The Ward County independent. [volume] (Minot, Ward County, N.D.) 1902-1965, 1917-01-11
THE FEDERAL FARM LOAN ACT
Twelve Articles, Article No. 8

THE FEDERAL LAND BANKS
The new act provides chain of
three links for connecting the farmer
with the money market. There is the
farmer at one end; there is his local
farm loan association to indorse and
handle his mortgage for him; and,
lastly or finally, there is his dis
trict land bank to loan money
on the mortgage. The cost for
the service rendered cannot be in
excess of one per cent and may be less.
This must cover all expenses and the
balance, if any, is paid back to the
farmer as dividends on his stock in the
local association. In other words, the
farmer is to get his loan at actual
cost. Very much depends, therefore,
or the Land Bank Of his district.
The Land Bank is to be an import
ant institution, with large funds, and a
large force of employees. The mini
mum cash capital for beginning bust
ness is $750,OOO for each bank, and
there will be twelve banks. The cap
ital may later be increased without
limit, and will be so increased if the
Act is a success. Each Land Bank
may establish branches in its district.
Four North Dakota cities have made
formal request to have Land Bank,
namely: Bismarck, Fargo, Grand Forks
and Minot. North Dakota may secure
one of the twelve land banks or at
least branch bank.
The Land Bank will have nine di-
rectors, six being farmers and three
being chosen by the Federal Farm
Loan board. The six farmers will be
members of the local loan associations,
having first mortgages on their farms,
and being chosen by the local associa-
ton. One of the three directors chos-
en- by the Farm Loan Board must also
be an actual farmer. That is, seven Of
the nine directors of this bank will be
farmers.
The $75O,O00 cash capital will start
the district Land Bank out in bust
ness. This original capital may be
subscribed by the public at large, but
this is hardly likely to happen, since
this capital stock will all be retired
| Just as soon as the local farm loan
associations are able to take out $780,
900 of stock in the district Land Bank.
In other words, the Land Banks will,
in the end, be owned and controlled
ny UOTTOWlIS 1dIIIlcIS. Lie SOVcIH-
ment of the United States will I'M
doubleday have to furnish part or all
of the $75O,OO0 of original capital for
each Land Bank. This it will do at
the end of thirty days after the sub
scription books have been opened, if
any or all of the capital stock remains
unsubscribed. The local farm loan as
sociations have to take out only $780,
600 of capital stock before choosing
their six of the nine directors, and
taking permanent control. This fea-
ture, coupled with the promise of ear
ly retiral of the original capital stock,
makes the chance for public subscrip-
ton for stock in the Land Bank very
small. And last of all, of course, it's
earnings cannot be high, working as
it will on one per cent margin.
There will be no limit to the capital
stock Of the Land Bank when once the
local farm loan associations get con-
troll. The capital will increase as loans
increase, five per cent of the loan being
added to the capital Thus, if the
loans are 100000 in Land Bank, it's
capital will be five per cent of this
amount, plus the original $750,000 or
$5,750,000. Its quick asset must be rs
per cent of it's capital. Quick assets,
under the Act, mean-cash, bank de-
posts, and readily marketable securi-
ties. In other words the capital may
and quick assets one and one-fourth
be per cent of the loans, and the cash
per cent of the loans.-N. D. Exp. Sta