St. Johnsbury Caledonian. [volume] (St. Johnsbury, Vt.) 1867-1919, 1916-08-16
New Farm Loan Act Just Passed
Will Be To Agriculturists What
Federal Reserve Is To Business
Man
WORKING OUT SYSTEM
But 1t Is Not Expected Loans Can
Be Made Before Spring-Pro-
vides For Twelve Land Banks
In Different Sections OF the
Country.

NAL interest rates anu On iOhS SAAAAS'
Congress has passed a Farm Loan
Act, President Wilson has named
members of the board which will ad-
minister its provisions, and the work
of organizing the vast new system is
about to begin.
Secretary McAdoo, ex-officio mem
her of the Farm Loan Board, which
will be at the head of the system,
predicts that it cannot be in opera
ton for at least six months and prob
ably loans cannot be made before
next spring.
In operation the system to some eX-
tent will do for the farmer what the
Federal Reserve system does for the
business man. The farmer will be
given opportunity to secure money on
his most available commodity, MS
land, just as the merchant and man
ufacturer has been enabled through
the Federal Reserve system to have
his paper, based on commercial trans
actions, find a ready market.
Resembles Federal Reserve
The new scheme has many points
of resemblance to the Federal Re-
serve system but in many essential
features it is entirely different In no
way will the banks created under IL
do commercial banking, and 'whlle IL
is possible that in years to come tney
NAV have funds to loan that Will
amount to several hundred million
| dollars. it is not believed probable
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 a Federal
| Land Bank in each. The work OF
! designing these districts and select
| ing the centers at which the loan
banks are to be located will be the
first important duty of the farm loan
| hoard. and is expected to result in
lust as many bitter contests as pre-
coded the announcement of the lines
| of the - Federal Reserve districts
and the location of the federal re-
serve banks. The only directory pro-
vision in the farm loan act avs that
land banks shall be located with par
! ticular reference to the farm loan
needs of the country, so the board
will have wide discretion. Many OPP
plications from cities, particularly in
| the northwest and southwest. already
have been filed in the treasury but the
! board will not make public its conclu-
sions until it has Travelled over the
country and held hearings in many
| states.
u. s. To Subscribe for Banks
Each Federal land bank must have
a minimum subscribed capital OF
$3.50 before it can start business. II
within 80 days after books are opened
for subscriptions to the stock OF any
of these banks individuals or corpora
lions have not subscribed that amount
the secretary of the treasury is d.
rected 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
stockholder cannot participate with
others.
The banks will not accept in special
cases. loans direct to farmers, but
through the agency of National Farm
Loan Associations, which may be or
ganized to any number in an land bank
district by any ten owners or prospec-
tive owners of farm land who desire
to secure loans on farm property. Ap-
plications for charter for these asso'
Citations must go up to the Farm LoaI
r Board and may be refused by 1t. Nc
association will be chartered unless i
q is shown that signing members desire
: loans totaling at least $4,000.
( In applying for membership in al
y association, a farmer must take nV'
e per cent of the face value of the de
d sired loan in stock of the association
Loan Committee
Applications for loans are to b.
passed upon by a loan committee
= the farm association Loans will b
, made only on first mortgages or farm
7, property and the value of the LOAF
- will be the main consideration. tn
land will be subject to inspection b
an appraiser of the Farm Loan Boarc
. Loans will be made only for purchas
= of land, for it's improvement, or 10
" purchase of live stock, equipment
, fertilizers, or to provide buildings o
: farm or to liquidate Indebtedness
= existing when the first association
: formed in the county where land
- located. No loan will be made {
v more than $4,000 nor less than So
Interest will not be charged create
than six per cent. The loan itself wi
be reduced through an amortizatio
- plan providing for reduction by al
nual or semi-annual payments on tn
principal. No mortgage shall run IL
more than 40 years nor less than nv
and there are the necessary provision
in the law for satisfaction of overdI
Int interest or amortization payments.
Loans Through Federal Banks
in The money to be loaned will CON
nd through Federal Land Banks, pass'
ne TO the hands of the National Far
X. Loan Associations and to the farme
ne The capital stock of the land ban
nd will not give them much loaning poN
en- er so Congress increased that pow
~ greatly by authorizing the banks
N issue Farm Loan Bonds and sell the
in the open market. The Act provid
that when a Federal Land Bank n
90 loaned $4,000 to farmers it may
-, sue a corresponding amount Of Fan
- Loan Bonds, and that the total tn
,;e may be issued by any one bank on