Evening capital news. (Boise, Idaho) 1901-1927, 1916-11-23
Letters From, the People
FARM LOANS.


Editor Capital News: An editorial
under title of farm loans appeared in
your issue Of the 21st that bears an
impression not warranted by the pro-
visions of the law, and carrying sug-
gestions that will discourage the forma-
ton of national farm loan associations,
and thus deprive our farmers of the
benefits SO much needed to build up
our western agriculture.
First. The interest and costs may be
as low as Az to per cent. The as
sumption that it is not likely that the
farm loan banks will pay dividends is
wholly without basic facts. The first
years interest is not 10 per cent. The
law wisely requires that the borrower
should become a stockholder in the
bank through which he borrows his
money, and assume an additional re-
sponsiblity of per cent-simply A
bond to that amount, as guarantee
that the officers of the local bank will
conduct the business honestly. and thus
give an additional guarantee that ali
loans will be paid. When the loan Is
paid the per cent will be returned and
he will receive dividends on 1t during
the life of his loan, like the stakeholder
vi any bdHh, VACCPl Iiidt Niit DpiIOWctS
only receive the dividends, as they only
are stockholders
The borrowers liability is limited to
his stock, which is per cent of his
loan, and a bond of 8 per cent of his
loan, which limits his total liability to
10 per cent of his loan. The German
and other European systems often re-
quired an unlimited liability. The pro-
permission from the local bank is
proper. as the banks are simply neigh
borhood affairs and the probability of
such restraint being exercised is very
remote.
Money cannot be borrowed at the
same rate-6 per cent-except in few
instances from the state, and 1t Is very
probable that per cent will pay both
principal and interest out in 80 to So
years, with the privilege Of canceling
the loan any time after Ave years.
The statement that the borrower can
only obtain a loan of one-fifth the
value of his property is misleading as
the law provides that he can borrow
one half the value of his land plus one
fifth the value of his buildings. The
red tape anticipated in the editorial is
not in evidence and Is simply q matter
of opinion. The national farm loan
board assured the writer at Spokane on
Sept. 4 that the law would be made
practical. and easily operative to carry
out the spirit of its purpose.
The provision that man may pay
$25 or more of the principal at any
interest paying date after five years
certainly commends itself to the thrifty
borrower. The privilege of taking 40
years or paying II in part. or as "a whole
after five years is unique and highly
important.
While the law may be improved
somewhat 1t is expected to be practical
and operative within three to Ave
months. The methods of procedure are
very simple. The small investor will
find these bonds, issued in small de-
nominations, very inviting and con-
venient. d. r. HUBBARD.
Boise, Idaho, Nov. %, 1916.
eve are glad to have any information
on the subject treated in the foregoing.
The law is new and comparatively little
is known at present of its provisions or
the manner in which they are to be
carried out. If we made any incorrect
statements it was certainly uninten-
tional and we are glad to have our at
! tention called to it.-Editor).