loan program.
91.11 Inspection fees.

91.5 Size of loans.

Section 91.1 Loans-(a) Borrowers to whom loans may be made. Regional agricultural credit corporations are authorized to make loans or advances to individual farmers and stockmen, partnerships and corporations engaged in the business of farming or raising, breeding, fattening, or marketing of livestock. Canners, packers, processors, commission merchants, etc., are ineligible. Also, the regional agricultural credit corporations will not make loans to cooperatives.

(b) Method of handling loans. All transactions of any one borrower should be handled by one office.* [RACC Bull. 1, Oct. 1, 1932] *88 91.1 to 91.11, inclusive, issued under the authority contained in sec. 201 (e), 47 Stat. 713; 12 U.S.C. 1148.

91.2 Purposes for which loans may be made. Loans or advances to farmers and stockmen are to be made only where the proceeds of the loans are to be used for agricultural purposes (including crop production) or for the raising, breeding, fattening, or marketing of livestock.* [RACC Bull. 67, June 16, 1933]

91.3 Present status. The regional agricultural credit corporations' present status is one of liquidation and applications only for the renewal of outstanding loans or for readjustment and restocking in specified areas, which have been affected by insect infestation and drought, will be received and acted on at the offices of the corporations.* [RACC Bull. 155, June 14, 1934, RACC Circ. Letter, Apr. 7, 1937]

91.4 Qualification as lending agencies re wool loan program. Regional agricultural credit corporations, including their branches, have been instructed to qualify as lending agencies on Commodity Credit Corporation Form H and are authorized to make loans to regional agricultural credit corporation producer borrowers on 193738 wool and/or mohair in storage in accordance with the Commodity Credit Corporation wool loan program.* [RACC Bull. 383, May 7, 1938]

CROSS REFERENCE: For Commodity Credit Corporation wool loan program, 1937-38, see Part 202.

91.5 Size of loans-(a) Livestock loans. Regional agricultural credit corporations are not authorized to make, or commit themselves to make, any livestock loan in the amount of $50,000 or more until all the facts in connection with the application shall have been presented (with an appropriate recommendation and a statement of any necessary conditions to be imposed) to the Farm Credit Administra

*For statutory citation, see note to § 91.1.

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tion, and its approval obtained. In all instances where the aggregate loans to a borrower (individually and/or jointly with others) and/or to any corporation controlled by such borrower, equal or exceed $50,000, a report covering all such loans should be forwarded to the Farm Credit Administration. [RACC Bull. 1, Oct. 1, 1932, RACC Bull. 326, Oct. 8, 1936]

(b) Agricultural loans. The corporations are not authorized to make, or commit themselves to make, any agricultural loan in the amount of $15,000 or more until all the facts in connection with the application shall have been presented (with an appropriate recommendation and a statement of any necessary conditions to be imposed) to the Farm Credit Administration, and its approval obtained. In all instances where the aggregate loans to a borrower (individually and/or jointly with others) and/or to any corporation controlled by such borrower, equal or exceed $15,000, a report covering all such loans should be forwarded to the Farm Credit Administration. [RACC Bull. 17, Nov. 26, 1932]

(c) Restocking loans. There is a minimum limitation of $5,000 on restocking and readjustment loans. All recommended applications for such loans, whether made by present borrowers or new applicants, are required to be submitted to the Washington office of the Farm Credit Administration for approval before commitment of the corporation is made. Such loans are available only in certain specified areas. [RACC Bull. 1, Oct. 1, 1932, RACC Bull. 300, June 9, 1936, RACC Circ. Letter, Apr. 7, 1937, as modified by Circ. Letters, Apr. 29, May 2, 1938]

91.6 Maturity of loans-(a) Livestock loans. It is contemplated that the following will be the maximum maturities for livestock loans:

Range and breeder loans: One year.

Pasture loans: One year, or an earlier point of time coincidental with the expected time for marketing the livestock.

Feeder loans: Eight months, or an earlier period of time coincidental with the expected time for marketing the livestock. [RACC Bull. 1, Oct. 1, 1932]

(b) Agricultural loans. No agricultural loan should be made with a maturity to exceed one year, unless a later maturity is specifically authorized by the Farm Credit Administration; and it is contemplated that such loans will usually be made for the period of time such loans are customarily made in the locality, or drawn to mature at such time as liquidation of the loans will be expected. [RACC Bull. 17, Nov. 26, 1932]

(c) Restocking loans and all other loans not specifically mentioned. These loans are limited in the same manner and to the same term, to wit: one year, as agricultural and livestock loans.* [RACC Bull. 1, Oct. 1, 1932, RACC Circ. Letter, Apr. 7, 1937, as modified by RACC Circ. Letters, Apr. 29, May 2, 1938]

91.7 Split lines. Regional agricultural credit corporations shall not handle "split lines" of credit. A regional agricultural credit cor

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*For statutory citation, see note to § 91.1.

poration should either meet all of the applicant's financing requirements or none of them.* [RACC Bull. 1, Oct. 1, 1932, RACC Bull. 17, Nov. 26, 1932]

91.8 Special requirements. In connection with any new loans. made with cattle as security therefor, or renewals of old loans in which cattle are any part of the security, the regional agricultural credit corporation requires the borrower to execute, in addition to the note and mortgage evidencing the debt, a collateral undertaking in which the borrower agrees that, in the event any cattle belonging to him are infected with Bang's disease and are sold in accordance with the terms of a contract with the Agricultural Adjustment Administration, executed in furtherance of this proposed program of eradication, and an indemnity payment is received in connection with the elimination of such cattle, the borrower will (a) apply such indemnity payment towards the purchase of sound cattle of the same type, grade, and approximate value as those sold under the proposed program, and subject the cattle so purchased as security for the loan, as if pledged for the repayment of the loan at the time of the making thereof; and/or (b) apply such indemnity payment to the reduction of his debt. [RACC Bull. 177, Aug. 15, 1934]

91.9 Renewals. At no time should paper be renewed (except where renewal will facilitate liquidation or pending action by a production credit association) until the regional agricultural credit corporation office is reasonably certain that the borrower is unable to obtain credit elsewhere and then only under express agreement that he will attempt to refinance elsewhere when asked to do so." [RACC Bull. 109, Nov. 21, 1933, RACC Bull. 155, June 14, 1934]

91.10 Interest rate. The interest rate for agricultural loans is the same as that provided for livestock loans.

Except as otherwise noted hereafter, the rate of interest on all loans now outstanding or hereafter made or renewed shall be 62 percent.

In all states wherein the maximum interest rate is fixed by statute at 6 percent per annum, the corporations are to establish their rate of interest on loans closed, additional advances and/or renewals to be made to borrowers at 6 percent per annum and to assess an additional charge to cover inspection.* [RACC Bull. 17, Nov. 26, 1932, RACC Bull. 24, Dec. 31, 1932, RACC Bull. 153, June 8, 1934]

91.11 Inspection fees. Effective June 1, 1934, the corporations will charge borrowers for actual cost of inspections not to exceed rate charged by production credit associations in same areas, this charge to be made only on normal and regular inspections made necessary in handling, extending, renewing or increasing loans and not for interim inspections made solely for the purpose of keeping in touch with status of loan between regular inspections. [RACC Bull. 151, June 1, 1934, RACC Bull. 208, Dec. 1, 1934]

*For statutory citation, see note to § 91.1.

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Sec.

PART 92-LOANS, TYPES AND KINDS; ELIGIBILITY OF BORROWERS

92.1 Agricultural loans. 92.2 Livestock loans.

Sec.

92.4 Silver fox growers.
92.5 Nurserymen.

92.3 Special types and kinds; eligibility 92.6 Indians. of poultry raisers.

92.7 Corporations.

Section 92.1 Agricultural loans. The term "agricultural loan" is used to designate a loan made for an agricultural purpose to an individual farmer or a partnership or corporation (other than a cooperative corporation) engaged in the business of farming. Such loans will include loans or advances secured by liens on growing crops or other property, for the purpose of defraying the cost of seed and cultivation; loans for harvesting, likewise secured by liens on crops; marketing loans secured by warehouse receipts (preferably issued by warehouses licensed under the U. S. Warehouse Act [39 Stat. 486; 7 U.S.C. 241-273]) covering agricultural commodities; and "barnyard loans", or loans secured by first mortgage liens on milch cows, hogs, work horses, mules, equipment and small stock.* [RACC Bull. 1, Oct. 1, 1932]

*88 92.1 to 92.7, inclusive, issued under the authority contained in sec. 201 (e), 47 Stat. 713; 12 U.S.C. 1148.

92.2 Livestock loans. The term "livestock loan" is used to designate a loan to a livestock grower, feeder, or breeder secured by a first lien on livestock, where the loan is expected to be repaid through funds obtained from: (a) the sale of the livestock and/or the increase and other available sources, in the case of a range or breeder loan, or (b) the sale of fat cattle and sheep, in the case of a feeder or pasture loan.* [RACC Bull. 1, Oct. 1, 1932]

92.3 Special types and kinds; eligibility of poultry raisers. Poultry raisers are farmers and, as such, eligible to apply to the regional agricultural credit corporations for poultry loans. Commercial hatcheries, engaged primarily in the business of producing and selling baby chicks, are not so considered.

The term "poultry loans" is used to designate loans which are secured primarily by liens on poultry and on the feed and equipment used in producing the same, as distinguished from so-called "barnyard loans", or loans "secured by first mortgage liens on milch cows, hogs, work horses, mules, equipment and small stock". The term "poultry raiser" is used to designate an applicant engaged primarily in the business of producing poultry and not merely following such pursuit for the purpose of providing supplementary income.* [RACC Bull. 20, Dec. 1, 1932]

92.4 Silver fox growers. Silver fox growers may be considered eligible as borrowers from regional agricultural credit corporations, where silver foxes are given as security for the loans.* [RACC Bull. 100, Oct. 13, 1933]

92.5 Nurserymen. Nurserymen engaged in the culture or propagation of ornamental shrubs and trees, and other products usually

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*For statutory citation, see note to § 92.1.

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