The Pensacola journal., 1917-01-21
By Frank R. Wilson, Federal Farm
Loan Bureau, Washington, D. @.

By Frank r. Wilson, Federal Farm
Loan Bureau, Washington, ID. @.
Farm lands have always been re-
garded as the safest security in the
world, but loans made against farm |
lands have generally exacted high
er interest rate than loans made on
other good security.
Such loans are not readily trans
ferable, i. e., marketable. Farm loans
are usually desired for long periods.
A loan for less than five years is US
ually of little 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 rea-
son to expect that land will pay for
itself in five years.
| Well managed commercial banks
cannot make a business of lending
money on farms and carrying the
loans themselves. 1t is not good
banking. 1t ties up their funds in
permanent investments and if per-
sisted in continually would ruin any
bank. This fact limits the supply of
local money for farm loans and par
TALLY accounts for high interest
rates on them.
The farm lands of the United
States constitute great mass of val
liable assets against which money
ought to be borrowed at fair fates 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
I it could be readily handled as mar
| ketable security.
] Now the government steps IN and
: provides this agency. 1t says to the
: farmer who wants to use his land
| as security:
D "You join a national farm loan as
5 sociation and contribute your mort
t gage to a great federal land bank
t pool of mortgages. We have provided
t the machinery for this purpose and
v adopted rules for its operation Sc
: that the interest of all will be safe.
e guarded. When your mortgages ar,
s massed together, a federal land banl
e viii take these mortgages and issue
|, bonds against them; sell the bond
: to investors, and re-lend the none.
to farmers. The pooled mortgage
of the farmers of the United State
"a will be security for every bond. Th
= high character of this security mean
that people who have money to inves
will jump at the chance to put thei
= savings up against your security a
: a low rate of interest. We viii le
= = you have this money at actual COS
= to US, plus not to exceed 1 per cen
u to cover the cost of operating thi
= money assembling and money-lend
= ing machinery"
e Then Uncle Sam turns to the in
vestor and says:
eve have enabled the farmers {
- the United States to give us the
E massed, mortgages. We are efferin
ir you bonds which are in reality fir:
mortgages against the farms of a
who join this pool 1t is the be.
= security in the world, because ever
dollar a farmer borrows is repr
sented by s2 worth of land plus Il
stock each farmer has purchased
his local association. To make the.
bonds even more attractive, so as
eventually give the farmer low
interest rate, we have exempted the
from all forms of taxation. Eys
Uncle Sam viii not collect any t.
from them, nor from the income ups
them. Ne state or municipality ma
ty, tax them. We have made the
Ter bonds in small denominations fro
e<. SIS upward SO their purchase viii