Finance letter

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, (O.sie'Y'

WAR FOOD ADMINISTRATION
OFFICE OF DISTRIBUTION

1944 CROP

Finance Le.'tter No. 43
Classification 560

IRISH POTATO LOAN PROGRAM - LCL3a

I. INTRODUCTION ' ' '

War Food Administration has authorized^ the making of loans on 1944 late crop
potatoes stored in approved warehouses or on farms in approved storage
structures.^ The program will be administered through, the facilities 'of the
Office of Distribution, .War .Food Administration, as agent for Commodity

Corporation, hereinafter referred to as "Commodity Credit Corporation,
/• ^ Farm and warehouse loans on potatoes located, within the producing
area will be' administered locally by State and County Agricultural Conserva-
,tion Committees. All correspondence, loan documents, remittances, etc.,
except service fees , .dn^ co nnection with loans shall be sent to the appropriate
egional Finance Office of the Office of Distribution. The chief purpo se
of the program is ^ to ^support potato prices at not less than 90 per cent of
parity as of ^ly 1> 1944, for the late crop. In connection with the loan
program, such diversion and procurement operations as might be practicable
will be conducted.

general DESCRIPTION OF THE PROGRAM ■ . •

To Whom Loans May Be Made . Loans will be made on 1944 late crop potatoes
to producers, cooperative associations of producers, certified potato
dealers and potato processors."

Loans May Be Obtained . All farm and warehouse loans within the
producing area must be approved by the County Agricultural Conservation
Committee of the county in which the potatoes are stored. The committee
^ indi cate its approval by having one of its members sign the
. promissory note. Loans, may be obtained directly through Regional Finance
^Offices of the Office of Distribution or from any bank or other lending
agency making loans pursuant to these instructions, provided such lending
agency has executed a Contract to Purchase on CCC Form E (Potatoes).

d^o^nt of Loan. The amount of the loan shall be computed in accordance
with the 1944 Schedule of Loan Rates. In the case of ungraded lots the
loan will be computed on the basis of the percentage of U.S.No.l quality
and the percentage of U.S. No. 1, size B and U.S.No. 2 (l 7/8 inch minimum)
quality potatoes in, the lot.

D. Terms of Loan,. Loans will' mature on demand or on March 31, 1945, vhichever

is. earlier. All loans wall bear- interest at the rate of 3 per cent per
annum. ■ .

F*' FTnal Da te of Obtaining Loans . Application for loans.may.be made by

Program Accounting
General

Loan Programs

10-19-44

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Sheet 1

Finance Letter No. 43
Classification 560

(

eligible borrowers only between the dates of September 15, 1944, and
December 15, 1944.

F. Potatoes Eligible for Loans . In order for potatoes to be eligible for
such loans, they must satisfy the following requirements?

(a) They must be mature Irish potatoes of the 1944 crop and in proper
condition for storing.

(b) They must have been inspected by licensed Federal or Federal -State
inspectors, or by a person designated for the purpose by the State
AAA committee or the regional director of Office of Distribution,
each for its respective field of operation. In the case of ungraded
lots, the percentage of U.S. No. 2 quality and the percentage of

U. S. No. 1, size B or U. S. No. 2 (l v/s inch minimum) quality
potatoes in the lot must be estimated by the inspector.

(c) Loans will be made on the quantity of U. S. No. 1 quality potatoes
in the lot at. the applicable loan rate for U. S. No. 1 potatoes
plus the quantity of U. S. No. 1, size B or U. S. No. 2 (l 7/s inch
minimum) quality potatoes in the lot at the applicable loan rate

or U. S. No. 2 po.tatoes.

(d) The potatoes must be in lots, as shown by such inspection, containing
no more than two percent soft rot nor more than three per cent dry
rot, including late blight.

(e) In the case of loans to producers, the beneficial interest in the
potatoes must be and must have always been in the producer.

(f) In the case of loans to cooperative associations of producers, the
potatoes must have been acquired pursuant to a 1944 Potato Producer’s
Sales Agreement (CCC Potato Form C) • (The purpose of requiring the
executing of such sales agreement is to insure that the cooperative
association has the power to give a valid mortgage on the potatoes.)

( g) In the case of loans to dealers, the dealer must have purchased

the potatoes from producers at not less than the applicable support
price, and must have applied for and received a certificate declaring
such dealer eligible to participate.

G. Preparation and Execution of Loan Documents. All borrowers, whether
producers, cooperative associations, or dealers, will, for each loan
advanced, execute a promissorj^ note on Producer’s Note (CCC Form A).

Notes representing loans obtained through the Office of Distribution
should name Commodity Credit Corporation as payee and should be forwarded
to the Regional Finance Office of the Office of Distribution serving

the area. Notes representing -loans obtained from lending agencies
should name the lending agency as payee.

All borrowers must also execute a Chattel Mortgage (CCC Form AA)

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Finance Letter No •.',43
Classification 560

securing each note* The mortgage must cover all the potatoes dn the
lot. The borrower must also be given a copy of the Mortgage Supple-
ment (Loan Agreement) (1944 Potatoes)* . .

The names of the holders of all existing liens on the potatoes, such as
landlords, laborers, or mortgagees must be. , listed, in the space provided
therefor on the chattel mortgage, and the lienhoider-, so listed must
execute the lienholder ’ s* waiver on the mortgage, or on CCC Form AB.

• All blanks mbst be filled in with ink, indelible, pencil, or ..typewriter,,
and no documents containing additions, alterations, or erasures will be
accepted.

In applying, for a loan, there must be submitted to the County Agricultural
Conservation Committee with the note and chattel mortgage, inspeptor’s
certificates covering the potatoes, and in the case of loans to
cooperative associations, copies of Potato Sales Agreements for all of
the potatoes tendered.

H* Storage . In the case of farm-stored potatoes, the potatoes must be ■

stored in'storage facilities of such substantial and permanent construction
as determined by the County Agricultural Conservation Committee to insure
safe keeping of the potatoes throughout the storage season. In the ease

I" of warehouse-stored potatoes, the potatoes must be stored in warehouses
approved by the County; Agricultural Conservation Committee which (a) have
convenient shipping facilities, (b) will afford safe storage throughout
the storage season, ( c) will afford protection against rodents, other
animals, thieves, and weather, (d) are frostproof or contain a heating
system sufficient to protect potatoes from frost damagej» (e) contain
sufficient space and possess or have access to adequate facilities for
grading, packaging, weighing and otherwise handling potatoes, (f) will
permit the regular inspection of such potatoes by the warehouseman, the
County Agricultural Conservation Committee, and the VJar Food. Administra-
tion, and (g) will permit the segregation of each lot of potatoes in bins,
which bins must be capable of being identified, and must afford adequate
ventilation and drainage.

I. ■ Release of Potatoes . At any time before the maturity of the loan the
borrower may obtain a release of all or any part of the potatoes upon .
payment, in the case of total redemption, or in the case of a partial
redemption for processing by the borrower, of the principal amount of ■
the loan-, together with three per cent interest per annum with respect
V to the potatoe s Teleased, and in the case of a partial redemption for
sale, upon payment of the net proceeds received from the sale of the-.

: potatoes, exclusive 6f charges for services actually rendered at rates

recommended by State Potato Committees or by the State AAA Committees in
States having no State Potato Committee, and approved by the , Regional .
Director of Office of Distribution, except that, in np event shall such

Progrtoi /ccounting
General

Loan Programs

- .Sheet 2

Finance Letter No. 43
.Classification 560

partial repayment be less than the amount loaned, plus interest with
respect to the potatoes released.

J. Settlement . If a borrower notifies the county committee of deterioration
or threatened deterioration such as to require immediate disposal of the
potatoes to avoid excessive loss, the county committee will, in all cases
v/here the borrower can make delivery, notify the Regional Director in the
Office of Distribution, by telegraph or telephone, regarding the borrower,
name, location of potatoes and quantity to be shipped, and request
shipping instructions. The Regional Direc,tor of the Office of Distribution
will (l) transmit shipping instructions to the county committee or
(2) notify the committee that immediate acceptance of delivery of the
potatoes is not possible. The county committee will, on receipt of
shipping instructions, request immediate delivery of the potatoes and
settlement will be made on the basis of the grades and quantities
delivered.

In cases where immediate acceptance of delivery is impossible or delivery
is impracticable the county committee will arrange for a reinspection in
storage of the potatoes, and final settlement at the time the potatoes
are actually delivered will be on the basis of such ' reinspe ction.

The borrower may, prior to the maturity of his loan, request the county
committee to provide such borrovirer instructions to enable him to deliver
on or after January 1, 1945, the potatoes in satisfaction of his mortgage
indebtedness. The county committee will, on receipt of such requests,
request the Regional Director of the Office of Distribution to provide
shipping instructions.

As soon as detailed operations procedure for handling the potatoes
acquired in satisfaction of loans has been concluded, detailed Finance
procedure will be issued.

Upon ' del ivery of -potatoes, borrowers will be credited with the full
support price applicable to the location and condition at the time of
delivery or time of settlement, with adjustments for marketing services
not actually performed. Office of Distribution may buy the potatoes
either under Section 32 Fund Programs or under the GCP Program.

Adjustments will be made between the program of purchase and the loan
program for the amount of the loan plus interest involved.

In order to assure- full price support to the borrower who. has repaid his
loan and has remaining potatoes formerly covered by the loan, and to
■protect the interests of the Commodity Credit Corporation with respect
to such potatoes, the folio-wing procedure will be used;

1. The borrower shall declare at the time he repays his loan, the
quantity of potatoes formerly covered by the loan which remain
in his possession.

2. The borrower will be permitted to deliver such remaining potatoes

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Finance* Letter ^ No. 43
Classification 560

to Comniodity^ Credit Corporation passing iitle thereto, free and clear
of liens -and ’ encumbrances> and will receive in settlement therefor the
same prices as though such potatoes had been delivered in satisfaction
■ ■ of the loan. ' ' '

3i. Commodity Credit Corporation may request delivery of such potatoes
at a specified date and- in' the same manner as if being delivered in
satisfaction of a loan and, if the borrower fails to make such
delivery, the Commodity Credit Corporation shall be relieved of any
further 'pr ice 'support obligations with ' respect to such potatoes.

County Agricultural Conservation Com mittee. Loan forms will be furnished
County 'Agricultural Conservation Commltiiees , and copies for the purposes of
•ihformation may be obtained from such committee, or from the Regional
Finance Offices of the Office of Distribution serving the area. Pursuant
to regulations issued by the War Food Administration, ’ State and County . ?
Committees shall be ■ responsible with respect to all farm and warehouse loans
on potatoes located 'within theproducing area for the supervision of the work
;of- inspection of storage structures and potatoes, the determination of the
borrower ’ s. eligibility, the preparation, filing, and certification of all
loan documents, maintenance of records,- ' submission of reports, arrangements
for delivery, and other supervision necessary for proper care of the pledged
collateral; provided, however, that the coun-ty committee may formally
designate certain employees of the Coup-ty Association to execute loan
forms on behalf of the committee.

In order to- meet the cost of local expenses. County Agricultural Conserve- .
tion Committees will 'collect from the borrovrer a service fee of 2 cents
per 100 pounds, but in no case less than C|5»00 per application. Fees
shall be handled according to previous instructions and forwarded to
Treasurer, Ooramodity Cre-dit' Corporation, Washington 25, D’. C.' a

1. Routing of Loan Documents .

Loans made through approved lending agency . The coun'ty committee
will attach securely to the original note a copy of ’’Special
Instructions to Lending Agency.” The original ’’Producer’s Note,”
■when signed by the producer and approved by the county committee,
■will be transmitted to the designated payee together with the
county office copy. The payee -vvill stamp or write the date of
disbursement of funds on both the original and' coun'ty office
copies and will return county office copy to appropriate county
corranittee- at regular intervals. The producer’s copy vrill be
retained in the coun'ty office until the county office copy is
returned.

•' • 'The' county recorder’ s copy' and coun'ty office copy of the chattel

: ■ C '

Program Accounting
General

Loan Programs

Sheet 3 -

Finance Letter No. 43
Classification 560

mortgage, properly signed and acknov/ledged, will be submitted to
the county recording official by the county committee in order
that the receipt of the recording official may be executed on the
county office copy. The county recorder’s copy will be retained
in the office of the recording official and the county office
copy will be filed in the county office with the producer’s
worksheet and copy of the note.

The yellow copies of all chattel mortgages -vd 11 be forv/arded
daily to the appropriate Regional Finance Office of the Office
of Distribution.

Loans made direct through CCC(OP ). The county committee will
transmit the original and the county office copy of the "Producer’s
Note" and the yellow copy of the "Chattel Mortgage" direct to the
appropriate Regional Finance Office of the Office of Distribution.
Vifhen payment is made, the date of disbursement of funds will be
stamped on both the original 'and county office copies of the
"Producer’s Note," and the county office copies will be returned
to the appropriate county committee at regular intervals. The
producer’s copy mil be retained in the county office until the
county office copy has been returned.

2. Records to be Maintained by County Committee . The county committee
will maintain a daily record. of loans certified. On Saturday of each
week the committee shall report to the State AAA. office (l) the number
of loans, the total quantity and grade of collateral, the amount of the
principal advanced on loans, (2) the number of loans vrhich have been
partially or wholly repaid, the total quantity and grade of collateral
released, and the amount of principal repaid, and (3) the number of loans
still in effect, the total quantity and grade of remaining collateral,
and the amount of unpaid principal.

Regional Finance Office of the Office of Distribution will keep county
committees currently informed regarding any repayments reported through
the Regional Finance Offices. In addition, county committees will make
such arrangements with local lending agencies, dealers, etc., as v/ill be
necessary for the preparation of currently accurate reports.

The State office will prepare a weekly summary of these reports by
counties. The original of such reports will be forwarded direct to the
War Food Administration, Office of Distribution, Procurement and Price
Support Branch, South Building, Washington 25, D. C. The first copy of
the report will be forwarded to the Regional ‘Office of AAA.

3. Signature Cards of Designated County Committeemen . If not already
furnished, each county committee will furnish the appropriate Regional
Finance Office of the Office of Distribution, in duplicate, on 3x5 cards
the typed names followed by tho manually signed signature of the
committeeman or employee designated to approve loan documents for the

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Finance Letter No.. 43
Classification 560

county committee. The State and county code number 'should be shown
in the upper right-hand corner, and immediately beneath the code
numbers, the name of the State and 'county should be shovm.

Terminal Market or In-Transit Loans . Under certain conditions such as a
pressing need for additional storage outside of producing areas, upon
determination of the Administrator or his authorized representative, loans
will be made on potatoes stored in terminal market or in-transit warehouses
in locations acceptable to the War Food Administration with respect to
ultimate distribution, to grovfers in connection with their own potatoes,
and to cooperative associations of growers, certified dealers, and processors
in connection with potatoes which have been purchased. The conditions and
requirements in connection with such loans would be the same as those set
forth in Paragraph F above, except that there may be added to the loan rate
calculated as previously set forth, an amount equal to 50 per cent of the
cost of transportation and charges incidental thereto from shipping point to
point of storage, provided, that in no case shall such additional amount
exceed 50 cents per hundredweight.

Such terminal warehouse or in-transit loans, if authorized by the Adminis-
trator or his authorized representative, will be administered and approved
by Regional Offices of the Office of Distribution. Promissory notes
covering such loans would be secured by either chattel mortgages or
ivarehouse receipts.

Accounting and Reporting . Accounting under the potato loan program will
be performed by the Regional Finance Offices of the Office of Distribution
and covered by a master general ledger maintr.ined by the Program Accounting
Section in accordance with Finance Instruction 560.6, 561.6, 562.6, 563.6
and 564.6. Reporting under the potato loan program will be in accordance
with Finance Instruction 569.6.

Examination of Loan Documents . Producer notes and pertinent documents
submitted to Regional Finance Offices either for direct loans to producers
or for purchase from lending agencies shall be processed by the Regional
Program Contract Accounting Section in accordance with Finance Instruction
551.3, Section IV, Part A.

Program Accounting
General

Loan Pro grams

Sheet 4