The Barre daily times. (Barre, Vt.) 1897-1959, 1916-08-08
TWELVE BANKS
TO BE CREATED
Farm Loan Board Begins
Organizing Work-No
Loans Before Spring

rates and on long time, Congress ma
passed farm loan act, President Wilson
has named members Of the board whicl
will administer its provisions, and tn
work of organizing the vast new system
is about to begin Secretary McAdoo
ex-officio member of the farm loan board
which will be at the head OF the system
predicts that 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 th'
federal reserve system does for the bus
mess man. The farmer will be given OPP
portunity to secure money on his most
available commodity, his land, just a;
the merchant and manufacturer has beer
enabled through the federal reserve sys-
tenn to have his paper based on CONNER
cial transactions, find a ready market.
The new scheme has many points oil
resemblance to the federal reserve sys-
tenn but in many essential features it is
entirely different. In no way will the
banks created under il do commercial
banking, and while it is possible that in
years to come they may 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 provides for division of con-
tinental United States into IL land bank
districts, with a federal land bank in
each. The work of designating these dis
tricts and selecting the centers at which
the loan banks are to be located 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 IL
federal reserve districts and the location
of federal reserve banks. The only d.
rectory provision in the farm loan act
says that land banks shall be located
with particular reference to the farm
loan needs of the country, SO the board
will have wide discretion. Many appli-
cations from cities, particularly in the
Northwest and Southwest already have
been filed in the treasury, but the board
will not make public its conclusions until
1t has Travelled over the country and held
hearings in many states.
Each federal land bank must have a
minimum subscribed capital OF S750,000
before it can start business. II within 80
DAYS after the books are opened for sub
scriptions 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 9TH |
ers.
No Direct Loans to Farmers.
The banks will not, except in special
cases, loan direct to farmers, but through |
the agency of national farm loan associa |
tons, which may be organized to any |
number in land bank district by any |
10 owners or prospective owners OF farm
land who desire to secure loans on farm
property. Applications for charter for
these associations must go up to the |
farm loan board and may be refused by |
it. No association will be chartered UNI
less it is shown that signing members de-
sire loans totaling at least $4,000. In
applying for membership in an associa
ton, farmer must take 5 per cent of
the face value of the desired loan in stock
of the association.
Applications for loans are to be passed
upon by loan committee of the farm
loan association. Loans will be made !
only on first mortgages or farm property
and the value of the land will be the
main consideration by an appraiser of
the farm loan board Loans will be made
only for the purchase of land, for its inn
or for purchase of livestock,
farf II 60 sl,I hull Il
ngs on a farm or to liquidate Indebted
ness existing when the first association
s formed in the county where land is To-
,ated. No loan will be made of more
han $4,000 nor less than 500. Interest
viii not be charged greater than 6 per
,ent. The loan itself will be reduced
through an amortization plan providing .
or reduction by annual or semi-annual
payments on the principal. No mort !
yage shall run for more than 40 years
Tor less than five, and there are the nee A:
.ssary provisions in the law for satisfac-
ion of overdue interest or amortiza ton
'ayments.
Banks May Issue Bonds.
The money to be loaned will come
through the federal land banks, passed
o the hands of the national farm loan
ssociations and to the farmer. The cap
tai stock of the land banks will not give :
hem much loaning power, so Congress
increased that power greatly by author
ring the banks to issue farm loan bonds
nd sell them in the open market The
ct provides that when a federal land
ank has loaned $4,000 TO farmers il
nav Issue a corresponding amount Of
arm loan bonds, and that the toal that
nav be issued by any one hank on a
1inimum capital Of $4,000. Is to be 20 I
ines that capital This would give each
ank Sl5.Oo0.0O0 and the whole system
! s0,OOO,0oo to loan on first mortgages.
Farm loan bonds are 10 be made at
raetive by payment Of not more than
per cent interest and a provision that
hey shall be exempt from federal. state,
r municipal taxation. They are made I
gal investments for trust funds They
re not 20 Be obligations Of the United :
tates, but will have behind them the
rst mortgages On farm lands These @
Mortgages also are exempt from taxa
on.
In case local conditions DO not favor N
rCznizstlon Of farm loan associations II