The citizen. [volume] (Berea, Ky.) 1899-1958, 1916-08-24


s25 or any multiple thereof, thus dis
charging the debt more quickly.
Funds Available For Loans.
After federal land bank has loaned
to first mortgage $4,000 II can obtain
permission from the farm loan board
to issue $4,000 In farm loan bonds
based on these mortgages. sell such
bonds In the open market and use the
money thus obtained to lend on other
mortgages.
This process Of lending on mortgages
and selling bonds In issues OF $4,000
may be repeated until bonds TO the
amount Of twenty times the banks
paid up capital are outstanding. II
each bank should have only Its 70.
quired minimum paid up capital OF
s750,0O0 this plan win provide eventu-
ally, n all the authorized bonds OF
the twelve banks are sold, over $780,.
100000 to lend on FIRST mortgages on
farm land. The banks. however. can
increase their capital stock above the
required minimum and 20 increase the
amount OF bonds they can sell and thus
increase the total amount Of money
available for loans on farm mortgages
To make these bonds attractive to In
vestors the bonds, together with the
mortgages upon which they are based,
are exempted from federal, state, mu-
nicipal and local taxation and are
made legal Investments for fiduciary
and trust funds. The capital stock Of
the federal land banks is also exempt
from taxation. Federal reserve banks
and member banks Of that system are
empowered to buy and se,l these bonds.
They are TO be issued In denominations
Of $50 $50. 500. $500 and $1,000.
orssnisafion Of Banks.
The temporary management of the
federal land banks IL to be In the
hands Of FIVE directors appointed by
the federal farm loan board. As soon.
however. as the subscriptions from the
loan associations total 100000 regular
directors are TO be appointed as fol.
lows: Three district directors. resident
In the district, shall be appointed by
the federal farm loan board TO repre-
sent the public interest. and six local
directors, resident In the district, shall
be elected by the farm loan associa.
tons, who must be stockholders In the
bank. The federal farm loan board
shall designate one Of its appointees to
act as chairman. The act requires
that at least one OF the three district
directors shall be experienced In farm.
ing and actually engaged at the time
Of his appointment In farming opera
lions within the district Any com
pensation paid to the directors must
be approved by the federal farm loan
board
Each loan association must have a
board Of directors and a secretary
treasurer. The directors shall serve
without pay. The secretary treasurer
shall receive such compensation as
may be determined by the board OF di.
rectors. The association must appoint
an appraisal committee for the pur.
pose OF valuing lands offered as Sc
curity for loans. No member OF such
committee shall have any interest In
the property upon which he passes
To provide funds for current ex.
penses the loan association may re-
tain as a commission from each inter.
est payment not TO exceed one eighth
Of ! per cent semiannually upon the
unpaid principal OF the loan. This
commission Is 10 he deducted from the
dividends payable TO such farm loan
association by the federal land bank
If the commissions are not adequate
and an association does not wish 20
assess members for current expenses
II may borrow at O per cent from the
federal land bank TO an amount not to
exceed In the aggregate one fourth OF
Its bank stock
The law requires both the land
banks and the farm loan associations
TO make provision for certain reserves
before they can pay any dividends.
In sections where local conditions do
not make the formation Of associations
practicable the farm loan board may
authorize the federal land bank to
make loans through agents approved
by tho board. These agents are TO be
banks. frost companies. mortgage com.
panies or savings institutions chartered
by the state. They may receive as
compensation the actual expense In
volved In transacting the loan and In
addition thereto a sum not TO exceed
one-half OF per cent per annum on
the unpaid principal Of the loans made
through them. When the farm loan
board decides that locality Is ade-
quately served by farm loan associa-
tons no further loans are TO be made
through agents.
In addition 20 the system Of twelve
federal land banks and the national
farm loan associations Of borrowers
the act permits the establishment OF
joint stock land banks and authorizes
them 10 carry on the business OF lend
ing directly 10 borrowers on farm
mortgage security and issuing farm
loan bonds. These banks must have
capital OF not less than $4,000. They
are under the supervision Of the fed
eral farm loan board. but the govern
ment does not lend them any financial
assistance.
General Provisions.