Evening star., 1916-01-05
RURAL CREDITS BILL
BEFORE CONGRESS
Measure Is Presented in the
House by Representa-
tive Moss.
FARM LOAN BANKS
AMONG ITS PROVISIONS
Institution in Each of the Districts
Will Have Minimum Capital
Of $5o0,ooo.

On behalf of the joint Congressional
committee on rural credits, Represent
ative Moss has introduced in the
House a bill for the establishment of
d farm loan banking system Senator
Hollis will introduce the measure in
the Senate.
Governmental control of the system
is provided for in a federal farm loan
board of five members to be appointed
by the President for ten years each.
Loans would be made to farmers by
twelve or more federal land banks.
each operating in a separate district,
with capital of not less than 100000.
The stock would be taken by the gov
ernment. if not privately subscribed.
In order to secure intimate touch
with the borrowers, the bill would pro-
vide that land banks shall make loans
to farmers through local associations
of borrowers, called National Farm
Loan Associations. Every borrower
would be required to take stock in the
association to the amount of per cent
of the face of his loan, and the asSo-
Citations would be of limited or unllm- !
tied liability, according TO the choice
of the organizers.
For the benefit of farmers who might
object to the publicity or scrutiny OF
co-operation the bill would provide
that loans might be secured from joint
stock banks, whose business would be
limited to making farm mortgage loans |
and issuing bonds. For farmers in COM |
munities without local associations or |
Joint stock banks the bill preScr1bes |
that the federal land banks may make
loans through trust companies, mort |
gage companies or savings institutions |
Would Be Savings Banks, Too. |
The land banks would be authorized !!
rt funds (
of which would be available to farm
ers for long term personal credit or
short-term mortgage credit, not ex- |
ceeding. five years. The banks also |
would be permitted to act as govern |
ment depositaries and required to act
as financial agents of the government !
A few states are not regarded by |
authors of the bill as giving adequate |
protection to those loaning on nrst |
mortgages. To meet this condition pro,
vision is made that the farm loan board
may declare mortgages in such states |
Ineligible as security, the idea being to |
force the states to amend their laws.
The proposed banks would be per-
mitted to charge borrowers l per cent
more for interest than they pay bond |
holders on bonds they may sell from
time to time. After paying expenses
out of this l per cent, it is provided
that the balance should be distributed
to the borrowers in the shape of divl- |
dends by the loan associations "A
limit of thirty-six years is placed ON |
the time of loans, and borrowers would
be required TO make small annual pay
ments on principal
Farming Need of Capital.
In reports accompanying the bill it |
was explained that modern farming re-
quires capital in large amounts which |
commercial banks are not suited to !
give Member banks of the federal re- |
serve system, it was said, had recog- |
nized the force of the argument that |
commercial banks, subject to making |
repayment at any time of funds de- |
posted with them, must invest their /,
money for no longer than it takes TO
carry through an ordinary commercial
transaction, sixty or ninety days.
On the other hand. it was pointed out
that a certain class of money holders
always were seeking investment at low
rates for long periods, such as scnooi
teachers, ministers, wage earners, nie
insurance companies, guardians ana
endowed colleges and hospitals. The
farm loan system, II was urged, pro-
vided machinery for bringing the two
classes together with the minimum or
expense.
Asks Extension of Time.
Chairman Glass of the House bank |
ing and currency committee unsuc- |
cessfully yesterday asked the House for
immediate consideration of a resolution
10 extend for four months the time in
which the joint committee on rural
credits shall report on the subject of
personal credit. Republican Leader
Mann suggested that meant that there
would be no personal credits legisla-
tion by this Congress.
Mr.. Glass explained that the personal
credits had received very little attention
because the joint committee devoted its
time almost exclusively TO the land mort
gage plan. Representative Henry of |
Texas said he had hoped to have personal
credits legislation for the farmers at this
session, that it had already been too long
DELAYED, and asked that the extension of
time be reduced. Objections to the re-
quest for extension deferred action for the
present.