Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1916-07-15
FEDERAL RURAL CREDITS MEASURE
One of the Days Best Cartoons.
By FREDERIC J. HAsK1S

WASHlNGToN. D. C., July 1.-THE
much discussed and long a waited rura!
credits bill has passed both houses OF
Congress with remarkably little opro-
sition. BY the afiixins of the presi-
Dental signature this highly important
and far-reachimg measure becomes a
la", 20 be known under the short title
OF tho Federal farm loan act.
When one realizes that II Is consrrv-
atiNelN estimated that about 10000
100000 worth OF real property in the
United states is made liquid as n basis
OF credit by this legislation. tina. farm
property. long regarded AS the black
sheep among securities for long time
loans, VIII tie used under IL as security
for longtime loans at low rates OF in.
terest. that the whole complexion OF
rural lie in America may be changed
as result Of its operation. II IL evil
dent that the Importance OF the law
cannot be overest!nated.
The measure was practically nom
partisan one. In the final vote In the
Senate there were only Ave dissenting
votes. in the House with It's much
larger membership. only ten. \ plank
promising III" enactment of such lcgis-
lation was AN integral part OF each OF
the three party platforms of 1912.
The Federal farm loan act strikes
at the roots OF the rural credit stu
alton. 1t creates a new and elaborate
system OF finance 10 co-cDcrat. with
the farmer and with the man who
wants 10 own land in the country The
men who have been working for II and
on il for the last four years look for
great and fundamental changes in The
national life as result Of it's opera
tons, They expect II TO prove n great
stimulus TO rural prosperity. TO put the
back IN farm N h,s,u
where II will really move. TO diminish
tenancy. which Is on the increase In
this country. and to create large
class which is attached TO the soil BY
which will be in the worn. bu; express
siva. phrase, the hackbor. Of the ma
ton.
Farm Lands as Credit Bnsia.
What ia The Federal farm loan act?
In the words Of one man who has been
connected with the movement from its
inception. It's purpose is TO make LIQUID
the $4,000. 900 600 worth OF farm prop.
"rty in the United States az basis
Of credit FOR long-ti mortgage loans
1T low rates Of interest on the amorti-
cation plan" There is & good deal
said nv implication in this sonorous
statement Of the cas-.
When farm property Is made liquid
az a basis OF credit II menns that the
old state OF a"airs by which "A farm
mortcag" vas reluctantly received by
most banks as security for loan Is
done away with. When such a mort
gage vas accepted. the loan was usual
~ Il short.tine loan, which meant that
the farmer had heavy payments to
make. and often had TO overwork the
sotl, his family and himself In order
10 set enough money out OF the three
10 meet his obl!Eatlons in the specified
time. Low rates of inter est" speaks
or the system lies one OF its most i'm
portant and advantageous points
BY amortization In this case Is
meant The payment of the principal OF
loan in small periodical instaIlnents
along With tho Interest According to
some men. the farmer who borrows
money under the new system will pay
interest as much as he did under the
old regime. only at the end OF
term of years these payments will not
only have covered the interest, but
also wiped out the principal of his debt
so that instead Of being AS deeply in
debt as ever. he finds himself an un-
encountered landowner. While the case
may not work out In quite such an
idca! manner at this. the annual pay
ments on the principal of loans Will
be so small, and the interest rates SO
low, that the farmer may quite pos
sibly pay off both without much more
effort than he formerly expended In
meeting his interest payments. More
over. il is we'll known that II is much
easier to meet an obligation in small
payments over period OF years than
10 save enough money 20 settle II with
a lump At one time.
How PInn VIII Work.
The Federal farm loan act will func-
ton on cooperative basis by which
the borrower becomes stakeholder In
the association which gets his loan for
him. In order to borrow money under
the new act. the borrower must sub
scribe for stock in n farm loan as
ISOLATION to an amount equal to 5 per
cent OF the loan he desires to make
If the application for the loan is grant
ed--a question determined By expert
appraisal OF the security offered--the
applicant becomes the owner OF stock
In the loan association to the amount
OF one share for every 500 that he
borrows. for which he pays. of course
50 share, and which has hence
par value of s.. This stock is taken
hy the loan association as additional
but when the loan is paid off in full
the association. in turn, redeems the
stock at par value. AS long as the
loan runs. the borrower owns the stool;
though the association holds IL, and he
gets dividends on 1t according TO the
prosperity OF that particular associa-
ton.
The National Farm Loan Associa-
lions are not private enterprises. "A
might be assumed They are created
by the new law as part of it's ma
chinery. Persons desiring to borrow
money under the provisions OF the law
may be organized into such an asso-
citation.
There will be created in the Treas.
ury Department by the new law a new
bureau. known as tho Federal Farm
Loan Bureau, which will be under thu