Atlanta Georgian. [volume] (Atlanta, Ga.) 1912-1939, 1914-02-08
Georgia Representative Gives De-
tails of His Project for Giant
Credit System Which Is to Pro-
vide Funds for the RuraFsts.
Old Arguments Against Central
Commercial Bank Can Not Be-
Used Against His, He Says,
Since 1t Doesn't Control Cash.
BY William Schley Howard,
Representative From Georoia,

representative from Georgia.
The bill which I have introduced
ls designed to create a system OF ag-
ricultural banking, owned, managed
and controlled by the farmers OF tho
country, and designed, primarily. to5
help the small farmer who needs as
sistance.
Under this bill, a small number oa
farmers can organize q local rural
bank. with a small capital, whose op-
erations are confined to a small dis
trict. This is the foundation prfncI-4'
pie OF the system. The farmers can
help themselves without awaiting eor@
outside help. They can create an in.
stitution OF a size and scope to meet
their needs. Owning the stock of this
institution, and having double liza
bility as stockholders, they will most
carefully guard their loans.
Familiarity with local conditions
will enable them to appraise fairly tho
value of lands offered as security for
loans and to see that the money Dor
rowed fs used for the Improvement
and upbuilding Of the farm. Per-
sonal knowledge of the needs OF the
individuals in the restricted district to
which their operations are confined.
Will insure an intelligent and neigh
borly interest in the needs and op-
erations OF the ebank's customers. ana
local pride and self-interest will In
sure their active attention to and
support of the institution The in
ability to make loans outside of thsI
restricted area prevents any tendency,
to speculation.
Dividends Restricted.
The local banks can only nav n
restricted dividend, and this also wilg
tend to promote conservatism of man
agement. The dividend authorized Is
fair return for the money invested.
and the surplus profits, instead Of be-
ing dissipated in extra dividends. are
accumulated and are ultimately used
TO buy In at par and cancel the out
standing stock Of the bank There
upon the local bank becomes mutual
lied. and the subsequent profits are
available to the customers of the,
bank, thereby in effect reducing the,
rate OF interest on farm lands.
The amount Of stock in a local bank
that may be owned by one individual
Is limited. and adequate provision is
made to prevent the control becoming
vested in any set of individuals.
IshaGn bo III
make long term mortgage loans-tha.
is, loans for not less than five years.
nor moro than thirty-five years. Sc
cured by first mortgage on farm,
lands, at not exceeding so per cent
of the appraised value in the case Of
improved lands and not exceeding 40
per cent in other cases, such loans
in all cases containing an amortisa-
ton provision requirine the repay
ment of the loan in small periodic
payments-to the extent of fifteen
times their capital and surplus. In
addition, they are authorized to make
short-term mortgage loans-that is.
first mortgage loans running for less
than five years and without the
amortization provision-to the extent
of five times their capital and sur
plus
How System Works.
Each local bank is required to IN
vest part of its capital and surplus
in the stock OF State national farm
land bank, and part in stock Of the
United States Farm Land Bank, in
which the State farm land banks arc
also required TO invest to some ex-
tent
The long term mortgages taken by
a local bank. or indorsed or guaran-
teed by it, are forwarded to the state
bank. which represents the combina-
ton Of a proportion of the capital and
credit of all the local banks in that
State, These long term mortgages are
then guaranteed by the State bank
and forwarded to the central bank,
known as the United States Lana
Bank, The central bank then takes
these mortgages, each of which is