obtained specifying the amount of such issue of preferred stock and his approval thereof and that the amount has been duly paid in as a part of the capital of such association, which certificate shall be deemed to be conclusive evidence that such preferred stock has been duly and validly issued.

Section 336 of the bill renders inoperative on July 1, 1937, but not by express amendment, the act of March 3, 1901, as amended, and section 4 of the act of March 4, 1933, relating to stockholders' liability in District of Columbia banks. The pertinent sections of these acts are set forth for the information of the House.

Act of March 4, 1933 (regulating banking in the District of Columbia) (D. C. Code, Supp. I, secs. 300a (a) and 300a (b)).

SEC. 4. (a) The shareholders of every savings bank or savings company other than building associations now or hereafter organized under authority of any Act of Congress to do business in the District of Columbia and of every banking institution organized by virtue of the laws of any of the States of the Union to do or doing a banking business in the District of Columbia, who acquire in any manner the shares of any such savings bank or savings company or such banking institutions other than building associations after the enactment of this Act, shall be held individually responsible equally and ratably, and not one for another, for all contracts, debts, and engagements of such bank or company, to the extent of the amount of their stock so acquired therein, at the par value thereof, in addition to the amount invested in such shares.

(b) The shareholders, at the date of the enactment of this Act, of every savings bank or savings company other than building associations organized under authority of any Act of Congress to do business in the District of Columbia, and of every banking institution organized by virtue of the laws of any of the States of this Union to do or doing a banking business in the District of Columbia, shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such savings bank, savings company, or banking institution, entered into or incurred subsequent to the date of the enactment of this Act to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such shares. The words "entered into or incurred" as used in this section, shall be held to include any extension or renewal of any contracts, debt, and engagement renewed or extended after the enactment of this Act.

Act of March 3, 1901 (D. C. Code, Title 5, sec. 361).

SEC. 734. All stockholders of every company incorporated under this subchapter, or availing itself of its provisions under section 725, shall be severally and individually liable to the creditors of such company to an amount equal to and in addition to the amount of stock held by them respectively for all debts and contracts made by such company.

Section 337 of the bill amends the second paragraph of section 9 of the Federal Reserve Act.

SEC. 9. * * *

Any such State bank which, at the date of the approval of this Act, has established and is operating a branch or branches in conformity with the State law, may retain and operate the same while remaining or upon becoming a stockholder of such Federal Reserve bank; but no such State bank may retain or acquire stock in a Federal Reserve bank except upon relinquishment of any branch or branches established after the date of the approval of this Act beyond the limits of the city, town, or village in which the parent bank is situated: Provided, however, That nothing herein contained shall prevent any State member bank from establishing and operating branches in the United States or any dependency or insular possession thereof or in any foreign country, on the same terms and conditions and subject to the same limitations and restrictions as are applicable to the establishment of branches by national [banks.] banks, except that the approval of the Federal Reserve Board, instead of the Comptroller of the Currency, shall be obtained before any State member bank may hereafter establish any branch and before any State bank hereafter admitted to membership may retain any branch established after February 25, 1927, beyond the limits of the city, town, or village in which the parent bank is situated.

Section 338 of the bill amends section 5234 of the Revised Statutes.

SEC. 5234. On becoming satisfied, as specified in sections fifty-two hundred and twenty-six and fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes as therein mentioned, and is in default, the Comptroller of the Currency may forthwith appoint a receiver, and require of him such bond and security as he deems proper. Such receiver, under the direction of the Comptroller, shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to it, and, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal property of such association, on such terms as the court shall direct; and may, if necessary to pay the debts of such association, enforce the individual liability of the stockholders. Such receiver shall pay over all money so made to the Treasurer of the United States, subject to the order of the Comptroller, and also make report to the Comptroller of all his acts and proceedings. Provided, That the Comptroller may, if he deems proper, deposit any of the money so made in any regular Government depositary, or in any State or national bank either of the city or town in which the insolvent bank was located, or of a city or town as adjacent thereto as practicable; if such deposit is made he shall require the depositary to deposit United States bonds or other satisfactory securities with the Treasurer of the United States for the safe-keeping and prompt payment of the money so deposited: Provided, That no security in the form of deposit of United States bonds, or otherwise, shall be required in the case of such parts of the deposits as are insured under section 12B of the Federal Reserve Act, as amended. Such depositary shall pay upon such money interest at such rate as the Comptroller may prescribe, not less, however, than two per centum per annum upon the average monthly amount of such deposits.

Section 339 of the bill amends section 61 of the National Bankruptcy Act.

SEC. 61. DEPOSITORIES FOR MONEY.-a Courts of bankruptcy shall designate by order, banking institutions as depositories for the money of bankrupt estates, as convenient as may be to the residences of trustees, and shall require bonds to the United States, subject to their approval, to be given by such banking institutions, and may from time to time as occasion may require, by like order increase the number of depositories or the amount of any bond or change such depositories []: Provided, That no security in form of a bond or otherwise shall be required in the case of such part of the deposits as are insured under section 12B of the Federal Reserve Act, as amended.

Section 340 of the bill amends section 8 of the Postal Savings Depository Act of June 25, 1910.

SEC. 8. * * *

[Any depositor may withdraw the whole or any part of the funds deposited to his or her credit with the accrued interest only on notice given sixty days in advance and under such regulations as the Postmaster General may prescribe; but withdrawal of any part of such funds may be made upon demand, but no interest shall be paid on any funds so withdrawn except interest accrued to the date of enactment of the Banking Act of 1933: Provided, That Postal Savings depositories may deposit funds in member banks on time under regulations to be prescribed by the Postmaster General.] Subject to such regulations as the Postmaster General may prescribe, any depositor may withdraw the whole or any part of the funds deposited to his or her credit with the accrued interest after the expiration of sixty days after giving notice in writing of intention to withdraw, and any depositor may withdraw the whole or any part of such funds without such notice only on condition that there be deducted from the funds to his or her credit derived from interest an amount equivalent to interest for a period of not less than three months on the amount withdrawn. Notwithstanding any other provision of law, no interest shall be paid on any deposit in any postal savings depository office at a rate in excess of that which may lawfully be paid on savings deposits under regulations prescribed by the Federal Reserve Board pursuant to the Federal Reserve Act for member banks of the Federal Reserve System located in or nearest to the place where such depository office is situated. Postal savings depositories may deposit funds on time in member banks of the Federal Reserve System subject to the provisions of the Federal Reserve Act and the regulations of the Federal Reserve Board regarding the payment of time deposits and interest thereon.

О

THE AGRICULTURAL BANK NOTE BILL

APRIL 22, 1935.—Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. JONES, from the Committee on Agriculture, submitted the following

REPORT

[To accompany H. R. 7593]

The Committee on Agriculture, to whom was referred the bill (H. R. 7593) to facilitate the extension of agricultural credit at lower interest rates by providing for the issue of certain bank notes, and for other purposes, having had the same under consideration, report it back to the House without amendment and recommend that the bill do pass.

GENERAL STATEMENT

This bill is designed to furnish cheaper credit for agriculture by providing means by which interest rates may be reduced. The bill proposes to accomplish this result by enabling Federal Intermediate Credit banks to issue currency to secure funds to finance their lending to their borrowers. Under the present law such funds are obtained by the issuance of debentures. Since the Intermediate Credit banks will thus be able to save the interest they pay, they will be able to lend more cheaply to their borrowers. Under the present law provision is made by which a reduced interest rate to borrowers from the banks who, in turn, finance farmers will be passed on to farmers. This reduction will apply throughout the agricultural intermediate credit field because the Intermediate Credit banks supply funds to cooperatives, production credit associations, banks, livestock loan companies, and similar organizations which take farmer paper as security for loans for marketing and carrying crops and livestock.

In the land-mortgage field and the second-mortgage field, the bill proposes to reduce interest rates by two methods. Specific authority is given the Federal land banks to borrow from and discount with Intermediate Credit banks. Since the interest rate charged by the Intermediate Credits will be lower than that paid by land banks on

their bonds, that saving will inure to the benefit of the farmer borrowers from the land banks. In addition to this indirect method of interest reduction, the bill proposes to reduce interest rates directly on land bank and Commissioner loans hereafter made. The bill provides for an interest rate of not exceeding 2 percent on that part of any such loan which is not above $5,000 regardless of the total amount of the loan.

EXPLANATION OF THE BILL

Section 1 contains the short title.

Section 2 creates the Agricultural Bank Note Committee which is to administer the act. The committee consists of the Governor of the Farm Credit Administration, who is chairman, the Secretary of the Treasury, and the Intermediate Credit Commissioner. Each of these officers is given authority to designate a person in his agency who may, when so designated, act as a member of the Committee. The chairman of the Committee is to be the executive officer of the Committee but will exercise his powers subject to the general supervision and control of the Committee. The Committee is given the power to employ and fix the duties and compensation of officers and employees. Members of the Committee are not to receive additional compensation for their services. The Committee is given the privilege of the free use of the United States mails, and it may avail itself of the services of other Government agencies and their employees.

The expenses of the committee are to be paid out of assessments levied by the Committee on Federal Intermediate Credit Banks (sec. 2 (d)). These expenses are to be estimated by the Committee on an equitable basis and are to be paid by the banks within 15 days after demand. The Committee is given power to make rules and regulations to carry out its powers and duties.

Section 3 of the bill proposes to discontinue the authority of the Intermediate Credit banks to issue debentures. This abolition becomes effective 90 days after the date of the enactment of this act. It does not affect the power of the Intermediate Credit banks to issue obligations other than debentures. If the Committee unanimously finds, however, that the issue of debentures by any Intermediate Credit bank is necessary to supplement funds available through currency issue under the act or to meet emergency needs of the bank, the Committee can, with the approval of the President, authorize debenture issue for such purposes. This section also contains an express limitation prohibiting any Intermediate Credit bank from having outstanding debentures or other obligations (except currency) in excess of 10 times the amount of the paid-in capital and surplus of the bank. Nor can the bank have outstanding debentures and other obligations, and currency issued under the act in an amount in excess of 15 times the unimpaired capital plus the surplus of the bank. Provision is made under which the lien on assets of the bank created to secure note issue may be released in order to provide security for debenture issue under the emergency circumstances outlined above. Section 4 contains the authority to issue bank notes. An Intermediate Credit bank may apply to the chairman of the Committee for the purpose of securing authority to issue notes for any lawful purpose for which it may need funds. The chairman of the Committee is required to determine the need of the bank for funds, the

necessity of the note issue to meet such needs, and whether the requirements and purposes of the act will be carried out by such note issue. On the basis of such determination the chairman is to grant the application in whole or in part or to reject it entirely.

Section 4 (b) makes the notes issued under the act legal tender for all debts, public and private. They are also made obligations of the United States as well as the issuing bank. They constitute a first lien on all the unpledged property, except cash, real property, and tangible personal property, of the bank. Each Intermediate Credit bank is liable on the notes issued by a defaulting Intermediate Credit bank to the same extent as such bank is liable on the debentures of a defaulting Intermediate Credit bank under the present law. The total amount of notes which any bank may have outstanding cannot exceed the fair book value of its unpledged property, except tangible personal property or real property. In no case may the amount of notes which such bank has outstanding, together with the face amount of its outstanding debentures and other obligations, exceed 15 times the unimpaired capital and surplus of the bank. The total amount of notes which all banks may have outstanding at any one time cannot exceed two and one-half times the gold reserve set aside for such notes. Under section 5 (a) the amount of such gold reserve is $800,000,000.

Under section 4 (c) whenever an application to issue notes is approved, they are to be delivered to the Farm Loan Registrar, who is to hold the notes for delivery to the issuing bank. Section 4 (d) provides for the preparation of printing material and the printing of the notes. Their form and tenor are to be prescribed by the Secretary of the Treasury and the issuing bank is required to be identified on the note. Section 4 (e) provides for the deposit of the notes in the subtreasury or mint of the United States nearest the place of business of the issuing bank where they are to be held by the United States subject to delivery to the Farm Loan Registrar as indicated above. Section 4 (f) provides for payment by the Committee of the expenses of preparation, retirement, etc., in connection with the issuance of such notes.

Section 5 (a) sets aside in the Treasury the sum of $800,000,000 in gold, which sum is to be held as a reserve for notes issued under the act. Such gold shall be of the standard of weight and fineness provided in accordance with law on the date of the enactment of the act. The stabilization fund provided for in section 10 of the Gold Reserve Act of 1934 is reduced by $800,000,000.

Section 5(b) requires each issuing bank to keep not less than 5 percent of the total amount of its outstanding notes on deposit in the Treasury for the purpose of redemption. Such deposit must be in lawful money other than money issued under the act, and the deposit is considered property of the bank for the purpose of determining the amount of notes which it may issue.

Section 5(c) provides a similar requirement that the bank maintain a similar amount on hand for redemption at the bank, which amount is similarly treated as property of the bank.

Under section 6, upon demand at the bank issuing notes or at the Treasury, notes are to be redeemed in money other than money issued under this act. The redeeming agency is to determine the kind of money in which redemption is to be made. When redemption