Custer weekly chronicle. [volume] (Custer City, S.D.) 1890-1931, 1916-08-26
FARM LOAN BANKS
Will They Relieve the Situation II
This Section of the
Country2

The two great subjects properly re-
ceiving editorial comment in all publica-
tons throughout the country are Good
Roads and Farm Loan Banks. Both are
being sponsored by the Government but
benefits to be realized from the latter
seem to be question.
The plans for these banks as outlined
in the Act of Congress seem to be the
same as those used in England and Ger
many foT many years with this differ
ence, that they have been modernized
and adapted to our republican form of
government We do not see but that
the modern plans should be- as effective
If not more so than the European meth
DDS.
Philadelphia, Pa, and Cincinnati,
Ohio, are two large cities in the country
where the Building and Loan Associa-
ton plans have been in use. 1t is a
recognized fact that these cities contain
a larger percentage Of home owners than
in cities where the people have not ta-
ken to the Association idea The only
difference between the Building and
Loan Association plan and the Farm
Loan Bank plan is that in the latter pro-
vision must be made for a longer term
Of loan. This is due to the fact that the
income of the average farmer is irregu-
lar in amount and as rule received but
once or twice year. He therefore can
only make payments on account of prin-
cipal and interest every six months or
one year. If the performance of the
conditions required of the borrower un-
der this law can be accomplished by the
average farmer then the results should
be the same as those achieved through
the Building and Loan Association
Banks. We would have more farm own
ers and fever renters. Ownership of a
thing creates a sense of pride in the most
of us and invigorates the ambition. The
renter gets all he can with as little out
lay as possible whereas the owner fer
tilizes the ground, introduces blooded
stock and plants selected seed.
So much for the moral effect. The
natural direct financial effect should be
to decrease interest rates on both private
and bank loans. Such a result will be
welcomed in this locality as well as
others. However, on account of the
peculiarities of the loan risks in the ives.
tern portion of this state, the rates of
interest at present generally are not
above what they normally should be.
The impression has been created in cas-
tern financial centers that this part OF
the country is subject to drouth and re.
sultant crop failure. While this is true
to certain extent still the usual amount
loaned is seldom over so per cent. of the
value of the land in the local market.
Such being the case why should not the
margin of safety be just as great as in
the case of the eastern loan. The secur-
ity is there and the western borrower,
when his loan is converted into a bond
as is required under the new law, can
not be distinguished from an eastern
borrower
The eliminating of this unjust discrim-
ination will naturally result in lower
interest rates on real estate loans. A
new confidence in the ability of the wes-
tern farmer to pay off his loan will be
established. The general conditions
surrounding the farms will be bettered.
The amount and quality of the stock and
crops will increase in value. All these
things will naturally tend to depress in
terest rates also on chattel loans. In all
probability some form of rural credit
system will be fostered by law which
will embrace within it's purview loans
| on chattels.
We often wonder why we should be
exultant over law which enables man
to borrow. One of our great financiers
once said that "a man is worth all he
can borrow" This is true to a certai n
extent for the man whose business abil-
ity and integrity inspires such conf
dence that he can borrow money then
he is of more value to himself and the
community. The man who lacks that
ability is of no value to himself or any
one.
Anything that tends to build up the
moral and wealth Of the nation is to be
encouraged. 1t appears to US that this
Farm Loan Bank law will do this. Some
imperfections in the law are to be ex.
pected but the ultimate result should be
for good.