Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1916-09-29
FARM CREDIT QUESTIONS
ANSWERED,

Owing to the large number of ques-
tions which the publication of the
farm loan act story has brought to us,
we have decided to discontinue pub
LEGATION of the original, couched in
the scientific language of the banker
and legislator, and publish instead a
complete resume of the subject, pre-
pared by Frank R. Wilson of the
treasury department, Washington. D.
c., for the sole purpose OF letting
light in on the dark places of this
greatest of all movements for the
benefit of the farmer:
The federal farm loan act recently
passed by congress and signed by
President Wilson is simple piece of
financial machinery by which the gov
eminent assemblies capital and lends
it to farmers on first mortgage secur-
ity for periods of from five to 40 years
at low rates of interest.
The hubs of this machine are IL
federal land banks to be established
in ~ districts not yet selected.
These banks will be capitalized at
$3.50, 900 each, and If the public does
not buy the stock, the government
will do it.
Any farmer who owns land or who
wishes to buy land may borrow from
these banks up to SO per cent OF the
value of the land and up to 20 per
cent of the value of the permanent
Improvements.
To utilize the system, it is neces-
sary for the borrowers to organize
themselves into local farm loan assoc
Citations, consisting of 10 or more far
mers in each association. These asso-
Citations then petition the federal land
bank of their district and indicate the
amount of the loans desired. The
federal land bank then sends apprais-
ers to value the land. II the loans
desired do not exceed the value OF the
land, the federal land bank advances
the money through the local farm
loan association, and the local asso-
citation forwards to the federal lana
bank the first mortgage on the lands
in question as security.
The rate of interest to be charged
is not yet determined, but 1t cannot
under the law be more than per
cent, and 1t may be less.
The loans may extend from hve 10
40 years, at the option of the borrow
ers, and both interest and principai
may be paid off in annual or semi-an-
nual installments, or at the option OF
the borrower.
No one farmer may borrow more
than $4,000 nor less than 800.
The borrower must specify to what
use he is going to put the money. The
law REQUIRES that it be spent either
for the purchase of land for farm
use: for the purchase OF equipment
fertilizer or live stock necessary 10
operate the farm; to provide build
ings or Improvements for the mort
gagged land, or to pay off a debt al
ready on the land.
ONLY those may borrow who are
actually going to live on the land ana
farm it. The law is drawn to give the
benefits to the working farmer and
not to the land Spectator.
After any one Of the IL federal
land banks has loaned 10000, II
holds $4,000 worth of first farm
mortgages as security. Using these
farm mortgages as security, 1t may
then make an issue of $4,000 OF
bonds which may be sold to provide
another $4,000 to loan. This proc
ess is repeated until the amount loan
ed EQUALS 20 times the amount OF the
capital stock of the bank. The total
loaning power of the II banks 49,