The Rice belt journal. (Welsh, Calcasieu Parish, La.) 1900-19??, 1917-11-30
HOW THE FARM LOAN
BOARD HELPS FARMERS

The Treasury Department Federal
Farm Loan Board Las issued circular
mo. y in which the method of making
long term loans to farmers is explained
/ also the system of "amortizatiOn," or,
literally, the manner Of killing of the
mortgage. The circular says in part:
The Federal farm loan act is law
the intention of which is to make it pos
Sble for the farmers to make money
by borrowing money. It's intention is
to place money within reach OF the
farmer on such terms as TO convert the
farm mortgage into source OF profit.
The law provides that the borrower
may take out his loan for as short a
time as years. but for most farmers
this would be burdenSome and foolish.
Very few farmers are boz roWing for as
short a time even as 10 years, because
the farmer has the privilege Of paying
in whole or in part, at any interest
date, and it is an advantage TO him to
have the mortgage run for a long
time. The Federal Farm Loan Board
is advising all farmers to take out
their mortgages for period of 81
years, because it makes the amount re.
Quired to kill the debt only about l per
cent year in addition to the interest
rate.
How does it work as a matter Of
actual payment? This is perfectly easy
to understand. Suppose that you, the
reader, desire to take out,a mortgage
under this system. You need 5000,
let us say, with which to pay off an old
mortgage; to buy farm; to buy more
land if you have not land enough; or to
purchase equipment, fertilizers, or live
stock necessary for the proper and
reasonable operation of the mortgaged
farm; to put up buildings, or for i'm
provements upon the land: to take care
of debts which been acCumulating, or
to otherwise Carry forward some pro,
ject for the development of agriculture
on the land mortgaged.
You borrow it by joining a national
farm loan association in the manner
d sCribed in the Farm Loan Primer,
which is Circular No. 5, issued bv this
bureau, and which may be had, free,
upon request, on application to the
Federal Farm Loan Board, Treasury
Building, Washington, D. C.
You get your $4,000 in cash. In order
to get it you have to furnish evidence
Of your title, and your land must be
appraised. You take 1t on SO years
time. TniS does not mean that the
lOap runs for IS years and then falls
due. These amortized loans mature"
in SO years, but they never fall due.
They are amortized or killed off by
small payments every year. The pay
mentS may be either every six months
or every year, and the first payment is
exactly as the payment made at the
end of the thirty fifth year. The last
payment may not be exactly the same
size as the other payments, but it is
about the same.
In your case you would pay 5per cent
interest on your $4,000, which is Sl5O a
year, This is the regular interest
You would amorize the loan or kill il
off by paying another per cent of 3d.
600, or $50 TO the $3.50 Interest, making
$3.50, BY paying this sum, $3.50, an
nually for So years, you not only will
carry interest on the debt, but you will
completely pay it of, amortize it, ex.
tiDguiSh it.
In the past the lender has bad control
Of the matter of payment. The Dor
ROVER has been, in the Scriptural sense,
"the servant TO the lender" Amortiza-
ton changes all that. The borrower
for the first time, is given the chance
to say what he wants.
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