Part 37
SECTION 109. That no loan shall be considered or consummated in any State until there are organized in such State at least twenty local associations in accordance with sections two, three, four and five of this Act and until at least five hundred thousand dollars have been paid up in cash.
SECTION 110. That when at least twenty such local associations have been organized in any one State the governor of such State, upon being informed of this fact, shall name a time and place for meeting, and the members of the several associations shall meet in person, or by legal proxy duly representing their respective shares, for the purpose of organizing a State Land Credit Association.
SECTION 111. That the State Land Credit Association shall be organized under the name of (here insert name of State where located) Land Credit Association and be known as a State Association.
SECTION 112. That every State association shall have a board of managers, which shall consist of seven members, who shall be elected by the shareholders of the several local associations in the State present or duly represented by legal proxies.
SECTION 113. That the members of the board of managers shall hold office for the period of seven years: _Provided, however_, That the seven first elected shall hold office for one, two, three, four, five, six, and seven years, respectively, and they shall determine by lot how long each member shall serve.
SECTION 114. That the officers of each State association shall consist of a president, vice-president, secretary, treasurer, and attorney. The said officers shall be members of the board of managers, except the secretary and treasurer, who may or may not be members.
SECTION 115. That the officers named in the preceding section shall be appointed by the shareholders of the several local associations present or duly represented by legal proxies.
SECTION 116. That the salaries to be paid the officers of each State association shall be fixed by the shareholders of the several local associations of such State present or duly represented by legal proxy. All such salaries and all the expenses of whatsoever kind incurred in carrying on the business of the State associations shall be paid out of fees or charges made upon the business done in that State.
SECTION 117. That the place of business of the State association shall be fixed by the shareholders of the local associations of the respective States present or duly represented by legal proxy.
SECTION 118. That all applications for loans made to any local association and duly recommended by the executive committee thereof after a personal examination of the property and a full report in accordance with such rules, regulations, and forms as the board of managers of the State association may prescribe shall be examined and considered by said board of managers.
SECTION 119. That no loan shall be made by any State association unless the same has been approved in writing by at least five members of the board of managers in a record of loans kept especially for that purpose by the State association; nor until such approval shall also be signed by the attorney of the State association stating that he has examined the title to the property and that it is free and clear and that the loan is a first lien upon the property described in the conveyance.
SECTION 120. That no loans shall be made upon any property unless an absolute conveyance of the same shall be made by the owner thereof to the State association of the State where the land is located, in such form and manner as the attorney of such association shall prescribe; and the owner shall lawfully waive any claim or right of defense that he might otherwise have in case of foreclosure proceedings under the laws of the State in which the real estate is located. And, further, the owner of said real estate shall, in such manner and form as the attorney of the association shall prescribe, appoint the local association through which the loan was negotiated as a trustee for the benefit of the State association to take possession of the property in case of default in payment of interest, taxes, or insurance, or in case of waste of any kind, and shall give such local association full authority and power to manage the property, or sell the same whenever, in the judgment of the executive committee of such local association, it is advisable to do so: _Provided, however_, That such sales shall be made only after the property has been duly advertised in accordance with the law made and provided for sale of real estate in the State where located after foreclosure proceedings have been had and judgment entered.
SECTION 121. That all money loaned shall be furnished through the several State associations, and shall be paid by check or draft, and full records shall be kept by the several State associations of all loans made in their respective States of every transaction connected with such loans. The State association shall have full and entire charge of all loans made and outstanding in their respective States, the collection of interest, the payment of taxes, the care of insurance, and the repayment of the loan by the borrower, which shall always be to the State association of the State where the real estate is situated.
SECTION 122. That no loans shall be made by any State association until--
_First_: There have been organized in the United States at least one thousand local associations, in accordance with sections ninety-nine, one hundred, one hundred and one, and one hundred and two of this Act.
_Second_: Until at least twenty State associations have been organized in accordance with sections one hundred and ten, one hundred and eleven, and one hundred and twelve of this Act.
_Third_: Until there has been paid up in cash the sum of twenty-five million dollars.
_Fourth_: Until there has been organized, as hereinafter provided, the National Land Credit Bank.
SECTION 123. That as soon as there have been organized at least one thousand local associations and at least twenty State associations, as herein provided, the President of the United States shall be notified of these facts, and he shall thereupon name a time and place in the city of Washington, District of Columbia, for the organization of the National Land Credit Bank, and he shall advise all the local associations whose names and addresses have been furnished him of such time and place of meeting and the purpose therefor.
SECTION 124. That, pursuant to the notice of the President of the United States provided in the preceding section, each local association of the several States where State associations shall have been organized shall send one representative to Washington for the purpose of organizing the National Land Credit Bank. Each representative of a local association shall have one vote, but any association may be represented by a proxy in such legal form as is prescribed by the laws of the State where such local association is situated.
SECTION 125. That the board of directors of the National Land Credit Bank shall consist of seventeen members, as follows:
_First_: Fifteen members of such board of directors shall be elected by the representatives of the local association present in person or by proxy.
_Second_: The Secretary of Agriculture of the United States shall ex officio be a member of said board.
_Third_: The President shall appoint a United States auditor, with the consent and approval of at least two-thirds of the members of the board elected by the representatives of the association. The term of service of the auditor shall be five years, and he shall be a member of the board of directors of said National Land Credit Bank.
SECTION 126. That the members of the board of directors of the National Land Credit Bank who have been elected by the representatives of the local associations shall serve for a period of five years: _Provided, however_, That those first elected shall serve for one, two, three, four, and five years, respectively, and they shall divide themselves into five groups, and thereupon determine by lot how long each group shall serve.
SECTION 127. That the officers of the National Land Credit Bank shall consist of a president, vice-president, secretary, treasurer, and auditor.
SECTION 128. That the officers of the National Land Credit Bank, except the auditor, shall be appointed by the board of directors of said National Land Credit Bank, and they shall receive such salaries as the board of directors may determine: _Provided, however_, That the president shall receive eighteen thousand dollars per annum and that the auditor shall receive six thousand dollars per annum.
SECTION 129. That the city or place where the National Land Credit Bank shall conduct its business shall be selected and determined by the representatives of the local associations present in person or by proxy.
SECTION 130. That the annual meetings of the local associations shall be held on the first Monday of April in each year. The annual meeting of the State association shall be held on the first Monday of May in each year. The annual meeting of the National Land Credit Bank shall be held in the first Monday of June in each year.
SECTION 131. That upon the completion of the organization of the National Land Credit Bank, as herein provided, each local association shall transfer and pay over to the National Land Credit Bank 50 per centum or one-half of their cash paid-up capital amounting in the aggregate to at least twelve million five hundred thousand dollars, and they shall also transfer and pay over to their respective State associations 25 per centum or one-quarter of their cash paid-up capital amounting in the aggregate to at least six million two hundred and fifty thousand dollars.
SECTION 132. That the cash capital so paid over to the National Land Credit Bank and the cash capital so paid over to the several State associations, as provided in the preceding section, shall become the absolute property of the National Land Credit Bank, and of such State associations, as completely and absolutely as if the same amount had been paid directly to them for stock issued. For the amount of money so received by the National Land Credit Bank and the amount so received by the State association from the local associations the said National Land Credit Bank and the several State associations shall issue their several receipts in such legal form as to entitle them to a pro rata share of the assets of the said National Land Credit Bank and the several State associations upon the distribution thereof, subject, however, to the claims of all holders of the obligations of whatsoever kind issued and outstanding of the National Land Credit Bank.
SECTION 133. That every local association, every State association, and the National Land Credit Bank shall each of them be, and they are hereby, made legally constituted bodies corporate that may sue and be sued in any United States court which may have jurisdiction of the subject matter of the action brought.
SECTION 134. That the said National Land Credit Bank, the several State associations, and the several local associations may severally invest their capital and surplus in mortgages token as herein prescribed, or in the obligations of the National Land Credit Bank, or in United States Government securities. They may severally borrow money in the regular course of their business either upon their credit or by pledging any of the securities they may own.
SECTION 135. That neither any local association nor any State association nor the National Land Credit Bank shall take deposits in any form, either subject to check or upon time, except for investment in the obligation of the National Land Credit Bank; and any one of these institutions that shall take a deposit of any kind, except as herein provided, shall pay to the United States Government a tax thereon of 10 per centum per annum, nor shall any one of these institutions loan money in any other manner or form than as herein provided. Upon any loan made by any one of them upon personal security, or in any other manner or form than as herein provided, shall pay a tax thereon to the United States Government of 10 per centum per annum.
SECTION 136. That the National Land Credit Bank shall have power, and is hereby authorized, to issue and sell or dispose of its own obligations in the form of bonds, debentures, or under any other name, and bearing such rates of interest, and in such manner and form, and upon such terms and conditions as to time to run, and manner and method of payment as the board of directors may determine from time to time.
SECTION 137. That the mortgages held by any local association, or by any State association, or by the National Land Credit Bank, such mortgages having been taken in accordance with the provisions of this Act, and all the obligations, bonds, or debentures issued by the National Land Credit Bank under the authority granted by this Act, shall be exempt from all taxes or duties of the United States Government, as well as from taxation in any form by or under any State, municipality or local authority.
SECTION 138. That all advances of money upon loans made by the several local associations shall be under the control and under the direction of the board of directors of the National Land Credit Bank, and the rate of interest to be charged on all such loans made shall be fixed from time to time by said board of directors.
SECTION 139. That at the end of each year the United States auditor shall make a full report of all the institutions organized under this Act, and such reports shall show what the profits are of the National Land Credit Bank, and of the several State associations, and of each of the local associations, respectively. Thereupon the board of directors of the National Land Credit Bank shall set apart one-half of the net profits so certified to by the United States auditor as a part of its surplus account, and may carry the balance as undivided profits, or may declare such a dividend out of its undivided profits as in their judgment seems wise.
SECTION 140. That the amount paid out in dividends by the National Land Credit Bank shall always be divided equally between the State associations and the local associations in proportion to the capital held by them and the local associations.
SECTION 141. That the board of managers of the several State associations shall thereupon set apart one-half of the net profits so certified to by the United States auditor as a part of its surplus account and may carry the balance as undivided profits and may declare and pay such a dividend out of the undivided profits as in their judgment seems wise.
The executive committee of the several local associations shall set apart one-half of the net profits so certified to by the United States auditor as a part of its surplus account and may carry the balance as undivided profits, or may declare and pay such a dividend out of the undivided profits as in their judgment seems wise.
SECTION 142. That when the surplus account of the National Land Credit Bank shall be equal to 50 per centum of the capital money so paid over to it by the several associations, the board of directors may declare such additional dividend as in their judgment may seem wise: _Provided, however_, That no such increase, or extra dividend, shall ever reduce the surplus below said 50 per centum of the capital so held by it. The same rule herein laid down for the payment of dividends by the National Land Credit Bank shall apply to the several State associations and each and all of the local associations.
SECTION 143. That if it shall become necessary at any time for a local association to take possession of real estate upon which a loan has been made and sell the same, the profit or loss thereon shall be shared by the several institutions in the same proportion as the capital is held by them; that is, the National Land Credit Bank shall share one-half of the profit or loss, the State institution making the loan shall share one-quarter of the profit or loss, and the local association recommending the loan shall share one-quarter of the profit or loss.
COMMENT:--_First_: Sufficient responsibility should be imposed upon each local association to compel it to look after all delinquents diligently.
_Second_: Sufficient responsibility should be imposed upon each State association to compel it to look after every loan in the State with promptness and persistency.
SECTION 144. That if any local association shall be formed at any time after the organization of the National Land Credit Bank, before it goes into actual operation such local association desiring to become a member of a State association shall first be compelled to obtain the unanimous consent of the board of managers of the State association in which the proposed local association is situated and shall pay for its shares such a price as may be fixed from time to time by the board of directors of the National Land Credit Bank for the admission of new associations.
SECTION 145. That all the expenses of whatsoever kind growing out of the management of the National Land Credit Bank shall be paid out of the earnings thereof.
SECTION 146. That the entire surplus of the National Land Credit Bank and the surplus of the State associations and the surplus of the local associations shall be held as a working balance, and also as a fund which may be withdrawn for investment in bonds or other securities of the United States. The President of the United States may direct that the whole of said surplus be invested in the bonds or other securities of the United States if, in his judgment, the general welfare and the interests of the United States require.
SECTION 147. That for the purpose of creating and establishing the organization provided for in this Act and putting the same into operation there is hereby appropriated the sum of three hundred thousand dollars, or so much thereof as may be necessary, as a loan to the National Land Credit Bank, at the rate of 3 per centum per annum until paid: _Provided, however_, That this loan shall not extend beyond the period of ten years.
SECTION 148. That to accomplish the purpose of this Act the governor of each State is hereby authorized and empowered to appoint some citizen of his State to organize at least twenty local associations in his State in accordance with the provisions of this Act, and such appointee is hereby authorized to expend not to exceed six thousand dollars in such undertaking. Upon the completion of the organization of at least twenty local associations under and in accordance with the provisions of this Act the amount of money so expended not to exceed six thousand dollars will be repaid to such appointee of any governor upon the presentation of vouchers for the money so actually expended duly signed by the governor of the State to the Treasurer of the United States.
SECTION 149. That the governor of the State in which at least twenty of such local associations have been organized as in this Act provided shall thereupon report in detail to the President of the United States, giving him the names and addresses of the local associations so organized, the names of the chairmen of the respective executive committees and their post-office addresses, and the names of the banks and their respective post-office addresses in which the several local associations have deposited the paid-up capital of twenty-five thousand dollars each, together with duplicate letters of receipt of the money from said bank.
SECTION 150. That if any governor of any State shall fail to make a report within nine months after the passage of this Act that at least twenty local associations have been organized as in this Act provided, then and in that event the allotment of the six thousand dollars to pay the expenses for the organization of at least twenty local associations in his State may be used proportionately to pay the expenses, if any, of organizing local associations in any other State or States in excess of the required number necessary to establish a State association--that is, the amount remaining unearned by any of the States shall be apportioned to the several States reporting more than twenty local associations directly in proportion to the number in excess thereof, preference, however, always being given to the States whose average expenses are lowest for the organization of their several associations.
MR. LAWYER: Gentlemen, this concludes the results of our labor and I want to express the solicitude of your committee in proposing this bill and the hope that it may in a large measure meet your expectations.
UNCLE SAM: Well, boys, speaking for the crowd, I want to say that I did not believe that the committee would be able to make its report for a month. Upon my soul, I did not expect that they would ever make so satisfactory a report. They seem to have thoroughly comprehended all the subjects we have discussed and to have produced a Financial and Banking Bill that will meet every question that can possibly arise; one that will protect every individual bank in its independence; one that will protect every commercial zone in its independence; and one that will protect my reserves against the demands of all the rest of the world.
MR. LAWYER: Those are precisely the things we have striven to accomplish, Uncle Sam.
MR. MERCHANT: During the past week I ran into a friend of mine who is in the banking business and considering that we were practically through with our work, I told him what I had been doing the past four months without giving him your names. "Well," he said, "I want to give you a pointer. If you are following along the trail of the Aldrich scheme you had better drop it; you had better save your time, because the people are on to that deal and they won't stand for it. You will have to make it clear that you are working from an entirely different point of view."
This remark of his opened my eyes and I am going to suggest that we spend one night demonstrating the striking, the fundamental points of difference between our bill and that Aldrich scheme.
MR. MERCHANT: I am convinced that we should do that very thing and I propose and move that we meet next Wednesday night for that purpose.
MR. BANKER: To make a clean job of our work, I believe that is essential; because hundreds and hundreds of thousands of dollars have been expended in promoting that scheme, therefore, I second that motion.
UNCLE SAM: The motion is carried and now good night, all.
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To you, UNCLE SAM, we, the representatives of the FARMERS, BANKERS, LAWYERS, LABORING-MEN, MERCHANTS and MANUFACTURERS, dedicate the result of our endeavor, our future services, indeed, our lives; and we pledge our callings, every one of them, to continue the work here begun with that degree of vigilance and patriotism of which this great cause is worthy, confident that the result of our efforts will be to safeguard your honor and establish you upon the solid foundations of a sound Financial and Banking System.
SEVENTEENTH NIGHT
ALDRICH PLAN AND PLOT EXPOSED
UNCLE SAM: From what you boys intimated the other night, I got the impression that the so-called Aldrich scheme demonstrated almost everything that we should not do in working out a financial and banking system. It must have been more or less of a warning to you, then, when you started out.
MR. LAWYER: To tell the truth, I had become so convinced of its ulterior purposes from the standpoint of management, that I never studied it seriously from an economic point of view, until this last week.