Gilpin observer., 1916-09-07
FARMER TO PROFIT
BY new LOAN ACT
Measure Designed to Give Him
Money on Long Time and
at Low Rate.
Big BANK SYSTEM CREATED
Borrowers to Form Local Associations
and Share in Earnings From the
Operation Of the Plan.

Inc farmers OF the United States
are to be the chief beneficiaries of the
Federal Farm Loan Act, through
which Uncle Sam is enabled, by
means of a rural credit system, to
assist agriculturists to borrow money
ut low rates of interest for the pur-
pose of buying and improving land.
This act, which is now law, is
the result of years of agitation and
study. 1t is designed not only to
enable farmers to borrow money at
low rate of interest but to make II
possible for them to secure these
loans for relatively long periods of
time and on such conditions that loans
can be repaid in annual or semiannual
installments which will be less In
many cases than the interest that
they are now required to pay on SIM
liar loans.
To attain this object, two farm
mortgage systems are provided
First, system operating through
joint-stock land banks.
To attract money to the farm loan
field, the act provides method where
by those who have money to lend can
find safe investments in the form of
debentures or bonds, of small and
large denominations, issued by the
banks and based on the security of
mortgages on farm lands.
These two systems are to be under
the general supervision of Federal
Farm Loan board in the treasury de-
partment, composed of the secretary
of the treasury, as chairman ex-oiiicio,
and four members appointed by the
president. This board has authority
to appoint appraisers, examiners, and
registrars, who will be public officials.
Federal Land Bank System.
Under the federal land bank system
the act provides for federal land
banks which make loans, for the first
II months, exclusively through local
national farm loan associations COM
posed of borrowers. These assoca-
tions shall be shareholders in the
banks and in that way the members,
who are the borrowers, will share in
the profits of the bank. The money
for the loans is to come partly from
the capital Of the banks and partly
from the sale by the banks of bonds
secured by first mortgages on farm
lands. The act defines strictly the
purposes for, and the conditions un-
der, which loans are to be made, and
requires that the rate Of interest
charged shall not exceed per cent
per annum.
The United States shall be divided
into II farm-lOan districts, and fed
eral land bank with subscribed cap
ital of not less than $75O,OOO, euch
share IS, shall be established in each
district. Each federal land bank may
establish branches in its district.
Within 30 days after the capital stock
is offered for sale it may be purchased
ut par by anyone. Thereafter, the
stock remaining unsOld shall be
bought by the secretary Of the treas
ury for the United States. 1t is pro-
vided, however, that the government
shall not receive any dividends on
Its stock. Ultimately, 1t is intended
that all the stock in the banks shall
be owned by the associations of bor-
rOwers, and provision, therefore, Is
made In the law for transferring the
original stock ut pnr to these assOcl-
atiOns.
Farm Loan Associations.
The net provides for the creation
Of local national farm loan associ-
ations through which 1t Is conteln-
plated that the federal land banks
shall make their loans. In the event
that local loan association is not
To-,
the Federal Farm Loan bonrd may au-
thorize a federal land bank to make
lonns on farm land through approved
agents. Ten or more persons who
own and cultivate farm land qualified
us security for u mortgage loan under
the net, or who are about to own nnd
cultivate such land, may form such
an association, provided the aggregate
Of the ioans desired by the member
ship is not less than $4,000. Each
member must take stock In his asso-
citation to an amount equivalent to 8
per cent Of the amount he wishes to
borrow. This stock the association
holds in trust as security for the
members individual lOnn. The asso-
cintion, In turn, when applying for
money from the bank, must subscribe
for stock in the bank to an amount
equivalent to s per cent of the sum
It wants to obtain for its members.
This stock Is held in trust by the
bank as security for the loans 1t
makes through the association. If
prospective borrower has no money
with which to pay for his association
stock, he may borrow the price Of that
stock as part of the loan on his
farm land.
Under this plan, then, every borrow.
er must be stakeholder in his local
association, and every association
stockholder In its district bank. Each
stockholder In IN association Is liable
for the acts Of that association up to