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(c) To loan on first mortgages on farm lands within the farm credit district, qualified under this Act as collateral security for an issue of farm loan bonds.

(d) To purchase United States Government bonds. e) To purchase Federal Farm Mortgage Corporation bonds. In the case of a joint stock land bank

(a) To pay off farm loan bonds issued by said bank as they mature.

(b) To purchase at or below par farm loan bonds.

(c) To loan on first mortgages qualified under section sixteen of this Act.

(d) To purchase United States Government bonds. (e) To purchase Federal Farm Mortgage Corporation bonds. (July 17, 1916, sec. 22, 39 Stat. 378; Mar. 4, 1923, sec. 309, 42 Stat. 1477; Jan. 31, 1934, sec. 8(b), 48 Stat. 347; Aug. 19, 1937, secs. 5(a), 15 (c), 50 Stat. 704, 708; 12 V. S. C., sec. 897.)

638–144. Payment of bonds, coupons, and interest at maturity; deposit of trust funds with registrars as substituted collateral security. The farm loan bonds, first mortgages, United States Government bonds, or cash constituting the trust funds aforesaid, shall be forthwith deposited with the farm loan register as substituted collateral security in place of the sums paid on the principal of indorsed mortgages held by him in trust. (July 17, 1916, sec. 22, 39 Stat. 378; 12 U. S. C., sec. 898.)

638–145. Payment of bonds, coupons, and interest at maturity; notice to registrar of disposition of principal payments on mortgages held as collateral; transfer to registrar on demand.-Every Federal land bank, or joint stock land bank, shall notify the farm loan registrar of the disposition of all payments made on the principal of mortgages held as collateral security for an issue of farm loan bonds, and said registrar is authorized, at his discretion, to order any of such payments, or the proceeds thereof, wherever deposited or however invested, to be immediately transferred to his

account as trustee aforesaid. (July 17, 1916, sec. 22, 39 Stat. 378; 12 U. S. C., sec. 899.)

638–146. Federal land bank and joint-stock land banks. Amount carried to reserve; making good impairment; debit to reserve account.—

That every Federal land bank, and every joint stock land bank, shall semiannually carry to reserve account twenty-five per centum of its net earnings untis said reserve account shall show à credit balance equal to twenty per centum of the outstanding capital stock of said land bank. Whenever said reserve shall have been impaired, said balance of twenty per centum shall be fully restored before any dividends are paid. After said reserve has reached the sum of twenty per centum of the outstanding capital stock, five per centum of the net earnings shall be annually added thereto. For the period of two years from the date when any default occurs in the payment of the interest, amortization installments, or principal on any first mortgage, by both mortgagor and indorser, the amount so defaulted shall be carried to a suspense account, and at the end of the two-year period specified, unless collected, shall be debited to reserve account.

After deducting the twenty-five per centum or the five per centum hereinbefore directed to be deducted for credit to reserve account, any Federal land bank or joint stock land bank may declare a dividend to shareholders of the whole or any part of the balance of its net earnings: Provided, That any dividend or dividends declared by

any joint-stock land bank shall be subject to the approval of the Federal Farm Loan Board [now Farm Credit Administration]* The reserves of land banks shall be invested in accordance with rules and regulations to be prescribed by the Federal Farm Loan Board (now Farm Credit Administration]*

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. 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 herein 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 Federal Farm Loan Board [now Farm Credit Administration]*. In the case of Federal land banks the requirements of this paragraph shall be in lieu of the requirements of the first three sentences of the first paragraph of this section and in lieu of the requirements of the first sentence of the second paragraph of this section. (July 17, 1916, sec. 23, 39 Stat. 379; Jan. 23, 1932, sec. 3(a) and (b), 47 Stat. 13; 12 Ú. S. C., secs. 901, 902.)

638_147. National farm loan associations; amount carried to reserve account. That every national farm loan association shall, out of its net earnings, semiannually carry to reserve account a sum not less than 10 per centum of such net earnings until said reserve account shall show a credit balance equal to 25 per centum of the outstanding capital stock of said association. After said reserve has reached the sum of 25 per centum of the outstanding capital stock, 5 per centum of the net earnings shall be semiannually added thereto. (July 17, 1916, sec. 24, 39 Stat. 379; Jan. 23, 1932, sec. 4, 47 Stat. 13; 12 U. Š. C., sec. 911.)

638–148. Making good impairment of reserve. Whenever said reserve shall have been impaired it shall be fully restored before any dividends are paid. (July 17, 1916, sec. 24, 39 Stat. 379; Jan. 23, 1932, Sec. 4, 47 Stat. 13; 12 U. S. C., sec. 912.)

638–149. Dividends on balance of net earnings.-After deducting the 10 per centum or the 5 per centum hereinbefore directed to be credited to reserve account, said association may at its discretion declare a dividend to shareholders of the whole or any part of the balance of said net earnings: Provided, That the declaration and payment of any such dividend shall be subject to the approval of the Land Bank Commissioner. (July 17, 1916, sec. 24, 39 Stat. 379; Jan. 23, 1932, sec. 4, 47 Stat. 13; June 3, 1935, sec. 4, 49 Stat. 315; 12 U. S. C., sec. 913.)

638–150. Investment of reserves. The reserves of farm loan associations shall be invested in accordance with rules and regulations to be prescribed by the Federal Farm Loan Board (now Farm Credit Administration).* (July 17, 1916, sec. 24, 39 Stat. 379; 12 U. S. C., sec. 914.)

* Sea Ex. Or. 6084, p. 254, this volume.

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638-151. Disposition of reserve on liquidation. Whenever any farm loan association shall be voluntarily liquidated a sum equal to its reserve account as herein required shall be paid to and become the property of the Federal land bank in which such loan association may be a shareholder. (July 17, 1916, sec. 24, 39 Stat. 379; 12 U. S. C., sec. 915.)

638–152. Mortgage held by Federal land bank; notice to indorsing association; making good default.—That if there shall be default under the terms of any indorsed first mortgage held by a Federal land bank under the provisions of this title, the National Farm Loan Association through which said mortgage was received by said Federal land bank shall be notified of said default. Said association may thereupon be required, within 30 days after such notice, to make good such default, either by payment of the amount unpaid thereon in cash or by the substitution of an equal amount of Federal farm loan bonds, with all unmatured coupons attached. (July 17, 1916, sec. 25, 39 Stat. 380; Mar. 4, 1923, sec. 310, 42 Stat. 1477; 12 U. S.C., sec. 921.)

638–153. Exemption from taxation; Federal land banks; national farm loan associations; mortgages and bonds as instrumentalities of Govern. ment.-That every Federal land bank and every national farm loan association, including the capital and reserve or surplus therein and the income derived therefrom, shall be exempt from Federal, State, municipal, and local taxation, except taxes upon real estate held, purchased, or taken by said bank or association under the provisions of section eleven and section thirteen of this Act. First mortgages executed to Federal land banks, or to joint stock land banks, and farm loan bonds issued 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. (July 17, 1916, sec. 26, 39 Stat. 380; 12 U. S. C., sec. 931.)

638–154. Exception; taxation of mortgages or obligations of joint-stock land banks.—Notwithstanding the provisions of section 26 of the Federal Farm Loan Act, as amended, in the case of mortgages made or obligations issued by any joint-stock land bank after the date of the enactment of this Act [Revenue Act of 1938, enacted May 28, 1938), all income, except interest, derived therefrom shall be included in gross income and shall not be exempt from Federal income taxation. (May 28, 1938, sec. 817, 52 Stat. 578; 12 U. S. C., sec. 931a.)

[Repealed. Insofar as this section related exclusively to Internal Revenue it was repealed and incorporated as section 3799 of Title 26, Internal Revenue. See section 4 (a) of enacting sections of Internal Revenue Code preceding section 1 of Title 26.]

638-155. Joint stock land banks; State taxation of shareholder, limitations on.—Nothing herein shall prevent the shares in any joint stock land bank from being included in the valuation of the personal property of the owner or holder of such shares, in assessing taxes imposed by authority of the State within which the bank is located; but such assessment and taxation shall be in manner and subject to the conditions and limitations contained in section fifty-two hundred and nineteen of the Revised Statutes with reference to the shares of national banking associations. (July 17, 1916, sec. 26, 39 Stat. 380; 12 U. S. C., sec. 932.)

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638–156. Federal and joint stock land banks; real property not exempt.Nothing herein shall be construed to exempt the real property of Federal and joint stock land banks and national farm loan associations from either State, county, or municipal taxes, to the same extent, according to its value, as other real property is taxed. (July 17, 1916, sec. 26, 39 Stat. 380; 12 U. S. C., sec. 933.)

638–157. Investment in farm loan bonds; fiduciary and trust funds; security for public deposits.—That farm loan bonds issued under the provisions of this Act by Federal land banks or joint stock land banks shall be a lawful investment for all fiduciary and trust funds, and may be accepted as security for all public deposits. (July 17, 1916, sec. 27, 39 Stat. 380; 12 U. Š. C., sec. 941.)

638–158. Buying and selling by member banks of Federal Reserve System.—Any member bank of the Federal Reserve System may buy and cell farm loan bonds issued under the authority of this Act. (July 17, 1916, sec. 27, 39 Stat. 380; 12 U.S. C., sec. 942.)

638–159. Buying and selling by reserve banks.-Any Federal reserve bank may buy and sell farm loan bonds issued under this Act to the same extent and subject to the same limitations placed upon the purchase and sale by said banks of State, county, district, and municipal bonds under subsection (b) of section fourteen of the Federal Reserve Act approved December twenty-third, nineteen hundred and thirteen. (July 17, 1916, sec. 27, 39 Stat. 380; 12 U.S. C., sec. 943.)

638–160. Farm credit examiners; appointment; number.—That the Federal Farm Loan Board [now Farm Credit Administration] * shall appoint as many farm credit examiners as in its judgment may be required to make careful examinations of the banks and associations permitted to do business under this Act. (July 17, 1916, sec. 28, 39 Stat. 381; Aug. 19, 1937, sec. 20, 50 Stat. 710; 12 U. S. C., sec. 951.)

638–161. Requirements, responsibilities, and penalties applicable to examiners; examinations; reports.--Said examiners shall be subject to the same requirements, responsibilities, and penalties as are applicable to national bank examiners under the national bank Act, the Federal Reserve Act and other provisions of law. Whenever directed by the Federal Farm Loan Board [now Farm Credit Administration), said examiners shall examine the condition of any national farm loan association and report the same to the Land Bank Commissioner. They shall examine and report the condition of every Federal land bank and joint stock land bank at least twice each year. (July 17, 1916, sec. 28, 39 Stat. 381; June 16, 1933, sec. 80 (a), 48 Stat. 273; Aug. 19, 1937, sec. 20, 50 Stat. 710; 12 U. S.C., sec. 952.)

638-162. Salaries of examiners.-Said examiners shall receive salaries to be fixed by the Federal Farm Loan Board [now Farm Credit Administration].* (July 17, 1916, sec. 28, 39 Stat. 381; Aug. 19, 1937, sec. 20, 50 Stat. 710; 12 U.S.C., sec. 953.)

638–163. National farm loan associations; institution and conduct of receivership; duties and powers of receivers.—That upon receiving satisfactory evidence that any national farm loan association has failed to meet its outstanding obligations of any description the Federal Farm Loan Board (now Farm Credit Administration] may forthwith declare such association insolvent and appoint a receiver and require of him such bond and security as it deems proper: Provided, That no national farm loan association shall be declared

*

* See Ex. Or. 6084, p. 254, this volume.

insolvent by said board [now administration] * until the total amount of defaults of current interest and amortization installments on loans indorsed by national farm loan associations shall amount to at least $150,000 in the farm credit district, unless such association shall have been in default for a period of two years. Such receiver, under the direction of the Federal Farm Loan Board (now Farm Credit Administration),* 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, with the approval of the Federal Farm Loan Board (now Farm Credit Administration],* or upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like approval or order, may sell all the real and personal property of such_association, on such terms as the Federal Farm Loan Board [now Farm Credit Administration] * or said court shall direct. (July 17, 1916, sec. 29, 39 Stat. 381; Aug. 19, 1937, sec. 5 (a), 50 Stat. 704; 12'U. S.C., sec. 961.)

638-164. Disposition of moneys collected by receiver; reports. Such receiver shall pay over all money so collected to the Treasurer of the United States, subject to the order of the Federal Farm Loan Board [now Farm Credit Administration]*, and also make report to said administration of all his acts and proceedings. The Secretary of the Treasury shall have authority to deposit at interest any money so received. (July 17, 1916, sec. 29, 39 Stat. 381; 12 U. S.C., sec. 962.)

638–165. Federal and joint stock land banks; institution and conduct of receivership.-Upon default of any obligation, Federal land banks and joint stock land banks may be declared insolvent and placed in the hands of a receiver by the Federal Farm Loan Board [now Farm Credit Administration]*, and proceedings shall thereupon be had in accordance with the provisions of this section regarding national farm loan associations. (July 17, 1916, sec. 29, 39 Stat. 381; 12 U. S. C., sec. 963.)

638–166. Authorization to receiver to borrow money for paying taxes on real estate.—Any receiver appointed by the Federal Farm Loan Board [now Farm Credit Administration]* pursuant to section 29 of the Federal Farm Loan Act, as amended, or any receiver appointed by a district court of the United States, is authorized, for the purpose of paying taxes on farm real estate owned by the bank or securing the mortgages held by it, with the approval of the Land Bank Commissioner, to borrow from the Reconstruction Finance Corporation and to issue receiver's certificates against the assets of such bank as security for any loan received from the Corporation under this section, and such certificates shall constitute a prior lien on such assets. The Reconstruction Finance Corporation is authorized to make loans to such receivers for the purposes of this section. (May 12, 1933, sec. 27, 48 Stat. 45; June 16, 1933, sec. 80 (a), 48 Stat. 273; 12 U. S. C., sec. 963a.)

638–167. National farm loan associations; disposition of stock in Fed. eral land bank.—If any national farm loan association shall be declared insolvent and a receiver shall be appointed therefor by the Federal Farm Loan Board [now Farm Credit Administration]*, the stock held by it in the Federal land bank of its district shall be canceled without impairment of its liability and all payments on such stock, with accrued dividends, if any, since the date of the last dividend shall be

*Seo Ex. Or. 6084, p. 254, tbis volume.

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