The Blackfoot optimist. [volume] (Blackfoot, Idaho) 1907-1918, 1916-08-10
The Federal F arm Loan Act
How the Proposes Provide Cheap Money


q"ife" reserves ana meeting expenses,
can declare association dividends to their
members. In this way the profits, if
any, can be returned to the borrowers
and VIII. to that extent, reduce the
amount of interest actually paid by
them.
The Federal Land Banks are specifi-
cahy prohibited from charging in con
nection with making a loan any fees
or commissions which are not author
lied by the Board The authorized fees
need not be paid in advance but may
be made part of the loan
Amortization Plan of Repayinr Loans
1t has been said that all loans are to
be paid on the amortization plan. This
plan calls for number of fixed annual
or semi-annual payments, which include
not only all interest ana charges due the
+ bank, but the principal as well. These
payments are so calculated as to extin-
gulsh the debt i'll given number of
years After five years the borrower has
4 the right on an interest date to make adj |
1 dtlonal payments on the principal in
sums of $25 or any multiple thereof
thus dlscharging the debt more quickly. |
Funds Available for Loans
After Federal Land Bank has
loaned on first mortgage $50 900, it 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 $780, 900
may be repeated until bonds to the
amount of twenty times the bank S paid
up capital are outstanding. If each bank
should have only it's required minimum
paidup capital of $750,000, this plan
will provide eventually, if all the au-
thorized bonds of the II banks are sold
over $1S0000,000 to lend on first mort
cages on farm land The banks, how
ever, can increase their capital stock
above the required minimum and so in
crease 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-
J nicipal and local taxation and are made
legal investments for fiduciarv and
a trust funds. The capital stock of the
t taxation. Federal reserve banks and
!. member banks of that system are EN-
II powered to buy and sell these bonds.
7 they are to be issued in denominations
q of 500, $50, 800, $500 and $1,000.
!, Officers of Loan Associations
u Each association must have a board
II of directors and secretary treasurer.
y The directors shall serve without pay
y The secretary treasurer shall receive
$. such compensation as may be deter
IL mined by the board of directors. The
IS association must appoint an Appraisal
+! committee for the purpose of valuins
IL lands offered as security for loans. Nc
member of such committee shall have
Sc any interest in the property upon which
he passes.
r. Agents of Land Bank
IT, In sections where local conditions dc
not make the formation of association.
81 practicable, the Farm Loan Board ma,
authorize the Federal land bank tt
OF make loans thru agents approved by thu
N board. These agents are to be banks
ne trust companies, mortgage companies o
nc savings institutions, chartered by thu
ne state They may receive as compensa
ton the actual expense involved il
ne transacting the loan and in addition
IN thereto a sum not exceeding one-half o
NJ one per rent per annurl on the unpai
principal of the loans made throug
he them. When the Farm Loan Board dc
a,s cides that locality is adequatel
ne served by farm loan associations, II
IS further loans are to be made throug
{" agents.
-. Joint Stock Land Banks
,is In addition to the system of II fe,
eral land banks and the national farl
rst loan associations of borrowers. the ac
permits the establishment of joint stoc
ito land banks and authorizes then to carr
nj on the business of lending directly t
Nv borrowers on farm mortgage securit
mr. and issuing farm loan bonds. Thes
no banks must have capital of not les
ev than $250,000. They are under the $,
ri pervision of the Federal Farm Loa
re- Board but the government, does not len
as them any financial assistance.
to The joint-stock bank is free frol
ev many of the conditions imposed on tn
ri federal land banks. Subject to the .
and 90 per cent value limitations an
AN the limitation as to territory, the join
stock land bank may lend more tina
ian $4,000 to a single individual, and it
md not restricted to making loans for Il
hue purposes SpecIleu III the cdSc VI u
We federal land bank.
The jOint-stOck bank, like the FEEDER
IAN land banks, cannot charge an intere
rate on farm mortgages in excess of
the per cent, nor shall such interest rate e
1ri- coed by more than per cent the ra
mn Of interest paid by the bank upon
all last issue of bonds. A joint stock ban
and is limited in its bond issue to 10 tim
.rm it's capital and surplus.
red Among the restrictions placed
the these banks under the act are, l, tn
their mortgages must provide for
ert amortization system of repayment SUI
the as is prescribed in the case Of loa
her through the federal land banks, and
that they shall in no case demand
70 receive under any form or pretense a