69 STAT. ] PUBLIC LAW 347-AUG. 11, 1955 655 

Public Law 347 CHAPTER 785 

AN ACT 

To provide for retirement of the Government capital in certain institutions operating under tlie supervision of tlie Farm Credit Administration; to increase 

borrower participation in tlie management and control of the Federal Farm 

Credit System; and for other purposes. 

August 11, 1955 

[H. R. 5168] 

Be it enacted hy the Senate and House of Representatives of the 

United States of America in Congress assembled., That this Act may o/i^s.^'**^" '^'^* 

be cited as the "Farm Credit Act of 1955". 

TITLE I—BANKS FOR COOPERATIVES 

SEC. 101. Section 42 of the Farm Credit Act of 1933, as amended, is 

amended to read as follows: 

"SEC. 42. (a) CLASSES OF STOCK; OWNERSHIP; VOTING RIGHTS; 

DIVIDENDS; AND RETIREMENT or STOCK.—Except as provided in section 111 of the Farm Credit Act of 1955, each regional bank for 

cooperatives shall have the following classes of stock, all of which 

shall have a par value of $100 per share: 

"(1) Class A stock shall be issued to and held by the Governor 

of the Farm Credit Administration on behalf of the United States, 

and stock of such banks held by the Governor on the effective date 

of title I of the Farm Credit Act of 1955 shall be exchanged, share 

for share, for class A stock of the respective banks. Class A stock 

shall be nonvoting and no dividends shall be paid thereon. At the 

end of each fiscal year, each of such banks, subject to the provisions 

of sections 33 and 40, shall determine the amount of class A stock 

that shall be retired at par by that bank. The minimum amount of 

class A stock that shall be retired shall be the equivalent in dollar 

value of the amount of class C stock issued for that year, except that 

class C stock issued by a regional bank on account of class C stock 

issued to it by the central bank, class C stock issued by a regional 

bank in exchange for class B stock the proceeds of which were 

used to retire an equivalent amount of class A stock, and class C 

stock issued by a regional bank in exchange for capital stock of 

the bank outstanding on the effective date of title I of the Farm Credit 

Act of 1955, shall not be included in such bank's calculation. Any 

amount of class A stock retired in excess of such minimum amount 

in one year may be used to reduce to that extent the amount of such 

stock required to be retired in any subsequent year. Funds from the 

retirement of class A stock shall be paid into the revolving fund 

authorized by the Agricultural Marketing Act, as amended, and shall 

continue to be available for the purchase of class A stock in the banks 

in accordance with sections 33 and 40. 

"(2) Class B stock may be issued in series and amounts approved 

by the Farm Credit Administration, and may be sold or transferred 

to any person subject to the approval of the issuing bank. Such stock 

shall be issued only at par and shall be nonvoting. Any bank may 

pay dividends of not to exceed 4 per centum per annum on class B 

stock if declared by the board of directors and approved by the Farm 

Credit Administration and if the surplus account of the bank, after 

payment of such dividends, will not be less than 25 per centum of 

the sum of all its outstanding capital stock. Dividends on class B 

stock shall not be cumulative, but no bank shall distribute in any year 

any of its net savings as patronage refunds as provided in section 

36 (a) unless for that year a dividend of at least 2 per centum is 

declared and paid upon outstanding class B stock of the bank. Each 

series of class B stock shall be issued only with the appi;oval of the 

48 Stat. 264. 

12 us e 1134d, 

Class A stock. 

12 us e 11341, 

114Id, 1134b. 

Post, p. 662. 

46 Stat. 11. 

12USeH41j (f). 

eiass B stock. 
656 PUBLIC LAW 347-AUG. 11, 1955 [69 ST A T . 

Class C stock. 

Farm Credit Administration and shall carry on the face of each 

certificate a statement of the maximum dividend which may be 

declared and paid thereon and of the minimum dividend which shall 

be declared and paid thereon before the bank may distribute any of 

its net savings as patronage refunds: Promded^ That such maximum 

and minimum dividends may be the same amount. After all class 

A stock has been retired, class B stock may be called for retirement 

at par with the approval of the Farm Credit Administration and 

shall be called in such manner that the oldest outstanding stock at 

any given time will be retired first. Any holder of class B stock 

whose stock has been called for retirement may elect, with the approval 

of the issuing bank, to leave Ms stock in the bank subject to its being 

included in the next call for retirement. 

"(3) Class C stock, except as approved by the Farm Credit Administration and consented to by the issuing bank, may be issued only to 

banks for cooperatives and farmers' cooperative associations as defined 

12 use ii4ij. jj^ section 15 (a) of the Agricultural Marketing Act, as amended. 

Such stock may be issued in fractional shares, shall be issued at its fair 

book value not exceeding par, as determined by the bank, and no dividends shall be paid on it. Each holder of one or more shares of class C 

stock which is eligible to borrow from a bank for cooperatives shall be 

entitled to one vote only: Provided^ That any such holder which within 

the period of two years next preceding a date, fixed by the Farm Credit 

Administration, prior to commencement of the voting has not been a 

borrower from a bank of which it holds class C stock shall not be 

entitled to vote. From time to time each bank for cooperatives shall 

obtain information concerning its class C stockholders to determine 

whether they continue to be eligible to borrow from the bank and to 

vote. Any class C stockholder found by the bank to be ineligible to 

borrow shall not be entitled to vote until its eligibility is reestablished 

to the satisfaction of the bank. Whenever in section 5 of the Farm 

12 uic 640*a et Credit Act of 1937, as amended, and section 4 (a) of the Farm Credit 

eg. Act of 1953, provision is made for a nomination or election by cooperai2u#c 63*6c. tives which are stockholders or subscribers to the guaranty fund of 

Post, p. 666. ^y^y bank for cooperatives the term 'cooperatives which are stockholders or subscribers to the guaranty fund' or the equivalent of that 

term, shall mean such cooperatives which are eligible to vote. Each 

borrower from a bank for cooperatives shall be required to own at the 

time the loan is made at least one share of class C stock. The purchase 

price of such stock may be retained out of the loan. In addition, each 

borrower as defined by the Farm Credit Administration for purposes 

of this sentence, shall be required to invest quarterly in class C stock 

an amount equal to not less than 10 nor more than 25 per centum, as 

prescribed by the board of directors of the bank with the approval of 

the Farm Credit Administration, of the amount of interest payable by 

it to the bank during the calendar quarter. Payments for such stock 

shall be made quarterly or when the regular interest payments of the 

borrower are payable, out the stock shall be issued to the borrower as 

of the end of each fiscal year in the amount of the payments for stock 

made by it during the year. Each regional bank shall purchase at 

least one share of class C stock of the central bank. In addition, the 

regional bank shall be required to invest quarterly in class C stock of 

the central bank an amount equal to not less than 10 nor more than 

25 per centum, as prescribed by the board of directors of the central 

bank with the approval of the Farm Credit Administration, of the 

amount of interest payable by the regional bank to the central bank 

during the calendar quarter by reason of any interest purchased by the 

central bank in a loan made by the regional bank. Payments for such 

stock shall be made to the central bank and the stock shall be issued to 
69 STAT. ] PUBLIC LAW 347-AUG . 11, 1955 657 

the regional bank in the same manner, insofar as practicable, as is provided in this section for payments for and issuance of stock on account 

of loans by the regional bank in which the central bank does not purchase any interest. Subject to rules prescribed by the board of directors of the lending bank with the approval of the Farm Credit Administration a borrower may convert class B stock into class C stock for 

the purpose of making the investment in class C stock required by this 

paragraph. After retirement of all class A stock, class C stock also 

may be retired at par by calling the oldest outstanding class C stock, 

but class C stock that was issued for a fiscal year period shall not be 

called for retirement until all class B stock that was issued during or 

prior to that fiscal year has been called for retirement. 

"(b) GUARANTY FUND SUBSCRIPTIONS IN LIEU OF STOCK.—If a cooperative association is not authorized under the laws of the State in 

which it is organized to take stock in the bank, the bank shall, in lieu 

thereof, require the association to pay into or have on deposit in a 

guaranty fund of the bank, or the bank may retain out of the amount 

of the loan and credit to the guaranty fund, a sum equal to the amount 

of class C stock which the association would otherwise be required 

by subsection (a) (3) of this section to own at the time the loan is 

made and to purchase thereafter. Any such association may make 

additional payments into the guaranty fund from time to time in lieu 

of the purchase of class B stock, and shall receive credits to such fund 

in lieu of patronage refunds payable in class C stock. Each reference 

in this Act to capital stock or class B or class C stock shall include 

also the guaranty fund equivalents of such stock, and, to the extent 

permitted under the laws of a State in which a cooperative association 

IS organized, a holder of guaranty fund equivalents of either class 

B or class C stock shall have the same rights and status as a holder 

of class B or class C stock, respectively. The rights and obligations 

of the bank as respects such.guaranty fund equivalents shall be identical to its rights and obligations as respects class B or class C stock, 

respectively. 

*'(c) LIEN ON STOCK.—Except as hereinafter provided in the case 

of an association which is a direct borrower from the central bank, 

each bank for cooperatives shall have a first lien on all stock in the 

bank owned by each cooperative association as additional collateral 

for any indebtedness of such association to the bank. In the case of 

an association which is a direct borrower from the central bank, the 

central bank shall have a first lien on any amount of class C stock 

which the borrowing association owns in any regional bank on 

account of direct loans of such association from the central bank; and 

the regional bank shall have a lien on such stock junior only to the 

lien of the central bank. In any case where the debt of a borrower 

is in default, the bank may, in accordance with regulations of the 

Farm Credit Administration, retire and cancel all or a part of the 

stock of the defaulting borrower at the fair book value thereof, not 

exceeding par, in total or partial liquidation of the debt, as the case 

may be, and, to the extent required, corresponding shares held by a 

regional bank in the central bank shall be retired. 

"(d) CALCULATION or PROPORTIONATE INTERESTS IN BANKS.—For 

the purpose of determining pursuant to section 5 (d) (2) (C) of the 

Farm Credit Act of 1937, as amended, the amount of the capital i2usc640d. 

stock and subscriptions to the guaranty fund of a regional bank for 

cooperatives held by cooperatives the term 'capital stock and subscriptions to the guaranty fund held by cooperatives' or the equivalent of 

that term shall also mean all outstanding class B and class C stock 

and the guaranty fund equivalents thereof." 

54402 O - 55 - 4? 
658 PUBLIC LAW 347-AUG. 11, 1955 [69 STAT. 

12 use 1134k. SEC. 102. Section 35 of the Farm Credit Act of 1933, as amended, is 

amended to read as follows: 

"SEC. 35. APPLICATION OF REGIONAL BANK STOCK PROVISIONS TO 

CENTRAL BANK.—All provisions of law with respect to class A, class 

B, and class C stock in the regional banks for cooperatives shall 

apply to the Central Bank for Cooperatives except as they may be 

inconsistent with the provisions of this section. Each borrower from 

the central bank shall be required to own at the time the loan is 

made at least one share of class C stock in such regional bank as the 

Farm Credit Administration shall designate and shall be required 

to invest quarterly in class C stock in such regional bank or banks 

as the Farm Credit Administration shall designate an amount equal 

to not less than 10 nor more than 25 per centum, as prescribed by 

the board of directors of the central bank with the approval of the 

Farm Credit Administration, of the amount of interest payable by 

such borrower to the central bank during the calendar quarter. Paj^-

ments for such stock shall be made quarterly or when the regular 

interest payments of such borrower are payable; but the stock shall 

be issued to the borrower as of the end of each fiscal year in the 

amount of the payments for stock made by it during such year. The 

regional bank whose stock is so issued to such borrower shall purchase 

a corresponding amount of class C stock in the central bank." 

12 use 1134/. SEC. 103. (a) Section 36 of the Farm Credit Act of 1933, as amended, 

is amended to read as follows: 

"SEC. 36. (a) APPLICATION OF SAVINGS.—Each bank for cooperatives, at the end of each fiscal year, shall determine the amount of its 

net savings after paying or providing for all operating expenses 

(including reasonable valuation reserves and losses in excess of any 

such applicable reserves) and shall apply such savings as follows: 

(1) To the restoration of the amount of the impairment, if any, of 

capital stock, as determined by its board of directors; (2) 25 per 

centum of any remaining savings shall be used to create and maintain 

a surplus account; (3) if said bank shall have outstanding capital 

stock held by the United States during the whole or any part of the 

fiscal year, it shall next pay to the United States as a franchise tax, 

a sum equal to 25 per centum of its net savings then remaining, not 

exceeding, however, a rate of return on such Government capital calculated at a rate equal to the computed average annual rate of interest 

on all public issues of public debt obligations of the United States 

issued during the fiscal year ending next before such tax is due, as 

certified to the Farm Credit Administration by the Secretary of the 

Treasury; (4) reasonable contingency reserves may be established; 

(5) dividends on class B stock may be declared as provided in section 

42 (a) (2); and (6) any remaining net savings shall be distributed 

as patronage refunds as provided in subsection (b) of this section: 

Provided, That any patronage refunds received by a regional bank 

from the central bank shall be excluded from net savings of the 

regional bank for the purpose of computing such franchise tax. 

Amounts applied as provided in (2) and (4) above after the effective 

date of title I of the Farm Credit Act of 1955 shall be allocated on 

a patronage basis approved by the Farm Credit Administration. At 

the end of any fiscal year, any portion of the reserve established under 

(4) above which is no longer deemed necessary shall be transferred 

to the surplus account and, if the surplus account of any such bank 

for cooperatives exceeds 25 per centum of the sum of all its outstanding capital stock, the bank may distribute in the same manner as a 

patronage refund any part or all of such excess which has been 

allocated: Provided, That any surplus and contingency reserves shown 

on the books of the banks as of the effective date of title I of the Farm 

Credit Act of 1955 shall not be distributed as patronage refunds. 
69 STAT. ] PUBLIC LAW 347-AUG. 11, 1955 659 

In making such distributions, the oldest outstanding allocations shall 

be distributed first. Wherever used in this Act, the words 'surplus co'unt"''^^"^ °'^' 

account' as applied to any bank for cooperatives shall mean any surpluses and contingency reserves shown on the books of the banks as 

of the effective date of title I of the Farm Credit Act of 1955 and any 

amounts applied as provided in (2) above after the effective date of 

said title I. Said surplus account shall be divided to show the amounts 

thereof subject to allocation as provided in this section and may be 

further subdivided as prescribed by the Farm Credit Administration. 

In the event of a net loss in any fiscal year after providing for all 

operating expenses (including reasonable valuation reserves and losses 

in excess of any such applicable reserves), such loss shall be absorbed 

by: first, charges to allocated contingency reserves; second, charges 

to allocated surplus; third, charges to other contingency reserves and 

surplus; fourth, the impairment of class C stock; and fifth, the impairment of all other stock. 

"(b) PATRONAGE REFUNDS.—The patronage refunds of each regional bank for cooperatives shall be paid in class C stock to borrowers, 

as defined by the Farm Credit Administration for the purposes of 

this subsection, during the fiscal year for which the refunds are 

declared. Patronage refunds of the Central Bank for Cooperatives 

shall be paid in class C stock to the regional banks for cooperatives 

upon the basis of interests held by the central bank in loans made 

by the regional banks and upon direct loans made by the central 

bank to cooperative associations; and any part of such refunds derived 

from such direct loans of the central bank shall be paid in class C 

stock issued to the regional bank or banks which issued to the borrower 

the stock incident to the loans, or to a regional bank or banks designated by the Farm Credit Administration, and such bank or banks 

shall issue a like amount of class C stock to the borrowers. All 

patronage refunds shall be paid in the proportion that the amount 

of interest earned on the loans of each borrower bears to the total 

interest earned on the loans of all borrowers during the fiscal year. 

"(c) APPLICATION OF ASSETS ON LIQUIDATION OR DISSOLUTION.—In 

the case of liquidation or dissolution of any bank for cooperatives, 

after the payment or retirement, as the case may be, first, of all 

liabilities; second, of all capital stock issued before the effective date 

of title I of the Farm Credit Act of 1955 held by cooperative associations at par, all class A stock at pfir, and all class B stock at par; and 

third, of all class C stock at par; any surpluses and contingency 

reserves existing on the effective date of said title I shall be paid to 

the holders of outstanding capital stock issued before the effective 

date of said title I, class A stock and class C stock pro rata, and any 

remaining surplus and contingency reserves shall be distributed to 

those entities to which they are allocated on the books of the bank. 

If it should become necessary to use any surplus or contingency 

reserves to pay any liabilities or to retire any capital stock, allocated 

contingency reserves and surplus shall be exhausted first in accordance with rules prescribed by the Farm Credit Administration." 

(b) For purposes of applying the amendment in subsection (a) separation of 

of this section, that part of the fiscal year 195G preceding the effective ^^^^ years, 

date of title I of this Act and that part of such year following said 

effective date shall be deemed to be separate fiscal years. 

SEC. 104. Section 31 of the Farm Credit Act of 1933 is amended 12 use n34g. 

to read as follows: 

"SEC. 31. BOARD OF DIRECTORS or CENTRAL BANK.—The Central 

Bank for Cooperatives shall have seven directors. Of this number 

four shall be appointed by the Governor of the Farm Credit Administration, by and with the advice and consent of the Federal Farm 
660 PUBLIC LAW 347-AUG. 11, 1955 [69 ST A T . 

Removal. 

Rules 

nations. 

for nomietCo 

Credit Board, and three shall be elected by the regional banks for 

cooperatives and cooperative associations: Provided^ That the terms 

of office of directors established prior to the effective date of title I 

of the Farm Credit Act of 1955 shall continue through the thirty-first 

day of December next following the effective date of said title I and 

shall expire at the end of that day. Three of the directors appointed 

by the Farm Credit Administration shall be appointed for terms of 

one year, two years, and three years, respectively, as designated at 

the time of appointment and the fourth appointed director shall be 

appointed for a term of three years and thereafter each appointed 

director shall be appointed for a term of three years. Any appointed 

director may be removed at pleasure at any time by the Farm Credit 

Administration. The Farm Credit Administration shall prescribe 

rules and regulations for the nominations and elections required by 

this section. Sufficiently in advance of the first day of January next 

following the effective date of title I of the Farm Credit Act of 

1955, and at any time subsequent to the enactment thereof, the Farm 

Credit Administration shall take all action necessary in order to 

permit the elections hereby provided and shall group the several 

farm credit districts into three areas, each of which shall be comprised of four contiguous farm credit districts, and a director shall 

be elected from nominees from each of such areas by regional banks 

for cooperatives of the area and cooperative associations of the area 

eligible to vote. The three elected directors shall be elected for terms 

of one year, two years, and three years, respectively, as shall be 

designated by the Farm Credit Administration and thereafter elected 

directors shall be elected for terms of three years: Provided^ That 

whenever, as determined by the Farm Credit Administration, the 

sum of the capital stock and subscriptions to the guaranty fund of 

the central bank held by persons other than the Governor of the 

Farm Credit Administration on behalf of the United States and 

surplus and reserve accounts of said bank shall equal or exceed 06% 

per centum of the total capital stock, subscriptions to the guaranty 

fund and surplus and reserve accounts of said bank as of the date 

six months before the expiration of the term of office of any appointed 

director, except the fourth appointed director, whose term next expires, the successor to such director shall be elected from nominees 

for a term of three years by regional banks for cooperatives of the 

area and cooperative associations of the area eligible to vote on a 

basis of areas comprised of two contiguous farm credit districts as 

designated by the Farm Credit Administration. Appointed directors 

except the fourth appointed director shall continue to be replaced 

by elected directors in accordance with the foregoing provisions until 

the total number of elected directors shall be six, elected one from 

each of six such areas comprised of two contiguous farm credit districts. Whenever, as determined by the Farm Credit Administration, the sum of the capital stock and subscriptions to the guaranty 

fund of the central bank held by persons other than the Governor 

of the Farm Credit Administration on behalf of the United States 

and surplus and reserve accounts of said bank shall not equal or 

exceed 66% per centum of the total capital stock, subscriptions to 

the guaranty fund and surplus and reserve accounts of the banks 

as of the date six months before the expiration of the term of office 

of any elected director whose term next expires, the successor to 

such elected director shall, if the number of elected directors then 

exceeds three, be appointed by the Governor of the Farm Credit 

Administration by and with the advice and consent of the Federal 

Farm Credit Board for a term of three years. In any such case where 

only one additional appointed director is needed in order to increase 
69 STAT. ] PUBLIC LAW 347-AUG. 11, 1955 661 

the total number of appointed directors to four, and the terms of 

office of more than one elected director next expire, the Farm Credit 

Administration shall designate the one of such next expiring terms 

of office which shall be replaced by the additional appointed director. 

Any vacancy in the Board whether filled by appointment or by election shall be filled for the unexpired term in the same manner in 

which the vacant office was filled. Each regional bank for cooperatives, each cooperative association which is a direct borrower from 

the central bank, each holder of one or more shares of class C stock 

in a regional bank for cooperatives which is eligible to vote under 

section 42 (a) (3), and each holder of one or more shares of stock 

in the central bank or any regional bank for cooperatives issued 

before the effective date of title I of the Farm Credit Act of 1955 

which is eligible to vote shall be eligible to vote for directors of the 

central bank and each such holder shall be entitled to one vote only 

without regard to the number of shares held in any one or more of 

said banks, and the vote of any such holder of stock in more than 

one bank shall be cast only with respect to elections in the area in 

which is located the main office of such holder. Elected direcjtors 

shall have been, for at least two years, residents of the area for 

which they are elected. No person shall be eligible for nomination, 

election, or appointment as a director if such person has Avithin one 

year next preceding the commencement of the term been a salaried 

officer or employee of the Farm Credit Administration or of any 

corporation operating urder its supervision. Any person who is a 

member of the Federal iVrm Credit Board or a district farm credit 

board when appointed or elected as director shall resign as a member of the Federal Farm Credit Board or the district board before 

assuming his duties as director of the central bank. No person who 

becomes such director shall be eligible to continue to serve if he 

becomes a member of the Federal Farm Credit Board or any district 

farm credit board or an officer or employee of the Farm Credit Administration or an officer or employee of any corporation operating 

under the supervision of the Farm Credit Administration." 

SEC. 105. Section 32 of the Farm Credit Act of 1933 is amended 

to read as follows: 

"SEC. 32. POWERS OF BOARD OF DIRECTORS OF CENTRAL BANK.—The 

Board of Directors of the Central Bank for Cooperatives shall elect 

a Chairman and a Vice Chairman from among its members. The 

powers of the Board of Directors shall be such powers as may be 

prescribed in the charter and bylaws with the approval of the Farm 

Credit Administration: Provided^ That said Board without limitation of powers conferred by section 60 shall have power, subject to 

approval of the Farm Credit Administration, to appoint and fix 

the compensation of the chief executive officer and such other officers 

and employees, experts, and consultants as may be necessary for the 

efficient conduct of the bank's business: Provided further^ That the 

chief executive officer of the bank shall not be an officer or employee 

of the Farm Credit Administration." 

SEC. 106. Section 38 of the Farm Credit Act of 1933 is amended 

by adding at the end of said section the following new sentence: 

"After the effective date of title I of the Farm Credit Act of 1955 

any amendment in the terms of the charter issued to any bank for 

cooperatives and any regulation issued under authority of this section 

or otherwise affecting lending operations of any such bank shall be 

consistent with the principle that the central bank shall make loans 

only in cases where it is not practicable for the loan to be made by a 

regional bank." 

Vacancies. 

12 us e 1134h. 

Chairma n and 

Vice Chairman. 

12 us e 1134J. 

Charter amend -

ments, etc» 
662 PUBLIC LAW 347-AUG. 11, 1955 [69 STA T 

12 us e 1134c, 

114 Id. 

12 us e 11341, 

114 Id. 

12 us e 1134j, 

1141d. 

12 us e 114 If, 

12 us e 1138e. 

12 us e 1138f. 

12 us e 636f. 

12 us e 665. 

Prior loans, applicability of title, 

etc. 

Effective date. 

SEC. 107. Section 41 of the Farm Credit Act of 1938, as amended, 

is amended by adding a new paragraph as follows: 

"Notwithstanding any other provision of law, any officer or employee of the Farm Credit Administration or of any bank for cooperatives designated to act as custodian of collateral securing loans 

made by any such bank to any cooperative association eligible to borrow therefrom may, in accordance with regulations of the Farm Credit 

Administration, act at the same time as custodian of collateral securing loans made by any other lenders to aiiy cooperative association 

eligible to borrow from any such bank." 

SEC. 108. (a) Section 38 of the Farm Credit Act of 1933 is amended 

by striking the words "Chairman of the Board" in the last sentence 

of said section and substituting in lieu thereof the words "Board 

of Directors". 

(b) Section 34 of the Farm Credit Act of 1983, as amended, is 

amended by striking the words "Chairman of its Board of Directors" 

in the first paragraph of said section and substituting in lieu thereof 

the words "Farm Credit Administration". 

SEC. 109. Subsection (a) of section 8 of the Agricultural Marketing 

Act, as amended, is amended to read as follows: 

"(a) Loans to cooperative associations made by any bank for cooperatives shall bear such rates of interest as the board of directors 

of the bank shall from time to time determine with the approval of 

the Farm Credit Administration, but in no case shall the rate of 

interest exceed 6 per centum per annum on the unpaid principal of 

a loan." 

SEC. 110. (a) Section 65 of the Farm Credit Act of 1933 is amended 

by striking the word "regional" in the first sentence of said section. 

(b) Section 66 of the Farm Credit Act of 1933, as amended, is 

hereby repealed. 

(c) The second sentence of section 7 (a) of the Farm (^redit Act 

of 1958 is hereby repealed. 

(d) Section 6 of the Act approved January 23, 1932 (47 Stat. 14), 

is amended by adding immediately following the comma after the 

word "Act" where it first appears the following: "the Farm Credit 

Act of 1933". 

SEC. 111. This title shall be applicable to loans made before its 

effective date from the date on which they may be changed by agreement to conform hereto, otherwise, except as provided in this title, 

such loans shall be treated as though this title had not been enacted. 

Any cooperative association owning capital stock or guaranty fund 

credits in any bank for cooperatives issued before the effective date 

of this title which is eligible to vote shall, as long as such eligibility 

continues, be entitled to vote to the same extent as a holder of class 

C stock which is eligible to vote; any cooperative association owning 

such stock or guaranty fund credits shall be entitled to have such 

stock or credits retired as though this title had not been enacted; and 

any such association may with the consent of the bank have such stock 

or credits, if it is found eligible to own class B or class C stock, converted in w^iole or in part into class B or class C stock or equivalent 

guaranty fund credits: Provided, That any bank for cooperatives 

with the approval of the Farm Credit Administration may retire at 

any time capital stock or guaranty fund credits issued before the 

effective date of this title held by any cooperative association and 

may hold the proceeds of such retired stock or guaranty fund credits 

as security for any indebtedness of the association to the bank. 

SEC. 112. This title shall take effect on the first day of the month 

]iext following one hundred and twenty days after its enactment. 
69 STAT.J PUBLIC LAW 347-AUG. 11, 1955 663 

TITLE II—PRODUCTION CREDIT SYSTEM 

SEC. 201. Section 21 of the Farm Credit Act of 1933 is amended by 12 use 113le. 

striking out of the fifth sentence the words "all stock shall share in 

dividend distributions without preference" and substituting therefor 

the words "Dividends may be paid on class A and class B stock without 

preference or on class A stock alone, as the board of directors of the 

association may determine". 

SEC. 202. Section 22 of the Farm Credit Act of 1933 is amended to ^^ use luif. 

read as follows: 

"SEC. 22. (a) Each production credit association shall, at the end 

of each fiscal year, apply the amount of its earnings in excess of operating expenses (including provision for reasonable valuation reserves) 

during such fiscal year, first, to the restoration of the impairment, if 

any, of capital; and, second, to the establishment and maintenance of 

a surplus account, the minimum amount of which shall be prescribed 

by the production credit corporation. 

"(b) A production credit association may pay dividends of not to 

exceed 7 per centum per annum when such payments are approved by 

the production credit corporation of the district and are consistent 

with policies established under regulations issued by the Farm Credit 

Administration." 

SEC. 203. The amounts in the guaranty fund reserve and the reserve 

account for bad and doubtful debts of each production credit association shall, as of the effective date of this title, be transferred to the 

surplus account of such association established pursuant to the provisions of section 22 of the Farm Credit Act of 1933 as amended by 

section 202 of this title. 

SEC. 204. Section 23 of the Farm Credit Act of 1933 is amended to ^^ use uaig. 

read as follows: 

"SEC. 23. Each production credit association shall, under such rules lomTfo'flrmerir'* 

and regulations as may be prescribed by the production credit corporation of the district with the approval of the Farm Credit Administration, invest its funds and make loans to farmers for general agricultural purposes. Such loans shall be made on such terms and conditions, at such rates of interest, and with such security as may be 

prescribed by the corporation. No borrower shall be indebted to 

the association at any one time in an amount in excess of 15 per 

centum of the capital and surplus of the association unless the loan 

has the prior approval of the corporation, or in excess of 35 per 

centum of the capital and surplus of the association unless the loan 

also has the prior approval of the Farm Credit Administration. 

Borrowers shall be required to own, at the time the loan is made, class 

B stock of the association in an amount equal in fair book value (not 

to exceed par), as determined by the association, to $5 per $100 or 

fraction thereof of the amount of the loan. Such stock shall not be 

canceled or retired upon payment of the loan but may be transferred 

or exchanged as provided in section 21 of this Act." 

SEC. 205. The last sentence of section 63 of the Farm Credit Act ^^ use lusc. 

of 1933 is hereby amended to read as follows: "The exemption provided herein shall not apply with respect to any production credit 

association or its property or income after the class A stock held in it 

by the production credit corporation has been retired, or with respect 

to the Central Bank for Cooperatives, or any production credit 

corporation or bank for cooperatives, or its property or income after 

the stock held in it by the United States has been retired." 
664 PUBLIC LAW 347-,AUG. 11, 1955 [69 STAT. 

TITLE III—FEDEEAL LAND BANK SYSTEM 

1 ? fiin' «?*«i:« SEC. 301. Sections 3, 7, and 8 of the Federal Farm Loan Act, as 

685, 659-664, 711- amended, are amended— 

723, 731-734. ^^^ ^^ changing next to the last paragraph of section 3 to 

read as follows: "The Farm Credit Administration shall prescribe a form for the statement of condition of national farm loan 

associations and land banks under its supervision, which shall 

be filled out by each such association or bank and transmitted to 

said administration as required by it."; 

(b) by changing the fiffti sentence of the fourth paragraph 

of section 7 to read as follows: "He shall make a report to the 

Farm Credit Administration as required by it upon forms to be 

provided for that purpose."; and 

(c) by deleting the last sentence of section 8. 

12 use 691-698. gj,^. gQg. The last paragraph of section 5 of the Federal Farm 

Loan Act, as amended, is repealed. 

12 use 751-756. g^c. 303. Scctiou 10 of the Federal Farm Loan Act, as amended, 

is amended by adding at the end thereof a new paragraph as follows: 

of^seffity^Vto"* "Notwithstanding any other provision of this Act to the contrary, 

subject to the approval of the Farm Credit Administration, the investigation and the written report or reports on the value of the security 

offered for a Federal land bank loan, which otherwise are required 

by this section to be made by land bank appraisers appointed under 

the authority of section 3 of this Act, may be made, in accordance 

with appraisal standards prescribed by the Farm Credit Administration, by any person (including a person who is secretary-treasurer 

of a national farm loan association) designated so to do by the Federal 

land bank of the district; a Federal land bank is authorized to make 

a loan, if otherwise authorized, on the basis of such an investigation 

and report by a person so designated; and a loan so made shall be 

12 use 857. eligible as collateral for farm loan bonds under section 19 of this 

Act, if otherwise qualified thereunder: Provided, That, within one 

year, the land bank shall obtain a written report on the security for 

the loan by a land bank appraiser appointed under section 3 of this 

Act, in terms and form prescribed by the Farm Credit Administration, and such a loan shall be eligible as collateral for farm loan 

bonds thereafter only if such report by a land bank appraiser establishes that the security meets the standards prescribed by the Farm 

Credit Administration for a land bank loan, and in no event shall 

any such loan thereafter be carried as such collateral for bonds at 

more than 65 per centum of the normal value of the security as determined by such land bank appraiser. Except as otherwise specifically 

provided in this paragraph, all provisions of this Act relating to 

loans made through national farm loan associations shall, insofar as 

applicable, apply with respect to loans made on such investigations 

and written reports by such designated persons." 

12 use 771,772. SJC. 304. Section 12 of the Federal Farm Loan Act, as amended, 

is amended— 

(a) by changing paragraph "Fourth" to read as follows: "Such 

loans may be made for general agricultural purposes and other 

requirements of the owner of the land mortgaged, under rules 

and regulations of the Farm Credit Administration."; 

(b) by striking out the period at the end of the second sentence 

of paragraph "Fifth" and adding the following: " ; and, consistent with community standards, the appraisal may also reflect 

home advantages, and the availability to a typical operator of 

the property of earnings from other dependable sources to supplement the normal earning power of the farm."; 
69 STAT.] PUBLIC LAW 347-AUG . 11, 1955 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 ^^ use 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.". 

SEC. 306. (a) That part of section 23 of the Federal Farm Loan Act, ^^ use 901.902. 

as 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 ^^ ^^^ 9ii-9is. 

Act, as amended, is amended by striking out the period at the end 

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 w4th 

the approval of the Farm Credit Administration.". 

(c) The amendments made by (a) and (b) of this section shall Effective date, 

become effective on the next January 1, or July 1 whichever first 

succeeds enactment hereof. 

SEC. 307. Section 601 (a) of the Department of Agriculture Organic \l ^i}: J32; 

Act of 1944 is amended by inserting after "Federal land banks,", the 

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.". 
PUBLIC DAW 348-,AUG. 11, 1955 [69 STAT . 

TITLE IV—MISCELLANEOUS PROVISIONS 

12 us e 640b. 

12 us e 640d. 

12 us e 636c. 

Separability. 

SEC. 401. (a) Section 5 (b) of the Farm Credit Act of 1937, as 

amended, is amended by changing the sixth sentence thereof to read 

as follo\N'S: "After the date of enactment of the Farm Credit Act of 

1955, no person shall be eligible for election or appointment to membership on said Board if such person has within one year next preceding the commencement of the term been a salaried officer or employee 

of the Farm Credit Administration, or a salaried officer or employee 

of any corporation operating under the supervision of the Farm Credit 

Administration.". 

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

amended— 

(1) by substituting "six months" for "three months" wherever 

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 begun 

any time within six months before the expiration of the term of 

office to which the director is to succeed, subject to the required determination 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 m^dnths"; 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. 

August 11, 1955 

[8.2198] 

Public Law 348 CHAPTER 786 

AN ACT 

To extend the period of restrictions on lands belonging to Indians of the Five 

Civilized Tribes in Oklahoma, and for other purposes. 

Be it enacted hy the Senate and House of Representatives of the 

TrTbVs* okia."^^*** United States of America in Congress assembled, That subject to 

tiikt."'* re8trie- ^^Q provisious of sectiou 2 of this Act, the period of restrictions 

against alienation, lease, mortgage, or other encumbrance of lands