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FEDERAL FARM MORTGAGE CORPORATION

HOUSE OF REPRESENTATIVES,

COMMITTEE ON AGRICULTURE,

Washington, D.C., January 10, 1934. (The committee this day met, Hon. Marvin Jones, chairman, presiding.)

The CHAIRMAN. The committee will come to order, please.

We have met for the consideration of H.R. 6670 which has for its purpose in the main the guaranteeing of the principal of the Emergency Land Bank bonds.

I have asked the Farm Credit Administration to make an explanation of its purposes and requirements. Governor Myers is here this morning and we will be glad to hear from him.

(The bill is as follows:)

(H.R. 6670, 73d Cong., 2d sess.) (A BILL To provide for the establishment of a corporation to aid in the refinancing of farm debts, and for

other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Governor of the Farm Credit Administration, hereinafter in this Act referred to as the “Governor”, is authorized to organize and charter a corporation to be known as the “Federal Farm Mortgage Corporation”, hereinafter in this Act referred to as the "corporation". The board of directors of such corporation shall consist of the Secretary of the Treasury, or an officer of the Treasury designated by him, the Governor, the Land Bank Commissioner, and two officers of the Farm Credit Administration to be designated by the Governor. The terms of the directors designated by the Governor shall be for a period of twelve months commencing January 1 of each year, but the terms of the directors first designated shall be for the balance of the twelve months' period commencing January 1, 1934, but a director appointed to fill a vacancy shall hold his office for the unexpired term of the director whose place he is selected to fill. Any director designated by the Governor may at any time be removed by him for cause. The directors shall receive no additional compensation for their services as directors of the corporation, but may be allowed actual necessary traveling and subsistence expenses when engaged in the business of the corporation outside of the District of Columbia. The Governor shall be the chairman of the board of directors. The directors shall have power to adopt such bylaws and amendments to the charter of the corporation as they deem necessary for the conduct of the business of the corporation. The directors shall have power, without regard to the provisions of other laws applicable to the employment and compensation of officers and employees of the United States, to employ and fix the compensation of such agents, officers, and employees of the corporation as may be necessary to carry out the powers and duties conferred upon the corporation, and to prescribe the manner in which the obligations of the corporation shall be incurred and its expenses allowed and paid.

Sec. 2. The corporation shall have succession until dissolved by Act of Congress; shall have power to sue and be sued in any court, to adopt and use a corporate seal, to make contracts, and to acquire, hold, and dispose of real and personal property necessary and incident to the conduct of its business; and shall have such other powers necessary and incident to carrying out its powers and duties under this or any other Act of Congress as may be provided by law or in its charter and bylaws or in any amendments thereto. The corporation shall

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be entitled to the free use of the United States mails in the same manner as the executive departments of the Government. The corporation, with the consent of any board, commission, independent establishment, or executive department of the Government, may avail itself of the use of information, services, facilities, officers, agents, and employees thereof, in carrying out the provisions of this Act.

SEC. 3. The capital of the corporation shall be in the sum of $200,000,000, which shall be subscribed by the Governor on behalf of the United States in such amounts and at such times as he deems necessary for the purposes of the corporation. For the purpose of such capital subscription, the funds and proceeds thereof made available to the Land Bank Commissioner under section 32 of the Emergency Farm Mortgage Act of 1933 and the mortgages taken by the Commissioner and the credit instruments secured thereby are hereby transferred and made available to the Governor.

Sec. 4. (a) With the approval of the Secretary of the Treasury, the corporation is authorized to issue bonds in an amount not exceeding in the aggregate $2,000,000,000 at any one time outstanding. Such bonds shall be in such forms and denominations, shall have such maturities, shall bear such rates of interest, shall be subject to such terms and conditions, and shall be issued in such manner and sold at such prices, as may be prescribed by the corporation, with the approval of the Secretary of the Treasury. Such bonds 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, and shall, on account of such guaranty, 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. In the event that the corporation shall be unable to pay upon demand, when due, the principal of, or interest on, such bonds, the Secretary of the Treasury shall pay to the holder 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 amount so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such bonds. The Secretary of the Treasury, in his discretion, is authorized to purchase any bonds of the corporation 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 Loan Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are extended to include any purchases of the corporation's bonds hereunder. The Secretary of the Treasury may, at any time, sell any of the bonds of the corporation acquired by him under this section. All redemptions, purchases, and sales by the Secretary of the Treasury of the bonds of the corporation shall be treated as public debt transactions of the United States. Such bonds shall be fully and adequately secured by such assets of the corporation and in such manner as shall be prescribed by its board of directors. The corporation shall have power to purchase such bonds in the open market at any time and at any price. On such terms and conditions as may be agreed upon, the corporation may exchange such bonds, upon application of a Federal land bank issuing bonds after the enactment of this Act under the provisions of the Federal Farm Loan Act, as amended, for such farm loan bonds of equal face value; and may exchange farm loan bonds held by it for bonds of the corporation of equal face value.

(b) The corporation is further authorized to purchase from time to time, for cash, consolidated bonds of the twelve Federal land banks issued or to be issued under the provisions of the Federal Farm Loan Act, as amended, at such price and upon such terms as may be approved by the board of directors of the corporation, and to make loans to Federal land banks on the security of such consolidated bonds.

(c) In order to furnish bonds for delivery by the Federal Farm Mortgage Corporation, the Secretary of the Treasury is hereby authorized to prepare suitable bonds in such form, subject to the provisions of this Act, as the board of directors may approve, such bonds when prepared 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 expenditures made in the preparation, custody, and delivery of such bonds.

Sec. 5. After ninety days after the enactment of this Act, no Federal land bank shall issue any bonds under the provisions of the last paragraph of section 32 of the Federal Farm Loan Act, as amended, subject to the guarantee of interest on such bonds by the United States, but this provision shall not apply to the issuance of any bond to refinance any bond which is or has been issued subject to such guarantee of interest.

Sec. 6. Direct loans made under section 7 of the Federal Farm Loan Act, as amended (U.S.C., Sup. VII, title 12, sec. 723), or under section 32 of the Emergency Farm Mortgage Act of 1933, may, at the option of the Federal land bank or the land bank commissioner, as the case may be, be made in bonds of the Federal Farm Mortgage Corporation.

Sec. 7. The twelfth paragraph of section 12 of the Federal Farm Loan Act, as amended (U.S.C., Sup. VII, title 12, sec. 772), is amended to read as follows:

Amounts transmitted to farm loan associations by Federal land banks to be loaned to its members shall, at the option of the bank, be in current funds or Federal Farm Mortgage Corporation bonds, or, at the option of the borrower, in farm loan bonds.

SEC. 8 (a). Section 13 of the Federal Farm Loan Act, as amended (U.S.C., Sup. VII, title 12, sec. 781), is amended by inserting at the end thereof the following new paragraphs:

"Fifteenth. To exchange farm loan bonds for Federal Farm Mortgage Corporation bonds of equal face value, and to purchase Federal Farm Mortgage Corporation bonds at or below par.

“Sixteenth. To exchange Federal Farm Mortgage Corporation bonds for farm loan bonds of equal face value.”

(b) The seventh paragraph of section 22 of the Federal Farm Loan Act, as amended (U.S.C., title 12, sec. 897), is amended by adding the following after the first subparagraph (d) thereof:

“(e). To purchase Federal Farm Mortgage Corporation bonds."

Sec. 9. Section 32 of the Emergency Farm Mortgage Act of 1933 (U.S.C., Sup. VII, title 12, sec. 1016) is amended by inserting at the end thereof the following: "Upon issuance of the charter of the Federal Farm Mortgage Corporation, the Land Bank Commissioner shall, in his name, make loans under this section on behalf of such corporation, and the mortgages and credit instruments secured thereby, together with the funds available to the Land Bank Commissioner under this section, are transferred to such corporation. The proceeds of bonds issued under section 4 of the Federal Farm Mortgage Corporation Act are hereby made available for the purposes of this section, but the face value of bonds which may be issued for such purposes shall not exceed $600,000,000.”

Sec. 10. Section 62 of the Farm Credit Act of 1933 (relating to fiscal agents of the United States) (U.S.C., Sup. VII, title 12, sec. 1138b) is amended by inserting after Associations,” the following: "the Federal Farm Mortgage Corporation,"

Sec. 11. (a) The corporation, including its franchise, its capital, reserves, and surplus, and its income shall be exempt from all taxation now or hereafterimposed 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.

(b) Mortgages executed to the Land Bank Commissioner and mortgages held by the corporation, and the credit instruments secured thereby, and bonds issued by the corporation under the provisions of this Act, shall be deemed and held to be instrumentalities of the Government of the United States, and as such they and the income derived therefrom shall be exempt from Federal, State, municipal, and local taxation (except estate, inheritance, and gift taxes).

SEC. 12. Section 64 of the Farm Credit Act of 1933 (relating to unlawful acts and penalties). (U.S.C., Sup. VII, title 12, sec. 1138d) is amended by inserting after “Farm Credit Administration" wherever such phrase appears a comma and the following: "any Federal intermediate credit bank, or the Federal Farm Mortgage Corporation,".

SEC. 13. Paragraph (2) of subsection (a) of section 5 of the Farm Credit Act of 1933 (U.S.C., Sup. VII, title 12, sec. 1131i) is amended by striking out the period at the end thereof and inserting a comma and the following: "and the notes or other obligations evidencing such advances and loans and the security therefor are hereby transferred to the Governor of the Farm Credit Administration."

SEC. 14. (a) Section 5 of the Farm Credit Act of 1933 (U.S.C., Sup. VII, title 12, sec. 1131i) is amended by inserting at the end thereof the following new subsection:

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