Pine Bluff daily graphic. (Pine Bluff, Ark.) 1893-1942, 1916-08-13
|FARM0WNGRS MAY
BORROW MONEY
At Low RATES
Organization of Federal
Farm Loan Bank System
Now Under Way.
KEEN COMPETITION
FOR THE IL BANKS
Loans to BE Made Thru Associations.
in Which Borrower Must Subscribe
for Stock Equal to Five Per Cent
Of Desired Loan.

After many years of investigation
and debate to develop the best method
of providing financial aid for the
farmer at normal interest rates and
on long time, congress has passed a
farm loan act, President Wilson has
named members of the board which
will administer it's provisions, and the
work of organizing the vast new sys-
tenn is about to begin.
Secretary McAdoo, eX- officio men,
Der of the farm loan board, which
will be at the head of the system, pre-
diets that it cannot be in operation
for at least six months and probably
loans cannot be made before next
spring.
In operation the system to some ex-
tent will do for the farmer what the
federal reserve system does for the
business man. The farmer will be
given opportunity to secure money on
his most available commodity, his
land, just as the merchant and manu-
facturer has been enabled through
the federal reserve system to have his
paper, based on commercial transac-
tons, find a. ready market.
| The new scheme has many points OF
resemblance to the federal reserve
system, but in many essential features
it is entirely different. In no way
will the banks created under it do
commercial banking, and while it is
possible that in years to come they
may have funds to loan that will
amount to several hundred million dol
| ,c ho1ioxol y,rnhoh1n FL of
the system ever will have the re-
sources of the reserve system.
| Fight for IL Banks.
The act provided for a division of
continental United States into -
land bank districts, with federal
land bank in each. The work of desig-
mating these districts and selecting the
centers at which the loan banks are to
be located will be the first important
duty Of the farm loan board, and is
expected to result in just as many bit
ter cotnests as preceded the announce
ment of the lines of the IL federal re-
serve districts and the location of
federal reserve banks. The only direc-
tory provision in the farm loan act
says that land banks shall be located
with particular reference to the farm
loan needs of the country, so the board
will have wide discretion. Many ap-
plications from cities, particularly in
the Northwest and Southwest, al
ready have been filed in the treasury,
but the board will not make public it's
conclusions until it has Travelled over
the country and held hearings in
many states.
Each federal land bank must have
a minimum subscribed capital of
$780, 900 before it can start business.
If within 80 days after books are
opened for subscriptions to the stock
of any of these banks individuals or
corporations have not subscribed that
amount the secretary of the treasury
is directed to subscribe for the United
States in the needed sums. Stock in
the banks may pay dividends when
earned, but the United States as a
stakeholder cannot participate with
other shareholders in the dividends.
The banks will not, except in special
cases, loan direct to farmers, but
Through the agency Of national farm
loan associations, which may be or
ganized to any number in land bank
district by any 10 owners or prospec-
tive owners of farm land who desire
to secure loans on farm property. APP
plications for charters for these as
sociations must go up to the farm
loan board, and may be refused by it.
No association will be chartered I'M
less it is shown that signing members
desire loans totaling at least $40, 1000.
In applying for membership in an
association, a farmer must take five
per cent of the face value of the de-
sired loan in stock of the association.
How Loans Obtained.
Applications for loans are to be
passed upon by a loan committee OF
the farm loan association. Loans will
be made only on first mortgages or
farm property, and the value of the
Hand will be the main consideration.
The land will be subject to inspection
by an appraiser of the farm loan
board. Loans will be made only for
purchase of land, for it's improvement,
or for purchase of livestock, equip
ment, fertilizers, or to provide build
ings on farm or to liquidate indebt-
edness, existing when the first asso-
i citation is formed in the county where
land is located. No loan will be made
of more than $4,000 nor less than
500. Interest will not be charged
greater than six per cent. The loan
itself will be reduced through an
amortization plan providing for re-
duction by annual or semiannual pay
ments on the principal. No mortgage
shall run for more than 40 years nor
less than five, and there are the neces-
sary provisions in the law for. salts
faction of overdue or amortization
payments.
The money to be loaned will come
through the federal land banks. passed
to the hands of the national loan as
sociations and to the farmer: The
capital stock of the land banks will
not give them much loaning power, so
congress increased that power greatly
by authorizing the banks to issue farm
loan bonds and sell them in the open
market. The act provides that when
a federal land bank has loaned $5O, 900
to farmers it may issue correspond
ling amount of farm loan bonds. and
In ~. L. kA nd hvy