section. (July 17, 1916, sec. 210; Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1111.)

638-238. Offenses by officers, employees, or agents; embezzlement; misapplication of funds; unauthorized making, issuing, or assigning instruments; false entries.-That_any officer, director, agent, or employee of a Federal Intermediate Credit Bank who embezzles, abstracts, purloins, or willfully misapplies any of the moneys, funds, or credits of such bank, or who, without authority from such bank, draws any order or bill of exchange, makes any acceptance, issues, puts forth, or assigns any note, debenture, bond, draft, bill of exchange, mortgage, judg ment, or decree, or who makes any false entry in any book, report, or statement of such bank with intent in any case to injure or defraud such bank or any other company or person, or to deceive any officer of such bank or the Federal Farm Loan Board [now Farm Credit Administration]*, or any agent or examiner appointed to examine the affairs of such bank; and every receiver of such bank who with like intent to defraud or injure embezzles, abstracts, purloins, or willfully misapplies any of the moneys, funds, or assets of such bank, and every person who with like intent aids or abets any officer, director, agent, employee, or receiver in any violation of this section, shall be deemed guilty of a misdemeanor, and upon conviction thereof in any district court of the United States, shall be fined not more than $5,000, or shall be imprisoned for not more than five years, or both, at the discretion of the court. (July 17, 1916, sec. 211 (a); Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1121.)

638-239. False statements to banks.-Whoever makes any statement, knowing it to be false, for the purpose of obtaining for himself or for any other person, firm, corporation, or association any advance, or extension or renewal of an advance, or any release or substitution of security from such bank, or for the purpose of influencing in any other way the action of such bank, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both. (July 17, 1916, sec. 211 (b); Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1122.)

638-240. Overvaluation of property offered as security for loan.Whoever willfully overvalues any property offered as security for any such advance shall be punished by a fine of not more than $5,000, or by imprisonment for not more than two years, or both. (July 17, 1916, sec. 211 (c); Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1123.)

638-241. Offenses by examiners.-Any examiner appointed under this Act who shall accept a loan or gratuity from any organization examined by him, or from any person connected with any such organization in any capacity, or who shall disclose the names of borrowers to other than the proper officers of such organization, without first having obtained express permission in writing from the Land Bank Commissioner or from the board of directors of such organization, except when ordered to do so by a court of competent jurisdiction or by direction of the Congress of the United States or of either House thereof, or any committee of Congress or of either House duly authorized, shall be punished by a fine of not exceeding $5,000 or by imprisonment of not exceeding one year, or both, and may be fined a further sum equal to the money so loaned or gratuity given, and shall forever thereafter be disqualified from holding office as an examiner

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

under the provisions of this Act. No examiner while holding such office shall perform any other service for compensation for any bank or banking or loan association or for any person connected therewith in any capacity. (July 17, 1916, sec. 211 (d); Mar. 4, 1923, sec. 2, 42 Stat. 1459; June 16, 1933, sec. 80 (a), 48 Stat. 273; 12 U. S. C., sec. 1124.)

638-242. Offenses by officers, employees, or agents of banks; receiving fees or gifts.-Whoever, being an officer, director, employee, agent or attorney of a Federal Intermediate Credit Bank, stipulates for or receives or consents or agrees to receive any fee, commission, gift, or thing of value, from any person, firm, or corporation for procuring or endeavoring to procure for such person, firm, or corporation, or for any other person, firm, or corporation any loan from any such corporation or extension or renewal of loan or substitution of security, or the purchase or discount or acceptance of any paper, note, draft, check, or bill of exchange by any such corporation, shall be deemed guilty of a misdemeanor and shall upon conviction thereof be imprisoned for not more than one year and fined not more than $5,000, or both. (July 17, 1916, sec. 211 (e); Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. Č., sec. 1125.)

638-243. Forgery, counterfeiting, and like offenses relating to obligations of banks.-Any person who shall falsely make, forge, or counterfeit or cause or procure to be falsely made, forged, or counterfeited or willingly aid or assist in falsely making, forging, or counterfeiting any debenture, coupon, or other obligation in imitation of or purporting to be in imitation of the debenture, coupon, or other obligation issued by any Federal Intermediate Credit Bank, or any person who shall pass, utter, or publish or attempt to pass, utter, or publish any false, forged, or counterfeited, debenture, coupon, or other obligation purporting to be issued by any such bank knowing the same to be falsely made, forged, or counterfeited, or any person who shall falsely alter or cause or procure to be falsely altered or shall willingly aid or assist in falsely altering any such debenture, coupon, or other obligation or who shall pass, utter, or publish as true any falsely altered or spurious debenture, coupon, or other obligation issued or purporting to have been issued by any such bank knowing the same to be falsely altered or spurious, shall be punished by a fine of not exceeding $5,000 or by imprisonment not to exceed five years, or both. (July 17, 1916, sec. 211 (f); Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1126.)

638-244. False representations as to debentures or other obligations of banks. Any person who shall deceive, defraud, or impose upon or who shall attempt to deceive, defraud, or impose upon any person, partnership, corporation, or association by making any false pretense or representation concerning the character, issue, security, contents, conditions, or terms of any debenture, coupon, or other obligation issued under the terms of this title, shall upon conviction be fined not exceeding $500, or imprisoned not to exceed one year, or both. (July 17, 1916, sec. 211 (g); Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1127.)

638-245. Unlawful use of words "Federal intermediate credit bank."All corporations not organized under the provisions of this title. are prohibited from using the words "Federal Intermediate Credit Bank" as part of their corporate name, and any violation of this pro

hibition shall subject the party charged therewith to a civil penalty of $50 for each day during which the violation continues. (July 17, 1916, sec. 211 (h); Mar. 4, 1923, sec. 2, 42 Stat. 1459; 12 U. S. C., sec. 1128.)

638-246. Charging of unauthorized fees or commissions by banks.That no Federal Intermediate Credit Bank shall charge or receive any fee, commission, bonus, gift, or other consideration not herein. specifically authorized. (July 17, 1916, sec. 212; Mar. 4, 1923, sec. 2, 42 Stat. 1461; 12 U. S. C., sec. 1129.)

638-247. Production credit corporations; establishment; number; location. The Governor of the Farm Credit Administration, hereinafter 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 farm credit district in the city in which there is located a Federal land bank. The members of the several farm credit boards of the farm credit districts provided for in the Farm Credit Act of 1937 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. (June 16, 1933, sec. 2, 48 Stat 257; Aug. 19, 1937, sec. 11, 50 Stat. 708; 12 U. S. C., sec. 1131.)

638-248. Charters and bylaws.-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. (June 16, 1933, sec. 3, 48 Stat. 257; 12 U. S. C., sec. 1131a.) 638-249. Capital stock; amount; value of shares; amount and subscription for initial stock; payments for stock subscribed on behalf of United States. 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 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. (June 16, 1933, sec. 4, 48 Stat. 257; 12 U. S. C., sec. 1131b.)

638-250. Purchase of stock in production credit associations; class of stock to be purchased and held; amount of stock; retirement of stock held by corporations; application of earnings on stock held by corporations.

Stock in associations organized under this section.-(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.

Stock in associations not organized under this section; restrictions and limitations. (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.

Earnings on stock in associations; application of; establishment and investment of surplus. (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.

Application of excess earnings on stock in associations; retirement of stock in corporations held by Government. (d) The amount of such excess of earnings not required in order to comply with the provisions of subsection (c) shall be paid into the revolving fund heretofore authorized. Stock held by the governor in the Production Credit Corporation shall be retired upon such payment in an amount equal to the amount of such payment. (June 16, 1933, sec. 6 (a) to (d), 48 Stat. 259; 12 U. S. C., sec. 1131c.)

638-251. Organization; articles of association; charters; bylaws; powers of governor respecting associations.-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 association 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 Corporation 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 operations may be carried on; fixing the method of election and appointment 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 consolidation of two or more such associations. The governor may, at any time, direct such changes in the charter of any such association as he finds necessary in accomplishing the purposes of this title. Bylaws of any such association may be adopted by the directors but shall not be valid unless approved by the governor. (June 16, 1933, sec. 20, 48 Stat. 259; 12 U. S. C., sec. 1131d.)

638-252. Capital stock; value of shares; classes of stock; voting rights; limitation on transfer of class B stock; exchange of class B stock upon holder ceasing to be borrower; dividends; ownership of stock as entitling credit corporation to approve or remove officers of association.-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 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 without 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 committee of such association shall be subject to the approval of the president of the Production Credit Corporation and during such