An Act to improve and simplify the credit facilities available to farmers, to amend the Bankhead Jones Farm Tenant Act, and for other purposes.
PL 84-878 (H.R.11544), enacted 08/01/1956

70 S T A T . ] 
PUBLIC LAW 878-AUG. 1, 1956 
801 
Public Law 878 
CHAPTER 829 
AN ACT 
August 1, 195(5 
To improve and simplify the credit facilities available to farmers, to amend the 
[H. R. ti544] 
Banlvhead-Jones Farm Tenant Act, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That the Bankhead-
Jones Farm Tenant Act, as amended, is further amended as follows: 
(a) The following sections of title I of the Bankhead-Jones Farm 
Tenant Act, as amended, are further amended as follows: 
Section 1 (a) is amended by striking from the second sentence 
thereof the words "to assist borrowers under this title in making the" 
and inserting in lieu thereof the words "or insured for" and by striking 
the word "their" preceding the words "farming operations". 
(b) Section 1 (b) is amended by inserting after the word "only" in 
the first sentence the words "farm owners", by striking the words 
"(including owners of inadequate or underimproved farm units)", 
and by inserting in lieu of the words "the major portion" the words 
"a substantial portion". 
(c) Section 1 (c) is amended to read as follows: "No loan shall be 
made, or mortgage insured, unless the farm is a family-type unit of 
such size as the Secretary determines to be sufficient to enable the 
family to carry on successful farming of a type which the Secretary 
deems can be carried on successfully in the locality in which the farm 
is situated: Provided^ however^ That— 
" (1) loans may be made to veterans or mortgages insured for vet-
erans, as defined in section 1 (b) (2) hereof, who have pensionable 
disabilities, with respect to farm units of sufficient size to meet the 
farming capabilities of such veterans and afford them income 
which, together Avith their pensions, will enable them to meet 
living and operating expenses and the amounts to become due on 
their loans; and 
"(2) loans may be made or mortgages insured to ow^ner-opera-
tors who are bona fide farmers w^ho have historically resided on 
farms and depended on farm income for their livelihood, and who 
are conducting substantial farming operations on units which are 
less than family-type units, to repair or improve such farm units, 
and to refinance indebtedness of the owner incurred for agricul-
tural purposes, if such farms are of sufficient size to produce in-
come which, together with income from other sources, will enable 
them to meet living and operating expenses and the amounts to 
become due on their loans; and 
"(3) loans in amounts not exceeding $15,000 per farm for the 
construction, improvement, repair, or replacement of farm dwell-
ings and other farm buildings on farms the operation of which 
require no more than three farm families or three farm dwellings 
may be insured under this Act." 
(d) The second sentence of section 2 (b) is amended by striking 
the period at the end thereof and inserting a comma and the follow-
ing: "except that, for loans under either part of the proviso in section 
1 (c) of this title, the certification shall be based on the normal market 
value of the farm." 
(e) Section 3 (a) is amended to read as follows: 
"SEC. 3. (a) Loans made under this title shall not be in excess of 
the amount certified by the county committee to be the value of the 
farm less any prior lien indebtedness, and shall be secured by a first or 
second mortgage or deed of trust on the farm. 
Loans may not be 
made for the acquisition or enlargement of farms which have a value, 
as acquired or enlarged, in excess of the average value of efficient 
Bankhead-Jones 
Farm Tenant Act, 
amendment. 
Power of Secre-
tary. 
60 Stat. 1072. 
7 u s e 1001. 
Certification. 
60 Stat. 1074. 
7 u s e 1002. 
Amounts. 
60 Stat. 1074. 
7 u s e 1003. 
692Z5 O - 5 7 - 5 5 (Vol. 70) 
802 
PUBLIC LAW 878-AUG. 1, 1956 
[70 S T A T . 
60 Stat. 1076. 
7 u s e 100 5b(b). 
60 Stat. 1076. 
7 u s e 1005b(e). 
69 Stat. 553. 
7 u s e 1006c. 
60 Stat. 1072. 
7 u s e 1007. 
B o r r o w e r s and 
terms. 
Restrictions. 
family-type farm-management units, as determined by the Secretary, 
in the county, parish, or locality where the farm is located." 
(f) Section 12 (b) is amended by striking the figure "$100,000,000" 
and inserting in lieu thereof the figure "$125,000,000". 
(g) Section 12 (e) is amended by striking from the last sentence of 
item (2) the words "to carry out the provisions of this title, relating 
to mortgage insurance" and by inserting in lieu thereof the words 
"of the Farmers Home Administration and may be transferred 
annually to that administrative expense account and become merged 
therewith". 
(h) Section 16 (a) is amended by inserting in the first sentence 
thereof before the word "mortgages" the words "or second" and by 
adding the following sentence at the end of said subsection: "I.K)ans 
insured under this section shall not be in excess of 90 per centum of 
the amount certified by the county committee to be the value of the 
farm, less any prior lien indebtedness." 
(i) The following new section 17 is added: 
"SEC. 17. Until June 30,1959, the purposes for which loans may be 
made or insured under this title shall include the advance of funds for 
refinancing secured or unsecured indebtedness of eligible farmers on 
farms of not more than family size who are presently unable to meet 
the terms and conditions of their outstanding indebtedness and are 
unable to refinance such debts with commercial banks, cooperative 
lending agencies, or other responsible credit sources at rates and terms 
which they could reasonably be expected to fulfill. 
No such loans 
shall be made to an applicant whose total indebtedness is in excess of 
the amount certified by the county committee to be the value of the 
real estate and the reasonable value of the applicant's livestock and 
farm equipment, unless the aggregate of the outstanding indebtedness 
shall be adjusted so as to be within such values. The total amount of 
loans insured in any one fiscal year under this section shall not exceed 
$50,000,000.'' 
SEC. 6. Title I I of the Bankhead-Jones Farm Tenant Act, as 
amended, is further amended by striking the words "Production and 
Subsistence Loans" in the title and inserting in lieu thereof the words 
"Operating Loans", and by the amendment of section 21 to read as 
follows: 
"SEC. 21. (a) The Secretary may make loans to farmers and stock-
men who are operators of family-type farms and who are citizens of 
the United States for the purchase of livestock, seed, feed, fertilizer, 
farm equipment, supplies, and other farm needs, the cost of reorganiz-
ing the farming enterprise or changing farming practices to accom-
plish more diversified or more profitable farming operations, the refi-
nancing of existing indebtedness, and for family subsistence: Pro-
mded, however, That loans may be made to operators who are bona 
fide farmers who have historically resided on farms and depended on 
farm income for their livelihood, and who are conducting substantial 
farming operations on units which are less than family-type units, 
if the units are of sufficient size to produce income which, together 
with income from other sources, including pensions in the case of dis-
abled veterans, will enable them to meet living and operating expenses 
and the amounts due on their loans. 
"(b) No loan shall be made under this section for the purchase or 
leasing of land or for the carrying on of any land-purchase or land-
leasing program. No loan may be made to any one borrower under 
this section which would cause the total principal amount outstanding 
to exceed $10,000: Provided, however, That an amount not to exceed 10 
per centum of the sum made available by annual appropriation for 
loans under this title may be used for making loans to borrowers, 
70 S T A T . ] 
PUBLIC LAW 8 7 8 - A U G . 1, 1956 
803 
which would cause such indebtedness to exceed $10,(X)0 but in no event 
may any loan be made which would cause such indebtedness to exceed 
$20,000. 
"(c) The terms of loans under this section, including any renewal 
or extension of any such loan except as provided in subsection (d) 
hereof, shall not exceed seven years from the date the original loan 
was made. 
"(d) No person who has failed to liquidate his indebtedness un-
der this section for seven consecutive years shall be eligible for loans 
hereunder: Provided, hoivever, That in justifiable cases where the 
Secretary finds that the inability of a borrower to repay his indebted-
ness under this section within seven years is due to causes beyond the 
control of the borrower, the Secretary may extend or renew such loans 
to be repayable in not to exceed ten years from the date the original 
loan was made, and during such extended term may make additional 
loans to such persons, if necessary," 
SEC. 3. Except insofar as they affect title III of the Bankhead-
Jones Farm Tenant Act, as amended, the following sections of title 
IV of the Bankhead-Jones Farm Tenant Act, as amended, are further 
amended as follows: 
(a) Section 41 (g) is amended to read as follows: 
ci^mi" ^'"**"* °' 
"(g) 
Compromise, adjust, or reduce claims and adjust and modify ^ eo^stat. io64. 
the terms of mortgages, leases, contracts, and agreements entered into 
^ "^^ ^°^^' 
or administered by the Farmers' Home Administration under any of 
its programs, as circumstances may require: Provided, however, That— 
" (1) compromise, adjustment, or reduction of claims of $15,000 
or more must be effected by reference to the Secretary of the 
Treasury or to the Attorney General pursuant to the provisions 
of section 3469 of the Kevised Statutes (31 U. S. C. 194); 
"(2) compromise, adjustment, or reduction of claims shall be 
based on a reasonable determination by the Secretary of the 
debtor's ability to pay and the value of the security and with or 
without the payment of any consideration at the time of such 
adjustment or reduction; 
"(3) releases from personal liability may also be made with or 
without the payment of any consideration at the time of adjust-
ment of claims against— 
"(A) borrowers who have transferred the security prop-
erty to other approved applicants under agreements assuming 
the outstanding secured indebtedness; and 
"(B) borrowers who have transferred their farms to other 
approved applicants under agreements assuming that portion 
of their outstanding indebtedness against the farm which is 
equal to the value of the farm at the time of the transfer, and 
borrowers whose farms have been acquired by the Secretary, in 
cases where the county committees certify and the Secretary 
determines that the borrowers have cooperated in good faith 
with the Secretary, have farmed in a workmanlike manner, 
used due diligence to maintain the security against loss, and 
otherwise fulfilled the covenants incident to their loans, to the 
best of their abilities; 
"(4) no compromise, adjustment, or reduction of claims shall 
be made upon terms more favorable than recommended by the 
appropriate county committee established pursuant to section 42 
of this Act; and 
"(5) any claim which has been due and payable for five years 
or more, and where the debtor has no assets from which the claim 
could be collected and has no apparent future debt payment abil-
ity, or is deceased and has left no estate, or has been absent from 
804 
PUBLIC LAW 879-AUG. 1, 1956 
[70 ST A T . 
Term of office. 
60 Stat. 1066. 
60 Stat. 1068. 
7 u s e 1017(d). 
Bid at f o r e clo-
sure. 
60 Stat. 1070. 
7 u s e 1025. 
12 use 
note. 
1148a-l 
his last-known address for a period of at least five years, has no 
known assets, and his whereabouts cannot be ascertained without 
undue expense, may be charged off or released by the Secretary 
upon a report and favorable recommendation of the employee of 
the Administration having charge of the claim: Provided^ how-
ever^ That claims involving a principal balance of $150 or less 
may be charged off or released whenever it appears to the Secre-
tary that further collection efforts would be ineft'ectual or likely 
to prove uneconomical." 
(b) The first sentence of section 42 (a) is amended bv inserting 
after the word "county" in each of three places the words "or area". 
(c) Section 43 (d) is amended by striking the words "as family-size 
farms". 
(d) Section 51 is amended to read as follows: 
"SEC. 51. The Secretary is authorized and empowered to make ad-
vances to preserve and protect the security for, or the lien or priority 
of the lien securing, any loan or other indebtedness owing to, insured 
by or acquired by the Secretary under any programs administered by 
the Farmers' Home Administration; to bid for and purchase at any 
foreclosure or other sale or otherwise acquire property pledged, mort-
gaged, conveyed, attached, or levied upon to secure the payment of 
any such indebtedness; to accept title to any property so purchased or 
acquired; to operate for a period not in excess of one year from the 
date of acquisition, or lease such property for such period as may be 
deemed necessary to protect the investment therein; to sell or grant 
rights-of-way or easements over such property; and to sell or other-
wise dispose of such property in a manner consistent with the provi-
sions of section 43 of this Act. 
Any advances or expenditures under 
this section with respect to any insured loan or insured mortgage shall 
be paid out of the mortgage insurance fund." 
SEC. 4. Section 1 of the Act of August 31, 1954, as amended (68 
Stat. 999; 69 Stat. 223), is further amended by striking the figures 
"1957" and inserting in lieu thereof the figures "1959" and by striking 
the figures "$15,000,000" and inserting in lieu thereof "$65,000,000". 
Approved August 1, 1956. 
Public Law 879 
CHAPTER 830 
• , .Qi;« 
AN ACT 
August 1, 1956 
Q
H
. R. 5738] 
rp^ authorize flight instruction during Reserve Officers' Training Corps programs, 
and for other purposes. 
ROTC. 
F l i g h t instruc-
tion. 
41 Stat. 777. 
41 Stat. 777; 68 
Stat. 896. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That the Act of June 
3,1916 (39 Stat. 166), as amended, is further amended as follows: 
(1) Section 40a, as amended (10 U. S. C. 385), is further amended 
by adding the following sentence at the end thereof: "The courses of 
theoretical and practical military training prescribed under this sec-
tion may include flight instruction,". 
(2) Section 47, as amended (10 U. S. C. 389), is further amended 
by adding the following sentence at the end thereof: "The Secretary 
of the Army and the Secretary of the Air Force may, for a period 
of four years after the effective date of this amendatory Act, provide, 
or contract with civilian flying or aviation schools or educational insti-
tutions to provide, such personnel, aircraft, supplies, facilities, and 
instruction as are necessary for flight instruction of members of the 
Reserve Officers' Training Corps in Army and Air Force units, respec-
tively.".