FEDERAL FARM MORTGAGE CORPORATION

The Federal Farm Mortgage Corporation was created by an Act of Congress approved January 31, 1934, to aid in financing the lending operations of the Federal land banks and Land Bank Commissioner, particularly the farm debt refinancing program begun in the spring of 1933. To carry out its purposes the corporation is authorized to issue and have outstanding at any one time a total of not more than $2,000,000,000 of bonds. The corporation has its principal office in Washington, D.C., and is managed by a board of directors, consisting of the Governor of the Farm Credit Administration, who is chairman of the board; the Secretary of the Treasury or a Treasury officer designated by him; and the Land Bank Commissioner.

QUESTIONS AND ANSWERS

1. Q. Are farm mortgage loans of the Federal land banks and the Land Bank Commissioner now being made in bonds of the Federal Farm Mortgage Corporation?

A. Yes; the disbursement of loan proceeds in cash has been discontinued for the present and all loans are now being made in bonds, except for making payments of less than $100 and for small amounts to meet special requirements, such as for the payment of taxes, insurance premiums on the properties and fees due to local national farm loan associations and to the Federal land bank.

2. Q. What is the capital of the Federal Farm Mortgage Corporation?

A. The corporation is capitalized at $200,000,000. Its resources also include consolidated bonds of the Federal land banks taken in exchange for the corporation's bonds, and the farm mortgages accepted by the Land Bank Commissioner. All assets of the corporation, of course, will be available for the payment of the bonds. 3. Q. Are the bonds guaranteed by the United States Government?

A. Yes; they are guaranteed fully and unconditionally, as to principal and interest, by the Government of the United States. This guaranty is expressed on the face of the bonds.

4. Q. What are some other features of these bonds?

A. In addition to being guaranteed fully and unconditionally as to payment of principal and interest by the United States Government, the bonds of the Federal Farm Mortgage Corporation

(a) Are as readily marketable as United States Government bonds;

(b) Are lawful security for 15-day borrowings by member banks of the Federal Reserve System; and

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(c) Are lawful investments (and may be accepted as security) for all fiduciary, trust, and public funds of which the deposit or investment is under the authority or control of the Gov

ernment.

5. Q. What interest rates do these bonds carry?

A. It is contemplated that the bonds will carry interest rates comparable to those on long-term United States Government bonds. Federal Farm Mortgage Corporation bonds of the first issue bear interest at the rate of 34 percent per annum, payable semiannually. 6. Q. What maturities do these bonds carry?

A. Bonds of the first issue, dated March 15, 1934, mature in 30 years from that date, and are callable upon notice 10 years after the date of issue. The amounts, terms, and conditions of the bonds are determined by the board of directors of the corporation, subject to the approval of the Secretary of the Treasury.

7. Q. Are the bonds tax exempt?

A. Yes; bonds issued by the Federal Farm Mortgage Corporation, together with the income derived therefrom, are exempt from all Federal, State, municipal, and local taxation (except surtaxes, estate, inheritance, and gift taxes).

8. Q. In what forms and denominations are the bonds issued? A. The bonds are issued initially in coupon form in denominations of $100, $500, and $1,000. They are exchangeable for coupon bonds in denominations of $5,000 or $10,000, or for registered bonds in denominations of $100, $500, $1,000, $5,000, or $10,000.

9. Q. How is interest collected on the bonds?

A. On a coupon bond the semiannual interest payment may be collected by detaching the matured coupon and presenting it to a local bank for collection. Interest on registered bonds is paid by checks of the United States Treasury, mailed to the persons who, one month before the payment date, are registered as the holders of the bonds.

10. Q. How are these bonds sold?

A. Those who find it necessary or desirable to sell Federal Farm Mortgage Corporation bonds for cash at any time are advised to acquaint themselves with the current price quotations on the principal markets where United States Government bonds are bought and sold. Most financial journals and many daily newspapers publish these quotations regularly. Bond dealers and many bankers are prepared to act as agents in the sale of the bonds, or to purchase them for their own accounts.

[Note: When selling bonds, account should be taken of the accrual of interest to the time of sale. The seller is entitled to accrued interest for the period during which he has held the bond since the previous interest-payment date. In computing accrued interest on registered bonds, buyers and sellers should take account of the fact that the Division of Loans and Currency of the Treasury makes the interest check payable to the person who was registered as holding the bond a month prior to the interest-payment date.]

11. Q. How can bonds be exchanged?

A. If the holder of one or more bonds wishes to obtain bonds of different denominations than those he holds, he may make the desired exchange through a Federal Reserve bank. The procedure ordinarily is to take the bonds to be exchanged to a local bank and request the bank to send them to the Federal Reserve bank for exchange. Federal Reserve banks also arrange for the exchange of coupon bonds for registered bonds, and of registered bonds for coupon bonds. In making such an exchange, the holder of the bond requests the local bank to effect an exchange or transfer through the Federal Reserve bank of the district.