The Caldwell tribune., 1916-07-28

is done away with. When such 4 |
mortgage was accepted the loan was
usually short time loan, which means
that the farmer had heavy payments to
make and often had to overwork the
soil, his family and himself in order
to get money enough out of the three
to meet his obligations in the speci-
ned time. Low rates of interest"
speaks for itself. In the amortization
feature of the system lies one of its
most important and advantageous
points
What Amortization Means
BY amortization in this case is
meant the payment of the principal of
a loan in small periodical installments
along with the interest. According to
some men. the farmer who borrows
money under the new system will pay
interest much as he did under the old
regime, only at the end of term of
years these payments will not only
have covered the interest, but also
wiped out the principal of his debt,
so that instead of being as deeply in
debt as ever, he finds himself an un-
incumbcred landowner. While the
case many not work out in quite such
an ideal manner as this, the annual
payments on the principal of loans
will be so small and the interest rates
so low that the farmer may quite pos
sfbly pay off both without much
more effort than he formerly expended
in meeting his interest payments.
Moreover, it is we'll known that it is
much easier to meet an obligation in
small payments over period OF years
than to save enough money to settle
! it with lump sum at one time.
The federal farm loan act will func
| ton ON cooperative basis, by which
| the borrower becomes a stockholder in
| the association which gets his loan
| for him. In order to borrow money un
| der the new act, the borrower must
subscribe for stock in farm loan as
| sociation to an amount equal to )
per cent of the loan he desires to
make If the application for the loan
! is granted-a question determined by
expert appraisal of the security Of
fered-the applicant becomes the own
er of stock in the association to the
am cunt of one share for every $lOO
that he borrows for which he pays,
of course SIS a share and which has
hence par value of SIS. This stock
is taken by the loan association as ad-
ditional security for the payment Of
the loan, but when the loan is paid off
in full the association in turn redeems
stock at par value. AS long as the
loan runs the borrower owns the
stock though the association holds it,
and he gets dividends on it according
to the prosperity of that particular as
sociation.
Associations Not Private
The national farm loan association
are not private enterprises, as might
casually be assumed. They are ere
ated by the new law as part of its
machinery. Persons desiring to Dor
row money under the provisions oi
the law may be organized into such an
association.
There will be created in the treas
ury department by the new law new
bureau, known as federal farm loan
bureau, which will be under the super
vision of federal farm loan board
and here will center the general ad,
ministration of the system. The boart
will consist of five members ,one o.
whom will be the secretary of the
treasury and the other four appointed
by the president, with the advice ano
consensat of the senate. Not more
than two of these four men may be
long to the same political party. Eacf
of them will receive an annual salary
of $4,000.
Besides the board, the act create!
system of federal land banks which
: are expected to bear somewhat thu
same relation to agriculture that thu
: | L Al, NV
reserve act bear to commerce and in
: dustrv. The continental United State
E and Alaska will be divided into twelv
5 federal land bank districts and in eacl
, district the federal farm loan boar,
1 will establish a federal land bank, t.
handle the farm loan business OF tha
: district in so far as it is transacte
under the provisions of the new ac
: Such federal land banks may be desiR
e mated by the secretary of the treasur
a as government depositaries, but thel
n scope of business is quite sharpl
limited by restrictions embodied III tn
e act.
. Long Loans, Low Interest
}. Provision is also made for the e:
It tablishment of joint stock land BANK
f for the business of lending on farr
mortgages and for the issuing OF tarl
loan bonds. The working details
: the system will, of course rapidly b'
# come familiar through use. In i
n outlines the structure stands out clea
!" ". Its purpose is to secure tor II
g farmer long time loans at modera
10 rate of interest, to help the tenant
N buying the land he works on. to e.
A courage the city man who hears Il
;s call of the soil to return to lltt
land and comfortable living,
A point worth noting In connectit
ia with this legislation is the rapid
~ with which the evidence in its fav
m was gathered and acted upon. Fo
I'd wears ago the meaning of the ter