The Bottineau courant. (Bottineau, Bottineau County, N.D.) 1895-1929, 1917-01-18
THE FEDERAL LAND BANKS

of three links for connecting
the farmer with the money
market. There is the farmer
at one end; there is his local
farm loan association to indorse
and handle his mortgage for
him; and, finally, there is his
district land bank to loan
money on the mortgage. The
cost for the service rendered
cannot exceed one per cent and
may be less. This must cover
all expenses, and the balance,
if any, is paid to the farmer as
dividends on his stock in the
local association. In other
words the farmer is to get his
loan at actual cost. Very
much depends, therefore, on
the Land Bank of his district.
The Land Bank is to be an
important institution, with
large funds, and a large force
of employees. The minimum
cash capital for beginning busi-
ness is $3.50, 200 for each bank,
and there will be twelve banks.
The capital may later be in
creased without limit, and will
be so increased if the act is
success. Each bank may esta-
blish branches in it's district.
Four North Dakota cities have
made formal request to have a
| Land Bank, namely: Bismarck,
Fargo, Grand Forks and Minot.
The Land Bank will have
nine directors, six being farm
ers and three being chosen by
the Federal Farm Loan board.
The six farmers will be mem
bers of the local loan assoCia
tiOns, having first mortgages
on their farms and being
chosen by the local association.
One of the three directors
chosen by the Farm Loan board
must also be an actual farmer.
That is, seven of the nine dire
ctors of this bank will be farm
ers.
The $3.50, 900 cash capital will
start the district Land Bank in
business. This original capital
may be subscribed by the
public at large, but this is hard
ly likely to happen, since this
capital stock will all be retired
just as soon as the local farm
loan associations are able to
take out $3.50, 600 of stock in
the District Land Bank. In
other words, the Land Banks
will, in the end, be owned and
controlled by borrowing farm
ers. The government of the
United States will undoubted-
ly have to furnish part or all of
! the $75O,OOO of original capital
for each Land Bank. This it
will do at the end of thirty days
after the subscription books
have been opened. if any or all
of the capital stock remain un-
subscribed. The local farm
loan associations have to take
out only 100000 of capital
stock before choosing their six
of the nine directors, and TAX
ing permanent control. This
feature, coupled with the pro-
mise of early retiral of the
original capital stock, makes
the chance for public subscrip-
ton for stock in the Land Bank
very small And last of all, Of
course, it's earnings cannot be
high, work as it will on one
per cent margin.
There will be no limit to the
capital stock Of the Land Bank
when once the local farm loan
associations get control. The
capital will Increase AS loans
increase, five per cent of the
loan being add u to the capital.
Thus, if the loans are 500, 600
in Land Bank, its capital
will be five per cent of this
amount. plus the original $780,
600 or $755,OOO Its quick
assets must be % per cent Of
its capital. Quick assets. un-
der the Act, means cash, bank
deposits and readily market\
able securities. In other words
the capital may be five per
cent of the loans, and the cash
and quick assets one and one
fourth per cent of the loans
North Dakota Experiment Sta
ton.