Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1917-12-18
Federal Land Banks
Fail to Come Up to
Business Expectations

chicago, Dec. 1S.-One or the Dig
problems confronting the farm loan
board is that Of financing Its opera
on paying basis. To accomplish. this
at time when the government is viz
tually monopolizing the inves tment
market with periodical fiotations Of
liberty bonds Is not an easy task. The
Offering Of federal land bank bonds
predicated on farm mortgages and gov
eminent securities Us provided by law
has not proved as successful as the
farm loan board had expected. It 10
stated on good banking authority that
considerable volume of the federal
land bank AZ per cent bonds offered to
the public at 1918. even tho tax ex-
empt. are still in the hands Of the
banking syndicate that bought them at
par. While the annual report Of the
federal farm board Is not yet available,
enough Is known to indicate that many,
it not all. of the federal land banks
are operating at loss. Adyices from
Spokane. Wash, giving Daniel G.
O'Shea, president Of the Spokane Fed
eral Land Bank, as authority state that
it will cost about $4,000 to pay the
salaries and other expenses Of the Spo-
kane land bank, the first year, while
the earnings Of that bank out Of which
the expenses are to be met probably
will not exceed $4,000. While Presi-
dent O'Shea is confident that the Spo-
kane bank ultimately will be self
tanning, it Is evident that upwards Of
100000 will have to be provided from
some source other than that now avail
able.
The same situation exists in many Of
the other federal land banks and the
reason Is clear. All Of the loans by the
federal land banks have been on a 5
per cent interest basis to the borrower.
The AZ per cent bonds were issued at
par, leaving one-haK Of ] per cent mar
gin from the interest on all loans for
use in paying expenses. In the instance
of the Spokane land banks the one-half
Of l per cent on the $10,000,000, which
Is the estimated volume Of loans made
the farmer Is $4,000. This Is $4,000
short Of the cost OF operation, SO that
the deficit must be provided for in some
other way. In addition to this the in
terest on the outstanding loans for tho
entire year will not all be paid in until
the end Of the lending year. Hence
only about $4,000 Of the expense mar
gin will be available; consequently
there will be a deficit Of $1O5, 900 to be
provided for.
1t is apparent from this why the fed
eral loan board a week ago found It
necessary to increase the rate Of in
terest to be charged the borrowing
farmer from 5k to per cent. Even
that increase, however, will not care
for the deficit this year, altho the mar
gin. II the new bonds are put out at
the old rate Of ~ per cent, would be
! per cent for expenses.
It became known today that menu
bers Of the farm loan board appeared
before the house banking committee to
press request that congress author
lie the secretary Of the treasury to pur-
chase 100000 900 worth OF farm loan
bonds yearly for two years.
The situation in view Of the fact that
funds now invested In farm mortgages
thru private agencies are being with
drawn from the market as fast as
mortgages mature increases the prob
lem Of financing farm developments
for the purpose OF stimulating food
produc ton. ~. "a 800