Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1916-12-01

Interest in the new system is country
wide and, to answer some of the
many questions arising concerning it,
the federal farm loan board has is
sued what it calls the Farm Loan
Primer" Some of the questions and
answers in it are:
Q.-You say a farmer who Dor
rows is required to buy stock of his
local association equal to per cent
of his loan. What becomes Of this
. stock?
Alt is held by the local loan as
ISOLATION as collateral security until
the farmer pays off his debt. Then
the money is returned to him, and
the farmer may use it as the last
payment of his debt.
Q.-What does the local associa-
ton do with the money the borrower
pays for his stock?
At buys stock in the federal
land bank, so as to increase the land
banks capital so that it can make
more loans.
Q.-Why does the local associa.
ton hold the borrowers stock?
A.-The stock purchased by each
borrower in that association is a part
of the assets of the local association
and is to be used to meet defaults in
case some borrower defaults and his
land does not satisfy the face of the
mortgage.
Q.-Is there much likelihood that
this stock will ever have to be used
for that purpose?
A.-No; because the loans do not
exceed SO per cent of the appraised
| value of the land.
Q.-Is there any other possible liza
bility on the part of the borrower?
Ayes. In case of a very severe
loss experienced by the local loan
association each borrower is liable fol
another 5 per cent. This is the dou.
bic liability feature which has always
been the rule in national bank stock
Ownership.
Q.-Then the total responsibility
Of the borrower for the debts of other
members of the association is only
10 per cent of the face of his loan
Ayes.
Q.-Who gets the dividends on this
stock while 1t is held as collateral
security by the local loan associa-
ton?
A.-The borrower. except that part
used to pay the expenses of the local
loan association.
Q.-May a local association in
crease it's membership after 1t is or
ganized and in operation?
A~-Certainly. 1t may admit any
borrower who subscribes to stock
equal to per cent of his loan. He
is admitted only by two-thirds vote
of the directors of the association.
Q.-Is there any limit to the mum.
Der that may be taken in?
A.-No.
Q.-Does the act specify how the
money borrowed shall be expended?
Ayes; the money may be spent
only for the purchase Of land, for the
purchase of additional land, for the
payment Of a mortgage or debt al
ready existing, for the purchase OF
live stock. or for any kind of pro-
ductive improvements, such as fer
tilizer, needed buildings. drainage
etc.
O.-May real estate spectators
borrow to buy land?
A.-None but actual farmers or
prospective farmers may borrow.
Q.-May an absentee landlord Dor
row on his land?
A-No.
Q.-what is the object Of these
Limitations?
| Alt is the policy Of the law to
benefit only the actual farmer, and
especially the farmer Of small or me-
dunn sized operations who Is most
in need Of credit facilities.
OWL the interest rate to farm.
ers be the same in every federal land
bank district?
!. A.-Probably about the same.
Q.-How can this be true when
each federal land hank issues its
bonds separately?
. A,-Because the bonds Of each
bank are guaranteed by every other
bank and are therefore equally Sc
cure.
. Q.-suppose the interest rate is
lowered after the banks are in oper'
alton. will the early borrowers be
forced to continue at the high rate!
A.-No. They may re-borrow ar
ter five years to pay off their first
mortgages.
Q.-Suppose I own farm worth
only $40 an acre because it is marshy