term of any director whose successor is to be appointed from among nominees as herein provided or as soon as practicable after a vacancy occurs in the office of such director other than by the expiration of his term, cause notice of the vacancy to be sent to each borrower eligible to vote for nominees. Each such borrower shall be eligible to cast one vote. The Secretary shall not count any ballot received after the expiration of thirty days after the sending of notice. From those (not exceeding three) receiving the highest number of votes, as shown by his count, the Secretary shall appoint the director.

POWERS OF THE BOARD

SEC. 5. The board shall have such powers as may be prescribed in the charter and bylaws of the Corporation, including the power, subject to approval of the Secretary and in accordance with the laws applicable to the employment and compensation of officers and employees of the United States, to employ and fix the compensation and duties of such agents, officers, and employees of the Corporation as may be necessary to carry out the powers and duties conferred upon the Corporation by this Act, to require bonds of them and fix the penalties thereof, and to prescribe the manner in which the obligations of the Corporation shall be incurred and its expenses allowed and paid.

The chairman of the board shall be the chief executive officer of the Corporation, and the executive secretary of the board shall be the administrative officer of the Corporation.

CAPITAL OF CORPORATION

SEC. 6. The authorized capital stock of the Corporation shall be $5,000,000. From the money authorized to be appropriated by section 12 (a) hereof, the Secretary is authorized and directed to subscribe and make payment for stock of the Corporation in such amount as the board determines is required for the purpose of the Corporation as provided in this Act, and such payments shall be subject to call by the chairman of the board. The stock of the Corporation shall be divided into shares of $100 each and shall be issued in accordance with provisions of this Act and the charter and bylaws of the Corporation not inconsistent herewith.

LENDING POWER OF CORPORATION

SEC. 7. (a) The Corporation is authorized to make loans to associations, subject to the conditions and limitations set forth in this Act and in accordance with such terms and conditions and upon such security as may be prescribed by the board of the Corporation for the purpose of enabling associations, as defined in section 14 (a) hereof-

(1) To exercise the powers and functions authorized by an Act of Congress approved June 25, 1934 (Public, Numbered 464, Seventy-third Congress); (2) To purchase fishery and marine supplies and equipment;

(3) To make loans and advances to members as producers of aquatic products;

(4) To conduct fishery business services; and

(5) To construct or acquire by purchase or lease physical facilities or refinance the cost of such construction or acquisition.

(b) The Corporation shall have power not inconsistent with this Act, to discount for or purchase from any association, with its endorsement, any note, draft, bill of exchange, or other such obligation, and to make loans or advances direct to any association secured by such obligations. The amount of paper discounted for or loan made to an association by the Corporation, or reloaned by an association to a producer-member thereof, shall be determined by rules and regulations established by the board of the Corporation.

(c) No loan shall be made unless, in the judgment of the board, the loan is in furtherance of the policy declared in section 1 and the association applying for the loan has an organization and management and business policies of such character as to insure the reasonable safety of the loan and the furtherance of such policy.

(d) Loans for the construction or acquisition by purchase or lease of physical facilities, or for refinancing the cost of such construction or acquisition, shall be subject to the following conditions:

(1) No loans shall be made in an amount in excess of 60 per centum of the appraised value of the security therefor;

(2) No loan for the purchase or lease of such facilities shall be made unless the board finds that the purchase price or rent to be paid is reasonable; and (3) No loan for the construction, purchase, or lease of such facilities shall be made unless the board finds that there are not available suitable existing facilities that will furnish their services to the association at reasonable rates; and, in addition to the preceding limitation, no loan for the construction of facilities shall be made unless the board finds that suitable existing facilties are not available for purchase or lease at a reasonable price or rent.

(e) Loans for the construction or purchase of physical facilities, together with interest on the loans, may be repaid upon an amortization plan over a period not in excess of twenty years.

RATE OF INTEREST AND DISCOUNT

SEC. 8. The Corporation may from time to time establish rates of interest and discount which, except with the approval of the Secretary, shall not exceed by more than 1 per centum the prevailing rate of interest or discount charged by the Federal Intermediate Credit Bank of Baltimore, but in no event shall the rate of interest or discount charged by the Corporation exceed the rate of per centum per annum.

MISCELLANEOUS LOAN PROVISIONS

SEC. 9. (a) Associations borrowing from the Corporation shall be required to own, at the time the loan is made, an amount of stock of the Corporation equal in fair book value (not to exceed par), as determined by the Corporation, to $100 per $2,000, or fraction thereof of the amount of the loan. Upon discharge of the loan the stock held by the borrowing association shall be retired and canceled and the association shall be paid therefor, or in case the stock subscription is included in the amount of the loan there shall be credited on the final payment of the loan, an amount equal to the amount paid for the stock or loaned to subscribe for the stock, as the case may be, minus the pro-rata impairment, if any, of capital and guaranty fund of the Corporation, as determined by the chairman of the board of the Corporation.

(b) In any case in which an association applying for a loan is not authorized, under the law of the State in which it is organized, to subscribe for stock in the Corporation, the Corporation shall, in lieu of stock subscription, require the borrowing association to pay into a guaranty fund, or the Corporation may retain out of the amount of the loan and credit to the guaranty fund, an amount equal to the amount which the borrowing association would have been required to own in stock if such association had been authorized to hold such stock. Upon discharge of its loan, the provisions of the last sentence of subsection (a) of this section shall apply with respect to sums of such association in the guaranty fund in the same manner as if such sums were represented by stock.

(c) The Corporation is authorized to borrow from and rediscount paper with Federal Intermediate Credit Banks subject to the provisions of this Act and the provisions of the Federal Farm Loan Act as amended.

(d) At least once each year and at such other times as the Corporation deems necessary, each association indebted to the Corporation shall be examined by examiners designated by the Corporation. The Corporation shall assess the costs of such examinations against the association which shall pay such costs to the corporation. The amount so assessed and unpaid shall be a prior lien on all the assets of the association examined except on assets pledged to secure loans. Each such association shall make reports and furnish information to the Corporation at such times and in such forms as may be prescribed by the Corporation.

EARNINGS AND RESERVES OF CORPORATION

SEC. 10. The Corporation shall, at the end of its fiscal year, apply the amount of its earnings in excess of operating expenses during such fiscal year, first, to making up any losses incurred; second, to the restoration of the amount of the impairment, if any, of capital and guaranty fund as determined by the chairman of the board; and at least 25 per centum of the remainder of such excess of earnings shall be applied to the creation and maintenance of a surplus equal to at least 25 per centum of the amount of the capital and guaranty fund. Any sums remaining may, with the approval of the chairman of the board, be devoted to the payment of dividends. Subscribers to the guaranty

fund shall be entitled to dividends at the same rate as subscribers to stock. No rate of dividend in excess of 7 per centum per annum shall be paid. Dividends on stock held by the Secretary, when paid, shall be credited to the fund of the Corporation authorized to be appropriated by section 12 (a) hereof.

FISCAL AGENT AND TAXATION EXEMPTION

SEC. 11. (a) When designated for that purpose by the Secretary of the Treasury, the Corporation shall act as fiscal agent of the United States Government and when acting as such shall perform such duties as shall be prescribed by the Secretary of the Treasury.

(b) The Corporation, including its franchise, its capital, reserves and surplus, and its income shall be exempt from all taxation now or hereafter imposed by the United States, by any Territory, dependency or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, Territorial, county, municipality, or local taxation to the same extent, according to its value, as other real property is taxed.

APPROPRIATIONS

SEC. 12. (a) There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $5,000,000, which shall be made available by the Congress for the purpose of enabling the Secretary to carry out the provisions of this Act.

(b) The money appropriated in pursuance of subsection (a) of this section, any amounts collected for services, and all collections of principal and interest of loans made under this Act may be used by the Corporation for making loans under this Act, and for all necessary administrative expenses incurred in connection with the making and collection of such loans.

(c) There is hereby authorized to be appropriated, from any money in the Treasury not otherwise appropriated, in addition to the appropriation provided for in subsection (a) hereof, the sum of $25,000, which shall be made available by the Congress to the Secretary for expenditures incurred prior to July 1, 1938, in establishing the fishery cooperative marketing section and in executing the functions authorized by section 13 hereof.

ESTABLISHMENT OF A COOPERATIVE MARKETING SECTION

SEC. 13. (a) The Secretary is hereby authorized and directed to establish in the Bureau of Fisheries of the Department of Commerce a Cooperative Marketing Section for the following purposes and functions:

(1) To conduct marketing and economic studies and make analyses of fishery cooperative associations, to encourage the organization and development of effective cooperative associations, and the improvement in cooperative methods; (2) To make marketing and economic studies and surveys of the cooperative production or marketing of aquatic products, and of areas in which aquatic products are cooperatively produced or marketed for the purpose of analyzing fishery cooperative activities or to determine the probable success of contemplated fishery cooperative marketing activities, such studies, surveys, and analyses may include any or all phases, functions, and activities in connection with the cooperative production and/or merchandising of aquatic products, the cooperative purchasing of fishery and marine supplies and equipment, and the conduct of fishery business services; and

(3) To promote education in the principles and practices of cooperative production or marketing of aquatic products, the cooperative purchasing of fishery and marine supplies and equipment, and to aid and assist fishery cooperative associations, and fishermen or planters of aquatic products in organizing and operating fishery cooperative associations through field or extension service, and through studies, surveys, and analyses authorized in this section, and to publish reports and provide other information and literature pertaining to the cooperative production or marketing of aquatic products. (b) The Secretary shall appoint a Director of such Cooperative Marketing Section, who shall be its chief administrative officer, subject to the supervision of the Commissioner of the Bureau of Fisheries, and the Director, with the approval of the Commissioner, shall take such action as he deems necessary to coordinate the work, personnel, functions, and services of the Cooperative Marketing Section with the purposes, functions, and activities of the Corporation provided for in this Act.

MISCELLANEOUS PROVISIONS

SEC. 14. (a) As used in this Act, "association" means any association in which fishermen or planters of aquatic products act together in the legal catching, collecting, taking, planting, cultivating, propagating, producing, or harvesting aquatic products, or in processing, handling, preparing for market, and/or marketing the aquatic products of said persons so engaged, and also means any association in which fishermen or planters of aquatic products act together in purchasing, testing, grading, processing, distributing, and/or furnishing fishery and marine supplies and equipment and/or fishery business services: Provided, however, That such association is operated for the mutual benefit of the members thereof as such producers or purchasers and conform to one or both of the following requirements:

First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; or Second. That the association does not pay dividends on stock or membership capital in excess of 8 per centum per annum.

And in any case to the following:

Third. That the association shall not deal in aquatic products, fishery and marine supplies and equipment, and fishery business services with or for nonmembers in an amount greater in value than the total amount of such business transacted by it with or for members.

(b) All business transacted by any association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association.

(c) As used in this Act the term “aquatic products" shall mean fish, mollusca, crustacea, seaweeds, and all other aquatic forms of animal and vegetable life legally caught, collected, taken, planted, cultivated, propagated, produced, or harvested by lawful methods, in either the natural or processed state, including derivatives and byproducts thereof.

(d) With the approval of the Governor of the Farm Credit Administration and under rules and regulations to be prescribed by the Intermediate Credit Commissioner, the Federal intermediate credit banks are authorized and empowered to discount for or purchase from the Fishery Credit Corporation, with its endorsements, any note, draft, bill of exchange, or other such obligations representing a loan or loans made under the provisions of this Act, and to make loans or advances direct to the Fishery Credit Corporation secured by such obligations.

(e) For the purpose of carrying out the provisions of this Act and effectuating the policy of Congress declared in section 1 hereof, the Secretary may make such rules, regulations, and orders consistent with the provisions hereof as he deems necessary; may cooperate with any department or agency of the Federal Government, or State, county, municipality, public, or private agency; and may make such expenditures in the District of Columbia and elsewhere for communications, travel, books, periodicals, printing, stationery, rent, furniture, office equipment, supplies and materials and other expenses as he may consider necessary.

(f) This Act may be cited as the "Fishery Credit Act."

OFFENSES AND PENALTIES

SEC. 15. (a) FALSE REPRESENTATION; OVERVALUATION TO PROPERTY.-Whoever makes any material representation knowing it to be false, or whoever willfully overvalues any property or security, for the purpose of influencing in any way the action of the Secretary, or the Corporation, or any division officer or employee thereof, upon any application, advance, discount, purchase or repurchase agreement, or loan, or any exchange or extension of any of the same, by renewal, deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both.

(b) FORGERY, COUNTERFEITING, ALTERATION, AND SO FORTH, OF OBLIGATIONS.— Whoever (1) falsely makes, forges, or counterfeits any note, certificate, or other such obligation, or paper in imitation of, or purporting to be a note, certificate, or other such obligation, or paper issued by the Corporation; or (2) passes, utters, or publishes, or attempts to pass, utter, or publish any false, forged, or counterfeited note, certificate, or other such obligation purport

ing to have been issued by the Corporation, knowing the same to be false, forged, or counterfeited; or (3) falsely alters any note, certificate, or other such obligation, or paper issued or purporting to have been issued by the Corporation; or (4) passes, utters, or publishes, or attempts to pass, utter, or publish any of the same as true, knowing it 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.

(c) EMBEZZLEMENT, MISAPPLICATION, AND SO FORTH, OF ANYTHING OF VALUE BELONGING TO CORPORATION; FALSE ENTRIES; UNAUTHORIZED MAKING, ISSUING, OR ASSIGNING OF INSTRUMENT; PERSONALLY BENEFITING FROM BUSINESS OF CORPORATION.-Whoever, being an employee, officer, or agent of the Corporation, or connected in any capacity with the Corporation, (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to the Corporation or pledged or otherwise entrusted to the same; or (2) with intent to defraud the United States, or the Corporation, or any individual, or to deceive any officer, auditor, or examiner of the Corporation, makes any false entries in any book, report, or statement of or to the Corporation, or draws any order, or issues, puts forth, or assigns any note, certificate, or other such obligation, or paper, or draft, loan, judgment, or decree thereof; (3) with intent to defraud the United States or the Corporation, participates or shares in, or receives directly or indirectly any benefit, property, or profits through any transaction, loan, commission, contract, or other act of such Corporation, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.

(d) CONCEALMENT, CONVERSION, AND SO FORTH, OF PROPERTY MORTGAGED, OR PLEDGED TO, OR HELD BY THE CORPORATION OR ADMINISTRATION.-Whoever knowingly, with intent to defraud the United States or the Corporation, shall conceal, remove, dispose of, or convert to his own use or to that of another any property mortgaged, or pledged to, or held by the Corporation, as security for any obligation, shall be punished by a fine of not more than $5,000 or imprisonment for not more than two years, or both.

(e) APPLICABILITY OF CRIMINAL-CODE PROVISIONS TO TRANSACTIONS OF CORPORATION. The provisions of sections 202 to 207, inclusive, of title 18 (U. S. C.), insofar as applicable, are extended to apply to contracts or agreements made by the Corporation, its division officers and employees, which for the purposes hereof shall be held to include advances, loans, discounts, and purchase and repurchase agreements; extensions and renewals thereof; and acceptances, releases, and substitutions of security therefor (June 16, 1933, ch. 98, sec. 64 (e), 48 Stat. 268; Jan. 31, 1934, ch. 7, sec. 13, 48 Stat. 347).

(f) CONSPIRACY.-Whoever conspires with another to accomplish any of the acts made unlawful by the preceding provisions of this Act shall, on conviction thereof, be subject to the same fine or imprisonment, or both, as is applicable in the case of conviction for doing such unlawful act.

The House meets today at 11 o'clock and it is necessary for us to proceed just as rapidly as possible. In order not to delay witnesses who are from out of town, I am going to change the usual order of procedure and am going to call first on the witnesses who are from out of town so that they can give us their reaction to proposals of this kind; then, later, we will take up the Government witnesses.

STATEMENT OF RUFUS H. STONE, EXECUTIVE DIRECTOR, FISHERMAN'S RELIEF CORPORATION, PORTLAND, MAINE

Mr. STONE. Mr. Chairman and members of the committee, I have prepared a statement in brief form and it will take me about 15 minutes, or I will submit the brief, as you will.

The CHAIRMAN. Suppose you go ahead and give us and the other witnesses the benefit of your views on it.

Mr. STONE. It starts out with a statement of facts.

The discussions contained herein embrace representations on the part of the board of directors of the Fisherman's Relief Corporation, of Portland, Maine, in favor of passage of the bill, H. R. 7309,