The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1916-08-31
FEDERAL FARM LOAN ACT

/ may issue farm loan bonds to the
amount OF twenty times the amount
! of its capital and surplus. This would
mean that each land bank having a
! capital of $750, 900 may eventually IS
| sue SIS, 600 900 OF farm loan bonds, or
in the twelve land banks $1S0,o00.000
| OF bonds.
| These debentures or farm loan
bonds may be retired at any time
after five years and are to bear IN
terest at. not exceeding per cent
per annum and are tax exempt. They
are also made a legal investment Tor
trust funds and approved IS security
for public deposits.
The farm loan bonds arc not q
government obligation but are secur-
ed primarily by the deposit Of the
mortgages with the farm loan regis
trar, and as additional security there
is pledged the capital of tho federal
land banks Each federal land bank
In turn Is secured by the capital OF
the farm loan associations and the
additional liability OF the members
thereof. These bonds are intended
to be an especially attractive form
of investment similar to a govern
ment bond and as they are issued for
low rate OF interest, this will In
directly provide the farmer with a
low rate OF interest This will be
helpful in those places where inter
est rates are high. These bonds are
to be issued in denominations of
$500. 5000. 10000. $4,000 and
81. 10000.
In some districts farm loan asso-
Citations may not be organized and
when such is the case the federal
agent which must be bank, trust
company or mortgage company chart
cred by the state In which it is doing
business. The land bank may then
receive applications through this
agent operating in tho territory des-
ignated for farm loans. These loans
must be OF the same character as
those required OF the farm loan as
sociations and the bank. trust COM
pany or mortgage coMpany must en-
dorso and guarantee tho loans to the
federal land bank
The act has another provision
which may be used in places
where the provisions Of the act are
such a. not to appeal to the farmers
and that is for the organization OF
joint stock land banks. These may
be organized by individuals, not less
than ten In number. and each must
have q capital OF $3.50. 900. which
the stock land bank can issue any
debentures. It has . double liability
on It's stockholders and the govern
ment II prohibited from purchasing or
subscribing for any Of its stock.
With reference to making loans,
however. the stock land bank Is not
restricted to the class Of loans re-
quired for tho federal land bank. It
must loan. however. only on first
nortzages on land situated within
the state in which It IL operating. or
In Q state oont1guono thereto: the
money loaned need not necessar-
lily be apphed - In the regular gov
ernment bank 10. actual fRTm opera
tons; It - not required to loan to
actual farmers. It may loan less than
$4,000 and more than 10000 to Dor
rowers. Aside from this, the general
provisions are similar to that Of the
federal land bank, and its operation
ed by tho federal farm loan board. II
may also issue debentnres, but they
shall be distinguishAble from those
issued by tho regular federal Land
banks.
The law provides that each bank
and association must accumulate a
reserve account and can only pay
dividends from the surplus left after
setting aside the required reserve.
1t Will probably be several months
before the machinery Is In good
working order. No doubt Il will be
OF considerable benefit in those
states where interest rates are high.
It Will have q tendency to encourage
agricultural development throughout
the country. Many weaknesses will
soon be apparent in the law. These
viii be remedied In due time as the
country generally has become COM
mitted to some legislation in the ma
tuPo az this law