New Ulm review. (New Ulm, Brown County, Minn.) 1892-1961, 1916-11-22

REGIONAL INSTITUTIONS WILL
BEGIN LOANING MONEY TO
ACRICULTURISTS

The new federal rural credit system
is about to be given practical trial.
Twelve regional land banks will be ready
to lend money to. farmers soon. What
should be the attitude of Minnesota
farmers toward the new system?
The great majority of those who have
studied the new plan carefully and with
out prejudice agree that it's main feat
ures are sound. 1t is possible that de-
fects in detail may prevent it's successful
operation at first, says E. Dana Durand
of the Minnesota College of Agriculture.
but defects can be corrected as soon as
experience shows what they are. It is
not for farmers or friends of farmers to
stand aside and criticise the new system
before it goes into operation. The thing
to do is to try it out.
Two Glasses of Banks.
Two classes of banks, federal land
banks and joint stock land banks are
provided for by the law. If the former
succeed it is not likely that the latter will
do much. Bankers or capitalists have
no control over the federal land banks.
AS soon as the farmers borrow enough
money from these banks, they will be-
come, through their local associations,
the sole stockholders of the banks. It is
essentially cooperative scheme.
If the farmers want the scheme to
succeed. they must take part in it and
the sooner the better. The banks can
not work at all unless the farmers form
local associations and apply for loans.
The land banks cannot sell any bonds
until they have taken mortgages from
farmers, since the bonds must be secured
by mortgages.
Rate to be Per Cent
The first loans to farmers, of course,
will be made from the proceeds of the
capital stock subscribed by the federal
government. It is understood that the
federal farm loan board intends to lend
this money at per cent, and those first
applying for loans are, therefore, sure
to get them at this rate, which is lower
than most farmers in Minnesota are. now
paying. After che bonds based on these
first mortgages have been sold, the rate
OF interest on future loans to farmers will
depend on the rate at which the bonds
are sold. 1t may be higher than S per
cent or even lower. If it should prove
to be higher, the first borrowers will have
gained by their promptness. fit proves
to be lower, they will not lose anything,
because the law permits them to pay up
their loans and make new ones at the
best available rate. Farmers, therefore.
who want to borrow money, or to reduce
their present rates Of interest should take
advantage of the new act just as soon as
it goes into effect. This they can do
only by forming National Farm Loan
Associations.
A Croundles Fear
Some farmers have expressed fear
that under the new plan they might
somehow be held responsible for the
debts of others. They do not see why
they should be asked to become stock
holders in the local associations and thus
indirectly in the Federal Land Banks.
They are afraid that they may lose their
subscription to the stock, or even be
assessed to cover losses. There is, of
course, a conceivable element of risk to
the borrower, but the loss could not
be large and the danger of losing any,
thing is so slight as to be absolutely
negligible. If, therefore, a farmer can
save appreciably in his rate of interest
by borrowing from the Federal Land
Bank, or if he, feels that the plan of long
time loans with amortization is a material
advantage, he should not hesitate to be-
come borrower by reason of the in
significant risk which he takes by be-
coming a stakeholder.
The division of agricultural economics
of the University of Minnesota will be
glad to furnish information or assistance
to any group of farmers dersiring to
participate in the new credit system.
Union Thanksgiving services will be
held at the Friedens church at 1890 on
Thanksgiving morning, Rev. George
Mayer will preach the sermon, with Rev.
c. Holm of the Methodist church, Rev.
e. +. Wheeler of the Congregational, and
Rev. H. F. Schlaak of the Bethel church,
taking part in the services.