establish rates of discount and interest which, except with the approval of the Governor of the Farm Credit Administration, shall not exceed by more than 1 per centum per annum the rate borne by the last preceding issue of debentures which it issued or in which it participated. Any Federal intermediate credit bank may be required by the Governor of the Farm Credit Administration to acquire, upon such terms as he may approve, loans and/or discounts of any other Federal intermediate credit bank. (July 17, 1916, sec. 204 (a); Mar. 4, 1923, sec. 2, 42 Stat. 1456; Mar. 4, 1925, sec. 2, 43 Stat. 1262; June 3, 1935, sec. 7,49 Stat. 316; 12 U. S. C., sec. 1051.)

638-225. Limitation on interest rate charged original borrower on paper discounted with bank.-No organization entitled to the privileges of this title, shall, without the approval of the Federal Farm Loan Board [now Farm Credit Administration]*, be allowed to discount with any Federal Intermediate Credit Bank any note or other obligation, upon which the original borrower has been charged a rate of interest exceeding by more than 12 per centum per annum the discount rate of the Federal Intermediate Credit Bank at the time such loan was made. (July 17, 1916, sec. 204 (b); Mar. 4, 1923, sec. 2, 42 Stat. 1456; 12 U. S. C., sec. 1052.)

638-226. Purchase by bank of debentures issued by it.-Subject to the approval of the Farm Credit Administration, a Federal intermediate credit bank may buy for its own account any debentures or similar obligations issued by or for the benefit and account of such bank or other Federal intermediate credit bank or banks, and (1) hold until maturity any such debentures or similar obligations or (2) retire before maturity any such debentures or similar obligations issued by it or for its benefit and account. (July 17, 1916, sec. 204 (c); Mar. 4, 1923, sec. 2, 42 Stat. 1456; Aug. 19, 1937, sec. 29, 50 Stat. 715; 12 U. S. C., sec. 1053.)

638-227. Capital stock; amount, shares; subscriptions to by United States; assessments against other banks to restore capital impairment of one bank.—That for the purpose of exercising the powers conferred by this title, each Federal Intermediate Credit Bank shall have a subscribed capital stock of $5,000,000, which amount may be increased from time to time with the approval of the Governor of the Farm Credit Administration. Capital stock of such amount shall be divided into shares of $5 each and shall be subscribed, held, and paid by the Government of the United States. It shall be the duty of the Secretary of the Treasury to subscribe to such capital stock on behalf of the United States, such subscription to be subject to call in whole or in part by directors of the said banks upon thirty days' notice to the Secretary of the Treasury and with the approval of the Federal Farm Loan Board [now Farm Credit Administration]*. The Secretary of the Treasury is authorized and directed to take out shares as called and to pay for the same out of any money in the Treasury not otherwise appropriated.

In the event that there shall be an impairment of the paid-in capital of any Federal intermediate credit bank, the Farm Loan Board [now Farm Credit Administration]*, at such time or times as it deems advisable, may determine and assess the amount thereof against the other Federal intermediate credit banks on such equitable basis of

*See Ex. Or. 6084, p. 254, this volume.

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apportionment as it shall prescribe. Each bank against which such an assessment is made shall, out of its surplus and/or to an extent up to 50 per centum of its net earnings, in accordance with the terms of such assessment, pay the amount thereof as soon as possible to the bank having the impairment. In such event payments into the surplus fund and payments of the franchise tax prescribed by this chapter shall be determined on the basis of the net earnings remaining after providing for the payment of any such assessment.

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. (July 17, 1916, sec. 205; Mar. 4, 1923, sec. 2, 42 Stat. 1457; May 19, 1932, sec. 2, 47 Stat. 159; Jan. 31, 1934, sec. 15 (b), (c), 48 Stat. 348; 12 U. S. C., sec. 1061.)

638-228. Application of earnings; salaries and expenses of Federal Farm Loan Bureau; assessment against banks for proportionate share.That the Federal Farm Loan Board [now Farm Credit Administration] shall equitably apportion the joint salaries and expenses incurred in behalf of Federal land banks, joint-stock land banks, and Federal intermediate credit banks, and shall assess against each Federal intermediate credit bank its proportionate share of the salaries and expenses of the Federal Farm Loan Bureau [now Farm Credit Administration]* made necessary in connection with the operation of this provision. (July 17, 1916, sec. 206 (a); Mar. 4, 1923, sec. 2, 42 Stat. 1457; Mar. 4, 1925, sec. 1, 43 Stat. 1262; 12 U. S. C., sec. 1062.) 638-229. Net earnings; surplus fund; franchise tax; disposition by United States of sums received from net earnings of banks and from surplus remaining after liquidation of banks.-Subject only to review and approval by the Farm Credit Administration, each Federal intermediate credit bank, at the end of its fiscal year, after all its necessary expenses and costs of operation for such fiscal year have been paid or provided for, shall apply its net earnings then remaining, first, to making up any losses in excess of its reserves against unforeseen losses and assets of doubtful value; second, to the elimination of any impairment of its paid-in capital and paid-in surplus; third, to the creation and maintenance of reserves against unforeseen losses and assets of doubtful value in such amount as its board of directors may prescribe; fourth, to the payment of 25 per centum of the amount then remaining to the United States as a franchise tax; and, fifth, to the payment of the remaining net earnings into its surplus account. The *See Ex. Or. 6084, p. 254, this volume.

amounts paid as franchise taxes to the United States by Federal intermediate credit banks shall, in the discretion of the Secretary of the Treasury, be used to supplement the gold reserve held against outstanding United States notes, or shall be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be prescribed by the Secretary of the Treasury. Should a Federal intermediate credit bank be dissolved or go into liquidation, after the payment of all debts and other obligations as hereinbefore provided, any surplus remaining shall be paid to and become the property of the United States and shall be similarly applied. (July 17, 1916, sec. 206 (b); Mar. 4, 1923, sec. 2, 42 Stat. 1457; May 19, 1932, sec. 3, 47 Stat. 159; Aug. 19, 1937, sec. 30, 50 Stat. 715; 12 U. S. C., sec. 1072.)

638-230. Liability of one bank for debentures issued by other banks; agreements by banks for transfer of funds for debenture payments.-That any Federal Intermediate Credit Bank issuing debentures or other such obligations under this title shall be primarily liable therefor, and shall also be liable, upon presentation of the coupons for interest payments due upon any such debentures or obligations issued by any other Federal Intermediate Credit Bank and remaining unpaid in consequence of the default of the other Federal Intermediate Credit Bank. Any Federal Intermediate Credit Bank shall likewise be liable for such portion of the principal of debentures or obligations so issued as are not paid after the assets of such other Federal Intermediate Credit Bank have been liquidated and distributed. Such losses, if any, either of interest or of principal, shall be assessed by the Federal Farm Loan Board [now Farm Credit Administration]* against solvent Federal Intermediate Credit Banks liable therefor in proportion to the amount of capital stock, surplus, and debentures or other such obligations which each may have outstanding at the time of such assessment. Every Federal Intermediate Credit Bank shall, by appropriate action of its board of directors duly recorded in its minutes, obligate itself to become liable on debentures and other such obligations as provided in this section: Provided, That in view of the liability of all Federal intermediate credit banks for the debentures and other such obligations of each bank under this Act, the banks shall, in accordance with rules, regulations, and orders of the Federal Farm Loan Board [now Farm Credit Administration]*, enter into adequate agreements and arrangements among themselves by which funds shall be transferred and/or made available from time to time for the payment of all such debentures and other such obligations and the interest thereon when due in accordance with the terms thereof. (July 17, 1916, sec. 207; Mar. 4, 1923, sec. 2, 42 Stat. 1458; May 19, 1932, sec. 4, 47 Stat. 159; 12 U. S. C., sec. 1081.)

638-231. Reports of condition of banks and other lending institu tions rediscounting with credit banks; examinations and audits of credit banks.—That in order to enable each Federal Intermediate Credit Bank to carry out the purpose of this title, the Comptroller of the Currency is hereby authorized and directed, upon the request of any Federal Intermediate Credit Bank, (1) to furnish for the confidential use of such bank such reports, records, and other information, as he may have available, relating to the financial condition of national banks through or for which the Federal Intermediate Credit Bank has

*See Ex. Or. 6084, p. 254, this volume.

made or contemplates making discounts, and (2) to make through his examiners, for the confidential use of the Federal Intermediate Credit Bank, examinations of organizations through or for which the Federal Intermediate Credit Bank has made or contemplates making discounts or loans: Provided, That no such examination shall be made without the consent of such organization except where such examination is required by law: Provided, That any organization, except State banks, trust companies, and savings associations, shall, as a condition precedent to securing rediscount privileges with the Federal Intermediate Credit Bank of its district, file with such bank its written consent to its examination as may be directed by the Federal Farm Loan Board [now Farm Credit Administration]* by farm credit examiners; and State banks, trust companies, and savings associations may be in like manner required to file their written consent that reports of their examination by constituted authorities may be furnished by such authorities upon request to the Federal Intermediate Credit Bank of their district. Each Federal Intermediate Credit Bank shall be examined and audited at least once each year by the Federal Farm Loan Board [now Farm Credit Administration]*, and the results of such examination and audit shall be made public by the board [now administration]*. (July 17, 1916, sec. 208 (a); Mar. 4, 1923, sec. 2, 42 Stat. 1458; Aug. 19, 1937, sec. 20, 50 Stat. 710; 12 U. S. C., sec. 1091.)

638-232. Submission and publication of reports of condition by banks.Every Federal Intermediate Credit Bank shall make to the Federal Farm Loan Board [now Farm Credit Administration]* not less than three reports during each year as requested by the board [now administration]* and according to the form which may be prescribed by the board [now administration]*, verified by the oath or affirmation of the president, or secretary, or treasurer, of each Federal Intermediate Credit Bank and attested by the signature of at least three of the directors. Each report shall exhibit, in detail and under appropriate heads, the resources and liabilities of the Federal Intermediate Credit Bank at the close of business on any past day specified by the Federal Farm Loan Board [now Farm Credit Administration]* within five days from the receipt of a request or requisition therefor from the board [now administration]*, and in the same form in which it is made to the Federal Farm Loan Board [now Farm Credit Administration]* shall be published in a newspaper published in the place where such Federal Intermediate Credit Bank is established, or if there is no newspaper in the place, then in the one published nearest thereto, in the same county, at the expense of the bank; and such proof of publication shall be furnished as may be required by the Federal Farm Loan Board [now Farm Credit Administration]*. The Federal Farm Loan Board [now Farm Credit Administration]* shall also have power to call for special reports from any particular Federal Intermediate Credit Bank whenever in its judgment the same are necessary for a full and complete knowledge of is condition. (July 17, 1916, sec. 208 (b); Mar. 4, 1923, sec. 2, 42 Stat. 1458; 12 U. S. C., sec. 1092.) 638-233. Investigations and reports by land bank appraisers and examiners for credit banks.-Land bank appraisers are authorized, upon the request of any Federal Intermediate Credit Bank and with the approval of the Federal Farm Loan Board [now Farm Credit Admin

1

istration]*, to investigate and make a written report upon the products covered by warehouse receipts or shipping documents, and the live stock covered by mortgages, which are security for notes or other such obligations representing any loan to any organization, under this title. Farm credit examiners are authorized, upon the request of any Federal Intermediate Credit Bank and with the approval of the Federal Farm Loan Board [now Farm Credit Administration]*, to examine and make a written report upon the condition of any organization, except national banks, to which the Federal Intermediate Credit Bank contemplates making any such loan. (July 17, 1916, sec. 208 (c); Mar. 4, 1923, sec. 2, 42 Stat. 1458; Aug. 19, 1937, sec. 20, 50 Stat. 710; 12 U. S. C., sec. 1093.)

638-234. Cost of examinations; assessments against organizations investigated. The Federal Farm Loan Board [now Farm Credit Administration]* shall assess the cost of all examinations made by the examiners of the board [now administration]* under the provisions of this title upon the bank, trust company, savings institution, or organization investigated, in accordance with the regulations to be prescribed by the board [now administration]*. (July 17, 1916, sec. 208 (d); Mar. 4, 1923, sec. 2, 42 Stat. 1458; 12 U. S. C., sec. 1094.)

638-235. Reports on condition of institutions receiving loans or deposits. The executive departments, boards, commissions, and independent establishments of the Government, the Reconstruction Finance Corporation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Reserve banks are severally authorized under such conditions as they may prescribe, upon the request of the Farm Credit Administration to make available to the Farm Credit Administration or any district bank or district corporation operating under its supervision, in confidence, all reports, records or other information they may have relating to the condition of any institution to which the Administration, such district bank, or corporation has made or contemplates making loans or for which it has discounted or contemplates discounting paper, or which it is using or contemplates using as a custodian of securities or other credit instruments, or as a depositary. (July 17, 1916, sec. 208 (e); June 3, 1935, sec. 8, 49 Stat. 316; Aug. 23, 1935, sec. 203 (a), 49 Stat. 704; Aug. 19, 1937, sec. 31, 50 Stat. 716; 12 U. S. C., sec. 1095.)

638-236. Rules and regulations; authority of Farm Credit Administration. That the Federal Farm Loan Board [now Farm Credit Administration]* is authorized to make such rules and regulations, not inconsistent with law, as it deems necessary for the efficient execution of the provisions of this title. (July 17, 1916, sec. 209; Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1101.)

638-237. Tax exemption; capital and income; debentures instrumentalities of Government.-That the privileges of tax exemption accorded under section 26 of this Act shall apply also to each Federal Intermediate Credit Bank, including its capital, reserve, or surplus, and the income derived therefrom, and the debentures issued under this title shall be deemed and held to be instrumentalities of the Government and shall enjoy the same tax exemptions as are accorded farm loan bonds in said *See Ex. Or. 6084, p. 254, this volume.