The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1917-02-21
BENEFITS OF LOAN ACT.
nishcS Aid to the Farmer in Einan-
cling His Business.


nishcs Aid to the Farmer in Finan-
cling His Business.
BY reason of the facilities created |
by the federal farm loan act, which |
was passed last summer, it will he !
easier in the future for a farmer 20
secure money to make needed i'm |
prOvements or for the purchase of
for the landless man to purchase a
farm, according to . recent publica-
ttiSn Of the United States Department
of Agriculture Farmers' Bulleton
1929 entitled "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 farmers on farm mortgage secur-
ity. The interest charges will be not
more than 6 PEI cent, nor more than
1 per cent. above the rate paid on the
bonds sold by the banks. If 1-2
per cent. bonds should be issued,
therefore, the rate charged on loans
| would be IL 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 ex-
pense of frequent renewals.
The payment of a certain part of
the principal annually or semian-
nually, with the interest, will be re-
quired The total payment, including
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 tetpay
on a loan of $1,000, with interest at 8
per cent. in 20 years, is sSO.24.
After a loan has run years the
the whole amount, if he desires, on
lany interest date, or to make partial
payments in addition to the regular
installment
The requirement Of installment
payments on the amortization plan,
as outlined above, will serve, first, to
cultivate habits of thrift in the bor-
rover. and second, to make possible
the placing of the loans at lower
rate of interest, since the gradual
reduction of the principal constantly
improves the security for the unpaid
balance. The privilege of optional
payments after first 5 years leaves
the borrower free to discharge his
indebtedness before the end of tho
, loan period, if he finds it convenien,
to do so.
The federal land banks will per.
4 fff1sl6 thfes important services! q,
They will convert the security which
farm mortgages afford into a ne
gotiable form, known as farm-loan
bonds. CD They will furnish addi-
tional 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 advantage.
The bonds are to be issued in de-
nominations ranging from S25 to ST.
ooo, and it is expected that the bonds
OF small denomination will encourage
saving through their appeal to indi-
Vlduals who have not been in the
habit of making investments. The
bonds will be secured not only by
farm mortgages deposited in trust
with a government official (thc regis
trar for the land bank district but
also, as indicated above, by the CAPT
| tai and surplus Of the IL land banks.
Both mortgages and bonds will be
exempt from all forms of taxation.
i Farmers who wish to obtain money
rrom the Federal land banks will Or
| dlnarlly be obliged to form local loan
associations, and get their loans
through these organizations. The To-
cal associations will improve the cred
1t OF their members and reduce the
cost of their loans through the per-
1ormance of certain definite services.
among which are the following: The
committee called the loan commit
tee of the association will appraise
the property offered as security and
approve all Applications for loans
winch are sent to thc lard bank. The
secretary-treasurer Of the associa.
tion VIII transmit the papers and car
ry on all COrreSpOndance with tbo t,,,d