The Birmingham age-herald., 1916-10-22

that an individual could not borrow money without getting numerous farmers to sign with him. This Is not true. Farm CTS are required to organize federal farm loan associations, which associations are composed of 10 or more borrowers. Each member of the association agrees to sub scribe to the stock In it, to the amount of per cent of the amount he borrows. This requirement. is a stumbling block to most farmers. They do not understand why they should be required to buy stock in order to borrow money, but they will see that this provision Is for thelf pro- lection, and helps them to perpetuate their own ownership and control of 7the banking system.
 There is no excuse for the farmers to await the establishment of the fed eral loan banks. to organize these local loan associations. They may organize them now so that they can get their charters as soon as the banks are To- cated, thus saving time. The federal farm loan board in Washington will furnish blanks for this organization work.
 RATE OF INTEREST LOW
 These local loan associations perform a further service. They are the agencies through which the farmer governs his vote in the election of officers. Farmers invariably want to know what rate of interest they are going to be required to pay under this system. It is ffn- possible for anybody yet to tell, except to say that it wYl not be over per cent, and probably will be much less. The rate of interest depends upon the price at which the bonds will sell. The law says the interest rate will not ex ceed the bond rate by more than l per cent This margin is to pay the cost of operating the bank. So if bonds sell for per cent, the farmer will get his money for per cent or less.
 "The federal land bank Is permitted to lend 20 times it's capital. So a bank with $750o00 capital could lend s15000,000 if it had no way to increase its capital. But these stock purchases which the farm CTS make in their local loan association creates fund with which the local loan association then buys stock in the fed eral land bank, so every time the bank makes loan of s1O0 it's capital stock is increased $5, so that it may lend an- other $100. That is the reason why the farmers are required to invest back one twentieth of what they borrow. but this is merely a temporary investment. be- cause they get their money back with dividends when their loan is paid off.
 "The bonds that will be issued are free from all taxation even including the if1- come tax and the income derived from the bonds is also free of the income and every other form of tax All loans under this cooperative system are to be made on the amortization plan. which means that they will be paid off in annual or senni-annual installments through a long or short period of years. Mortgages may run for period of from five to 70 years, entirely at the option of the borrower. ''This provision of the bill is plainly of great advantage to the farmer. Digging a fortune out of the land is slow business at it's best. The seasons come around only too fast. the tragedies in the way os crop losses and stock diseases make ire euent visitations. It takes long time to develop live stock to where they yield returns. The long time amortized loans contemplate that farmer may use the money to stock up his farm or other wise put it into 8 condition to pay back the money out of the fruits of the invest r,1opt