The weekly times-record. (Valley City, N.D.) 1912-1922, 1916-11-23
Experiment Station Explains
Workings Of Farm Loan Act

North Dakota Experiment Station,
Fargo, Nov. 18.-According to gov
eminent report, the farmers of the
United States have farm mortgage
debt of $3,598,S95,O0 This money Isl
loaned to farmers by banks, by life
insurance companies, by mortgage
companies, and by private investors.
The life insurance companies have
loans of five billion dollars, only one.
seventh of which is loaned to farmers.
The estimate farm mortgage debt OF
North Dakota is $l00,364,0O0. About
20 million dollars of this amount
comes from life insurance companies.
The agents of these companies charge
a commission on the loan, ranging
usually from one to two per cent, and
averaging is per cent. The interest
rate paid by the farmer averages 81
per cent for the whole state. North
Dakota banks loan about 100000 Of
their funds on North Dakota farm
mortgages. These banks handle
about $420O0,00O Of outside money, on
which they receive commission. A
person or corporation borrowing
money goes to the money market for
the loan, thus there are many money
markets. The state of North Dakota
has debt of $57S,700 bearing interest
at four per cent. This money was bor-
rOwed from the state school funds.
These funds will eventually amount to
about $50,000,000 Many counties
have bonded debt. One county re-
Gently built new court house, Dor
rowing for that purpose 100000 from
the state school funds, at four per
cent. for 20 years, to be paid back on
the installment plan. Most North Da-
kota cities have bonded debt, bear
ing interest at rates ranging from
four to six per cent. Hundreds of
school districts are likewise borrow
ers on their bonds, the rate of inter-
est ranging from four to seven per
cent. Thus the farmer is seen to pay
more than his school, county, munich
pal or state government, although they
occupy the same territory. The great
industries Of the country, such as
transportation or manufacturing, have
access to the central money markets,
such as New York, Boston and Chica-
go. Thus the railroads have mort
gage debt Of ten billion dollars, the in
terest on which ranges from four to
seven per cent. They have two advan-
ges over the farmer: They have d.
rect access to the great money mar
kets of the east, consisting chiefly
of banks, savings banks, trust COM
panies and insurance companiesD
they have standardized liquid securi
ties; standardized, in that the rail
road bond is we'll known on the
money market, is familiar to all inves-
tors throughout the length and breadth
of the land, is usually in convenient
denominations, such as 500, $500, ST.
600, ETC., and has definite earning pow
er; liquid, in that it can be turned
into cash, through the banks or stock
exchanges, and business day of the
year, without loss and without delay.
The farm loan act aims to furnish
the farmer cheap money. This result
will come, it is hoped, through giving
the farmer access to the money mar
kets of the country The act provides
for form Of security known as marin
loan bonds, issued in denominations of
$25, $50, 500, $500, or $1,000. These
bonds will bear rate of interest not
to exceed five per cent. The farmers
mortgage will always pay just one per
cent more than these bonds. This Sc
curity will be both standard and liquid.
These bonds will be free from all
taxes, federal state, municipal or To-
cal. They will be a lawful investment
for al fiduciary or trust funds, and
may be accepted as security for all
iduciary or trust funds, and may be
accepted as security for all public de-
posits. In short, they are expected to
be equal or superior to the securities
used by the great corporations, there
fore, it is believed that the money
market will absorb quantities of these
than five per cent interest, buut this
is high rate for an absolutely gilt
edge security. Of course, if they can
be sold at four per cent. it will mean
money at five per cent. to the farmer.
The amount Of the farm loan bonds to
be issued is unlimited, depending en-
tirely upon the number of first mort
cages for sale by the farmer and the
number of farm loan bonds the invest
crs will take at five per cent. or less.
1t is believed that the present money
market will absorb many hundreds of
millions Of these securities, and also
that small investors and money savers
all over the country will form a new
money market by acquiring the habit
of putting their savings in this new
form of security. If this proves to be
the case, the act will furnish plenty OF
cheap money to the farmer with the
proper security. It should be added
that it is the aim of the act to furnish
the money to farmers at actual cost
which is not to exceed the one per
cent. margin mentioned above, and
may prove to be as low as one half OF
one per cent. In this case, should the
bonds sell at Ave per cent, the farm
er would get his money at five and
per cent.
Mrs. George Stems was in the cry
from Rogers.
Mrs. Nels Larson was a visitor in
Valley City Saturday from Rogers.
Mrs. Steinway, of Courtenay, is in
the city for chiropractic treatment.
H. M. Velzy was a business visitor
IN kIou, Cot,,rdo,, ,oer;e&o,el