The Detroit times., 1916-08-11

hundreds OF able rlen. and when
finally passed Vas as good a S,A
as honest purpose. great study anh
ability could make T.. Il is pCoba bly,
imperfect however and viii need
amendment
Under the federal farm loan act
mortgages viii not be held by int,
viduals az all There Will be L
federal land banks, situated In dif-
ferent parts Of the country a good
deal as tho federal reserve banks
are situated. and each ~ these fed.
eral land banks will hold All The
mortgages issued n its oue-twelfth
OF the United States The mort.
cages will not De sold They will
be held by The system Each fed
eral land bank will issue land bonds
secured by the mortgages II holds
These land bonds will be in differ
snt denominations. some as low as
SIS. so that any person with saw
ings amounting 20 that sum or more
may invest In land bonds without
having 70 wait until he can buy a
whole mortgage
These land bonds will De safe
They will not b. taxable They will
be secured in three ways First, By
the indorsemnt OF The federal land
bank which issues them, handling
one-twelfjh OF the United States
Second. by all the other II federal
land banks Third. BY the national
farm loan association which Issues
them in the nrst place, and which
is a cooperative organization ot
borrowing farmers In the vicinity
OF the land mortgaged. Fourth. by
the land ortgaged. which must b.
worth AZ least twice as much as the
face OF the mortgage according %
the sppraisement OF the loan com.
mittee OF the association and a gov
ernment appraiser.
The guarantee OF the local loan
association Is backed by per
cent guaranty fund. One loan out
OF 20 might be a loss before this
guaranty fund would be used up.
Altogether. Il looks as II the land
bonds would be considered a. good
"a government bonds-but, OF
course. the government does not
guarantee them The government,
however. does subscribe the stock
OF the federal land banks-the u
mentioned-proyided that private
capital does not take the stock They
have $3.50. 900 capital each.
Ten or more farms may estab-
lish a national loan association and
begin issuing mortgage II ls a
simple and easy thing. bat under
strict government supervision All
they need 20 DO Is 70 meet, declare
that they want 10 borrow on mort
gage. and proceed They will ea~n
have 10 buy s. Of stock in the fed.
eral land bank OF their region for
every 800 borrowed but they will
ge; this money back when they pay
OF their mort cages, and in the mean
time will get their dividends Il the
federal land bank earns any. which
:, is expected to DO.
In other words. instead u paying
a nvc per cent commission for 4
loan as some nov DO, tae borrower
will pay the same SUN FOR stock
which VIII probably earn dividend.
for him. and which he VII gcf back
when be pays of hls dsa,
The mortgage Is not allowed "a
draw 4 higher rate oi interest than
the legal rate Of the locality L
viii draw a. low rate as vii b
proven possible by tfe sale of the
land bonds u investor, and savers
think 50 well OF tho land bonds hat
they are willing ~ buy them gr a
I basis OF tour pei cen. ths mort
! cages will not draR over Eve Thet
may not draw a. much az one per
cent above the land bond rate Tina
/ depends on experience Any bow %
farmer viii get his money a. aetna
cost 20 The great system o. bank
handling the business
! lie cannot borrow over $4,000 u
he wants more than that he pil
have 20 borrow iu some other way