The diamond drill. (Crystal Falls, Iron County, Mich.) 1887-1996, 1917-02-17
BENEFITS OF LOAN ACT.
Ways In Which the New System Fur
nishes Aid TO the Farmer In FL
nancing His Business.

by the Federal farm loan act, which
was passed last summer, II will be
easier I'm the future for a farmer TO
secure money TO make needed inn
proyements or for the purchase OF
live stock, and 1t will be easier also
for the landless man 20 purchase
farm. according TO a recent puolica-
ton OF the United States Department
OF Agriculture (Farmers' Bulletin
1927 entitled How 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 security.
The interest charges will be not more
than per cent nor more than per
cent above the rate paid on the bonds
sold by the banks. II Az per cent
bonds should be issued therefore. the
rate charged on loans would be oHs
per cent or less. There viii be no
commissions or bonuses. The loans
will be made for periods OF time rang
ing from s to 40 years. thus dong
away with the trouble and expense OF
frequent renewals.
The payment OF a certain part Oh
the principal annually or semi-anhu-
al,v with the interest will be required.
The total payment, including the IN
,arest will be the same for each year
and will be just large enough 40 tha'
the entire principal will be paid OH
at the end OF the period. The annaai
payment thus required TO pay on
loan OF 81 1000, with interest at . per
cent, in 20 years, is 5000.
After a loan has run years the
borrower will be permitted to pay OH
the whole amount, II he desires on
any interest date. or to make partiai
navmeuts in addition to the regular
installment.
The requirement OF installment pay
ments on the amortization plan, as
outlined above, will serve, hrst, 10 cui-
,,vate habits OF thrift in the borrower
and second. to make possible the piac-
ing OF the loans at lower rate OF IN
terest. since the gradual reduction OF
the principal constantly improves the
security for the unpaid balance. The
privilege OF optional payments alter
the first years leaves the borrower
free TO discharge his indebtedness pc
fore the end OF the loan period, II ne
finds Il convenient to do so.
The Federal land banks VIII per
form three important services. W
They will convert the security which
"a RIM mortgages afford into negotiable
form. known as farm-loan bonds. tS)
They will furnish additional security
sor the protection OF these bonds,
through their capital and surplus ana
thus make the bonds more attractive
TO investors. CD They viii sell the
land bank bonds in the open invest
ment market, which, for obvious rea-
sons. the small farmer could not reach
to advantage
The bonds are to be issued in de
nominations ranging from $50 &c
81 900. and il Is expected that the
bonds of small denomination VIII en-
courage saving through their appea
IN individuals who have not been II
the habit OF making Investments The
bonds will be secured not only b!
farm mortgages deposited In trus
with a government official (the regis
trar for the mnd-bank districU bu
also. as indicated above, by the CAPT
tai and surplus of the II land banks
Both mortgages and bonds VIII b
exempt from all forms Of taxation.
Farmers who wish to obtain none
from the Federal land banks will OF
dinarily be obliged TO form local loa
associations. and get their loan
through these organizations. The Il
cal loan associations will improve TIA
credit OF their members and reduc
the cost OF their loans through IN
performance Of certain definite sci
vices. among which are the following
The committee called the loan con
mittee" or the association will al
praise the property offered as securi'
and approve all applications Tor ioai
which are sent to the land bank FL
secretary-treasurer of the associate
will transmit the paper&RId cpfiY
all correspondence witlrthsvlana hag
relative to the loans. Ybe:as sSciati'
will guarantee the fnoftgs isee of
members, the lIabttis Tfssiy fodiyi
ual member beinses fir9,tt3: hpwsy'
TO an additional, ssirr oapai 10, :