86 DEPARTMENT OF AGRICULTURE

Does this mean that the total amount of loans and discounts
 which the 12 banks may make can not exceed $60.-
 000,000?
 No. Each bank may issue collateral trust debentures,
or short-term bonds, based on discounted or purchased
farmers' notes and other agricultural paper. Such deben-
tures may be sold up to an amount not exceeding ten tunes
the banks paid-in capital and surplus. Proceeds of deben-
tures sales are available for making loans. On the basis of
the present total authorized capital of the 12 banks, their
maximum loaning power in $660,000,000.
How do the intermediate credit banks operate?
 They discount farmers' credit paper for banks and other
financing institutions and for cooperative associations. This
means that these institutions may mdorse and turn over
their credit paper to the intermediate credit bank and obtain
the money tied up in the loan for the further extension of
credit to their patrons. The intermediate credit banks also
make loans direct to cooperative associations of agricultural
producers on the security of warehouse receipts or mort-
gages on live stock.
For what term may these banks make discounts or ad-
 vances?
 The minimum term is six months and the maximum
term three years For the present the Federal Farm Loan
Board has hmited the term of discount to nine months.
Borrowers, whether these be farmers' organizations or
banks, have the assurance, however, that renewals will be
made where the need exists and the security warrants
Loans made by intermediate credit banks are not based on
deposits which may be suddenly withdrawn, but on funds
obtained from the sale of securities with a definite maturity
At what rate are discounts and advances made by the in-
 termediate credit banks?
 Interest or discount rates charged may not exceed by
more than 1 per cent the rate paid on the last debentures