The weekly times-record. (Valley City, N.D.) 1912-1922, 1917-02-08
BENEFITS OF FARM LOAN ACT

Washington, Jan. 30.-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 cas-
Ter also for the landless man to pur-
chase a farm, according to a recent
publication of the department of agri-
culture (Farmers' Bulletin 1922 EMIT
led "How the Federal Farm Loan Act
Benefits the Farmer"
The federal land banks established
under this act will stand ready at all
times, it is expected, to lend money to
formers on farm-mortgage security.
The interest charges will be not more
than six per cent, nor more than one
per cent aboev the rate paid on the
bonds sold by the banks. If AZ per
cent bonds should be issued, therefore,
the rate charged on loans would be
51k per cent or less. There will be NO
commissions or bonuses. The loans
will be made for periods of time rang
ing from five to 40 years, thus doing
away with the trouble and expense OF
frequent renewals.
The payment of certain part of the
principal annually or semi-annually,
with the interest, will be required. The
total payment, including the interest,
will be required. The total payment,
including the interest, will be the same
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 $1,000, with interest
at five per cent, In 20 years, is $80.24.
After a loan has run five years the
borrower will be permitted to pay off
the whole amount, if he desires, on any
interest date, or to make partial pay
ments in addition to the regular in
stallment.
The requirement of installment pay
ments on the amortization plan, as
outlined above, will serve, first, to cul-
tivate habits of thrift in the borrower,
and second, to make possible the plac.
ing Of the loans at lower rate Of in
terest, since the gradual reduction of
the principal constantly improves the
security for the unpaid Balance. The
privilege of optional payments after
the first five years leaves the borrow
er free to discharge his Indebtedness
before the end Of the loan-period, if
he finds it convenient to do so.
The Federal land banks will per-
form three important services. ~
They will convert the security which
farm mortgages afford into negoti-
able form, known as farm-loan bonds.
(2) They will furnish additional Sc.
curity for the protection of these
bonds, through their capital and sur.
plus, and thus make the bonds moro
attractive to investors. (3) They will
sell the land-bank bonds in the open
investment market, which for obvious
reasons, the small farmer could not
reach to advantage.
The bonds are to be issued in de-
nominations ranging from $25 to ST.
900, and it is expected the bonds Of
small denomination will encourage
saving through their appeal to individ-
uals who have not been in the habit
of making investments. The bonds
will be secured not only by farm mort.
cages deposited In trust with a govern
ment official (the registrar for the
land-bank district) but also, as indi.
Gated above, by the capital and sur.
plus of the IL 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 ordi-
narily be obliged to form local loan
associations, and to get their loans
through these organizations. The To-
cal loan associations will improve the
credit of their members and reduce
the cost of their loans through the
performance of certain definite SER
vices, among which are the following.
The committee called the "loan CON-