AMENDMENT TO THE FEDERAL FARM LOAN ACT TRANSFERRING POWERS OF INSOLVENT JOINT-STOCK LAND BANKS

JUNE 12, 1930.-Referred to the House Calendar and ordered to be printed.

Mr. MCFADDEN, from the Committee on Banking and Currency, submitted the following

REPORT

[To accompany H. R. 12063]

The Committee on Banking and Currency, to whom was referred the bill (H. R. 12063) to amend section 16 of the Federal farm loan act, having considered the same, report favorably thereon with the recommendation that the bill do pass, with the following amendment: Page 2, line 1, strike out all of the paragraph down to and including line 7, on same page, and insert in lieu thereof the following:

In any case where a joint-stock land bank has been, or may within a period of seven months after the date of the passage of this act be, declared insolvent and placed in the hands of a receiver by the Federal Farm Loan Board, any Federal land bank or joint-stock land bank may, in such manner as may be prescribed by the Federal Farm Loan Board and with the approval of the Federal Farm Loan Board, acquire the assets and assume the liabilities of said joint-stock land bank in the hands of a receiver. Any joint-stock land bank which has acquired or may hereafter acquire the assets and which has assumed or may hereafter assume the liabilities of another joint-stock land bank may, if authorized by the Federal Farm Loan Board, make loans secured by first mortgages on farm lands within the States in which the other joint-stock land bank was authorized to make loans at the time of such acquisition, and the purchasing bank may, with the approval of the Federal Farm Loan Board, continue to make loans in the States where it was authorized to make loans at the time of such acquisition.

When the Federal farm loan act was originally passed it provided for 12 Federal land banks. The number of States in which a Federal land bank could do business was not definitely fixed. In practice, the number of States in a district vary from one to six. Joint-stock land banks, however, were allowed to operate in but two States. The reason for this arbitrary limitation is not apparent and years of experience has not demonstrated either the wisdom or the necessity for this restriction.

H. R. 12063 as originally introduced was intended to correct this situation. In the beginning a number of small joint-stock land banks

were organized. Experience has shown that larger and stronger banks were needed. Reorganizations and consolidations have taken place, but in every case where a joint-stock land bank purchased the assets and assumed the liabilities of another bank, they have not been permitted to operate in added territory, even though the charter of the purchased bank covered additional States. This has not been for the good of the system, has injured the stockholder, has not benefited the bondholder, and has not been satisfactory to the farm borrower as in many cases it has meant liquidation and the inability to increase loans or to secure proper service from the new institution.

The language of the bill as originally drawn was not sufficiently clear to take care of all situations that might arise, and did not include banks in receivership. Consequently, the committee adopted the amendment to make it possible for a bank to buy the assets of a joint-stock land bank in receivership and continue to function in the territory. This is of great value to the system, as a whole, to all stockholders, and all bondholders. It is a guarantee of permanency and gives assurance that there is a possibility of weak banks or banks in difficulty, or banks in territory suffering from agricultural depression to be taken over by stronger and better institutions. The legislation apparently has the approval of all organization interested in the better functioning of the Federal farm-loan system and its passage in the amended form is urged by the committee.

In comformity with section 2a, of Rule XIII, of the House Rules, there is herewith printed section 16 of the Federal farm loan act, as it will read with the amendment proposed in this bill, such amendment being printed in italics, as follows:

SEC. 16. That corporations, to be known as joint-stock land banks, for carrying on the business of lending on farm mortgage security and issuing farm-loan bonds, may be formed by any number of natural persons not less than ten. They shall be organized subject to the requirements and under the conditions set forth in section four of this act, so far as the same may be applicable: Provided, That the board of directors of every joint-stock land bank shall consist of not less than five members.

Shareholders of every joint-stock land bank organized under this act shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such bank to the extent of the amount of stock owned by them at the par value thereof, in addition to the amount paid in and represented by their shares.

Except as otherwise provided, joint-stock land banks shall have the powers of, and be subject to all the restrictions and conditions imposed on, Federal land banks by this act, so far as such restrictions and conditions are applicable: Provided, however, That the Government of the United States shall not purchase or subscribe for any of the capital stock of any such bank; and each shareholder of any such bank shall have the same voting privileges as holders of shares in national banking associations.

No joint-stock land bank shall have power to issue or obligate itself for outstanding farm loan bonds in excess of fifteen times the amount of its capital and surplus, or to receive deposits or to transact any banking or other business not expressly authorized by the provisions of this act.

No joint-stock land bank shall be authorized to do business until capital stock to the amount of at least $250,000 has been subscribed, one-half thereof paid in cash and the balance subject to call by the board of directors, and a charter has been issued to it by the Federal Farm Loan Board.

No joint-stock land bank shall issue any bonds until after the capital stock is entirely paid up.

Farm loan bonds issued by joint-stock land banks shall be so engraved as to be readily distinguished in form and color from farm loan bonds issued by Federal land banks, and shall otherwise bear such distinguishing marks as the Federal Farm Loan Board shall direct.

Joint-stock land banks shall not be subject to the provisions of subsection (b) of section seventeen of this act as to interest rates on mortgage loans or farm loan bonds, nor to the provisions of subsections first, fourth, sixth, seventh, and tenth of section twelve as to restrictions on mortgage loans: Provided, however, That no loans shall be made which are not secured by first mortgages on farm lands within the State in which such joint-stock land bank has its principal office, or within some one State contiguous to such State, except as hereinafter provided. Such joint-stock land banks shall be subject to all other restrictions on mortgage loans imposed on Federal land banks in section twelve of this act.

Joint-stock land banks shall in no case charge a rate of interest on farm loans exceeding by more than one per centum the rate of interest established for the last series of farm-loan bonds issued by them.

Joint-stock land banks shall in no case demand or receive, under any form or pretense, any commission or charge not specifically authorized in this act.

Each joint-stock land bank organized under this act shall have authority to issue bonds based upon mortgages taken by it in accordance with the terms of this act. Such bonds shall be in form prescribed by the Federal Farm Loan Board, and it shall be stated in such bonds that such bank is organized under section sixteen of this act, is under Federal supervision, and operates under the provisions of this act.

In any case where a joint-stock land bank has been, or may be, within a period of seven months after the date of the passage of this act, declared insolvent and placed in the hands of a receiver by the Federal Farm Loan Board. any Federal land bank or joint-stock land bank may, in such manner as may be prescribed by the Federal Farm Loan Board and with the approval of the Federal Fare Loan Board, acquire the assets and assume the liabilities of said joint-stock land bank in the hands of a receiver. Any joint-stock land bank which has acquired or may hereafter acquire the assets and which has assumed or may hereafter assume the liabilities of another jointstock land bank may, if authorized by the Federal Farm Loan Board, make loans secured by first mortgages on farm lands within the States in which the other joint-stock land bank was authorized to make loans at the time of such acquisition, and the purchasing bank may, with the approval of the Federal Farm Loan Board, continue to make loans in the States where it was authorized to make loans at the time of such acquisition.

INTERNATIONAL HYGIENE EXHIBITION TO BE HELD AT DRESDEN, GERMANY, FROM MAY 6 TO OCTOBER 1, 1930

JUNE 13, 1930.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. BLOOM, from the Committee on Foreign Affairs, submitted the following

REPORT

[To accompany S. 2414]

The Committee on Foreign Affairs, to whom was referred the bill (S. 2414) authorizing the Government of the United States to participate in the International Hygiene Exhibition at Dresden, Germany from May 6 to October 1, 1930, inclusive, having considered the same, reports it to the House and unanmiously recommends that it do pass with the following minor amendments:

Page 1, line 9, strike out the words "a joint exhibit" and insert in lieu the word "representatives".

Page 1, line 11, strike out the sum "$10,000" and insert in lieu the sum "$5,000".

The invitation which was extended to the Government of the United States to send an exhibit to the International Hygiene Exhibition at Dresden doubtless contemplated a material display by this country, wherein would be demonstrated the advanced and progressive practices of hygiene as applied in America to-day, practices comparable with those of other great nations of the world with whom we are always willing to exchange scientific information which tends toward the preservation of human health.

The purpose of the Dresden exhibition is twofold: First, it will commemorate the opening of the Deutches Hygiene Museum, an institution which is to stand preeminent as a storehouse of scientific information on human health, and second, it proposes to set a milestone along the path of progress by bringing together, in one multiple display, all the data concerning his mind and body which is now at the disposal of civilized man. A few of the fields covered by the Dresden exhibition are as follows: Heredity and eugenics (race hygiene); woman as the principal agent of human propagation;