The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1916-08-25
HOW FARM LOAN
ACT WILL WORK
Government Assemblies Capital and
Loans it to Farmers at Low
Interest for Long
Terms.
ESTABLISHED DISTRICTS
Loans Can Extend From Five to Forty
Years Under Terms of This
Act-How It Must
Be Spent.

The federal farm loan act recently
passed by congress and signed by
President Wilson is a piece Of finan
cial machinery by which the govern
men assemblies capital and lends il
to farmers ON first mortgage secur
ity for periods OF from five to forty
years at low rates of interest.
The farm loan board which meets
next week has furnished this sum
mary Of the statute.
The hubs of this machine are
twelve federal land banks to be estab
lished in twelve districts not yet Sc
lected.
Those banks will be capitalized at
S $4,000 each and If the public does
not buy the stock. the government
will do it.
Farmer May Borrow.
Any farmer who owns land or who
wants to buy land may borrow from
those banks up to fifty per cent OF
the value of the land and up to twenty
per cent of the value OF the perma-
nent improvem ents.
To utilize the system, it is neces-
sary for the borrowers to organize
themselves into local farm loan as
sociations, consisting Of ten or more
farmers in each association. These
associations then petition the fed
eral land bank Of their district and
indicate the amount of the loan de-
sired The federal land bank then
sends appraisers to value the land. II
the bans desired do not exceed fifty
per cent of the value of the land, the
federal land bank advances the money
through the local farm loan associa-
ton, and the local association for
wards to the federal land bank the
first mortgages on the lands in ques-
ton as security.
The rate of interest to be charged
Is not yet determined, but it cannot
under the law be more than six per
cent and it may be less.
Long Time Loan.
The loans may extend from fve to
forty years at the option Of the Dor
rowers and both interest and prin-
cipal may be paid OF In annual or
semi-annual installments or at the
option OF the borrower.
No one farmer may borrow more
than sol 900 nor less than 800.
The borrower must specify to what
use he is going to put the money. The
law requires that 1t be spent either
for the purchase of land for farm use:
for the purchase of equipment, ferttl
tzer or live stock necessary to oper-
ate the farm. to provide buildings or
improvements for the mortgaged land
or to pay of debt already on the
land.
Only those may borrow who are
actually going to live on the land and
farm it, The law Is drawn to give the
benefits. to the working farmer and
not to the land Spectator.
W. i
Farm Securities.
After any one of the twelve fed
eral land banks has loaned $4,000
1t holds $4,000 worth of first mort
cages as security Using those farm
mortgages as security. it may then
make an issue of $4,000 of bonds
which may be sold to provide another
$4,000 to loan. This process is re-
peated until the amount loaned equals
twenty times the amount of the capt.
tai stock of the bank The total loan
ing power of the twelve banks is
therefore s1S0O0O,000, in addition to
the capital stock.
To make these bonds attractive to