The Ocala evening star. [volume] (Ocala, Fla.) 1895-1943, 1916-08-14
FINANCIAL AID FOR
THE FARMER
Explanation of System Under
Which the Federal Loan
Act Will be Operated
(AssOciated Press)

years of investigation and debate to
develop the best method of providing
financial aid for the farmer at normal
interest rates and on long time, Con-
gress has passed a farm loan act,
President Wilson has named members
of the board which will administer
its provisions, and the work of organ
izing the vast new system is about to
begin.
Secretary McAdoo ex-officio mem
Der of the farm loan board, which will
be at the head of the system, predicts
that it cannot be in operation for at
least six months and probably loans
cannot be made before next spring.
In operation the system to some ex-
tent will do for the farmer what the
federal reserve system does for the
business man. The farmer will be
given opportunity to secure money on
his most available commodity, his
land, just as the merchant and man.
ufacturer has been enabled through
the federal reserve system to have
his paper, based on commercial trans
actions, find a ready market.
The new scheme has many points
of resemblance to the federal reserve
system but in many essential features
il is entirely different. In no way will
the banks created under it do COM
mercial banking, and while it is pos
sible than in years to come they may
have funds to loan that will amount
to several hundred million dolla1s, it
is not believed probable that the sys-
tenn ever will have the resources OF
the reserve system.
The act provided for division OF
continental United States into twelve
bank districts, with a federal land
bank in each. The work of designat-
ing these districts and selecting the
center$ at which the loan banks are
to be located will be the first import
ant duty of the farm loan board and
is expected to result is just as many
bitter contests as preceded the an
nouncement of the lines of the twelve
federal reserve districts and the loca-
tion of federal reserve banks. The
only directory provision in the farm
loan act says that land banks shall be
located with particular reference to
+1.< fo,-x.. Loo, ,,oade ~ +ha oo,4ufrxv
so the board will have wide discretion.
Many applications from cities, par
ticularly in the northwest and south
west, already have been filed in the
treasury, but the board will not make
public its conclusions until it has
travelled over the country and held
hearings in many states.
Each federal land bank must have
a minimum subscribed capital of
$3.50, before it can start business. If
within thirty days after books are
opened for subscription to the stock
OF any of these bands individuals or
corporations have not subscribed that
amount the secretary of the treasury
is directed to subscribe for the United
States in the needed sums. Stock in
the banks may pay dividends when
earned, but the United tSates as "a
stockholder cannot participate with
others.
The banks will not, except in spe-
cial cases, loan direct to farmers, but
through the agency of national farm
loan associations, which may be or
ganized to any number in a land
bank district by any ten owners or
prospective owners of farm land who
desire to secure loans on farm prop
erty. Applications for charter for
these associations must go up to the
farm loan board and may be refused
by it. No association will be charter
ed Unless it is shown that signing
members desire loans totaling at least
$50, 900.
In applying for membership in an
association, a farmer must take five
per cent of the face value of the de-
sired loan in stock of the association.
Applications for loans are to be
passed upon by loan committee of
the farm loan association. Loans viii
be made only on first mortgages or
farm property and the value of the
land viii be the main consideration.
The land viii be subject to inspection
by an appraiser of the farm loan
board. Loans viii be made only for
purchase of land, for its improve
ment, or for purchase of live stock,
equipment, fertilizers, or to provide