The central record. (Lancaster, Ky.) 18??-current, 1916-08-10

al heCOrd, Thurs
a given number OF years. After ave
years the borrower has the right on
any interest date to make additional
payments on the principal In sums OF
s25 or any multiple thereof. thus dis
charging the debt more quickly
Funds Available For Loans.
After federal land bank has loaned
to first mort gage SJO,O0O It can obtain
permission from the farm loan board
to issue $4,000 In farm loan bonds
based on these mortgages, sell such
bonds In the open market and use the
money thus obtained to lend on other
mortgages.
This process of lending on mortgages
and selling bonds In issues II SJ0,oo0
may he repeated until bonds TO the
amount Of twenty times the banks
paid up capital are outstanding II
each bank should have only its re.
quircd minimum paid up capital of
SIJo.oO this plan will provide eventu.
ally, IL all the authorized bonds OF
the twelve banks are sold. over $780,.
OO.OOO to lond on first mortgages on
farm land. The banks. however. can
Increase their capital stock above tho
required minimum and so Increase the
amount Of bonds they can sell and thus
increase the total amount Of money
available for loans on farm mortgages.
To make these bonds attractive to in.
vestors the bonds, together with the
mortgages upon which they are based,
are exempted from federal. state. mu-
nicipal and local taxation and are
made legal Investments for fiduciary
and trust funds. The capital stock Of
the federal land banks Is also exempt
from taxation. Federal reserve banks
and member banks OF that system are
empowered 10 buy and sell these bonds.
They are to lie issued IN denominations
Of $50. so, 500. $500 and 81 900.
Organization OF Banks.
The temporary management of the
federal land banks IL 90 he In the
hands Of five directors appointed by
the federal farm loan board. As soon.
however, as the subscriptions from the
loan associations total 100000 regular
directors are to be appointed as fol.
lows: Three district directors. resident
In the district. shall lie appointed 10y
the federal farm loan board 20 repre-.
sent the public interest, and six local
directors, resident In the district. shall
be elected by the farm loan aSsocia
tonS who must be stockholders I'm the
hank The federal farm loan board
shall designate one Of Its appuintccs 10
act as chairman. The act requires
that at least one Of the three district
directors shall be experienced In farm
ing and actually engaged ut the time
OF his appointment In farming opera
lions within the district. ANY com.
pensation paid "a the directors must
be approved by the federal farm loan
board
Each loan association must have
board OF directors and secretary.
treasurer. The directors shall serve
without pay. The secretary treasurer
shall receive such compensation as
may be determined by the board ~ III,
rectors. The association must appoint
an appraisal committee for the pur.
pose OF valulng lands offered as Sc
curity for loans. No member Of such
shall have any interest In
the property upon which be passes
To provide funds for current OK.
pensee the loan association may re
tain as commission from each inter.
est payment not to exceed one-eighth
of ! per cent scminnnunlly upon the
unpaid principal OF the loan. This
IL 10 10 deducted from the
dividends payable TO such farm loan
by the federal land bank.
II the commissions are not adequate
lnd an association does not wish To-
assess members for current expenses
L may borrow at o per cent from the
federal land bank 10 an amount not 10
,xceed In tho aggregate one fourth Of |
u bank stock.
The law requires both the land 4
hanks and the farm loan associations
70 make provision for certain reserves !
Iefore they can pay any Dividends.
In sections where local conditions do |
not mako the formation Of associations
practicable the farm loan board may .
authorize the federal land bank 10 /
make loans through agents approved I
By the boarl These agents are 10 be /
banks trust companies, mort gage com. |
lenics or savings institutions chartered |
BY the state. They may receive az
'ompPnsatinn the actual expense In /
'o,ved In transactIng the loan and IN
idditiOn thereto sum MT 10 exceed |
'De-half Of per cent per annum On |
ho unpaid principal 81 the loans malo
through them When the farm loan |
'oari dectles that locality is ado
luntely served by farm loan ussccla-
ions no further bans are - ls made
Trough agents
In addition tp the system of twelve
edcnl laTi tanks and the national
arm loan associations of borrowers
he act permits the establishment OF
rint stock lnNi banks and authorizes
hem 81 carry On the business ~ lend
NJ directly - borrowers on farm
lOrnge security and issuing farm
Inn bonds These hrnks must havo u
spltal Of pot lcss than s2JOOuG They
~ un!er the sY"erv.si0n OF the fed
"a farm loan bard. but the govern
lent does not lend them any financial
ssistnnce.