Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1916-08-12

loan that Will amount to several hum
dred million dollars, it is not believed
that the system ever will have the re-
sources of the reserve system.
The act provided for a division Of
continental United States into twelve
land bank districts. with federal land
bank in each. The work of designating
these districts and selecting the centers
at which the loan banks are to be locat-
ed will be the first important duty of
the farm loan board and is expected to
result in just as many bitter contests
as preceded the announcement of the
lines Of the twelve federal reserve dis
tricts and the location of federal re-
serve banks. The only directory pro-
vision in the farm loan act says that
land banks shall be located with partic-
ular reference to the farm loan needs
of the country, so the board will have
wide discretion. Many applications
from cities, particularly in the north
west and southwest. already have been
filed in the treasury. but the board will
not make public its conclusions until it
has Travelled over the country and held
hearings in many states.
Banks Must Have Capital.
Each federal land bank must have
minimum subscribed capital of $750,000
before it can start business. If within
thirty days after books are opened for
subscriptions to the stock of any of
these banks individuals or corporations
have not subscribed that amount the
secretary of the treasury is directed to
subscribe for the United States in the
needed sums. Stock in the banks may
pay dividends when earned. but the
United States as a stakeholder cannot
participate with others.
The banks will not, except in special
cases, loan direct to farmers. but thru
the agency of national farm loan asso-
Citations which may be organized to
any number in land bank district by
any ten owners or prospective owners
Of farm land who desire to secure loans
on farm property. Applications for
up to the farm loan board and may be
refused by it. No association will be
chartered unless it is shown that sign
ing members desire loans totaling at
least $4,000.
In applying for membership in an as
ISOLATION. farmer must take five per
cent of the face value Of the desired
loan in stock Of the association.
Applications for loans will be passed
upon by loan committee of the farm
loan association. Loans will be made
only on first mortgages on farm prop
erty and the value of the land will be
the main consideration. The land will
be subject to inspection by an apprais-
err of the farm loan board. Loans will
be made only for purchase Of land, for
its improvement. or for purchase OF live
stock. equipment, fertilizers, or to pro-
vide buildings on a farm or to liquidate
existing when the first
association is formed in the county
where land is located. No loan will be
made of more than $4,000 nor less than
800. Interest will not be charged
greater than six per cent. The loan it
self will be reduced thru an amortiza-
ton plan providing for reduction by an
nual or semi annual payments on the
principal. No mortgage shall run for
more than forty years nor less than
five, and there are the necessary pro-
visions in the law for satisfaction of
overdue interest or amortization pay
ments.
Money Thru Federal Land Banks.
The money to be loaned will come
thru the federal land banks, passed to
the hands Of the national farm asso-
Citations and to the farmer. The CAPT.
tai stock of the land banks will not
give them much loaning power SO con-
gress increased that power greatly by
the banks to issue farm
'oan bonds and sell them in the open
market. The act provides that when
federal land bank has loaned $4,000 to
farmers 1t may issue corresponding
amount of farm loan bonds, and that
the total that may be issued by any
one bank on a minimum capital of
s750,000, is to he twenty times that
capital. This would give each bank
S15,000,000 and the whole system $780,
100000 to loan on first mortgages.
Farm loan bonds are to be made at
tractive by payment Of not more than
five per cent interest and a provision
that they shall be exempt from federal,
state or municipal taxation. They are
made legal investments for trust funds.
I hey are not to be obligations Of the
United States. but will have behind
them the first mortgages on farm lands |
These mortgages also are exempt from
taxation.
In case local conditions do not favor
of farm foam associations
and banks may be authorized by the
farm loan board to make loans to farm
ers thru agents 1t approves, such as
banks, trust or mortgage companies,
and the law permits establishment Of
Joint stock land banks to lend directly
to borrowers on first mortgages of
farm lands. These banks will be un-
der supervision Of the farm loan board,
but will not be assisted by federal land
bank funds as will loan associations
The stock banks, however, which are
to be capitalized at not less than $780,
900 each, also may issue farm loan
bonds, exempt from taxation and based
Oh first mortgage securities, to the ex-
tent Of fifteen times their capital stock.
These banks are subject to the same
provision of the law as loan associa-
tons, in respect to, interest rates,
etc.
In the beginning the federal land
banks will be governed by directors APP
pointed by the farm loan board, but
after subscriptions from loan associa-
lions to any federal land banks capt.
tai stock reach 100000. an elective
system will become effective. with three
dir udtss-ss; chcse. By the board and sly
by the loan associations. The board