The Birmingham age-herald., 1916-08-08
PLAN OF OPERATION

Washington, August 7.-After many years of investigation and debate, 10 develop the best method of providing financial aid for the farmer at normal interest rates and on long time, Con- gress has passed farm loan act' fres- ident Wilson has named members or the board which will administer US provisions and the work of organizing the vast new system is about to begin. Secretary McAdoo, exofficio member of the farm loan board, which will be at the head of the system, predicts tnat l it cannot be in operation for at least six months and probably 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, his land, | just as the merchant and manurac- turer has been enabled through the federal reserve system to have his paper, based on commercial transac- tions, find ready market.
 The new scheme has many points oi resemblance to the federal reserve sys- | tenn, but in many essential features II | is entirely different. In no way will the 1 banks created under it do commercial banking. and while 1t Is possible that IT years to come they may have funds te
 loan that will amount to several hundred
 million dollars, it is not believed prooaoie
 that the system will ever have the re- sources of the reserve system.
 l The act provided for division of con tinental United States into 12 land oanH districts, with federal land bank 1T each. The work of designating these dis tricts and selecting the centers at whicf the loan banks arc to be located WI.
 be the first important duty of the farn
 loan board and is expected to result IT just as many bitter contests as preceded the announcement of the lines of the | federal reserve districts and the locator of fedel al reserve banks. The only al
 rectory provision in the farm loan ac l says that land banks shall be located with particular reference to the farm loan needs of the country, so the poare will have wide discretion. Many appn cations from cities. particularly ln tn' northwest and southwest, already hav' been filed in the treasury, but the boar< will not make public it's conclusions unti if has travelled over the country and helt
 hearings in many states
 MINIMUM CAPITAL REQUIRED
 Each federal land bank must have minimum subscribed capital Of S'oo'W before it can start business If wlthll 30 days after books are opened for sub
 scription to the stock of any of thes banks individuals or corporations hay not subscribed that amount. the secre
 tary of the treasury is directed to sub
 scribe for the United States in tn
 needed sums. Stock in the banks ma
 pay dividends when earned, but tn
 United States as a stockholder canno
 participate with others.
 The banks will not, except in specia
 cases, loan direct to the farmers. bu
 through the agency of national farm loa
 associations, which may organize to an
 number in land bank district by an
 10 owners or prospective owners of farr and who desire to secure loans on farr
 property Applications for charter flo
 these associations must go up to tn l farm loan board and may be refuse by it No association VIII pc cnartere ! unless it is shown that signing member desire loans totaling at least $2O0o0.
 In applying for membership in an asso citation, a farmer must take five per cen of the face value of the desired loan
 stock in the association.
 Applications for loans are to be passe , upon by a loan committee of the farr loan association. Loans will be mad only on first mortgages or farm propert , and the value of the land will be tn
 main consideration. The land will b
 subject to Inspection by an appraise of the farm loan board. Loans will b made only for purchase of land, for II improvement. or for purchase Of lv stock, equipment fertilizers, or to pro | vide buildings on farm or to liquidat indebtedness existing when the first a! sociation is formed in the county wher
 thA land is located. No loan will made of more than $10.0o0 nor less tha , s1oo Interest will not be charged greatt
 than six per cent. The loan, itself wi ' l. be reduced through an amortization pla | providing for reduction by annual ( 8 semi-annual payments on the principa ] No mortgage shall run for more tha T 40 years nor less than five. and there al |, the necessary provisions in the law ft i l satisfaction or overdue interest or ann r tizati payments.
 CHANNEL OF LOANS
 The money to be loaned will com d through the federal land banks, passe c to the hands of the National Farm I1oa '- association and to the farmer. The car ,, Iital stock of the land banks will nc . give them much loaning power, so Cor