Letter, dated March 16, 1956, from R. B. Tootell, Governor, Farm Letter to Senator Mundt from Sam H. Bober, Newell, S. Dak. Letter, dated April 27, 1956, from the Farm Credit Administration, Statement filed by Lloyd Godley, president, secretary-treasurers and presidents of the Arkansas Production Credit Associations, Osceola, S. 3564, 84th Congress, with amendments recommended by P. O. Wilson, secretary, National Live Stock Producers Association, Resolution adopted by the District Advisory Committee of the Pro- duction Credit Associations in the Fifth Farm Credit District. Telegram from the directors of the Shreveport Production Credit Association, Shreveport, La--- Letter, dated April 12, 1956, from Producers Marketing Association, Inc., of Indianapolis, Ind., to the Honorable Cecil M. Hardin... Letter, dated April 18, 1956, from the Producers Livestock Credit J. Olney Brott, general counsel, American Bankers Association.. James E. Wells, Jr., executive vice president, Farmers Union Livestock Association, South St. Paul, Minn., representing the National W. A. Hambright, secretary-treasurer, South Carolina Federation of Production Credit Associations, Spartanburg, S. C.......... Carlos Val. Smith, secretary-treasurer, and W. D. Walker, president, Leroy O. Castle, president, and G. E. Spencer, secretary, Jackson- ville Production Credit Association, Jacksonville, Ill.. W. C. Sloan, president, Jonesboro Production Credit Association, FARM CREDIT ACT OF 1956 MONDAY, APRIL 23, 1956 UNITED STATES SENATE, SUBCOMMITTEE ON AGRICULTURAL CREDIT AND RURAL ELECTRIFICATION OF THE COMMITTEE ON AGRICULTURE AND FORESTRY, The subcommittee met, pursuant to call, at 10:10 a. m., in room 324, Senate Office Building, Senator Spessard L. Holland presiding. Present: Senators Holland (presiding), Scott, Mundt, and Schoeppel. Senator HOLLAND. The subcommittee will please come to order. This is a hearing called on three Senate bills, S. 3549, S. 3550, and S. 3564 which cover the same subject matter. The chairman of the Senate Committee on Agriculture and Forestry, Mr. Ellender, introduced by request the first two bills, 3549 and 3550. S. 3564 was introduced by me and I understand from the officials of the Farm Credit Administration that some changes are embraced in that bill which do not occur in either of the two bills introduced by Senator Ellender. Therefore, I am going to have a copy of S. 3564 placed in the record at this time, with the understanding that all measures are before the committee and if there be any substantial question that arises from the changes in wording, they may be considered by the subcommittee. S. 3564 will be included in the record at this point. (S. 3564 is as follows:) [S. 3564, 84th Cong., 2d sess.] A BILL 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 Congress assembled, That this Act may 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 farmer 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 insitutions operating on a sound credit basis with maximum local authority to determine credit needs and loans 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 1 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 to be held by him on behalf of the United States, 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 repect to the production credit associations, the Farm Credit Administration 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. (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 all Federal intermediate credit banks held by the Secretary of the Treasury shall be transferred to the Governor and may be reallocated by him in such manner as he determines necessary to meet the needs of the respective banks. The Governor shall then exchange such stock of each bank for an equal par amount of class A stock of the 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 |