The West Virginian. [volume] (Fairmont, W. Va.) 1914-1974, 1916-08-17
Law Drawn to Aid Farmers
And for No Other Pur-
pose.
10y SAM T. HuGHEs.)
Written Especially for the West
Vlruinian,

| llVI uGhl Win bHt uuothtaa VI ibaltlAs y
farmers money on their unsecured
promtssory notes, or on notes secured
by chattel mortgages. Congress felt
that this should be d later develop.
ment
Better Farming, More Food.
The federal farm loan act Is simple
In principle and In purposes. The gov.
eminent and the laws trainers hope
to put the business Of farming on a
more business.llke basis, to the end
that this nation shall have more farm
Ing, and better farming and therefore
more food, better food, cheaper food,
while the farmer himself shall at the
same time find his business more prof
table. There are no opposites In this
statement. Both propositions are en-.
tirely feasible.
The problem before the trainers OF
the bill was to draw a law which would
work In America. The obstacles to a
law exactly like that of Germany,
France or Italy are partly legal and
partly in the fact that farmers In this
country are not situated economically
or socially like those Of Europe. Tile
bill was drawn with an eye to the ben
eft OF the farmers, and with no other
purpose, Once in while congress-
does good thing and this is one. No
bill of which | have any knowledge,
not even the federal reserve act. was
ever labored over more unremittingfy,
more painstakingly.
Two commissions went to Europe to
study the question before any bill was
drawn. Tie people OF the Uniteo
States may have good or bad rural
credit act; but 1t Is certain that 1t was
honestly drawn, after long study on
tho part Of hundreds OF able men, and
when finally passed was as good bill
as honest purpose, great study and
ability could make it. 1t is probably
imperfect. however, and will need
amendment.
There Wtll Be IL Federal Land Banks.
Under the federal farm loan act
mortgages will not be held by individ-
uals at all. There will be IL federal
land banks, situated in different parts
OF the country good deal as the fed.
eral reserve banks are situated, and
each of these federal land banks will
hold all the mortgages issued In its
one.twelfth of the United States. The
mortgages will not be sold. They WIN
be held by the system. Each federal
land bank will issue land bonds Sc.
cured by the mortgages 1t holds. These
land bonds will be in different demon.
nations, some as low as SIS. so that
any person with savings amounting to
that sum or more may invest in land
bonds without having TO wait until he
Gun buy n whole mortgage.
These land bonds will be safe. They
will not be taxable. They will be Sc
cured in three ways. First, by the en-
dorsement Of the federal land bank,
which issues them, handling one.
twelfth OF the United States. Second,
by all the other II federal land banks.
Third, by the national farm loan asso.
citation which issues them in the first
place, and which Is cooperative or.
ganization Of borrowing farmers in
the vicinity OF the land mortgagea.
Fourth, by the land mortgaged. which
must be worth at least twice as much
to the appraisement OF the loan com.
mittee OF the association and gov
eminent appraiser.
Good as Government Bonds.
The guarantee Of the local loan as
sociation Is backed by a S per cent.
guaranty fund. One loan out OF 20
might be loss before this guaranty
fund would be used up. Altogether, II
looks as IL the land bids would be con.
sidered as good as government bonds
but OF course the government does
not guarantee them. The government,
however, does subscribe the stock of
tho federal land banks--12 mentioned
provided that private capital does
not take the stock. They have $3.50.
900 capital each.
Ten or more farms may establish a
national loan association and begin Is.
suing mortgages. 1t Is simple and
easy thing, but under strict govern
ment supervision. All they need to do
Is to meet. declare that they want to
borrow on mortgage, and proceed.
They will each have to buy IS Of stock
In the federal land bank of their re.
gion for every 500 borrowed, but they
will get this money back when they
pay off their mortgages, and in the
meantime will get their dividends II
the federal land bank earns any, which
1t Is expected TO do.
Pay Interest and Also Earn Dividends.
In other words, instead of paying a
five per cent. commission for loan
as some now do, the borrower will nay
the same sum for stock which will
probably earn dividends for him, and
which he will get back when he pays
Off his debt.
The mortgage Is not allowed to draw
a higher rate Of interest than the lie.
ral rate Of the locality. 1t will draw
as low a rate as will be proven posi-.
BILE by the sale Of the land bonds. II
investors and savers think so we'll OF
the land bonds that they are willing
to buy them on basis OF four per