The interior journal. [volume] (Stanford, Ky.) 1912-1984, 1917-02-09

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citation equal to per cent. of the
amount he borrows. If he borrows
81 900 he will get $3.50 in cash and a
certificate of stock for $50. Or he
may make his loan $1,000, and thus
have net loan of $1,000 taking as
long a time to repay the $50 invested
n stock as on the thousand borrowed.
This investment is for the purpose
of providing the increasing capital
of the Federal Land Bank, and the
| local association invests it in the land
bank stock. The borrower will get
his money back when he pays off his
mortgage, and will get what dividends
it earns while it is invested.
Now, what is the object of re-
curing the borrowers to thus group
themselves into loan associations?
Primarily that the loan associations
may eventually own the Federal land
banks.
This is a cooperative banking sys-
TEN, and machinery must be pro-
vided for the government of the
banks. Each of the local loan associa-
tions has vote in the election of the
directors in one of the Federal land
banks. The loan committee, provided
ny thC lONdl iSSOClttlOIl, 10 tIlt dStHCN
for the valuation of the lands. The
Board of Directors of the local as
ISOLATION admits or rejects new men,
bers, according to their wishes. But,
most important of all, since this sys-
tenn is cooperative, the borrowers
must provide the money for the in
creasing capital Of the bank-and
they do this by investing in the local
associations.
Loans made under this system may
not exceed so per cent. fthe APP
praised value of the land used as Sc
not exceed so per cent of the APP
praised value of the permanent, in
sured improvements thereon.
Non-land owners may become
members of an association by indicat-
ing in their application what land
they expect to come into possession
of and against which the mortgage
will be placed.
Amortization
1t has always been recognized that
the most effective aid one can get is
that which enables him to help him
self.
Some critics of the Federal farm
loan act have charged that this act
makes it too easy for farmers to get
into debt and that there will be a
tendency to overborrow
A careful reading of the bill will
show that this objection is met by
very carefully limiting the use TO
which the borrowed money may he
put and by the requirement that far |
mers gradually each year must re-
duce their Indebtedness.
The farm loan act was designed TO |
be helpful to the farmer of average |
operations who has heretofore heen |
denied inadequate credit. 1t wisely |
limits the leans to so per cent. of the
appraised value o., the security Beg
.&use tlhs s46satS5al makes the Sc
.urity OF high character, this salts
flying the investor, and therefore re-
suits in lower rate of interest.
The use of the money is carefully !
limited to the purchase of land, to
pay off existing Indebtedness, to pur-
chase livestock or to make any pro-
luctive improvement, such as fenc-
ing. drainage, buildings and machin-
nry.
When money can be borrowed
,heaply for productive use, mort
gage becomes ar investment rather |
than handicap. The farmer is en-
lbled to get money to put his land to
better use, so that the profits of his
will pay off his indebted
ness. Hereafter judicious borrowing
on the part of the farmer will be re-
yarded as business enterprise Just as
t is now considered beneficial for
arge commercial institutions to Dor
row.
The farm loan act creates form
IF indebtedness which peculiarly fits
he farmers need. 1t recognizes that
he farming business is one of slow
returns.
SO it provides that mortgage
made under the act shall be paid on
he amortization or installment plan
through long or short period of
ears. The mortgages may be made
% run five to forty years, at the op-
ion of the borrower, and they must
De paid Off interest and principal, in
EQUAL installments through the period
IF loans. Permission is given to pay
I'll of the loan or any part of it on
mi interest-paying date after it has
'un five years.
To give the propectiye borrower AN
.xact idea of the size of the pay
nents required annually to wipe out
mortgage in given period, amor
ization tables have been prepared.
The following table shows the amount
# annual payments required to ey-
inguish, in the period indicated a
thousand dollar loan bearing interest
It 5, l-2 and per cent.
Rate of Interest
FERN years. SCI So 81 SO
o.. $129.5O $135.67 $135.87
QH o. 90 % no Qk