The pioneer express. [volume] (Pembina, Dakota [N.D.]) 1883-1928, 1917-11-16
lying principles are practicable and

lying prlnc,pi-s are practicable and
successful.
When any man borrows money for any
purpose he must pay it back, sometime,
and also pay interest for ITS use. The
real financial question is how cheap can
the money be borrowed?
The general theory Of the Federal
Loan Law is that while the borrower
shall pay five per cent interest that
the business OF the central bank which
loans the money can be done at a cost of
four and a half per cent.
That would ordinarily leave half
per cent profit to the bank and be shar-
ed by the stockholders. In the Federal
bank system this is also true, but as
each borrower must take out shares to
the amount of five per cent of the loan,
then consequently each borrower will re-
ceive as dividend prorata part of the
half per cent profit and thus make his
interest payment equal to actual cost.
OF course this half per cent profit may
be more or less, according to the profits
of the business.
HOW THE MONEY Is RAISED,
For a slater, the government loans
each of the twelve central banks pro-
vided for the whole country with $3.50,
wv. These sums though large are very
small in comparison to the loans des-
ired. The banks and therefore author
lied to sell bonds based on the applica-
tlons for loans at four or four and a
half per cent to investors. This is the
only way that persons not farmers can
get IN on the farm loan business Of the
Federal banks. Later, it is probable
that the money dirived from interest
and principal payments by borrowers
will keep sufficient funds on hand to
supply applicatins for new loans, or
nearly so.
HOW THE MONEY is LENT TO BORROWERS.
AS we intimate the law provides for
twelve Federal banks. These banks
have certain territory They do not
loan money direct to the borrower.
The money is loaned through local Or
CARNATIONS very similar to building and
loan associations. These associations
under the direct control of the head
bank OF the district. Our bank is at St.
Paul.
LOCAL ASSOCIATIONS.
1t requires at least ten borrowers who
wish to borrow as much as $4,000 to-
gether to form local associations.
No special territory is required, though
for conveniences 1t should be in patri.
cular localities.
The associations have president, dir
ectors, etc. as do other societies. The
secretary treasurer is the business man
of the association.
There is loan committee that passes
on all application for loans and the dir
ectors pass upon the loan when the loan
committee unanimously approves.
New members must receive the ap-
proVal of the directors.
All security lands are appraised also
by special appraisers IN the employ of
the Federal bank.
METHOD OF OBTAINING LOANS.
The borrower must file an application
describing land and stating what use he
will make of the money.
He agrees to pay five per cent interest
on the money borrowed.
He agrees to take out five per cent
of his loan in shares IN the Federal
bank. Thus if he wants $1,000 loan
he must take out 800 in shares. In
effect he will receive $1,000 as proceeds
of his loan and certificate for ten
shares of bank stock and will agree to
pay interest on 62l0O at five percent!
This extra 800. looks like sort of
bonus to the bank. So it is but by this
act the borrower becomes part of the
bank and therefore receives his proper.
tionate share of all such bonuses given
by borrowers. plus any other profits
made by the bank and such accruments
are thus returned to him. In actual
practice the amount paid Tor borrowed)
to pay for the shares is fanally applied
on the principal Of his loan.
TIMES AND METHODS OF PAYMENTS.
Interest is payable semi.annually. in
equal sums. All loans are made for
thirty-six years.
Loans may be paid up partially or IN
full at any time after five years. At
every interest payment part 81 the
money is applied to the principal. #