The Barre daily times. (Barre, Vt.) 1897-1959, 1917-01-18
GOOD CHANCE
TO INVEST
Thinks Frank r. Wilson
About the Federal
Loan System
BONDS TO BE SOLD
ON MORTGAGES
Every Dollar a Farmer Bor-
rows Is Represented by
So Worth of Land

The farm loan act from the point Of
view of the investor is taken up by
Frank r. Wilson of the federal farm loar
bureau in the fourth of series of ar.
ticles on the farm loan banks. Mr. vii.
son says;
Farm lands have always been regard
ed as the safest security in the world
But loans made against farm lands have
generally exacted higher interest rate
than loans made on other good property.
"There are several reasons for this.
'Such loans are not readily transfer
able, i. e., marketa Bile. Farm loans are
usually desired for long periods. A loan
Tor less than five years is usually OF lit
tie value to the farmer. If the loan is
made for the purpose OF buying land the
farmers chance to pay it off is to make
the money out of the land 1t is against
reason to expect that land will pay for
itself in five years.
"Well managed commercial banks can
not make business of lending money
on farms and carrying the loans them
selves. 1t is not good banking, 1t ties
up their funds in permanent investments
and if persisted in continually would ruin
any bank. This fact limits the supply of
local money for farm loans, and partially
accounts for high interest rates on them.
"The farm lands OF the United States
constitute a great mass OF valuation as.
sets against which money ought to be
borrowed at fair rates of interest. But
it has been chaotic mass of value. No
agency has ever undertaken to assemble
this mass of assets into negotiable form
so that it could be readily handled as a
marketable security,
Now the government steps in and pro-
vides this agency. 1t says to the farmer
who wants to use his land as security:
"'You join a national farm loan asso
citation and contribute your mortgage to
a great federal land bank pool OF mort
Cages. We have provided the machinery
for this purpose and adopted rules for its
operation so that the interest of all will
be safeguarded. When your mortgages
are massed together, "A federal land bank
will take these mortgages and issue
bonds against them; sell the bonds to in |
vestors and relend the money to farmers. |
The pooled mortgages of the farmers of |
the United States will be security for |
every bond The high character of this |
security means that people who have |
money TO invest will jump at the chance
TO put their savings up against your Sc
,urity at low rate OF interest. We will |
ct you have this money at actual cost
% us, plus not to exceed per cent to
,over the cost of operating this money
assembling and money lending machin-
,ry,'
"Then Uncle Sam turns to the investor
md says:
"'We have enabled the farmers OF the
United States to give us their massed
mortgages. We are offering you bonds
which are in reality first mortgages
igainst the farms of all who join this
,ool II is the best security in the world, II
,eeause every dollar farmer borrows is
represented by 81 worth of land plus the
took each farmer has purchased in his
ocal association. To make these bonds
ven more attractive, 50 as TO eventually
i've the farmer lower interest rate. we
ave exempted them from all forms of
axation. Even Uncle Sam will not col
ect any tax from them, nor from the in /
ONE upon them. No state or municipal
ty may tax them. We have made these
onds in small denominations from S25
pward so their purchase will be easy
mong people with small savings, and we .
ill have the bonds printed and engraved :,
Y the government bureau of engraving .
nd printing to protect them against !
and the United States Sc
ret service will watch over them
$50 the farm loan act, in addition to o
roviding money for land purchase and :
Irm development, provides a new form
security which ought to become one
the most popular in existence, because
is based upon the land values of the
ltire country"
Editors note: To morrow's installment
i'll be devoted to discussion of how '
"a farm, Loan oof halp 70 raI.aaa : y