The gazette-times. [volume] (Heppner, Or.) 1912-1925, 1916-08-17
FULL PARTICULARS
OF FARM LOAN ACT
Low Interest and Long Time Loans
Are Features of Rural Cred
ii System.

|
to promote agricultural prosperity
by enabling farmers to borrow mon
ey on farm-mortgage security at a
reasonable rate of interest and for
relatively long periods of time. To
attain this object, two farm-mort-
gage systems are provided: (D A
system operating through regional
land banks, and (2) system oper-
ating through joint-stock land banks.
To attract money to the farm-loan
field the act provides a method
whereby those who have money to
lend can find safe investment in the
form of debentures or bonds in small
and large denominations, issued by
the banks and based on the security
of mortgages on farm lands.
These two systems are to be un-
der the general supervision of a Fed
eral Farm Loan Board in the Treas
ury Department, composed of the
Secretary of the Treasury, as chair
man ex officio, and four members
appointed by the President. This
board has authority to appoint ap-
praisers, examiners and registrars,
who will be public officials.
Federal Land-Bank System.
Under the Federal land-bank sys-
tenn the act provides for Federal
land banks which make loans, for
the first II months, exclusively
through local national farm-loan as
| lsociations composed of borrowers.
These associations shall be share
holders in the banks, and in that
way the members who are the bor-
rowers 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 loans. The
act defines strictly the purposes 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 per
cent per annum.
Twelve Federal Land Banks.
The United States shall be di-
vided into II farm-loan districts,
and Federal land bank with a sub
scribed capital stock of not less than
S750,000, each share S., shall be
established in each district. Each
Federal land bark may establish
branches in its district Within
30 DAYS after tn capital stock is Of
rit for sale T. Ii Az be purchased at
par by anyone. Thereafter, the
stock remaining unsold shall be
bought by the Secretary of the
Treasury for the United States. 1t
is provided, however, that the Gov
ernment shall not receive any divi-
dends on its stock. Ultimately, it is
intended that all the stock in the
banks shall be owned by the associ-
ations of borrowers, and provision
therefore is made in the law for
transferring the original stock at
par to these associations.
Farm-Loan Associations.
The act provides for the creation
of local national farm-loan associa-
tiQns through which it is contem-
plated that the Federal land banks
shall make their loans. In the
event that a local loan association
is not formed in any locality within
a year, the Federal Farm Loan Board
may authorize Federal land bank
to make loans on farm land through
approved agents. Ten or more per-
sons who own and cultivate 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 association, provided
the aggregation of the loans desired
by the members is not less than $20.-
90. Each member must take stock
in his association to an amount equi-
valent to per cent of the amount he
wishes to borrow. This stock the as
sociation holds in trust as security for
the members individual loan. The
association, in turn, when applying
for money from the bank, must sub
scribe for stock in the bank to an
amount equivalent to s per cent Of
the sum it wants to obtain for its
members. This stock is held in
trust by the bank as security for the
loans it makes through the associa-
ton. If prospective borrower has
no money with which to pay for his
association stock, he may borrow
the price of that stock as part of
the loan on his farm land.
Under this plan, then, every bor-
rover must be stockholder in his
local association, and every associa-
tion stockholder in it's district
bank. Each stock holder in an as
sociation is liable for the acts of that
association up to twice the amount
of its stock.
How Loans Are Obtained.
A member of national farm loan |
association before obtaining a loan,
must first fill out an application
blank supplied to the loan associa-
tion by the Federal Farm Loan
Board. This application blank and
other necessary papers will then oe