Little Falls herald. [volume] (Little Falls, Morrison County, Minn.) 1889-1950, 1916-12-01
NEW \: LAND BANKS AND THE
FARMER ga: s.sgs 5l HI:

Twelve regional land banks will be
ready to lend money to farmers soon.
What should be the attitude Of Min
nesota farmers toward the new sys-
tent
The great majority of those who
have studied the new plan carefully
and without prejudice agree that its
main features are sound. It is pos
sible that defects in detail may pre-
vent it's successful operation at first,
SAYS E. Dana Durand Of the Minneso-
ia College of Agriculture, but defects
can be corrected as soon as experience
shows what they are. It is not for
farmers or friends Of farmers to stand
aside and criticise the new system be-
fore it goes into operation. The thing
to do is to try it out.
Two classes Of Banks
Two classes Of banks, federal land
banks and joint stock land banks are
provided for by the law. If the for
mer succeed it is not likely that the
latter will do much. Bankers or CAPT
talists have no control over the federal
land banks. AS soon as the farmers
borrow enough money from these
banks, they will become, through their
local associations, the sole stockhold-
ers of the banks. 1t is essentially a
cooperative scheme.
The Farmers Part in Starting the New
System
If the farmers want the scheme to
succeed, they must take part in it and
the sooner the better. The banks can
not work at all unless the farmers
form local associations and apply for
loans. The land banks cannot sell any
bonds until they have taken mortgages
from farmers, since the bonds must
be secured by mortgages.
Rate to Be Per Cent
The first loans to farmers, Of course,
will be made from the proceeds Of the
capital stock subscribed by the feder-
al government. It is understood that
the federal farm loan board intends
to lend this money at S per cent, and
those first applying for loans are, there
fore, sure to get them at this rate,
which is lower than most farmers in
Minnesota are now paying. After the
bonds based on these first mortgages
have been sold, the rate Of interest on
future loans to farmers will depend
on the rate at which the bonds are
sold. 1t may be higher than per cent
or even lower. If it should prove to
be higher, the first borrow ers will have
gained by their promptness. If it
proves to be lower, they will not lose
anything, because the law permits them
to pay up their loans and make new
ones at the best available rate. Farm
ers, therefore, who want to borrow
money, or to reduce their present rates
Of interest should take advantage of
the new act just as soon as it goes in
to effect. This they can do only by
forming National Farm Loan associa-
tions.
A Groundless Fear
Some farmers have expressed fear
that under the new plan they might
somehow be held responsible for the
debts Of others. They do not see why
they should be asked to become stock
holders in the local associations and
thus Indirectly in the Federal Land
banks. They are afraid that they may
lose their subscription to the stock, or
even be assessed to cover losses. There
! is, Of course, a conceivable element of
! risk to the borrower, but the loss
could not be large and the danger of
losing anything is so slight as to be
absolutely negligible. IT,. therefore, a
farmer can save appreciably in his
rate Of interest by borrowing from the
Federal Land bank, or if he feels that
the plan Of long time loans with amor
tization is material advantage, he
should not hesitate to become Dor
rover by reason Of the insignificant
risk which he takes by becoming a
! stockholder.
! The division Of agricultural econom
les of the University of Minnesota
will be glad to furnish information o,
assistance to any group Of farmers de-
string to participate in the new credit
| system.