The Kennewick courier-reporter. [volume] (Kennewick, Wash.) 1914-1938, 1916-10-12
Federal Farm Loan H6f
At the request of number Of its readers the Courier
Reporter is publishing the first nstament of synop-
&c Of the federal farm loan act. y = - =

Tho Federal farm loan act, popular
.olled the ''Rural credits law" was
signed by the president and became a
law on July II, 1916.
The primary purpose of this act is
- promote agricultural prosperity by
.rabling farmers to borrow money on
tsrm-mortgage security at a reason
Nc rate of interest and for relatively
,ono periods of time. To attain this
.h;ect two farm-mortgage systems are
nrovided: (DA system operating thru
recional land banks, and (2) a sys-
.em operating thru joint-stock land
banks.
To attract money to the farm-loan
Gold the act provides method where
bv those who have money to lend can
Snd safe investment in the form of de-
hentures or bonds, of small and large
denominations, issued by the banks
and based on the security of mort
cages 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-oficio
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 IL
months, exclusively thru local national
farm-loan associations composed of
borrowers. These associations 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 de-
fines strictly the purposes for and the
conditions under which loans are to
be made, and requires that the rate
Of interest charged on farm loans shall
not exceed 6 per cent per annum.
Twelve Federal Land Banks
The United States shall be divided
into IL farm-loan districts, and fed
eral land bank with subscribed stock
of not less than $75O,0O0, each share
S., shall be established in each dis
trict. Each federal land bank may
establish branches in it's district.
Within 80 days after the capital stock
is offered for sale it may be purchased
at par by anyone. Thereafter, the
stock remaining unsold shall be bought
by the secretary Of the treasury for
the United States. 1t is provided.
however, that the government shall
not receive any dividends on it's stock.
Ultimately it is intended that all the
stock in the banks shall be owned by
the associations of borrowers, and
provision therefore is made in the law
for transferring the original stock at
par to these associations.
Farm-Loan Associations
The act provides for the creation Of
local national farm-loan associations
thru which it is contemplated that the
federal land banks shall make their
loans. In the event that local loan
association is not formed in any To-
cality within year, the Federal Farm
Loan Board may authorize a Federal
land bank to make loans on farm land
thru approved agents. Ten or more
persons who own and cultivate farm
land qualified as security for a mort
gage loan under the act, or who are
about to own and cultivate such land,
may form such an association, pro-
vlded the aggregate of the loans de-