La Junta tribune., 1917-02-10
FARM LOAN ACT
Some Of the Ways In Which the New
System Aids the Farmer In Fin.
ancing His Business

BY reason OF the facilities created
by the Federal Farm Loan Act,
which was passed last summer, 1t
will be easier In the future for a
farmer to secure money to make
needed Improvements or for the pur-
chase of live stock, and 1t will be
easier also for the landless man to
purchase a farm, according to a re-
cent publication OF the Department
of Agriculture Farmers Bulletin
1929 entitled How the Federal
Farm Loan Act Benefits the Farm
er."
The federal land banks established
under this act will stand ready at
all times, it is expected, to lend
money TO farmers on farm mort
gage security. The interest charges
will be not more than s per cent.
nor more than l per cent above the
rate paid on bonds sold by the banks.
II Az per cent bonds should be
issued, therefore. the rate charged
on loans would be 5a per cent or
less. There will be no commissions
or bonuses. The loans will be made
for periods OF time ranging from
five to forty years thus doing away
with the trouble and expense Of
frequent renewals.
The payment OF certain part of
the principal annually or semi-an-
nually, with the interest. will be re-
Quired. The total payment. includ-
ing the interest. will be the same
for each year. and will be just
large enough so that the entire prin-
cipal will be paid off at the end OF
the period. The annual payment
thus required TO pay off loan of
$1,000. with interest at 5 per cent,
in twenty years. is ss0.2i.
After loan has run five years.
the borrower will be permitted to
pay off the whole amount, II he de-
sires, on any interest date. or to
make partial payments in addition
10 the regular installments.
rhe requirement of installment
payments In the amortization plan.
as outlined above. will serve, first.
TO cultivate habits OF thrift In the
borrower. and second. to make pos
sible the placing of loans at lower
rate OF interest. since the gradual re-
duction OF the principal constantly
improves the security for the unpaid
balance. The privilege of optional
payments after the first five years
leaves the borrower free to discharge
his Indebtedness before the end OF
the loan period. II he finds II con-
venient to do so.
The federal land banks will per-
form three important services. t
They will convert the security which
farm mortgages afford into nego-
table form. known as farm-loan
bonds. (?) They will furnish addi-
tionai security for the protection Of
these bonds. through their capital
and surplus. and thus make the
bonds more attractive TO investors.
CD They will sell the land-bank
bonds In the open investment market.
which. for obvious reasons. the
small farmer could not reach to ad-
vantage.
Tha bond, arc 70 be issued In de-
nominations ranging from s25 to
$1,000. and II is expected that the
bonds OF small denomination will
encourage saving through their ap-
real 10 individuals who have not
been In the habit OF making invest
ments. The bonds will be secured
not only by farm mortgages depos-
tied In trust with n government Of
ficial fthe registrar for the land
bank district) but also. as indicated
above. by the capital and surplus OF
the twelve land banks.
10th mortgages ana bonds will be
exempt from all forms OF taxation.
Farmers who wish 10 obtain mon
ey from the federal land banks will
ordinarily be Obliged TO form local
loan associations. and 10 get their
loans throush those organizations.
The local loar associations will i'm.
s.rovu Tho ~-catt NJ shotr n. nm, ha -
and reduce tho cost Of their loans
through ttc rerfo' nance Of certain
definite services. among which are
the following: The committee called
the loan committee" Of the associa-
ton viii appraiss the property Of
fered as security and approve oil ap.
plications for loans which are sent
20 th, land bank. The secretary
treasurer Of the association will
transmit the papers and carry on