The Richfield recorder. (Richfield, Idaho) 1909-1931, 1916-07-28


credits law" was signed by the presi-
dent and became 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 reason
able rate of interest and for relatively
long periods of time. To attain this
object two farm mortgage systems
are provided, system operating
through regional land banks, and
system operating through joint stock
land banks.
To attract money to the farm loan
field, the act provides method
whereby 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 systems 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
registrars, who will be public officials.
Federal Land Bank System.
Under the federal land bank system
the act provides for federal land
banks which make loans for the first
- months. exclusively through local
national farm loan associations COM
posed of borrowers. The associations
shall be shareholders in the banks
and in that way the members, who
are the borrowers, will share in the
profits of the bank. The money Tor
the loans is to come partly from the
capital of the banks and partly from
the sale by the banks of bonds secur-
ed by first mortgages on farm lands.
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 six per
cent per annum.
The United States shall be divided
into IL loan districts and a federal
land bank with a subscribed capital
stock of not less than $750,000, each
share SIS, shall be established in each
district. Each federal land bank may
establish branches in It's district.
Within 80 days after the capital
stock is offered for sale 1t may be pur-
chased at par by anyone. Thereafter
the stock remaining unsold shall be
bought by the secretary of the treas
ury of 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 associations of borrow
ers, and provision therefor is made In
the law for transferring the original
stock at par to these associations.
Loan Associations.
The act provides for the creation OF
| local national farm loan associations
through which 1t 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 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
cultivate farm land qualified as secur'
ity for mortage loan under the act
or who are about to own and cuiti-
vate such land, may form such an as
sociation. provided the aggregate OF
the loans desired by the membership
is not less than $4,000.
Each member must take stock IL
his association to an amount equiva
lent to S per cent of the amount ne
wishes to borrow. This stock the as
ISOLATION holds in trust as security fol
the members individual loan. Int
association in turn, when applying fol
money from the bank, must subscribe
| for stock In the bank to an amoun
equivalent to per cent Of the sun
1t wants to obtain for its members
IThis stock is held in trust by th'
| bank as security for the loans
makes through the association. II
prospective borrower has no none.
with which to pay for his association
stock. he may borrow the price Q
! that stock as part Of the loan on nj
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