The log cabin Democrat., 1917-01-29
BENEFITS OF THt
 FARM LOAN ACT HOW II HELPS FARMER Details of Plan AuthOritativeIy Out lined in Bulletin by U. s. De-
 partment of Agriculture.

An authoritative outline of the
 working plans of the new federal farm loan act is contained in re-
 cent bulletin of the United States ldepartment of agriculture and in re- lsponse to many inquiries from our subscribers as to details of the new
 law, summary of the bulletin pre-
 pared by the department, copy of
 which has just been received by
 the Log Cabin Democrat, is pub
 lished below:
 | Washington, D. C.-By reason of
 the facilities created by the federal farm loan act, which was passed last
 summer, it will be easier in the future
 for farmer to secure money to make needed improvements or for the pur- chase of live stock, and it 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 792) entitled "How the Federal
 Farm Loan Act Benefits the Far mer."
 The federal land banks estab-
 lished under this act will stand ready at all times, it is expected, to lend money to farmers on farm
 mortgage security. The interest charges will be not more than 6 per cent, nor more than l per cent above the rate paid on the bonds sold by the banks. If 1-2 per cent bonds should be issued, there
 fore, the rate charged on loans would be l-2 per cent or less. There will be no commissions or bonuses. The loans will be made for periods of time ranging from to 40 years, thus doing away with the trouble and expense of frequent re- newals.
 The payment of certain part of the principal annually or semi annually, 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 principal will be paid off at the end of the period. The annual payment thus required to pay off loan of $1,00O, with interest a 5 per cent, in 20 years, is $S024.
 After loan has run years the borrower will be permitted to pay off the whole amount, if he desires, on any interest date, or to make par tal payments in addition to the reg ular installment.
 The requirement of installment payments on the amortization plan, as outlined above, will serve, first, to cultivate habits of thrift in the bor- rower, and second, to make possible the placing of the 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 leaves the borrower free to discharge his indebtedness before the end of the loan period, if he finds it con lvenient to do so.
 The federal land banks will per form three important services. CD They will convert the security which farm mortgages afford into nego- tiable form, known as farm-loan bonds. CD They will furnish ad- ditional security for the protection of these bonds through their capital and surplus, and thus make the bonds more attractive to investors. (3) They will sell the land-bank bonds in the open investment market, which, for obvious reasons, the small far mer could not reach to advantage. The bonds are to be issued in de nominations ranging from $25 to- $1 ,000, and it is expected that the bonds of small denomination will en- courage saving through their appeal to individuals who have not been in the habit of making investments, The bonds will be secured not only by farm mortgages deposited in trust with government official (the registar for the land-bank district) but also, as indicated above, by the capital and surplus of the 12 land banks. Both mortgages and bonds will be exempt from all forms of taxation. Farmers who wish to obtain money from the federal land banks will or dinarily be obliged to form local loan associations, and to get their loans through these organizations. The local loan associations. will inn prove the credit of their members and reduce the. cost of their loans through the performance of certain definite services, among which are the following: The committee called the "ioan committee" of the associa- t;nr, ,uill annraisa the nronertV offered