Custer weekly chronicle. [volume] (Custer City, S.D.) 1890-1931, 1916-07-29
CUSTER CITY, SOUTH DAKOTA, SATURDAY, JULY 90, 1916

members. The federal land banks may
not charge in connection with making
loan any fees or commissions not auth
orized by the Farm Loan Board, and
such fees may be made part of the loan.
When a federal land bank shall have
loaned $4,000 on first mortgages it may
obtain from the Farm Loan Board per
mission to issue like amount in farm
loan bonds based on the mortgages, sell
them in the open market, and lend the
money thus obtained on other mort
cages, and this process may be repeated
until bonds to the amount Of twenty
times the banks paid-up capital are out
standing. Under the operation Of this
plan to the full, there would be ultimate.
ly on the basis of the minimum paid-up
capital Of each bank, if all the author
lied bonds of the twelve banks were
sold, $3.50, 600, 600 to lend on first mort
cages on farm land. The banks, how
ever, can increase the amount of their
capital stock above the required mini
mum. To make the bonds attractive to
investors, they, with the mortgages on
which they are based, are exempted
from federal, state, municipal and local
taxation, and are made legal investments
for trust funds. The bonds may also be
bought and sold by federal reserve banks
and member banks Of that system. The
capital stock of the land banks is also
exempt from taxation.
At the outset the federal land banks
are to be managed each by five directors
appointed by the Farm Loan Board.
When subscriptions from loan associa-
tion9 to a bank amount to 500, 900, how
ever, the management will comprise
three district directors appointed by the
Farm Loan Board, one of whom is to be
chairman, and six local directors elected
by the associations. At least one Of the
district directors must be a farmer. Com
pensation paid to the directors must be
approved by the Farm Loan Board. The
associations are to be managed by unpaid
directors and a secretary-treasurer re-
ceivng compensation determined by
the directors.
In localities where conditions do not
render practicable the formation of asso-
Citations, the land banks may be author
lied by the Farm Loan Board to make
loans through agents approved by the
latter, such as banks, trust or mortgage
companies or sayings institutions char
tered by the state. In addition TO the
already mentioned,
however, the law permits the establish
meut of Joint stock land banks TO carry
on the business of lending directly TO
borrowers on farm mortgage security and
issuing farm loan bonds. Such banks
must have a capital of not less than
$3.50, 900 each, and will be under the sup
ervision Of the Farm Loan Board, bat
will have no financial assistance from
the government These banks are sub
ject to the limitations as to territory and
as to the percentage of value of land and
improvements on which they can make
loans, but are not subject to the restric-
tions as TO the purposes Of the loans, nor
as to the amount to be loaned to a sin
gle individual, imposed on the federal
land banks. They are, however, sub
ject to the same provisions as 70 interest
rates the same amortization system Of
repayment, and as to commissions or
fees They are limited in their bond
issues to fifteen times their capital and
surplus. Their bonds are exempted
from taxation, but their capital stock is
not. Machinery for examinations of
both classes of banks and of the associa-
tions is provided in the law, which i'm
poses penalties for violations of its pro
visions, malfeasauce in office, fraud,
embezzlement, defalcaton or other IL
legal practices.