The Cordele dispatch. (Cordele, Ga.) 19??-1971, 1916-07-23
BANK SYSTEM AND
FARM LOAN ACT
PROVIDES SYSTEM FOR LENDING
MONEY ON FARM LANDS AT A
REASONABLE INTEREST FOR
RELATIVELY LONG PERIODS.

MONEY YIN FARM EAINOS ~ -
REASONABLE INTEREST FOR
RELATIVELY LONG PERIODS.
Washington, July 22.-The. Federal
Farm Loan Act, popularity called the
Rural Credits Law" was signed by
the President and became a law on
July II, 1916.
The Primary purpose of this Act is
to promote agricultural prosperity by
enabling farmers to borrow money on
farm-mortgage security at a reasona
Bile rate of interest and for real
long periods of time. To attain this
object two farm-mortgage systems are
provided: % A system operating
through regional land banks; and GU
system operating through joint-stock
land banks.
To attract money to the farm loan
field, the Act provides method where
by those who have money to lend can
find safe investments in the form of
debentures or bonds, of small and
large denominations, issued by the
banks and based on the security Of
mortgages on farm lands.
These two system are to be under
the general supervision of Federal
Farm Loan Board in the treasury de-
partment, composed of the Secretary
of the treasury, as chairman eX officio,
and four members appointed by the
President. This Board has authority to
appoint appraisers, examiners, and reg
istrars, who will be public officials.
The Federal Land Bank System.
Under the federal land bank system
the Act provides for Federal land
banks which make loans, for the first
twelve months, exclusively through To-
cal national farm loan associations
composed of borrowers. These asso-
Citations shall be shareholders in the
banks and in that way the members,
who are borrowers, will share in the
profits of the bank. The money for
the loans is to come partly from the
capital of the banks and partly from
the sale by the banks of bonds secured
by first mortgages on farm lands. The
Act defines strictly the purpose for,
and the conditions under, which loans
are to be made, and requires that the
rate of interest charged on farm loans
shall not exceed 6 per cent per annum.
Twelve Federal Land Banks.
The United States shall be divided
into II farm loan districts, and Fed
eral land bank with a subscribed cap
ital stock of not less than $75O,OO0,
each share IS, shall be established in
each district Each Federal land bank
may establish branches in its district.
Within thirty days after the capital
stock is offered for sale it may be pur-
chased at par by anyone. Thereafter,
the stock remaining unsold shall be
bought by the Secretary of the Treas
ury for the United States. 1t is pro-
vided, however, that the government
shall! not receive any dividends on its
stock. Ultimately, it is intended that
all the stock in the banks shall be
owned by the association of borrow
ers, and provision therefore is made
in the law for transferring the original
stock at par to these associations
National Farm Loan Association.
The Act provides for the creation
of local national farm loan associa-
lions through which it is contemplated
that the Federal land banks shall make
their loans. In the event that local
loan association is not formed in any
locality within a year, the Federal
Farm Loan Board may authorize Fed
eral land bank to make loans on farm
land through approved agents. Ten
or more persons who own and cult
vate farm land qualified as security
for a mortgage loan under the Act,
or who are about to own and cultivate
such land may form such an associa-
ton, provided the aggregate of the
loans desired by the membership is not
less than $4,000. Each members must
take stock in his association to an
amount equivalent to 5 per cent OF the
amount he wishes to borrow. This
stock the association holds in trust
as security for the memebers individ-
ual loan. The association, in turn,
when applying for money from the
bank. must subscribe for stock in the
bank to an amount equivalent to per
cent of the sum it wants to obtain for
it's members. This stock is held in
trust by the bank as security for the
loans it makes through the associa-
ton. If a prospective borrower has
no money with which to pay for his
association stock, he may borrow the
price of that stock as a part OF the
loan on his farm land.
Under his .l1an, then, every borrow
er must be a stakeholder in his local
association, and every association
stakeholder in it's district bank Each
| s+ool,bo1der in an association is liable