Ashland tidings. [volume] (Ashland, Or.) 1876-1919, 1916-08-21
Details OF New
Rural Credit Bill
(By Sam T. Hughes.)

law for the purpose of promotinl
the financing of the farmers. Tha
law is now in effect. It is called the
federal farm loan act, and is the re
suit of long agitation and for the re
form, called by writer's and speakers
rural credits"
The federal farm loan act deals
with the matter of putting farmers
all over the United States in position
to borrow money on easier terms
when secured by mortgages on their
farms. 1t does not deal with the
business of loaning farmers money
on their unsecured promissory notes
or on notes secured by chattel mort
cages. Congress felt that this should
be a later development.
The federal farm loan act is sim
pie in principles and in purposes.
The government and the laws franz
ers hope to put the business Of farm
ing on more businesslike basis, to
the end that this nation shall have
more farming and better farming
and, therefore, more food, better
food, cheapened food, while the farm
er himself shall, at the same time,
find his business more profitable
There are no opposites in this state
ment Both propositions are entirely
feasible.
The problem before the trainers of
the bill was to draw law which
would work in America The obsta-
cles to a law exactly like that of Ger
many, France or Italy are partly le-
gal and partly in the fact that farm
ers in this country are not situated
economically or socially like those of
Europe. The bill was drawn with
an eye to the benefit of the farmers,
and with no other purpose. Once in
while congress does good thing,
and this is one. No bill of which I
have any knowledge, not even the
federal reserve act, was ever labored
over more unremittingly, more pains
takingly.
Two commissions went to Europe
to study the question before any bill
was drawn. The people of the United
States may have a good or bad
rural credit act; but it is certain
that it was honestly drawn, after long
study on the part of hundreds of able
men, and when finally passed was as
good bill as honest purpose, great
study and ability could make it. It is
probably imperfect, however, and will
need amendment.
Under the federal farm loan act,
mortgages will not be held by individ-
uals at ALL There will be twelve fed
eral banks, situated in different parts
of the country, a good deal as the
federal reserve banks are situated,
and each of these federal land banks
will hold all the mortgages issued in
it's one-twelfth Of the United States.
The mortgages will not be sold. They
will be held by the system. Each
federal land bank will issue land
bonds secured by the mortgages 1t
holds. These land bonds will be in
different denominations, some as low
as $25, so that any person with. saw
ings amounting to that sum or more
can invest in land bonds without hav-
ing to wait until he can buy whole
mortgage.
These land bonds will be safe. They
will not be taxable. They will be Sc
cured in three ways. First, by the
endorsement of the federal land
bank which issues them, handling
one-twelfth of the United States
Second, by all the other eleven fed
eral land banks. Third, by the ma
tional farm loan association, which
issues them in the first place, and
which is a cooperative association
of borrowing farmers in the vicinity
of the land mortgaged. Fourth, by
the land mortgaged, which must be
worth at least twice as much as the
face of the mortgage, according to
the appraisement of the loan COM
mittee of the association and a gov
ernment appraiser.
The guarantee Of the local loan as
sociation is backed by a 5 per cent
guaranty fund One loan out of
twenty might be a loss before this
guaranty fund would be used up. AL
together, 1t looks as II the land bonds
would be considered as good as gov
ernment bonds-but, of course, the
government does not guarantee them.
The government, however does sub
scribe to the stock of the federal land
banks-the twelve / mentioned
provided that private capital does not
take the stock. They have $75O,000
capital each.
Ten or more farms may establish
national loan association and begin