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Sec. 6. Section 5202 of the Revised Statutes of the United States, as amended, is hereby amended by inserting after the words “Reconstruction Finance Corporation act” the words " and the Farmers' Reconstruction Finance Corporation act."
SEC. 7. All moneys of the corporation not otherwise employed may be deposited with the Treasurer of the United States subject to check by authority of the corporation or in any Federal reserve bank, or may, by authorization of the board of directors of the corporation, be used in the purchase for redemption and retirement of any notes, debentures, bonds, or other obligations issued by the corporation, and the corporation may reimburse such Federal reserve bank for its services in the manner as may be agreed upon. The Federal reserve banks are authorized and directed to act as depositaries, custodians, and fiscal agents for the corporation in the general perfomance of the powers conferred upon it by this act.
SEC. 8. The corporation is authorized and empowered, with the approval of the Secretary of the Treasury, to issue, and to have outstanding at any one time in an amount aggregating not more than three times its subscribed capital, its notes, debentures, bonds, or other such obligations; such obligations to mature not more than five years from their respective dates of issue, to be redeemable at the option of the corporation before maturity in such manner as may be stipulated in such obligations, and to bear such rate or rates of interest as may be determined by the corporation : Provided, That the corporation, with the approval of the Secretary of the Treasury, may sell on a discount basis shortterm obligations payable at maturity without interest. The notes, debentures, bonds, and other obligations of the corporation may be secured by assets of the corporation in such manner as shall be prescribed by its board of directors : Provided further, That the aggregate of all obligations issued under this section shall not exceed three times the amount of the subscribed capital stock. Such obligations may be offered for sale at such price or prices as the corporation may determine with the approval of the Secretary of the Treasury. The said obligations shall be fully and unconditionally guaranteed both as to interest and principal by the United States and such guaranty shall be expressed on the face thereof. In the event that the corporation shall be unable to pay upon demand, when due, the principal of or interest on notes, debentures, bonds, or other such obligations issued by it, the Secretary of the Treasury shall pay 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 amounts so paid to the Secretary of the Treasury shall succeed to all the rights of the holders of such notes, debentures, bonds, or other obligations. The Secretary of the Treasury, in his discretion, is authorized to purchase any obligations of the corporation to be 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 bond act, as amended, and the purposes for which securities may be issued under the second Liberty bond act, as amended, are extended to include any purchases of the corporation's obligations hereunder. The Secretary of the Treasury may, at any time, sell any of the obligations of the corporation acquired by him under this section. All redemptions, purchases, and sales by the Secretary of the Treasury of the obligations of the corporation shall be treated as public-debt transactions of the United States. Such obligations shall not be eligible for discount or purchase by any Federal reserve bank.
SEC. 9. Any and all notes, debentures, bonds, or other such obligations issued by the corporation 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, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority. The corporation, including its franchise, its capital, reserves, and surplus, and its income shall be exempt from all taxation now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority; except that any real property 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.
SEC. 10. In order that the corporation may be supplied with such forms of notes, debentures, bonds, or other such obligations as it may need for issuance under this act, the Secretary of the Treasury is authorized to prepare such forms as shall be suitable and approved by the corporation, to be held in the Treasury subject to delivery, upon order of the corporation. The engraved plates, dies, bed pieces, 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 expenses incurred in the preparation, custody, and delivery of such notes, debentures, bonds, or other obligations.
SEC. 11. When designated for tha purpose by the Secretary of the Treasury, the corporation shall be a depositary of public money, except receipts from customs, under such regulations as may be prescribed by said Secretary; and it may also be employed as a financial agent of the Government; and it shall perform all such reasonable duties, as depositary of public money and financial agent of the Government, as may be required of it. Obligations of the corporation 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.
SEC. 12. Upon the expiration of the period of one year within which the corporation may make loans, or of any extension thereof by the President under the authority of this act, the board of directors of the corporation shall, except as otherwise herein specifically authorized, proceed to liquidate its assets and wind up its affairs. It may with the approval of the Secretary of the Treasury deposit with the Treasurer of the United States as a special fund any money belonging to the corporation or from time to time received by it in the course of liquidation or otherwise, for the payment of principal and interest of its outstanding obligations or for the purpose of redemption of such obligations in accordance with the terms thereof, which fund may be drawn upon or paid out for no other purpose. The corporation may also at any time pay to the Treasurer of the United States as miscellaneous receipts any money belonging to the corporation or from time to time received by it in the course of liquidation or otherwise in excess of reasonable amounts reserved to meet its requirements during liquidations. Upon such deposit being made, such amount of the capital stock of the corporation as may be specified by the corporation with the approval of the Secretary of the Treasury but not exceeding in par value the amount so paid in shall be canceled and retired. Any balance remaining after the liquidation of all the corporation's assets and after provision has been made for payment of all legal obligations of any kind and character shall be paid into the Treasury of the United States as miscellaneous receipts. Thereupon the corporation shall be dissolved and the residue, if any, of its capital stock shall be canceled and retired.
SEC. 13. If at the expiration of the ten years for which the corporation has succession hereunder its board of directors shall not have completed the liquidation of its assets and the winding up of its affairs, the duty of completing such liquidation and winding up of its affairs shall be transferred to the Secretary of the Treasury, who for such purpose shall succeed to all the powers and duties of the board of directors of the corporation under this act. In such event he may assign to any officer or officers of the United States in the Treasury Department the exercise and performance, under his general supervision and direction, of any such powers and duties; and nothing herein shall be construed to affect any right or privilege accrued, any penalty or liability incurred, any criminal or civil proceeding commenced, or any authority conferred hereunder, except as herein provided in connection with the liquidation of the remaining assets and the winding up of the affairs of the corporation, until the Secretary of the Treasury shall find that such liquidation will no longer be advantageous to the United States and that all of its legal obligations have been provided for, whereupon he shall retire any capital stock then outstanding, pay into the Treasury as miscellaneous receipts unused balance of the moneys belonging to the corporation, and make the final report of the corporation to the Congress. Thereupon the corporation shall be deemed to be dissolved.
SEC. 14. The corporation shall make and publish a report quarterly of its operations to the Congress, stating the aggregate loans made pursuant to this act during the period covered by such report and the number of borrowers by States. The statement shall show the assets and liabilities of the corporation, and the first report shall be made on April 1, 1932, and quarterly thereafter. It shall also show the names and compensation of all persons employed by the corporation whose compensation exceeds $400 a month.
SEC. 15. (a) Whoever makes any statement knowing it to be false, or whoever willfully overvalues any security, for the purpose of obtaining for himself or for any applicant any loan, or extension thereof by renewal, deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, or for the purpose of influencing in any way the action of the corporation, or for the purpose of obtaining money, property, or anything of value under this act, 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, or coupon, in imitation of or purporting to be a note, debenture, bond, or other obligation, or coupon, issued by the corporation, or (2) passes, utters, or publishes, or attempts to pass, utter, or publish, any false, forged, or counterfeited note, debenture, bond, or other obligation, or coupon, purporting to have been issued by the corporation, knowing the same to be false, forged, or counterfeited, or (3) falsely alters any note, debenture, bond, or other obligation, or coupon, issued or purporting to have been issued by the corporation, or (4) passes, utters, or publishes, or attempts to pass, utter, or publish, as true any falsely altered or spurious note, debenture, bond, or other obligation, or coupon, issued or purporting to have been issued by the corporation, knowing the same to be falsely altered or spurious, or any person who willfully violates any other provision of this act, 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 connected in any capacity with the corporation, (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to it or pledged or otherwise intrusted to it, or (2) with intent to defraud the corporation or any other body politic or corporate, or any individual, or to deceive any officer, auditor, or examiner of the corporation, makes any false entry in any book, report, or statement of or to the corporation, or, without being duly authorized, draws any order or issues, puts forth, or assigns any note, debenture, bond, or other obligation, or draft, bill of exchange, mortgage, judgment, or decree thereof, or (3) with intent to defraud, participates, shares, receives directly or indirectly any money, profit, property, or benefit through any transaction, loan, commission, contract, or any other act of the corporation, or (4) gives any unauthorized information concerning any future action or plan of the corporation which might affect the value of securities, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.
(d) No individual, association, partnership, or corporation shall use the words Farmers' Reconstruction Finance Corporation or a combination of these four words, as the name or a part thereof under which he or it shall do business. Every individual, partnership, association, or corporation violating this prohibition shall be guilty of a misdemeanor and shall be punished by a fine of not exceeding $1,000 or imprisonment not exceeding one year, or both,
(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, ch. 5, secs. 202 to 207, incl.) in so far as applicable, are extended to apply to contracts or agreements with the corporation under this act, which for the purposes hereof shall be held to include loans, advances, discounts, and rediscounts; extensions and renewals thereof; and acceptances, releases, and substitutions of security therefor.
SEC. 16. The right to alter, amend, or repeal this act is hereby expressly reserved. If any clause, sentence, paragraph, or part of this act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this act, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.
The CHAIRMAN. In addition to those bills there have been introduced in the House and Senate amendments to the agricultural marketing act of 1929 for the purpose of incorporating in that act the so-called debenture plan and the equalization fee plan. But these are bills pending before the committee which have been referred to subcommittees in the main that have not been acted on by this committe, and having made reference of these bills to the various farm organizations, it is hoped that they will be able to discuss these matters that the committee may have their opinion concerning the legislation.
There has been one difficulty in all the meetings we have had regarding farm relief and that is to bring about a crystallization of opinion among the farm leaders in respect to farm relief and the appropriate legislation. I think that is one of the reasons why we have seen fit to bring together the representatives we have this morning
Mr. Bestor, do you desire at this time to be heard?
STATEMENT OF PAUL BESTOR, FARM LOAN COMMISSIONER FROM
MISSOURI, FEDERAL FARM LOAN BUREAU
The CHAIRMAN. If you will occupy this seat at the head of the table, Mr. Bestor, giving your full name, address, and the public service that you perform.
Mr. BESTOR. Paul Bestor. Farm loan commissioner from Federal Farm Loan Bureau.
The CHAIRMAN. Mr. Bestor, you have received from the chairman of the committee a number of suggested plans of legislation. They have been submitted to you for your consideration and advice. You have read them all, I assume, and are prepared to discuss them?
Mr. BESTOR. I have read them all, Senator. There are some of them that do not particularly concern the farm loan system.
The CHAIRMAN. Well, the one that I think probably does more particularly—there has been so much said for and against it—is the so-called Frazier bill, S. 1197. That affects the credit structure of the country and naturally affects your institution. You have read that, of course?
Mr. BESTOR. Yes, Mr. Chairman.
Mr. BESTOR. May I say, Mr. Chairman and gentlemen of the committee, that I appeared some time ago before the subcommittee.
The CHAIRMAN. Yes. Mr. BESTOR. Senator Frazier was chairman. I spoke very briefly in regard to this particular bill. I think you have, Mr. Chairman, a letter which was written by the Secretary of the Treasury in regard to bill S. 1197.
The CHAIRMAN. Yes.
Mr. BESTOR. I should like to ask permission to have the Secretary's letter inserted here in the record. Briefly, the bill provides for the liquidation and refinancing of farm mortgages and farm indebtedness at a reduced rate of interest through the farm loan system, the Federal reserve banking system and the postal savings depository system, and would set up machinery for refinancing farm mortgages and other farm indebtedness existing at the date of the passage of the act. I should like to call your attention to the fact that the interest rate provided on farm mortgages at 112 per cent. In the past the lowest rate obtained on Federal land bank bonds has been 4 per cent, and it would not appear how they could possibly be sold to the public at any such rate as 112 per cent. They would, therefore, have to be taken by the Federal Reserve Board and the trustees of the postal savings depository system. Furthermore, if such a low rate were provided, a very large part of the present agricultural debt of the Nation would be refinanced with no margin of security required and no means provided for absorbing the operating expenses and losses incurred by the banks. There is a further provision that:
The benefits of this act shall also extend to any farmer, or member of his family, who lost his farm through indebtedness or mortgage foreclosure since 1920 and who desires to purchase the farm lost or another farm.
In such cases a new loan would include the principal of the entire original loan plus all accumulations on the loan over a period of years.
MARCH 8, 1932. Hon. CHAS. L. McNARY, Chairman Senate Committee on Agriculture and Forestry,
United States Senate. Dear Mr. CHAIRMAN : Careful consideration has been given, in accordance with the request contained in your letter of December 21, to Senate bill 1197, introduced December 9, to liquidate and refinance agricultural indebtedness, and to encourage and promote agriculture, commerce, and industry by establishing an efficient credit system.
The bill would provide “for the liquidation and refinancing of farm mortgages and farm indebtedness at a reduced rate of interest through the Federal farm loan system, the Federal reserve banking system, and the postal savings depository system,” and would set up machinery for refinancing farm mortgages and other farm indebtedness existing at the date of the passage of the act. This work would be carried on under the supervision of the Federal Farm Loan Board which would be directed “to make all necessary rules and regulations for the carrying out of the purposes of this act with expedition.” There would also be created a Board of Agriculture consisting of one member from each State “who shall be elected by delegates selected by a mass convention of farmers in each county or parish within the United States." Immediately following their election and upon call of the Federal Farm Loan Board, the members of the Board of Agriculture would be required to meet in Washington for the purpose of making " such rules and regulations as they deem necessary and expedient in carrying out the purposes of this act,” and of electing executive committee of three” who would receive “a salary of $10,000 per annum, and 5 cents per mile for necessary traveling expenses while on official business, to be paid by the United States Government in the manner now provided for the payment of salaries of Members of Congress.”
The executive committee would in turn be required to "counsel with and supervise the work of liquidating and refinancing farm mortgages and farm indebtedness by the Federal Farm Loan Board and the Federal Reserve Board."
Section 3 of the bill provides for the liquidating of existing farm mortgages “by making real-estate loans, secured by first mortgages on farms, to an amount equal to the fair value of such farms and 50 per centum of the value of insurable buildings and improvements thereon
Such loans to be made at a rate of 112 per centum interest and 142 per centum principal per annum."
Section 4 of the bill would provide for taking up and liquidating existing chattel mortgages and other “farm indebtedness” by making loans at 3 per cent interest per annum secured by first mortgages on livestock.
The first sentence of section 5 is as follows:
“ The funds with which to liquidate, refinance, and take up existing farm mortgages and other farm indebtedness shall be provided by the issuing of farm loan bonds by the Federal farm loan system, through the Federal Farm Loan Board and Federal land banks, as now provided by law, which bonds shall bear interest at the rate of 112 per centum per annum, if secured by mortgages on farms, and 3 per centum per annum if secured by chattel mortgages on livestock used for breeding or agricultural purposes."
The farm loan bonds which would be issued under the terms of the bill would be available for purchase by individuals or corporations; Federal reserve banks would be required to make certain investments in such bonds; the trustees of the postal savings depository system” would be required to