All 69 Stat. 665.

(c) by striking out "the raising of livestock" wherever it appears in next to the last sentence of paragraph "Sixth" and substituting therefor "farming operations" and by striking out of such sentence "Land Bank Commissioner" and substituting therefor "Farm Credit Administration"; and

(d) by striking out "$100,000" from paragraph "Seventh" and substituting therefor "$200,000" and by striking out of such sentence "but loans to any one borrower shall not exceed $25,000 unless approved by the Land Bank Commissioner," and substituting "but loans to any one borrower shall not exceed $100,000 unless approved by the Farm Credit Administration,".

SEC. 305. Paragraph "Nineteenth" of section 13 of the Federal Farm 12 USC 781. Loan Act, as amended, is amended by adding at the end thereof a new sentence as follows: "Such a deferment may be permitted for other purposes for a period not exceeding five years under regulations prescribed by the Farm Credit Administration.".

902.

SEC. 306. (a) That part of section 23 of the Federal Farm Loan Act, 12 USC 901as amended, which precedes the last paragraph, is amended to read as follows: "Every Federal land bank shall semiannually carry to reserve account a sum not less than 50 per centum of its net earnings until said reserve account shall show a credit balance equal to the outstanding capital stock of said land bank. After said reserve is equal to the outstanding capital stock 10 per centum of the net earnings shall be added thereto semiannually until said reserve account shall show a credit balance equal to 150 per centum of the outstanding capital stock of said land bank, and any land bank having a credit balance in said reserve account in excess of 150 per centum of its outstanding capital stock may withdraw such excess from said reserve account with the approval of the Farm Credit Administration. Whenever said reserve shall have been impaired it shall be fully restored before any dividends are paid.

"After deducting the 50 per centum or the 10 per centum hereinbefore directed to be deducted for credit to reserve account, any Federal land bank may declare a dividend or dividends to shareholders of the whole or any part of the balance of its net earnings, but only with the approval of the Farm Credit Administration.

"The reserves of land banks shall be invested in accordance with rules and regulations prescribed by the Farm Credit Administration."

(b) The second sentence of section 24 of the Federal Farm Loan 12 USC 911Act, as amended, is amended by striking out the period at the end 915. thereof and adding the following: "until said reserve account shall show a credit balance equal to 50 per centum of the outstanding capital stock of said association, and any association having a credit balance in said reserve account in excess of 50 per centum of its outstanding capital stock may withdraw such excess from said reserve account with the approval of the Farm Credit Administration.".

(c) The amendments made by (a) and (b) of this section shall Effective become effective on the next January 1, or July 1 whichever first date. succeeds enactment hereof.

SEC. 307. Section 601 (a) of the Department of Agriculture Organic 58 Stat. 740. Act of 1944 is amended by inserting after "Federal land banks,", the 12 USC 832. second time it appears therein, "national farm loan associations,"; by striking out "joint-stock land banks," wherever it appears therein; and by striking out the period at the end thereof and inserting ", except that the amounts apportioned to national farm loan associations shall be assessed against and collected from the Federal land bank of the district which may in turn collect such amounts from the associations in a manner approved by the Farm Credit Administration.".

All 69 Stat. 666.

12 USC 640b.

12 USC 640d.

12 USC 6360.

Separability.

TITLE IV-MISCELLANEOUS PROVISIONS

SEC. 401. (a) Section 5 (b) of the Farm Credit Act of 1937, a amended, is amended by changing the sixth sentence thereof to rea as follows: "After the date of enactment of the Farm Credit Act o 1955, no person shall be eligible for election or appointment to mem bership on said Board if such person has within one year next preced ing the commencement of the term been a salaried officer or employe of the Farm Credit Administration, or a salaried officer or employe of any corporation operating under the supervision of the Farm Credi Administration.".

(b) Section 5 (d) of the Farm Credit Act of 1937, as amended, i amended

(1) by substituting "six months" for "three months" whereve it occurs in paragraph (2) thereof; and

(2) by adding at the end thereof a new paragraph as follows "(4) As directed by the Farm Credit Administration, the election of a director under section 5 (d) (2) by any group may be begur any time within six months before the expiration of the term of office to which the director is to succeed, subject to the required deter mination being made as of the date six months before the expiration of such term of office that a director so elected by such group is to serve in lieu of a district director (or third district director)."

SEC. 402. Section 4 of the Farm Credit Act of 1953 is amended

(a) by inserting in the first proviso in subsection (a) "all persons so tied shall be considered designated as nominees" in lieu of "the procedure prescribed therein shall be followed again until the tie is broken":

(b) by inserting before the period at the end of the second sentence of subsection (b) ", except that one full term of six years shall be considered to include an additional four months if the particular term is one which was legally extended for an additional four months"; and

(c) by adding the following additional sentence at the end of subsection (c): "All terms of office which otherwise would expire on November 30 of any year following enactment of the Farm Credit Act of 1955 are extended four months to expire on the following March 31 so that the term of office of all successors to the terms so extended shall begin with the first day of April.".

SEC. 403. (a) If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of the Act, and the application of such provisions to other persons or circumstances, shall not be affected thereby.

(b) The right to alter, amend, or repeal this Act is hereby expressly reserved.

Approved August 11, 1955.

84th Congress Chapter 741 - 2d Session

To merge production credit corporations in Federal intermediate credit banks; to provide for retirement of Government capital in Federal intermediate credit banks; to provide for supervision of production credit associations; and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in ('ongress assembled, That this Act may Farm Credit be cited as the "Farm Credit Act of 1956".

DECLARATION OF POLICY

SEC. 2. It is declared to be the policy of the Congress to continue to provide agriculture with a sound, dependable, and effective source of credit; to promote the efficiency of the farm credit system by merging production credit corporations in Federal intermediate credit banks and to facilitate increased farmer participation in the management, control, and ownership of the merged banks and retirement of Government capital therein; to encourage and promote the continued growth and development of the production credit associations as self-supporting cooperative lending institutions operating on a sound credit basis with maximum local authority to determine credit needs and loan policies consistent with the maintenance of a national production credit system; and to continue to provide other financing institutions making loans to farmers and ranchers with the right to borrow from and rediscount with such merged banks on a basis comparable with the production credit associations regardless of the ownership of such banks. The provisions of this Act shall be construed in keeping with this declaration of policy.

TITLE I-PRODUCTION CREDIT SYSTEM

SEC. 101. MERGER OF PRODUCTION CREDIT CORPORATIONS IN FEDERAL INTERMEDIATE CREDIT BANKS (a) TRANSFER OF ASSETS.-The production credit corporation in each farm credit district is hereby merged in the Federal intermediate credit bank of the district and all assets, funds, contracts, property, and records belonging to such corporation, except stock in production credit associations, are hereby transferred to and vested in such bank. All obligations and liabilities of the production credit corporation shall be assumed by the Federal intermediate credit bank of the district. Stock held by each production credit corporation in production credit associations is transferred to the Governor of the Farm Credit Administration and the Governor shall cancel an equal par amount of stock of the corporation.

(b) SERVICES TO AND SUPERVISION OF PRODUCTION CREDIT ASSOCIATIONS.-In order to carry out the declared policy of this Act with respect to the production credit associations, the Farm Credit Admin istration shall, by appropriate provisions in the charter and bylaws, or otherwise, provide for such organization and assignment of functions within the Federal intermediate credit banks as will assure proper supervision of and assistance to the production credit associations in a manner which will enable them to make sound credit available to farmers and ranchers. The income derived from the surplus transferred from the production credit corporation to the Federal intermediate credit bank of the district shall be used to pay expenses of the bank in providing such supervision and assistance, and expenses in excess of such income may be paid out of other resources of the bank.

Aot of 1956.

All 70 Stat. 660.

42 Stat. 1457. 12 USC 1061.

48 Stat. 348. 12 USC 11311.

(c) OFFICERS AND EMPLOYEES.-Notwithstanding any other provision of law, the employment of the officers and employees of each Federal intermediate credit bank and each production credit corporation is terminated on the effective date of this Act and the board of directors of the Federal intermediate credit bank shall, not later than sixty days prior to the effective date of this Act, take all necessary action to reemploy as of such effective date such of the officers and employees so terminated in such capacities as the board determines they are qualified and needed to carry out the functions, powers, and duties of the Federal intermediate credit bank. Such reemployment shall be subject to the approval of the Farm Credit Administration.

SEC. 102. Section 205 of the Federal Farm Loan Act, as amended, is amended to read as follows:

"CAPITAL STOCK

"SEC. 205. (a) CLASSES OF STOCK; OWNERSHIP; DIVIDENDS; AND RETIREMENT OF STOCK.-Each Federal intermediate credit bank is authorized to issue class A and class B stock as follows:

"(1) Class A stock shall have a par value of $100 per share and shall be issued to and held by the Governor of the Farm Credit Administration on behalf of the United States. Stock of each Federal intermediate credit bank held by the Secretary of the Treasury shall be transferred to the Governor who shall exchange such stock for an equal amount of class A stock of such bank. The Governor is authorized thereupon to reallocate the investment of the United States in such banks in such manner as he determines necessary to meet the needs of the respective banks. Any transfers of capital funds required as a result of such reallocation shall be made in four equal installments, the first of which shall be made on January 1, 1957, and one of which shall be made on the first day of each of the next succeeding three calendar years. Upon each such transfer of capital funds the Governor shall require an appropriate adjustment in the class A stock of each such bank. Stock of each production credit corporation held by the Governor (less the amount canceled pursuant to section 101 of the Farm Credit Act of 1956) shall be exchanged for an equal par amount of class A stock of the Federal intermediate credit bank in which such corporation is merged pursuant to section 101 of such Act. No dividends shall be paid on class A stock. Annually at the end of its fiscal year each such bank shall determine the amount of its class A stock which shall be retired. Whenever the total of the capital stock, participation certificates, surplus, and reserves of the bank is more than one-sixth of the highest month-end balance of debentures and other obligations issued by or for the bank, outstanding during the immediately preceding five years, the minimum amount of class A stock to be retired shall be the total amount of class B stock and participation certificates issued for that year. All class A stock shall be retired at par. The proceeds of such class A stock retirements of each bank shall be paid into the Treasury as miscellaneous receipts until there is so paid a sum equal to $30,000,000 plus the amount of class A stock of the bank issued in exchange for stock of the production credit corporation. The proceeds of any further such stock retirements shall be paid into the revolving fund established by section 5 (e) of the Farm Credit Act of 1933, as amended. The Governor of the Farm Credit Administration is authorized to purchase from time to time class A stock in any bank in such amount as he determines is needed to meet the credit needs of the bank and such revolving fund shall continue to be available for such purchases as provided in said section 5(e). The Governor may at any time require the bank to retire such

All 70 Stat. 661.

class A stock if, in his judgment, the bank has resources available therefor, and the proceeds of such retirements shall be returned to such revolving fund.

"(2) Class B stock shall have a par value of $5 per share and may be issued only to production credit associations in series and amounts approved by the Farm Credit Administration. Such stock shall be issued only at par and may be transferred to another production credit association with the approval of the issuing bank. Whenever a bank has no class A stock outstanding it may pay like dividends on class B stock and participation certificates in an amount not to exceed 5 per centum in any year if declared by the board of directors. Dividends on class B stock and participation certificates shall not be cumulative. Within sixty days after the effective date of the Farm Credit Act of 1956, the production credit associations shall subscribe to class B stock in the banks in an aggregate amount equal to 15 per centum of the total amount of class A stock in all banks. Such required amount of subscriptions shall be allotted among the several districts in the proportion that the average amount of the bank's loans to and discounts for the production credit associations of the district, outstanding during the immediately preceding five fiscal years, is of the average of such loans and discounts of all banks outstanding during such five-year period. The amount so allotted to each district shall be further allotted to each production credit association on the basis of the proportion that its average indebtedness (loans and discounts) to the bank during the immediately preceding five fiscal years is of the average of such indebtedness of all production credit associations to the bank during such five-year period. Each production credit association shall subscribe to class B stock in the bank of the district in the amount so allotted to it. One-third of the purchase price of such stock subscription shall be paid at the time of such subscription, one-third shall be paid within one year after the effective date of said Act, and the balance shall be paid within two years after such effective date. Such class B stock shall be issued as payments therefor are made. Any production credit association chartered after the effective date of the Farm Credit Act of 1956 shall thereupon purchase class B stock in the bank in the amount of $5,000, and such amount shall be adjusted at the end of five years thereafter to an amount determined by applying to its average indebtedness to the bank during such fiveyear period the same percentage as the percentage which the initial subscriptions of other production credit associations was of their indebtedness, as provided in this subsection: Provided, That this provision shall not apply to any association owning stock in the bank in such required amount as a result of merger, consolidation, or reorganization of one or more associations. After all class A stock has been retired, the bank may retire class B stock at par and participation certificates at a face amount under policies established by the Farm Credit Administration. Class B stock and participation certificates shall be retired without preference and in such manner that the oldest outstanding stock or certificates at any given time will be retired first. In case of liquidation or dissolution of any production credit association or other financing institution, the stock or participation certificates of the bank owned by such association or institution may be retired by the bank at the fair book value thereof, not exceeding par or face amount, as the case may be.

"(b) LIEN ON STOCK AND PARTICIPATION CERTIFICATES.-Each Federal intermediate credit bank shall have a first lien on all stock in the bank owned by each production credit association and on all participation certificates owned by other financing institutions as additional collateral for any indebtedness of the holders thereof to the bank: