five. Such persons shall enter into articles of association which shall specify in general terms the object for which the corporation is formed, and may contain any other provisions, not inconsistent with law, which the corporation may see fit to adopt for the regulation of its business and the conduct of its affairs. Such articles of association shall be signed by the persons intending to participate in the organization of the corporation, and thereafter shall be forwarded to the Comptroller of the Currency to be filed and preserved in his office.

SEC. 3. Requisites of articles and certificate: That persons signing such articles of association shall, under their seals, make an organization certificate which shall specifically state the name of the corporation to be organized, the city within which its principal place of business is to be located, the State or States in which its operations are to be carried on, the amount of its capital stock, and the number of shares into which the same shall be divided, and the fact that the certificate is made to enable the subscribers to avail themselves of the advantages of this act.

The name of each corporation organized under this act shall include the words "Rural credit."

The said organization certificate and articles of association shall be acknowledged before some judge of a court of record or notary public and shall, together with the acknowledgment thereof duly authenticated by the seal of such court or notary, be transmitted to the Comptroller of the Currency, who shall file, record, and carefully preserve the same in his office.

Upon making and filing the articles of association and organization certificate with the Comptroller of the Currency, and when the Comptroller of the Currency has approved the same and issued a permit to begin business, the said corporation shall be and become a body corporate, and as such and in the name set forth in the organization certificate shall have power

(1) To adopt and use a corporate seal.

(2) To have succession for a period of 50 years unless sooner dissolved by the act of shareholders owning two-thirds of its stock or by act of Congress or unless its charter shall be forfeited for violation of law.

(3) To make contracts.

(4) To sue and be sued, complain and defend in any court of law or equity.

(5) To elect or appoint directors and by its board of directors to appoint such officers and employees as may be deemed proper; to define their authority and duties; to fix their salaries; in its discretion to require bonds of any of them and to fix the penalty thereof; and to dismiss at pleasure any of such officers or employees.

(6) To prescribe by its board of directors by-laws not inconsistent with law or the regulations of the Comptroller of the Currency regulating the manner in which its general business may be conducted, its shares of stock be transferred, its directors and officers be elected or appointed, its property transferred, and the privileges granted to it by law be exercised and enjoyed.

(7) To exercise by its board of directors or duly authorized officers or agents all powers specifically granted by the provisions of this act, and such incidental powers as shall be necessary to carry on the business for which it is incorporated, within the limitations prescribed by this act, but such corporation shall transact no business except such as is incidental and necessarily preliminary to its organization until authorized by the Comptroller of the Currency to commence business under the provisions of this act.

(8) Under regulations to be prescribed by the Comptroller of the Currency to establish and maintain branches or agencies within the States in which authorized to engage in business.

SEC. 4. Powers of the corporation: That each corporation so organized shall have power under such rules and regulations as the Comptroller of the Currency may prescribe:

(1) To make advances upon, to discount, rediscount, or purchase, and to sell or negotiate, with or without its indorsement or guaranty, notes, drafts, or bills of exchange, and to accept drafts or bills of exchange, which

(a) Are issued or drawn for an agricultural purpose, or the proceeds of which have been or are to be used for an agricultural purpose;

(b) Have a maturity, at the time of discount, purchase, or acceptance, not exceeding nine months;

(c) Are secured at the time of discount, purchase, or acceptance by warehouse receipts or other like documents conveying or securing title to nonperishable and readily marketable agricultural products, or by chattel mortgages or other like instruments conferring a first and paramount lien upon live stock which are being fattened for market.

(2) To make advances upon or to discount, rediscount, or purchase, and to sell or negotiate with or without its indorsement or guaranty, notes secured by chattel mortgages conferring a first and paramount lien upon maturing and breeding livestock and dairy herds, and having a maturity at the time of discount, rediscount, or purchase not exceeding three years.

(3) To issue, subject to such regulations as the Comptroller of the Currency may prescribe, collateral trust notes or debentures, with a maturity not exceeding three years, and to pledge as security for such notes or debentures any notes, drafts, bills of exchange, or other securities held by the corporation under the terms of this act. The regulations of the Comptroller of the Currency may prescribe the form of such notes or debentures, and of notes, drafts, bills of exchange, warehouse receipts, chattel mortgages, or other instruments which may be pledged as security therefor, the provisions which may be made with regard to release, substitution, or exchange of such securities, and with regard to protection, supervision, inspection, and reinspection of the agricultural commodities or live stock pledged or mortgaged as security therefor. (4) To subscribe for, acquire, own, buy, sell, and otherwise deal in bonds, notes, Treasury certificates of indebtedness, or other obligations of the United States to such extent as its board of directors may determine.

(5) To act, when requested by the Secretary of the Treasury, as fiscal agent of the United States, and to perform such services as the Secretary of the Treasury may require in connection with the issue, sale, redemption or repurchase of bonds, notes, Treasury certificates of indebtedness, or other obligations of the United States.

(6) To act as custodian, trustee, or agent for banks or trust companies which are members of the Federal reserve system.

(7) To purchase, hold, acquire, and dispose of shares of the capital stock of any corporation organized under the provisions of section 8 of this act, in an amount not to exceed at any time 20 per centum of its paid-in and unimpaired capital and surplus. (8) To purchase, hold, and convey real estate for the following purposes, and for no others:

(a) Such as shall be necessary for its immediate accommodation in the transaction of its business.

(b) Such as shall be mortgaged to it in good faith by way of security for loans or advances made, or for debts previously contracted.

(c) Such as shall be conveyed to it in satisfaction of loans or advances made or debts previously contracted in the course of its dealings.

(d) Such as it shall purchase at sales under judgments, decrees, or mortgages held by the corporation or shall purchase to secure debts due to it.

Any obligation referred to in paragraphs 1 or 2 of this section which is secured by chattel mortgage upon live stock of an estimated market value at least equal to the face amount of such obligation may be additionally secured by mortage or deed of trust upon real estate or by other securities, under such regulations as may be made by the Comptroller of the Currency.

SEC. 5. Limitations: Except as hereinafter in section 8 provided, no corporation organized under this act shall incur liabilities, whether direct or contingent, in excess of ten times its paid-in and unimpaired capital and surplus; nor shall any such corporation make advances to or hold notes or other direct obligations of any person or corporation in an amount exceeding 20 per centum of the paid-in and unimpaired capital and surplus of such corporation, unless such advances, notes, or other obligations are adequately secured by warehouse receipts representing readily marketable and nonperishable agricultural commodities, in which event the amount of such advances to, or notes or other direct obligations of, such one person, association, or corporation shall not exceed 50 per centum of such paid-in and unimpaired capital and surplus. No such corporation shall purchase, own, or deal in any live stock except live stock taken in the course of liquidation of obligations held by it.

SEC. 6. Interest rates: Any corporation organized under the provisions of this act may take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidence of debt, interest at the rate allowed by the laws of the State in which such obligation is by its terms made payable.

The taking, receiving, reserving, or charging a rate of interest greater than is allowed by the preceding paragraph, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representative, may recover back in an action in the nature of an action for debt twice the amount of the interest thus paid from the corporation taking or receiving the same, provided such action is commenced within two years from the time the usurious transaction occurred.

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 of all of its shareholders 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 conferred 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 74 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 73 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

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 for 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 if 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 Currency, 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.