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Sec. 7. Capital stock: That no corporation organized under the provisions of this act shall be permitted to commence business with a paid-in capital of less than $250,000.

The capital stock of any such corporation may be increased at any time with the approval of the Comptroller of the Currency by a vote of two-thirds of the holders of its issued and outstanding capital stock, or by written consent all of its share. holders without a meeting and without a formal vote; and may be reduced in like manner: Provided, That in no event shall such capital stock be reduced to an amount less than one-tenth of its then outstanding indebtedness, direct or contingent, or to an amount less than $250,000. No corporation, except as herein provided, shall withdraw or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its paid-in capital, and section 5204 of the United States Revised Statutes, prohibiting the payment of unearned dividends or the withdrawal of capital of national banks, shall be held to apply to corporations organized under the provisions of this act.

The provisions and limitations contained in section 5136 of the United States Revised Statutes, relative to transfer of the shares of the capital stock of national banks, shall apply to corporations organized under the provisions of this act.

Whenever any shareholder or his assign fails, upon demand of the Comptroller of the Currency, to pay his subscription or any part thereof on stock of such corporation subscribed to by him, the directors of the corporation, after fifteen days' notice, shall proceed in the manner prescribed by section 5141 of the United States Revised Statutes for the collection of unpaid subscriptions to stock of national banks.

Section 5144 of the United States Revised Statutes, which relates to the right of shareholders of national banks to vote by proxy, shall be held to apply to shareholders of corporations organized under the provisions of this act.

SEC. 8. Rediscount corporations: That corporations having a paid-in capital stock of $1,000,000 or over may be organized under the provisions of this act, to exercise all the powers enumerated in section 4, except that in lieu of the powers cɔn ferred in subsections 1 and 2 of said secion 4 such corporations shall have power, upon the indorsement of any corporation organized under the terms of this act, to rediscount notes, drafts, bill of exchange, and acceptances for such corporations. Such indorsement shall be deemed to be a waiver of demand notice and protest by such corporation as to its own indorsement exclusively.

Corporations organized under the provisions of this section shall not be subject to the limitations contained in section 5, but the Comptroller of the Currency may by general regulations from time to time prescribe the amount of indebtedness, direct or contingent, which such corporations may incur, and the aggregate amount of paper of different types which such corporations may rediscount for any one corporation.

Corporations with powers limited, as provided in this section, may be permitted to commence business without deposit of bonds or other obligations of the United States, as provided in section 9 of this act.

Sec. 9. Permit to begin business: That no corporation organized under this act, except corporations with powers limited, as provided in section 8, shall commence business until it has deposited with the Federal reserve bank of the district wherein it has its prinicpal place of business, bonds, or other obligations of the United States in an aggregate face amount at least 25 per centum of its paid-in capital stock. Each such corporation shall at all times keep on deposit with such Federal reserve bank an amount of such bonds or other obligations of the United States at least equal in face value to 7 per centum of the aggregate indebtedness of such corporation, direct or contingent. Except as hereinafter provided, such bonds or other obligations shall be held by such Federal reserve bank, subject to the direction and control of the Comptroller of the Currency, in trust for the equal and pro rata protection and benefit of all holders of notes, debentures, drafts, bills of exchange, or acceptances upon which such corporation may be directly or contingently liable. Upon receipt of proper evidence that the amount of such bonds or other obligations of the United States so deposited exceeds 7} per centum of such aggregate indebtedness, the Comptroller of the Currency may release such excess, provided that the amount remaining on deposit shall in no event be reduced below 25 per centum of the paid-in capital stock of such corporation. Under such regulations as the Comptroller of the Currency may prescribe, a Federal reserve bank may, upon request of the corporation which deposited the same, sell any such bonds or obligations for account of such corporation, and permit such corporation to use the proceeds thereof for the protection or preservation of any property pledged or mortgaged as security for obligations owned or indorsed by the corporation. If by reason of such sale the face amount of such bonds or other obligations of the United States remaining on deposit with such Federal reserve bank shall be less than 7) per centum of such aggregate indebtedness of the corporation, no further advances shall be made, or notes, drafts, or bills of exchange discounted, rediscounted, accepted, or purchased by such corporation until sufficient additional bonds or other obligations of the United States have been restored to make good the deficiency.

No permit to begin business in any State of the United States shall be granted to any corporation organized under the provisions of this act unless the Comptroller of the Currency shall determine that the laws of such State afford adequate protection to advances made upon the security of warehouse receipts covering agricultural commodities or chattel mortgages upon live stock with respect to (a) bonding, licensing, and inspection of warehouses; (b) recordation of chattel mortgages or deeds of trust on live stock; (c) recordation of brands or other identifying marks on live stock; (d) reporting and recording of interstate shipments and slaughter of live stock; and (e) right of mortgagee to release a portion of the mortgaged property without prejudice to the priority of lien as against junior lienors or other creditors of the mortgagor.

SEC. 10. Supervision by the Comptroller of the Currency: All corporations organized under the provisions of this act shall be under the supervision of the Comptroller of the Currency, who shall be charged with the execution of all laws of the United States relating to the organization, regulation, and control of such corporations. The comptroller shall exercise the same general power of supervision over the operations of corporations organized under the provisions of this act as he now exercises over national banks under the laws of the United States.

The comptroller shall power to appoint and fix the compensation of examiners to examine corporations organized under the provisions of this act or to use nationalbank examiners for this purpose. All examiners appointed by him shall be subject to existing provisions of law relating to national-bank examiners and to the provisions of the Federal reserve act which prohibit national-bank examiners from performing any service for compensation for any bank or officer and from disclosing the names of borrowers or the collateral for loans without obtaining the written consent of the comptroller, and such provisions shall be held to apply to examiners appointed to examine corporations organized under the provisions of this act,

The expense of all of the examinations herein provided for shall be assessed by the Comptroller of the Currency upon the companies examined in proportion to assets or resources held by the companies upon the dates of examination of the various companies.

The provisions of the Federal reserve act which prohibit any member bank from making loans or granting a gratuity to any national-bank examiner shall be applicable to corporations organized under the provisions of this act.

Corporations organized under the provisions of this act shall be required to make reports to the comptroller at the time and in the manner required by sections 5211 and 5212 of the United States Revised Statutes, and shall be subject to the provisions, so far as the same may be held to be applicable, of section 5213 of the United States Revised Statutes.

Sec. 11. Licensed inspectors of live stock: That the Secretary of Agriculture may issue a license to any person, upon presentation to him of satisfactory evidence that such person is competent, to inspect live stock as a basis for loans. The Secretary of Agriculture may suspend or revoke any license issued by him under this act whenever, after opportunity for hearing has been given to the licensee, the Secretary shall determine that such licensee is incompetent, or has knowingly or carelessly made false or erroneous inspection reports with respect to any live stock, or has accepted any money or other consideration directly or indirectly, for any neglect or improper performance of duty, or has in any other manner shown himself to be unfit to act as a live-stock inspector. Pending investigation, the Secretary of Agriculture, whenever he deems it necessary, may suspend a license temporarily without a hearing. It shall be unlawful for any person other than a holder of a license duly issued under this section, or any person whose license has been suspended or revoked under the terms of this section, to represent that he is a federally licensed live-stock inspector, and any violation of this provision shall be punishable by a fine of not more than $1,000, or by imprisonment for not more than one year, or both.

Any inspector licensed under the provisions of this section who makes any statement in any inspection report or to any person for the purpose of obtaining for himself or any other person any advance on the security of the live stock inspected, knowing the same to be false, or who willfully overvalues any security by which an advance is secured, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than five years, or both.

The Comptroller of the Currency shall allot to the Department of Agriculture from time to time such sums as may be estimated to be necessary for the administration of

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this section, and may ratably assess the same from time to time against the corporations organized under this act.

SEC. 12. National banks may become stockholders: That any national banking association may file application with the Comptroller of the Currency for permission to invest an amount not exceeding in the aggregate 10 per cent of its paid-in capital stock and surplus in the stock of one or more of the corporations organized under the provisions of this act, and upon approval of such application may purchase such stock. The Comptroller of the Currency shall have discretion to approve or reject such application in whole or in part.

Sec. 13. Taxation: The shares of capital stock of corporations organized under the provisions of this act may be 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 principal place of business of the corporation is located, and the legislature of each State may determine and direct the manner and place of taxing all the shares of such corporation located within the State, subject only to the two restrictions that the taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State, and that the shares of any such corporation owned by nonresidents of any State shall be taxed in the city or town in which the principal place of business of such corporation is located and not elsewhere. Real property owned by such corporations shall be subject to taxation för State, county, and municipal taxes to the same extent according to its value as other real property is taxed.

SEC. 14. fiscal agents and depositories: That the moneys of corporations organized under the provisions of this act may be kept on deposit subject to check in any of the Federal reserve banks.

The Federal reserve banks are hereby authorized to act as depositories for and fiscal agents of any of the corporations organized under the provisions of this act in the general performance of the powers conferred by this title.

SEC. 15. Use of words “rural credit” in corporate title: All corporations not organized under the provisions of this act are prohibited from using the words “rural credit” as a part of their corporate name, and any violation of this prohibition committed after the passage of this act shall subject the party charged therewith with a penalty of $50 for each day during which it is committed or repeated.

Sec. 16. Consolidation of corporations organized under this act: Any two or more corporations organized under the provisions of this act, with the approval of the Comptroller of the Currency, may consolidate into one corporation under the charter of either or any of the existing corporations on such terms and conditions as may be lawfully agreed upon by a majority of the board of directors of each corporation proposing to consolidate, such agreement to be ratified and confirmed by the affirmative vote of the shareholders of each of such corporations owning at least two-thirds of its capital stock outstanding, at a meeting to be held on the call of the directors after publishing notice of the time, place, and object of the meeting for four consecutive weeks in some newspaper published in the place where the said corporation is located, and

no newspaper is published in the place then in a paper published nearest thereto, and after sending such notice to each shareholder of record by registered mail at least ten days prior to said meeting: Provided, however, That the capital stock of such consolidated corporation shall not be less than $250,000 paid in if the corporations consolidated are organized to exercise the powers covered by section 4, and provided that the capital stock of such consolidated corporation shall not be less than $1,000,000 paid in if the corporations consolidated are those organized under section 8: And provided further, That when such consolidation shall have been effected and approved by the comptroller any shareholder of either of the corporations so consolidated who has not voted for such consolidation may give notice to the directors of the corporation in which he is interested, within twenty days from the date of the certificate of approval of the comptroller, that he dissents from the plan of consolidation as adopted and approved, whereupon he shall be entitled to receive the value of the shares so held by him, to be ascertained by an appraisal made by a committee of three persons, one to be selected by the shareholder, one by the directors, and the third by the two so chosen; and in case the value so affixed shall not be satisfactory to the shareholder, he may, within five days after being notified of the appraisal, appeal to the Comptroller of the ('urrency, who shall cause a reappraisal to be made, which shall be final and binding; and if said reappraisal shall exceed the value affixed by said committee the corporation shall pay the expense of the reappraisal, otherwise the appellant shall pay said expense; and the value so ascertained and determined shall be deemed to be a debt due and be forthwith paid to said shareholder by said corporation, and the shares so paid shall be surrendered and after due notice sold at public auction within thirty days after the final appraisement provided for by this act.

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Where corporations consolidate under the provisions of this act, all of the rights, franchises, and interest of said corporations shall be consolidated in and to every species of property, personal and mixed, and choses in action thereto belonging, and shall be deemed to be transferred to and vested in the corporation into which it is consolidated without any deed or other transfer, and the said consolidated corporation shall hold and enjoy the same and all rights of property, franchises, and interest, in the same manner and to the same extent as they were held and enjoyed by the corporations so consolidated therewith.

SEC. 17. Insolvency, receivership, and liquidation: Whenever any corporation organized under the provisions of this act shall be dissolved and its rights, privileges, and franchises declared forfeited as prescribed in the preceding section, or whenever any creditor of any such corporation shall have obtained a judgment against it in any court of record and made application accompanied by a certificate from the clerk of the court, stating that such judgment has been rendered and has remained unpaid for the space of thirty days or whenever the comptroller shall become satisfied of the insolvency of such corporation, he may, after due examination of its affairs in either case, appoint a receiver who shall proceed to wind up the affairs of such corporation. The receiver so appointed shall exercise the powers and be subject to the restrictions of receivers of national banks; and the comptroller shall have the same powers and duties in connection with the administration of such receivership as he has in reference to the receivership of national banks.

Shareholders' agents for shareholders of corporations organized under the provisions of this act may be appointed in the manner prescribed by section 522 of the national bank act, being the act of June 30, 1876, as amended, and shall have the same general powers and duties and be subject to the same restrictions as shareholders' agents of a national bank.

Corporations organized under the provisions of this act may be placed in voluntary liquidation in the manner prescribed for national banking associations by sections 5220 and 5221 of the United States Revised Statutes.

Sec. 18. Penalty for violation of the provisions of this act: If the directors of any corporation organized under the provisions of this act shall knowingly violate or knowingly permit any of the officers, agents, or servants of the corporation to violate any of the provisions of this act, all the rights, privileges, and franchises of the corporation shall be thereby forfeited. Such violation shall, however, be determined and adjudged by a district court of the United States in a suit brought for that purpose by the Comptroller of the Currency in his own name before the corporation shall be declared dissolved, and in cases of such violation, every director who participated or assented to the same shall be held liable in his personal and individual capacity for all damages which the corporation, its shareholders, or any other person shall have sustained in consequence of such violation.

Sec. 19. Penalty for embezzlement, forgery, false statements, and so forth: Any officer, director, agent, or employee of any corporation organized under the provisions of this act who embezzles, abstracts, or willfully misapplies any of the moneys, funds, or credits of corporation, or who, without authority from the direc order or bill of exchange, makes any acceptance, issues, puts forth, or assigns any note, debenture, bond, draft, bill of exchange, mortgage, judgment, or decree, or who makes any false entry in any book, report, or statement of such corporation with intent in any case to injure or defraud such corporation or any other company or person, or to deceive any officer of such corporation or the Comptroller of the Currency, or any agent or examiner appointed to examine the affairs of such corporation; and every receiver of such corporation who, with like intent to defraud or injure, embezzles, abstracts, purloins, or willfully misapplies any of the moneys, funds, or assets of the corporation, and every person who with like intent aids or abets any officer, director, agent, employee, or receiver in any violation of this section shall be deemed guilty of a misdemeanor, and upon conviction thereof in any district court of the United States shall be fined not more than $5,000, or shall be imprisoned for not more than five years, or both, at the discretion of the court.

Whoever (1) makes any statement, knowing it to be false, for the purpose of obtaining for himself or for any other person, firm, corporation, or association any advance from a corporation organized under the provisions of this act, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.

Whoever willfully overvalues any security by which any such advance is secured shall be punished by a fine of not more than $5,000, or by imprisonment for not more than two years, or both.

Whoever (1) falsely makes, forges, or counterfeits any debenture, bond, coupon, or other obligation of any corporation organized under the provisions of this act, in imitation of or purporting to be in imitation of any such obligation issued by any such

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corporation; or (2) passes, utters, or publishes, or attemps to pass, utter, or publish, any false, forged, or counterfeited bond, debenture, coupon, or other obligation purporting to be issued by any such corporation, knowing the same to be falsely made, forged, or counterfeited; or (3) falsely alters any such bond, debenture, coupon, or other obligation; or (4) passes, utters, or publishes as true any falsely altered or spurious bond, debenture, coupon, or other obligation, issued or purported to have been issued by any such corporation, knowing the same to be falsely altered or spurious, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.

TITLE II.

AMENDMENTS TO FEDERAL RESERVE ACT.

SECTION 1. That section 13 of the Federal reserve act, as amended, be further amended by striking out the proviso at the end of the second paragraph of said section, so that said paragraph shall read as follows:

"Upon the indorsement of any of its member banks, which shall be deemed a waiver of demand, notice, and protest by such bank as to its own indorsement exclusively, any Federal reserve bank may discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes, or the proceeds of which have been used, or are to be used, for such purposes, the Federal Reserve Board to have the right to determine or define the character of the paper thus eligible for discount, within the meaning of this act. Nothing in this act contained shall be construed to prohibit such notes, drafts, and bills of exchange, secured by staple agricultural products, or other goods, wares, or merchandise from being eligible for such discount, but such definition shall not include notes, drafts, or bills covering merely investments or issued or drawn for the purpose of carrying or trading in stocks, bonds, or other investment securities, except bonds and notes of the Government of the United States. Notes, drafts, and bills admitted to discount under the terms of this paragraph must have a maturity at the time of discount of not more than ninety days, exclusive of days of grace.'

Sec. 2. That the Federal reserve act, as amended, be further amended by striking out the fourth paragraph of section 13 thereof and inserting in lieu of said fourth paragraph the following:

Any Federal reserve bank may discount acceptances of the kinds hereinafter described, which have a maturity at the time of discount of not more than ninety days sight, exclusive of days of grace, and which are indorsed by at least one membr bank: Provided, That such acceptances if drawn for an agricultural purpose and secured at the time of acceptance by warehouse receipts or other such document conveying or securing title covering readily marketable staples may be discounted with a maturity at the time of discount of not more than six months sight, exclusive of days of grace."

SEC. 3. That the Federal reserve act, as amended, be further amended by adding at the end of section 13 a new section, to be numbered section 13a and to read as follows:

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“Sec. 13a. Upon the indorsement of any of its member banks, which shall be deemed a waiver of demand, notice, and protest by such bank as to its own indorsement exclusively, any Federal reserve bank may discount notes, drafts, and bills of exchange issued or drawn for an agricultural purpose, or based upon live stock, and having a maturity, at the time of discount, exclusive of days of grace, not exceeding six months: Provided, however, That (a) such notes, drafts, or bills of exchange, when secured by warehouse receipts or other such negotiable documents, conveying or securing title to readily marketable, nonperishable agricultural products, may be discounted with a maturity, at the time of discount, not exceeding nine months, under regulations to be prescribed by the Federal Reserve Board. Such regulations shall be designed to insure that such notes, drafts, or bills of exchange were drawn or issued as a part of a program of orderly marketing of such agricultural products, and not for speculative holding of such products. (b) Such notes, drafts, or bills of exchange, when secured by chattel mortgage upon live stock, may be discounted with a maturity not exceeding nine months, provided such live stock is at the time of discount being fattened for market, under such conditions that it will be ready for market on or before the date of maturity of such note, draft, or bill. Notes, drafts,

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