The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1916-08-31

mary purpose OF this act is TO pro
mote agricultural prosperity by
enabling farmers to borrow money on
farm mortgage security at q reason.
able rate Of interest and for rela.
lively long periods Of time. To at.
tain this object two farm mortgage
systems are provded-frE, system
operating through regional land banks
and. second, a system operating
through joint stock land banks.
To attract money to the farm loan
field the act provides method where
by those who have money to lend can
ind safe investments 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 de-
partmerm, composed of the secretary
tof the treasury as chairman e1 of1cto
and four members appointed by the
president. This board has authority
to appoint apCcd sers. examiners and
lrexistrars. awho will bexpub1ic omcfa1s.
Tho Federal Land Bank System.
Under the Federal land bank sys-
tenn the act provides for federal land
banks, which make loans for the first
twelve months exclusively through
local national naa.m loan associations
fcompoeed Of borrowers. These asso-
Citations shall be shareholders In the
t6anks, and in that way members who
saae borrowers will share in the profits
a. xhe bank The money for the loans
sissto come partly from the capital OF
then banks and partly from the sale
ny the bands OF bonds secured by
tdrst mortgages on farm lands. The
act defines strictly the purposes for
and the condltions under which loans
are to be made and requires that the
rate OF interest charged on farm
loans shall mott exceed 6 percent per
tannum.
- The United ,staates shall be divided
into twelve faxm loan districts, and
= federal land baA1k with subscribed
capital stock of, not less than $780,
600, each share S. shall be establish
Cd In each district. Each federal land
hank may estabaish branches in its
district Within thirty days after the
capital stock is. oftHed for sale 1t may
Re purchased At par by anyone
Thereafter the stock remaining un-
sold shall be bought by the secretary
or the treasury for the United States.
It is provided, however. that the gov
eminent. shall not receive any dtvi-
dends on its stock. Ultimately 1t Is
intended that an the stock in the
banks shall be owned by the associa-
lions Of borrowers and provision
therefor is made in the law for trans
ferring the original stock at par to
these associations.
i.s NationaIaF arm 4 oan Associations.
W The act provides for the creation
OF local national farm loan associa-
lions, through which It is contem-
plated that the federal land banks
shall make their loans. In the event
that a local loan association is not
found in any locality within year.
the federal farm loan board may
authorize federal land bank to
make loans on farm land through ap-
proved agents. Ten or more persons
who own and cultivate farm land
qualified as security for a mortgage
loan under the act or who's are about
to own and cultivate such ,land may
form such an association. provided
the aggregate of the loans desired
by the membership is not less than
$4,000. Each member must take
stock in his association to an amount
equivalent to percent of the amount
he wishes to borrow. This stock the
association holds as security for the
tmember's individual loan. The asso-
citation in turn, when applying for
money from the bank, must subscribe
for stock in the bank to an amount
equivalent to per cent. of the sum
st wants to obtain for it's members.
This stock is held in trust by the
bank as security for the loans it
makes through the association. If
prospective borrower has no money
with which to pay for his association
stock he may borrow the Price Of that
stock as part Of the loan on his
farm land.
Under this plan. then, every Dor
rover must be q stakeholder in his
local association and every associa-
ton a stakeholder in its district bank.
Each stakeholder in an association is
liable for the acts of that association
up to twice the amount OF his stock.
tlgs How Loans Are Obtained.
A member of a national farm loan
association before obtaining a loan
must first fill out an application blank
,supp1ied to the loan association by
the federal farm loan board This
application blank and other necessary
papers will then be referred to loan
COMMITTEE of the association, which
must appraise the property offered as
security. Such application as is ap
proved by the loan committee is then
forwarded 10 the federal land bank
and must be investigated and report
ed on by salaried appraiser of the
bank before the loan is granted. This
appraiser is required to investigate
the solvency and character of the
prospective borrower as well as the
value of his land. When loan is
granted the amount is forwarded to
the borrower through the loan asso-
citation.
The act specifically defines the pur-
poses for which loans may be OBJ
tanned. These are:
(a) To provide for the purchase of
land for agricultural use.
obi To provide for the purchase of