New Ulm review. (New Ulm, Brown County, Minn.) 1892-1961, 1916-08-30
RURAL CREDIT LAW,
WILL BENEFIT ALL
FARMERS WILL BE ABLE TO
BORROW MONEY AT REASON
ABLE RATES,
LOANS MAY BE MADE ON Ionic
TIME BASIS OR PAID OFF
a QUICKLY.

On account of the European war an,
the Mexican situation occupying tn,
stage to the exclusion of almost an,
other events, very little attention ha.
been given by the press to the "Rura
Credits Bill" which has recently becom,
law. This law is intended to benefi,
the rural communities and from it.
provisions ought to accomplish tn,
purpose for which it is intended.
1t is we'll known fact that at tn,
present time and for years back farmer:
have been forced to pay not only stiff
rate of interest for moneys borrowed or
their farms as security, but they also
have in many instances been forced tt
pay a respectable commission to the
person or persons who have negotiated
the loans for them. This the new law
is expected to remedy.
Under this law the United States will
soon be divided into twelve land bank
districts, each containing a. Federal land
bank. These banks will be established
for the sole purpose of loaning money to
the farmers for productive purposes on
the security of their farms. Every
borrower will take per cent of his loan
in stock, and thereby become partner
in 4he enterprise. Any profit will be
returned to him in the shape of dividends.
Under the law the interest rate cannot
exceed 6 per cent, but may be as much
lower as cheap money and good manage
ment will warrant. The land bank will
not deal with the farmer direct, but
through national farm loan association
composed of ten farmers who wish Ito
borrow.
Any farmer and nine farmer friends
can form such a farm loan association
and secure from the Farm Loan Board the
necessary blanks and circulars. They
elect officers, fill out the blanks, sign
their names, giving the amount required
by each and send their application to the
land bank of their district. An agent
is sent out to investigate and if he makes
a favorable report, they receive charter
covering their county, and one of their
number is made Secretary Treasurer.
With the charter 60 blanks for mort
cages and appraisal blanks. Each loan
will be appraised by the loan committee
of the Association. These appraisals
will be forwarded to the land bank to be
examined by the appraiser of the bank
who recommends the loan if he finds
everything in order and the appraisal
satisfactory.
The money is then sent to the Secre-
tary- Treasurer who distributes the money
among the borrowers. Thereafter he
collects and forwards to the land bank
the installment payments on each loan
as they become due. For this service he
receives a small fee.
The beauty of this plan is that the
loan may run from five to forty years.
With each payment of interest certain
fixed percentage of the principal is paid.
If the interest rate is per cent, and he
pays in per cent yearly on the principal,
the whole debt will be paid off in &c
years. This clearing of the mortgage
will result from total payment each
year of 6 per cent of the original loan,
covering interest, expenses and install
ment on principal.
A borrower, is however, not limited to
the payment of per cent on the principal.
After five years are up, he may pay
as much faster as he pleases and thereby
reduce his interest payments in pro-
portion and thus pay off the loan so
much quicker. This plan works similar
to building and loan associations with
this exception that the expenses oi
operation are less and that all the profits
60 to the borrower as there will be nc
free shares to participate in the earnings
AS stated before per cent of the loans
thus made come to the borrower in the
shape of stock in the Association. If the
enterprise makes earnings, the farmer
will get his share in dividends on hi:
stock. He can borrow up to so per cent
of the value of his land plus 20 per CEN
of the value of his buildings. With tn,
money thus borrowed, he can MAKE
repairs, lay drains, and buy live stock
machinery and fertilizer. This propo
sition is purely cooperative. The far
IL IL
the profits. It is expected to have tn
plan in operation by next January.