borrower is located; and that the rate of interest on any loan made under the provisions of section 1141e (a) (2) hereof shall conform as nearly as may be practicable to the prevailing rate on mortgage loans made to members of national farm loan associations.

(b) Payments of principal or interest upon any such loan or advance shall be covered into the revolving fund [provided for in section 1141d].

(c) Loans to any cooperative association or stabilization corporation shall be made upon the terms specified in this subchapter and upon such other terms not inconsistent therewith and upon such security as the administration deems necessary.

(d) No loan or insurance agreement shall be made by the administration if in its judgment the agreement is likely to increase unduly the production of any agricultural commodity of which there is commonly produced a surplus in excess of the annual marketing requirements. (June 15, 1929, c. 24, § 8, 46 Stat. 14; Mar. 27, 1933, Ex. Or. 6084; June 16, 1933, c. 98, § 54, 48 Stat. 266; June 3, 1935, c. 164, § 11, 49 Stat. 316; Aug. 19, 1937, c. 704, § 5 (a), 50 Stat. 704.)

"Administration" mentioned in the text was substituted for "board" pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter.

See § 1141g and note thereto.

§ 1141g

Stabilization corporations.-(a) The administration may, upon application of the advisory commodity committee for any commodity, recognize as a stabilization corporation for the commodity any corporation if

(1) The administration finds that the marketing situation with respect to the agricultural commodity requires or may require the establishment of a stabilization corporation in order effectively to carry out the policy declared in section 1141; and

(2) The administration finds that the corporation is duly organized under the laws of a State or Territory; and

(3) The administration finds that all the outstanding voting stock or membership interests in the corporation are and may be owned only by cooperative associations handling the commodity; and

(4) The corporation agrees with the administration to adopt such bylaws as the administration may from time to time require, which bylaws, among other matters, shall permit cooperative associations not stockholders or members of the

§ 1141g corporation to become stockholders or members therein upon equitable terms.

(b) Any stabilization corporation for an agricultural commodity (1) may act as a marketing agency for its stockholders or members in preparing, handling, storing, processing, and merchandising for their account any quantity of the agricultural commodity or its food products, and (2) for the purpose of controlling any surplus in the commodity in furtherance of the policy declared in section 1141, may prepare, purchase, handle, store, process, and merchandise, otherwise than for the account of its stockholders or members, any quantity of the agricultural commodity or its food products whether or not such commodity or products are acquired from its stockholders or members.

(c) Upon request of the advisory committee for any commodity the administration is authorized to make loans from the revolving fund to the stabilization corporation for the commodity for working capital to enable the corporation to act as a marketing agency for its stockholders or members as hereinbefore provided. Not less than 75 per centum of all profits derived by a stabilization corporation each year from its operations as such a marketing agency shall be paid into a merchandising reserve fund to be established by the corporation. No such payment shall be required whenever the fund is in such amount as, in the judgment of the administration, constitutes a sufficient reserve for such operations of the corporation. Out of the remainder of such profits for the year the corporation shall repay any outstanding loan made under this subdivision and the accrued interest thereon, or if all such loans and accrued interest have been fully repaid, then it may distribute a patronage dividend to its stockholders or members. Such patronage dividend shall be paid to each stockholder or member on the basis of the total volume of the commodity or its products for the year marketed for his account through the corporation.

(d) Upon request of the advisory committee for any commodity the administration is authorized to make loans from the revolving fund to the stabilization corporation for the commodity to enable the corporation to control any surplus in the commodity as hereinbefore provided and for meeting carrying and handling charges and other operating expenses in connection therewith. The administration shall require a stabilization corporation to establish and

§ 1141g maintain adequate reserves from its profits from its surplus control operations before it shall pay any dividends out of such profits. All losses of the corporation from such operations shall be paid from such reserves, or if such reserves are inadequate, then such losses shall be paid by the Administration as a loan from the revolving fund. Any amounts so loaned for payment of losses shall be repaid into the revolving fund by the corporation from future profits from its surplus control operations. Any stabilization corporation receiving loans under this subdivision for surplus control operations shall exert every reasonable effort to avoid losses and to secure profits, but shall not withhold any commodity from the domestic market if the prices have become unduly enhanced, resulting in distress to domestic consumers. Stockholders or members of the corporation shall not be subject to assessment for any losses incurred in surplus control operations of the corporation.

(e) A stabilization corporation shall keep such accounts, records, and memoranda, and make such reports with respect to its transactions, business methods, and financial condition, as the administration may from time to time prescribe; shall permit the administration to audit its accounts annually and at such other times as the administration deems advisable; and shall permit the administration, upon its own initiative or upon written request of any stockholder or member, to investigate the financial condition and business methods of the corporation.

(f) No loan shall be made to any stabilization corporation unless, in the judgment of the administration, the loan is in furtherance of the policy declared in section 1141. (June 15, 1929, c. 24, § 9, 46 Stat. 14; Mar. 27, 1933, Ex. Or. 6084.)

This section constituted § 9 of the Agricultural Marketing Act of June 15, 1929. The powers and duties originally vested in the Federal Farm Board by this section were vested in the Farm Credit Administration, by 3 of Executive Order No. 6084, subject to the following provisions of § 6 of that Order:

"The functions vested in the Federal Farm Board by section 9 of the Agricultural Marketing Act are abolished, except that such functions shall continue to be exercised to such extent and for such time as may be necessary to permit the orderly winding up of the activities of stabilization corporations heretofore recog nized under authority of such section, and the governor of the Farm Credit Administration shall take appropriate action for winding up at the earliest practicable date the activities of such corporations and all affairs related to the exercise of such functions."

The "Advisory Commodity Committees" to which reference is made in this section were provided for by 3 of the Agricultural Marketing Act of June 15, 1929, which section was repealed by section 50 (a) of the Farm Credit Act of June 16, 1933.

"Administration" mentioned in the text was substituted for "board" pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter.

8 1141h

8 1141i

Avoidance of duplication; cooperation with other governmental establishments; obtaining information and data; cooperation with States, Territories, and agencies or subdivisions thereof; indicating research problems; transfer of offices, functions, etc.-(a) The administration shall, in cooperation with any governmental establishment in the Executive branch of the Government, including any field service thereof at home or abroad, avail itself of the services and facilities thereof in order to avoid preventable expense or duplication of effort.

(b) The President may by Executive order direct any such governmental establishment to furnish the administration such information and data as such governmental establishment may have pertaining to the functions of the administration [under this subchapter]; except that the President shall not direct that the administration be furnished with any information or data supplied by any person in confidence to any governmental establishment in pursuance of any provision of law or of any agreement with a governmental establishment.

(c) The administration may cooperate with any State or Territory, or department, agency, or political subdivision thereof, or with any person.

(d) The administration shall, through the governor, indicate to the appropriate bureau or division of the Department of Agriculture any special problem on which a research is needed to aid in carrying out the provisions of this subchapter.

(e) The President is authorized, by Executive order, to transfer to or retransfer from the jurisdiction and control of the administration the whole or any part of (1) any office, bureau, service, division, commission, or board in the Executive branch of the Government engaged in scientific or extension work, or the furnishing of services, with respect to the marketing of agricultural commodities, (2) its functions pertaining to such work or services, and (3) the records, property, including office equipment, personnel, and unexpended balances of appropriation, pertaining to such work or services. (June 15, 1929, c. 24, § 13, 46 Stat. 17; Mar. 27, 1933, Ex. Or. 6084.)

"Administration" mentioned in the text was substituted for "board" pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter.

Examination of books and accounts; limitation on purpose of examination respecting expenditures from revolving fund.-Vouchers approved

by the Governor of the Farm Credit Administration for expenditures from the revolving fund [provided for in section 1141d] pursuant to any loan or advance or from insurance moneys pursuant to any insurance agreement, shall be final and conclusive upon all officers of the Government; except that all financial transactions of the administration shall, subject to the above limitations, be examined by the General Accounting Office at such times and in such manner as the Comptroller General of the United States may by regulation prescribe. Such examination, with respect to expenditures from the revolving fund pursuant to any loan or advance or from insurance moneys pursuant to any insurance agreement, shall be for the sole purpose of making a report to the Congress and to the Administration of expenditures and of loan and insurance agreements in violation of law, together with such recommendations thereon as the Comptroller General deems advisable. (June 15, 1929, c. 24, § 14, 46 Stat. 18; Mar. 27, 1933, Ex. Or. 6084.)

Insurance agreements, to which reference is made in this section, were authorized to be made by § 11 of the Agricultural Marketing Act of June 15, 1929, which section was repealed by 50 (a) of the Farm Credit Act of June 16, 1933. The provision, as originally contained in the Agricultural Marketing Act, authorized the Federal Farm Board, upon application of cooperative associations, to enter into agreements, subject to specified conditions for the insurance of the associations against loss through price decline in the agricultural commodity handled by the associations and produced by the members thereof.

"Governor of the Farm Credit Administration" and "administration" mentioned in the text were substituted for "chairman of the board" and "board," respectively, pursuant to the Executive Order cited thereto, which is set out in full at the beginning of this chapter.

8 1141j

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Miscellaneous provisions (a) “Cooperative association" defined.-As used in this subchapter, the term "cooperative association" means any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services: Provided, however, That such associations are operated for the mutual benefit of the members thereof as such producers or purchasers and conform to one or both of the following requirements:

First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; and