Federal Intermediate Credit Banks (FICBs)

Passage of the Agricultural Credits Act on March 4, 1923, installed Federal Intermediate Credit Banks (FICBs), introduced by Congress in the early twentieth century to extend credit to farmers in response to the populist impetus. Congress empowered 12 FICBs to discount short- and intermediate-term notes offered by commercial banks, livestock loan companies, and thrift institutions.

FICBs underwrote collateral trust debentures, discounted agricultural paper, and made loans to cooperative associations. Loans typically had short maturities that could not exceed three years.

Critics charged that FICBs were unnecessary because they added surplus machinery to the U.S. financial system by providing loans that could be underwritten by standard banks. Advocates countered that shifts in the American marketplace made lending money to farmers undesirable and that alternative funding methods were critical.

Years of political uprisings, retraction, cooptation, and compromise evolved into the FICB program. Beginning with the Greenback Party in the mid-1870s there was a burning desire among farmers and rural settlers for more control over the markets they served and the land they worked. Frustrated Americans—suffering from declining prices, railroad rates, and deflationary currency—sent 15 representatives to Congress. Beginning in 1891, as Greenback interests fused with the Democratic Party, the People's Party became the farmers’ advocate. Silver boosters sought inflationary monetary policies benefiting debtor-farmers in the Midwest and miners in the West.

After the Panic of 1907, Congress passed the Aldrich-Vreeland Act, which empowered the National Monetary Commission to investigate the crisis. Populist leaders hoped for significant banking reform and public oversight, but Senator Nelson Aldrich, chairman of the commission, and the Populists also favored a central bank in Washington and elastic currency on a gold standard.

In the face of public calls for more oversight, Aldrich and his colleagues were forced to support government control of the banking system. The 1913 Federal Reserve Act incorporated 12 regional banks reporting to a seven-member board appointed by the president and confirmed by the Senate. Backers hoped revised financial oversight would provide relief from financial panics, unemployment, and business depressions. Silver advocates watched as their core issue evaporated under the weight of the new national currency, the Federal Reserve Note.

Rural advocates sought easier credit after banking was centralized. The Federal Farm Loan Act of 1916 created a regional system like the Federal Reserve. Twelve Federal Land Banks (FLBs) were established, providing mortgage credit to farmers, ranchers, and rural homebuyers.

Declining land and commodity prices in the 1920s undermined the program, and members of Congress from the Midwest and Plains states, dubbed the “Farm Bloc,” pushed for broader programs. The resulting 12 regional FICBs received infusions of $60 million from the U.S. Treasury and emerged as divisions separate from FLBs.

FICBs were authorized to provide credit for the development of crops and livestock, cooperative marketing of staple agricultural products, and cooperative purchase of farm supplies. The impact of the banks was limited. Outstanding loans and discounts at the end of 1929 totaled approximately $76 million and amounted to less than 2 percent of non–real estate agricultural loans outstanding.

FICB methods undermined success. The banks were not authorized to make loans directly to individual farmers. Cooperative marketing associations, finance corporations, and livestock loan companies acted as intermediaries. The rediscounting function of the banks was a disincentive for lenders because caps on profit margins were imposed.

The Farm Credit Act of 1933 was required to assist FICBs in reaching out to individual farmers. Twelve credit associations were created for this purpose. During the same year, bank supervision was transferred from the Federal Farm Loan Board to the Farm Credit Administration (FCA). The impact was minimal. FICBs never provided more than 2 percent of non–real estate agricultural loans outstanding through 1970.

By 1988, 11 of the 12 existing FICBs merged with regional Federal Land Banks to form Farm Credit Banks (FCBs). The last remaining FICB in Jackson, Mississippi, merged with the FCB of Columbia, South Carolina, which was renamed AgFirst FCB, on October 1, 1993.

Jake Sudderth

See also: Federal Reserve Act (1913) ; Greenback Party ; National Monetary Commission ; New Deal ; Progressivism


American Institute of Banking. Farm Credit Administration. New York: American Institute of Banking, 1934.

Benner, Claude L. “Has Rural Credit Legislation Gone Far Enough and in the Right Direction?” Journal of Farm Economics 7 (1): 84–101.

Lee, V. P. “The Intermediate Credit Banks,” Journal of Farm Economics 7 (4): 425–434.

O'Brien, Patrick G. “A Reexamination of the Senate Farm Bloc, 1921–1933.” Agricultural History 47 (3): 248–263.

Sparks, Earl Sylvester. History and Theory of Agricultural Credit in the United States. New York: Thomas Y. Crowell, 1932.