The Ontario Argus. (Ontario, Or.) 1???-1947, 1916-08-17
HOW FARM LOAN
ACT WILL WORK
Secretary McAdoo Says Loans Cannot
he Made Before Next Spring.

not be IN operation LOT at leaSl SlN
months and probably loans cannot be
made before next spring
In operation the system to some
extent will do for the farmer what
the federal reserve system does for
the business man. The farmer will
be given opportunity to secure money
on his most available commodity, his
land. just as the merchant and man
ufacturer has been enabled through
the federal reserve system to have his
paper, based on commercial transac-
tions. find ready market.
The new scheme mas many points
of resemblance to the federal reserve
system, but in many essential fea-
lures II Is entirely different. In no
way will the banks created under II
do commercial banking, and while IL
Is possible that in years to come they
may have funds to loan that will
amount to several hundred million
dollars, II Is not believed probable
that the system ever will have the
resources of the reserve system.
The act provided for division OF
continental United States into IL
land bank districts. with federal
land bank In each The work OF des-
ignating these districts 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 pre-
ceded the announcement of the lines
OF the i2 federal reserve districts and
the location of federal reserve banks.
The only directory provision In the
farm loan act says that land banks
shall be located with particular refer
ence to the farm loan needs OF the
country. 30 the board will have wide
discretion. Many applications from
cities. particularly In the Northwest
and Southwest, already have been
filed In the treasury, but the board
will not make public It's conclusions
until II has travelled over the coun-
try and held hearings In many states.
Each federal land bank must have
minimum subscribed capital OF
$75O,O0O before Il can start busi-
ness, II within 80 days after books
are opened for subscriptions to the
stock OF any OF these banks individ-
uals or corporations have not sub
scribed 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 Unit
ed States as stockholder cannot par
ticipate with others.
The banks will not. except In spe-
oial cases. loan direct TO farmers. but
through the agency OF national farm
loan associations, which may be or
ganized TO any number In land bank
district by any ten owners or pros
pective owners OF farm land who de-
sire to secure loans on farm prop
erty. Applications for charters for
these associations must go up to the
farm loan board and may be re-
fused by Il. No association will be
chartered unless II is shown that
signing members desire loans total
ing az least $4,000.
In applying for membership in an
association, a farmer must take five
per cent OF the face value OF the de-
sired loan In stock to 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,
The land will be subject to inspec-
tion by an appraiser of the farm loan
board. Loans will be made only for
purchase Of land, for its improve
ment or for purchase OF live stock,
equipment, fertilizers, or to provide
buildings on farm or to liquidate
Indebtedness, existing when the first
association is formed in the county
where land is located. No loan will
be made of more than $4,000 nor
less than 500. Interest will not be
charged greater than per cent. The
loan itself will be reduced through
an amortization plan providing for
reduction by annual or semi-annual
payments on the principal No mort
gage shall run for more than 10 years
nor less than five. and there are the
necessary provisions in the law for
satisfaction of overdue interest or
amortization payments.
The money to be loaned will come