of the Treasury. Any such certificate shall be redeemed and paid by such land bank at the discretion of the Secretary of the Treasury. The aggregate of all sums so deposited by the Secretary of the Treasury shall not exceed the sum of $6,000,000 at any one time.

Until such time as the aggregate paid-in capital stock of the 12 Federal land banks shall be $50,000,000 or more, the Secretary of the Treasury may in his discretion make deposits in addition to those authorized by the preceding paragraph, to be secured, redeemed, and paid in the same manner as provided in such paragraph, except that any additional deposit made hereunder shall be called by the Secretary of the Treasury and redeemed by the bank or banks holding the same, within 15 days after the conclusion of each general offering of farm loan bonds by such bank or banks. The aggregate of such additional deposits outstanding at any time shall not exceed the difference between the aggregate paid-in capital stock of the 12 Federal land banks on the last day of the preceding month, and the sum of $50,000,000. The certificate of indebtedness issued to the Secretary of the Treasury by the Federal land bank for such additional deposits shall bear a rate of interest not exceeding by more than one-half of 1 per cent per annum the rate borne by the last bond issue of the land bank receiving such deposits.

The Secretary of the Treasury is further authorized, in his discretion, upon the request of the Federal Farm Loan Board, from time to time during the fiscal years ending June 30, 1918, and June 30, 1919, respectively," to purchase at par and accrued interest with any funds in the Treasury not otherwise appropriated, from any Federal land bank, farm loan bonds issued by such bank.

Such purchases shall not exceed the sum of $100,000,000 in either of such fiscal years. Any Federal land bank may at any time repurchase at par and accrued interest for the purpose of redemption or resale any bonds so purchased from it and held in the Treasury.

The bonds of any Federal land bank so purchased by the Secretary of the Treas ury, and held in the Treasury under the provisions of this amendment one year after the termination of the pending war, shall upon 30 days' notice from the Secretary of the Treasury be redeemed or repurchased by such bank at par and accrued interest. The temporary organization of any Federal land bank as provided in section 4 of said Federal Farm Loan Act shall be continued so long as any farm loan bonds purchased from it under the provisions of this amendment shall be held by the Treasury, and until the subscriptions to stock in such bank by national farm loan associations shall equal the amount of stock held in such bank by the Government of the United States.

ORGANIZATION EXPENSES

Sec. 33. That the sum of $100,000, or so much thereof as may be necessary, is hereby appropriated, out of any money in the Treasury not otherwise appropriated, to be expended under the direction of the Federal Farm Loan Board, for the purpose of carrying into effect the provisions of this act, including the rent and equipment of necessary offices.

LIMITATION OF COURT DECISIONS

Sec. 34. That if any clause, sentence, paragraph, or part of this act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this act, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.

Extended by joint resolution approved May 26, 1920, to authorize purchase during fiscal years 1920 and 1921 of any bonds which might have been purchased during fiscal years 1918 and 1919, but prohibiting purchase of bonds issued against loans approved after March 1, 1920. 41 Stat., 627, chap. 208.

APPENDIX VI

RULINGS AND REGULATIONS OF THE FEDERAL FARM LOAN BOARD TO JULY 1, 1923 "

In Matters Pertaining to the Federal Farm Loan Act

The Federal Farm Loan Act requires the Farm Loan Board to define certain terms and to make rules and regulations for carrying out the provisions of the act. Since the establishment of the Federal Farm Loan System various questions have arisen which have required that the board make decisions thereon in addition to making definitions of certain terms in the act itself. These definitions and decisions affect directly or indirectly the Federal land banks, joint-stock land banks, and national farm loan associations, which organizations are authorized under the law. In many cases these definitions and decisions are of particular importance to the members and officers of farm loan associations, as well as being of some interest to the general public. It has been deemed best, therefore, to present in circular form the definitions and decisions that have been thus far made by the Federal Farm Loan Board.

The definitions, rulings, and regulations hereby presented are classified under headings dealing particularly with some definite subject connected with the interpretation and operation of the provisions of the farm loan act.

DEFINITIONS

1. Equipment.-Under the term equipment may be included the implements needed in the conduct of a farm to facilitate its operation. It may consist of teams, as well as machinery, tools, and like articles.

2. Improvements.—Under this term is included anything in the form of beneficial structure, or any useful, permanent physical change tending to increase productive value, such as clearing, tiling, draining, fencing, buildings, etc.

3. Actual farmer.-An actual farmer is one who conducts the farm and directs its entire operation, cultivating the same with his own hands or by means of hired labor. An owner, to borrow under the Farm Loan Act, must be responsible in every way, financially and otherwise, for the cultivation of his land. (See also rule No. 15, p. 954.)

4. Area of farms.—As a basis of determining what area constitutes a farm for loaning purposes the board requires the following test:

(1) Generally: The farm must be of sufficient area to yield at the hands of an ordinarily capable farmer, putting it to the use to which it is generally adapted and using average methods, an income sufficient to maintain the family of the applicant and discharge the interest and amortization payments on his loan.

(2) Specially: Where, through intensive farming or the practice of a specialty, a sufficient income has been regularly derived from a tract deficient in area for ordinary farming, or where the application of the prospective borrower shows that he is by experience capable of producing such an income from such a tract, such area may be accepted as sufficient, provided the land has a stable and permanent market value sufficient to warrant the loan applied for. This ruling does not apply to fruit and orchard lands which have been subjects of definite rulings by the board.

** Issued August, 1923, as Circular No. 10 (Revised).

FEDERAL LAND BANKS

1. Surety bonds of officials.-The surety bond to be executed, as required by the Federal Farm Loan Act by the president, secretary, and treasurer of each Federal land bank, is fixed at the sum of $20,000 each; the bond required of the vice president is fixed at $10,000; and the bond of the remaining director is fixed at $2,000. The registrar shall be the custodian of the surety bonds given by the officers and directors of the Federal land banks.

2. Qualifications of officials.—Section 3 of the Federal Farm Loan Act, in reference to the qualifications of registrars, land bank appraisers, and land bank examiners, means that no person who is a stockholder in any bank, or in any corporation making land mortgage loans or selling land mortgages, is eligible to any one of the above-named offices, except for temporary appointment.

3. Rate of interest.-In view of the change in interest rates as a result of postwar conditions, the Farm Loan Board recommended to the Federal land banks after the decision of the Supreme Court of the United States on February 28, 1921, sustaining the constitutionality of the farm loan act, that the interest rate on mortgages be increased to 6 per cent until such time as interest rates return to a more normal basis. This rate was temporarily adopted by the Federal land banks, but the present rate is 51⁄2 per cent.

4. Kind of abstract.—The Federal land banks must determine the nature of the abstracts which will be required with the applications for loans. The abstracts may be prepared by bonded abstractors, attorneys, or anyone competent to do this work. Any abstract of title sanctioned by ordinary sound business usage in a community where loans are made will be sufficient under the Farm Loan Act.

5. Charge for examining abstract.-When abstracts are furnished by the borrower, the examination of the abstract will be made by the general attorney of each Federal land bank at its office. In districts where abstracts are not obtainable except by examination of the public records, then the borrower will have to bear the cost of examination. The board has permitted the Federal land banks to make a nominal charge for the determination of title from an abstract of title when presented to the bank with the application for a loan.

NATIONAL FARM LOAN ASSOCIATIONS

1. Condition for a charter.-Where in the organization of a national farm loan association the accepted number of borrowers is less than ten, or the amount of approved loans is less than $20,000, a charter will not be granted.

2. Territory covered by an association.-No farm loan association may operate in territory covering any part of two states. In defining the territory within which an association will do business said territory must be entirely within the boundary of a single state, but the overlapping of the territories of different national farm loan associations is permissible when confined within state lines. No monopoly of territory will be allowed.

3. Oath of directors.-The act provides that every national farm loan association shall elect in the manner prescribed for the election of directors of national banking associations a board of not less than five directors, who shall hold office for the same period as directors of national banking associations. In view of the fact that directors of national banks are required to be sworn, the question was raised whether or not directors of national farm loan associations should be sworn. The board believes that the directors of farm loan associations should be put to the least possible trouble; that no requirement should be made that is not legally necessary; and that the omission of the oath in their case is permissible.

4. Officers as members of loan committees.-Members of the board of directors of national farm loan associations are considered eligible to serve on loan committees,

limited, such loan may be granted to the amount permitted under the terms of this paragraph without requiring a new application or appraisal.

6. No such loan shall be made to any person who is not at the time, or shortly to become, engaged in the cultivation of the farm mortgaged. In case of the sale of the mortgaged land, the Federal land bank may permit said mortgage and the stock interests of the vendor to be assumed by the purchaser. In case of the death of the mortgagor, his heir or heirs, or his legal representative or representatives, shall have the option, within 60 days of such death, to assume the mortgage and stock interests of the deceased.

7. The amount of loans to any one borrower shall in no case exceed a maximum of $25,000, nor shall any one loan be for a less sum than $100, but preference shall be given to applications for loans of $10,000 and under.

8. Every applicant for a loan under the terms of this act shall make application on a form to be prescribed for that purpose by the Federal Farm Loan Board, and such applicant shall state the objects to which the proceeds of said loan are to be applied, and shall afford such other information as may be required.

9. Every borrower shall pay simple interest on defaulted payments at the rate of 8 per cent per annum, and by express covenant in his mortgage deed shall undertake to pay when due all taxes, liens, judgments, or assessments which may be lawfully assessed against the land mortgaged. Taxes, liens, judgments, or assessments not paid when due, and paid by the mortgagee, shall become a part of the mortgage debt and shall bear simple interest at the rate of 8 per cent per annum. Every borrower shall undertake to keep insured to the satisfaction of the Federal Farm Loan Board all buildings the value of which was a factor in determining the amount of the loan. Insurance shall be made payable to the mortgagee as its interest may appear at time of loss, and, at the option of the mortgagor and subject to general regulations of the Federal Farm Loan Board, sums so received may be used to pay for reconstruction of the buildings destroyed.

10. Every borrower who shall be granted a loan under the provisions of this act shall enter into an agreement, in form and under conditions to be prescribed by the Federal Farm Loan Board, that if the whole or any portion of his loan shall be expended for purposes other than those specified ir his original application, or if the borrower shall be in default in respect to any condition or covenant of the mortgage, the whole of said loan shall, at the option of the mortgagee, become due and payable forthwith: Provided, That the borrower may use part of said loan to pay for his stock in the farm loan association, and the land bank holding such mortgage may permit said loan to be used for any purpose specified in subsection 4 of this section.

11. That no loan or the mortgage securing the same shall be impaired or invalidated by reason of the exercise of any power by any Federal land bank or national farm loan association in excess of the powers herein granted or any limitations thereon.

Funds transmitted to farm loan associations by Federal land banks to be loaned to its members shall be in current funds, or farm loan bonds, at the option of the borrower.

POWERS OF FEDERAL LAND BANKS

Sec. 13. That every Federal land bank shall have power, subject to the limitations and requirements of this act

1. To issue, subject to the approval of the Federal Farm Loan Board, and to sell farm loan bonds of the kinds authorized in this act, to buy the same for its own account, and to retire the same at or before maturity.

2. To invest such funds as may be in its possession in the purchase of qualified first mortgages on farm lands situated within the Federal land bank district within which it is organized or for which it is acting.

3. To receive and to deposit in trust with the farm loan registrar for the district, to be by him held as collateral security for farm loan bonds, first mortgages upon farm land qualified under section 12 of this act, and to empower national farm