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 RuraIists.
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 Ceoroia

''SF' SSS'NohtNC ! iOttt SSOFHlds
The bill which I have introduced
is designed to create a system of ag-
rcultural banking, owned, managed
and controlled by the farmers of the
country, and designed, primarily, TO
help the small farmer who needs ass
sistance.
Under this bill, a small number OF
farmers can organizes a local rural
bank, with small capital, whose OBJ
erations are confined to small dis
trfct This is the foundation princi-
pie of the system. The farmers can
help themselves without waiting for
outside help. They can create an in4
stitution of size and scope to meet
their needs, Owning the stock Of this
institution. and having a double la.
bility as stockholders, they will most
carefully guard their loans
Familiarity with local conditions
will enable them to appraise fairly the
value of lands offered az security for
loans and to see that the money bor-
rowed is used for the Improvements
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 neigh4
borly interest in the needs and opx
erations Of the banks customers, and
local pride and self-interest will in
sure their active attention to ana
support of the institution. The in4
ability to make loans outside of the
restricted area prevents any tendencv
to speculation,
Dividends Restricted.
The local banks can only pay d
restricted dividend, and this also viii
tend to promote conservatism of man4
agement. The dividend authorized fs
a 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's
upon the local bank becomes mutualA
available to the customers of tho
bank, thereby IN effect reducing tho
rate of interest on farm loans
The amount OF stock in local bank
that may be owned by one individuaa
is limited. and. adequate provision is
made to prevent the control becoming
vested in any set OF individuals.
These local banks are permitted to
make long-term mortgage loans-thas
Is. loans for not less than five years
nor more than thirty-fiv years, se-
cured by first mortgage on farm
lands, at not exceeding 80 per cent
of the appraised value in the case "a
improved lands and not exceeding "a
per cent in other cases, such loans
In all cases containing an amortiza4
ton provision requirihe 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 i've years, and without tina
amortization provision-to the extens
OF five times their capital and SUR
plus.
How System Works.
Each local bank is required to ins
vest part OF its capital and surplus
in the stock OF a State national fara
land bank, and part in stock Of the
United States Farm Land Bank, In
which the State farm land banks are
also required to invest to some ex4
tent.
The long-tern mortgages taken bN
a local bank. OF indorsed or guaranS
teed by It, are forwarded to the State
bank, which represents the combina<
ton of proportion of the capital and
credit OF all the local banks in that
State. These long-term mortgages ard
then guaranteed by the State BAND
and forwarded to the central bank.
known as the United States Land
Bank. The central bank then takeS
these mortgages. each Of which 10