The Yale expositor., 1917-03-15
FARM LOAN ACT.
v. Its Effect on Farm Tenantry.
(By Frank r. Wilson, federal loan bu-
reau, Washington, ID. CD

(By Frank r. Wilson, federal loan bu-
reau. Washington, ID. CD
Students of American agriculture
have been greatly concerned over the
remarkable increase in farm tenantry.
Years ago when land was plentiful
and cheap, tenantry was almost un-
known. The man who wanted to farm
simply went out and purchased cheap
land or settled on government land.
Practically all of the land was farmed
by owners.
When the supply of cheap land be-
came exhausted and most of the land
occupied, there was no longer an out
let for the increasing number OF land
less farmers. Consequently, those
who wished to engage in the business
were compelled to dicker with those
who already held title to the lands.
Farm land ownership now represents
billions of dollars in land values which
constitute positive bar to the getting
of farm homes by landless farmers.
The question is frequently asked, IF
the farm loan act provides cheaper
money for land purchase, will 1t not
make it easier for some men to get
credit to monopolize land, increase
land values, make it harder for the
tenant farmer, and perpetuate and
broaden the tenant systemT
Only for Actual Farmers.
The answer is that the privilege OF
borrowing under the farm loan act
is denied the landlord and the spec
ulator. Furthermore, the size of the
loans is limited to $4,000 to check
the tendency toward too large farms
and land monopoly.
So, it will be seen that the farm
loan act gives to the rich no additional
advantage in buying land, but does
give an added advantage to the land
! less. 1t exerts its financial pressure,
and will always do so, in favor of ac-
tual working-farmer ownership and
against absentee landlordism or the
holding of lands out of use for specu-
lative purposes.
But it has been frequently asked
how a credit system that lends only
up to 80 per cent of the value of the
land enables the tenant to buy farm
if the tenant has not saved the other
so per cent.
To this man the avenue for acquir-
ing the other so per cent is the Sec
ond mortgage, given either to the orig
inal owner of the land or to a private
money-lending agency. Financial men
predict that under the farm loan sys
TEN the second mortgage will take on
new value.
Good for Both Parties.
The tenant who wants to buy land
indicates what land he intends to pur
chase when he joins the farm loan as
sociation. Then when he gets his lOar
up to 80 per cent of the value he pays
that down to the original owner of the
land. Then he executes u second mort
gage to the original owner this mort
gage to come due, say, in ten years
The first mortgage under the amortiza
tion plan will be gradually reduced
each year and the required payment!
Hereunder will be so small as not t
menace the ultimate security of tn,
second mortgage. This will be an ad
vantageous arrangement for bol
parties.
The original owner will get a 81
per cent cash payment for his land
which is more than he would ordinar
lily get in a real estate transaction
The tenant will find that, unless h
has paid an unduly high price for hi
land, his annual payments to retir
both his first and second mortgage
will not be as great as the rent pre-
viously paid.
In some of the states second mort
gage banks are already being forme
by private individuals to lend none
to landless people of proper characte
who want to buy farms and who hav
not saved the so per cent as a mes
egg. 1t Is believed by financiers tha
men with farming ability and integrit
will not have difficulty In getting tn
proposition financed. 1t depends a
. together on the character Of the bol
. rover.