Deming graphic. (Deming, N.M.) 1903-1948, 1917-02-16
BENEFITS OF LOAN ACT

There are many ways IN which the
new system furnishes aid to the
Farmer III financing his business.
by reason of the facilities created
nv the federal farm loan act. which
was passed last summer. il will be
easier IN the future for farmer 10
secure money 90 make needed i'm
provemcnis or for the purchase Of
live stock. aud il will be easier also
for the landless man to purchase a
farm, according to recent publica-
ton of the United States Department
If Agriculture Farmers Bulletin
1922 entitled GLOW the Federal Farm
Loan Act Benefits the Farmer"
The Federal land banks established
under this act will stand ready at all
times. il is expected, to lend money
10 farmers on farm mortgage secur-
ily The interest charges will b. not
more than Il per cent, nor more than
per cent above the rate paid on the
bonds sold by the banks. If AZ per
cent bonds should be- issued, there
fore, the rate charged on loans would
he > per cent or less. There will
be no commissions or bonuses. The
loans will be- made for periods of
time ranging from ) to 40 years, thus
doing away with the trouble and en-
pense of frequent renewals.
The payment of n certain part of
the principal annually or semiannu-
ally, with the interest, will be re-
CURED. The total payment, including
the interest, will be the same for each
year, and will be just large enough so
that the entire principal will be paid
off at the end of the period. The
annual payment thus required to pay
off loan of 81 900, with interest Mt
} per cent, in 20 years, is $S0.24.
After loan has run years the
borrower will be permitted to pay off
the whole amount, if he desires, on
any interest date, or to make partial
payments in addition to the regular
installment.
The requirement of insiallment pay
ments ON the amortization plan, as
outlined above. will serve, first, to
cultivate habits of thrift in the bor-
rover, and second, to make possible
the placing of the loans at a lower
rate of interest, since the gradual
reduction of the principal constantly
improves the security for the unpaid
balance. The privilege of optional
payments after the first five years
leaves the borrower free to discharge
his Indebtedness before the end Of the
loan period, if he finds it convenient
to do so.
The Federal land banks will per-
form three important services. al
They will convert the security which
farm mortgages afford into nego-
table form, known as farm-loan
bonds. GU They will furnish addi-
iional security for the protection of
these bonds, through their capital and
surplus. and thus make the bonds
more attractive to investors. (3)
They will sell the land bank bonds
in the open investment market, which,
for obvious reasons, the small farmer
could not reach to advantage.
The bonds are to be issued in de-
nominations ranging from $25 to
$1,000, and il expected that the bonds
OF small denomination will encourage
saving through their appeal to in
dividuals who have not been in the
habit of making investments. The
bonds will be secured not only by
farm mortgages deposited in trust
with government official 1.-THE
registrar for the land bank district)
but also, rs indicated above, by the
capital and surplus of the twelve land
banks.
Both mortgages and bonds will be
exempt from all forms of taxation.
Farmers who wish to obtain money
from the Federal land banks will or
dinarily be obliged TO form local loan
associations, and get their loans
through these organizations. The To-
cal loan associations will improve the