The Glasgow courier., 1916-07-28

was SlSucu Oy tuC ASoANAAs ssAAN OSe |
came law on July II, 1916.
The primary purpose of this act is
to promote agricultural prosperity by
enabling farmers to borrow money on
farm-mortgage security at reason
able rate of interest and for relatively
long periods of time. To attain this
object, two farm-mortgage systems
are provided: (1) A system operat-
ing through regional land banks, and
(2) a system operating through joint
stock land banks.
To attract money to the farm-loan
field the act provides a method where
by those who have money to lend can
find safe investment in the form of
debentures or bonds, of small and
large denominations, issued by the
banks and based on the security of
mortgages on farm lands.
These two systems are to be under
the general supervision of Federal
Farm Loan Board in the Treasury
Department, composed of the Secre-
tary of the Treasury, as chairman ex-
officio, and four members appointed
by the President. This board has
authority to appoint appraisers, ex-'
aminers, and registrars, who will be
public officials.
Under the Federal land-bank sys-
tenn the act provides for Federal land
banks which make loans, for the first
IL months, exclusively through local
national farm-loan associations COM
posed of borrowers. These associa-
tions shall be shareholders in the
banks, and in that way the members
who are the borrowers will share in
the profits of the bank. The money
for the loans is to come partly from
the capital Of the banks of bonds Sc
cured by first mortgages on farm
lands. The act defines strictly the
purposes for and the conditions under
which loans are to be made, and re-
quires that the rate of interest charg-
ed on farm loans shall not exceed
per cent per annum.
The United States shall be divided
into 12 farm-loan districts, and a
Federal land bank with a subscribed
stock of not less than S750,O00, each
share $5, shall be established in each
district. Each Federal land bank
may establish branches in its district.
Within 80 days after the capital stock
is offered for sale it may be purchased
at par by anyone. Thereafter, the
stock remaining unsold shall be bought
by the Secretary of the Treasury for
the United States. 1t is provided
however, that the Government shall
not receive any dividends on its stock
Ultimately, it is intended that all the
stock in the banks shall be owned
by the associations of borrowers, and
provision therefore is made in the law
for transferring the original stock at
par to these associations.
The act provides for the creation OF
local national farm-loan associations
through which it is contemplated that
, the Federal land banks shall make
their loans. In the event that {
, local farm loan association is not
formed in any locality within year
the Federal Farm Loan Board may
authorize Federal land bank to MAKE
loans on farm land through approx
ed agents. Ten or more persons wh'
own and cultivate farm land qualified
as security for a mortgage loan unde
the act, or who are about to own ant
cultivate such land, may form sucl
an association, provided the aggre
gate of the loans desired by the mem
bership is not less than $4,000. Eacl
member must take stock in his asso
iation to an amount equivalent to
per cent of the amount he wishes t
borrow. This stock the association
holds intrust as security for the mem
ber's individual loan. The associa
ton, in turn, when applying for mon
ey from the bank, must subscribe fo
stock in the bank to an amount equiva
lent to per cent of the sum it want
to obtain for it's members. Thi
sock is held in trust by the bank a
security for the loans it makes throug
the association. If prospectiv
| borrower has no money with whic
to pay for his association stock, h
may borrow the price of that stool
as part of the loan on his farl
land.
| Under this plan, then, every boz
rover must be q stockholder in h
local association, and every associ,
ton a stockholder in its district ban
Each stockholder in an associate
is liable for the acts of that associ,
ton up to twice the amount of h
stock.