Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1917-04-27
FARM LOAN BONDS

he feueTal Fafm Loan Act OF
July II, 1916, created a Bureau in
the Treasury Department, under the
general supervision of a Federal
Farm Loan Board, consisting of the
Secretary of the Treasury, chair
man, and four members appointed
by the President. 1t was made the
duty of this Board to divide the
continental United States (exclus-
i've of Alaska) into IL districts and
to organize in each one of these dis
tricts a Federal land bank. Each one
OF these banks is to start business
with $4,000 capital making the
aggregate capital of the IL banks
100000. The Secretary of the
Treasury was directed to subscribe.
on behalf of the United States Gov
eminent, to any stock not otherwise
subscribed for within 80 days of the
opening of the subscription books,
and in pursuance of this direction
$S,879,905 has been subscribed on
behalt OF the government.
These banks are authorized to
make loans to farmers upon first
mortgages, and to pledge these mort
cages as collateral security for bonds
to be sold to investors, the proceeds
of the sale of these bonds to be used
in making additional mortgage loans.
The act looks to the launching of
IA second national-bank system
TO afford facilities to citizens en-
gagged in the basic industry of agri-
culture to secure credit with which
successfully to carry on their opera
dons SO essential to the general well
fare and to which the value of their
property ought to entitle them"
In response to numerous inquiries
the following information has been
compiled in reference to the Farm
Loan Bonds to be issued by the Fed
era Land Banks under the pro-
visions of the act.
These bonds will be issued in SER
les of not less than $4,000 Cprob-
ably not less than $25O,000) each.
as and when authorized and APP
proved by the Federal Farm Loan
Board, after such investigation and
appraisement as it shall deem wise.
They will be the obligations of the
| issuing bank.
$25, $50, 500, $500, and $1,000.
Coupon may be exchanged into
one of the 2 banks.
Probably 30 years, redeemable af-
ter five years
Payable semi-annually. Rate not
yet determined-not less than four
per cent nor more than five per cent.
Pledge of an equal amount of first
| mortgages on cultivated farms. These
mortgages are limited to so per cent
of the value of the land mortgaged
and 20 per cent of the value
of the permanent insured improve
ments, as determined by two sep
arate appraisements, of which the
1
second is to be made by an appraiser
appointed by the Farm Loan Board.
| The equality between the amount of
| bonds outstanding and the amount of
collateral pledged will always be
maintained by the redemption of
| bonds or the addition of collateral
but as every loan will be made on
the amortization plan, the principal
OF each mortgage will be reduced an
nually, thus effecting a continuing
increase in the equity" or differ
ence between loans and land values.
Each mortgage is guaranteed by a
Farm Loan Association" of which
the borrower is a member and stock
holder. On this stock there IS
| double liability. Each association is
required TO buy stock in the bank
to the amount of five per cent of the
loans to its members, and this stock
is held by the bank as security on the
| associations guarantees. Each bank
will start business with assets of
S750,O00, derived from the sale of
its capital stock. This stock will in
crease with each loan made, to the
amount of five per cent of such loan.
until II reaches $1,000, 900, after
which the repayment of the $780,
| 600 originally subscribed will begin.
such repayment being concluded
when the aggregate capital reaches
sS,OO0,0o0. Twenty-Five per cent of