The Johnson City comet. (Johnson City, Tenn.) 1916-1917, 1917-04-19
FARM LOAN ACT
HELPS FARMERS
1t Helps Those Who Help Them
selves and Who Keep Up
Their Farms
DO YOU KEEP FARM RECORDS?
Farm Records Tell What Kind of Bust
ness You Are Doing, What the Earn
ing Power of Your Fatm ls-This
Assures Better Borrowing Credit.

(By C. e. Alfred, Division of Extension,
University OF Tennessee, Knoxville)
The Federal Farm Loan Act passed
by the Gath Congress, contains one pro-
vision that is especially interesting
from the viewpoint OF the new business
principle it is introducing to the
financing of farms. In Section II, Ar
ticle 5, of this act it is expressly stated
that "in making said appraisal, the
value of the land for agricultural pur-
poses shall be the basis or appraisal,
and the earning power of said land
shall be principal factor. >
Heretofore, mortgage, security has
been principally upon the sale value Of
the land. With fifty per cent margin
on the value Of the land and Intelligent
appraisers, this has been safe business
for the lender. Appraisal in this case
consists mainly in a comparison of the
land under consideration with other
nearby land OF known value in topog-
raphy distance from the market soil
and other factors likely to affect its
sale value. Under such system, the
earning power of the land is consid-
cred only to the extent that such fac
tors as those named are limiting fac,
tors in the earning power of the farm.
Such a basis OF mortgage security is
~ 81 ia a N n
of borrowers for lenders is much
larger than the demand of lenders for
borrowers. With the coming of COM
petition in the farm loan business,
more and more attention is likely to
be given to the earning power of indi-
vidual farms, and to individual systems
of management.
The new Federal Farm Loan Act In
the section quoted, contemplates follow
ing this latter method in appraising
land,
Under this system of appraisal rec
ognition is given to the fact that the
same farm may be worth more under
one farmer and one system of manage
ment than under a different farmer
and different system of management
In other words, of two farms that are
now being valued the same, the one
with the best income can secure the
larger loan under the new method OF
appraisal. Loans made on such ap.
praisals are based on the ability of the
borrower to meet his obligations with.
out foreclosure, rather than on his
probable solyency lii case of foreclO'
sure :, A-.-esaAsa- -
This will be good business for both
borrower and lender, as it will curb
the careless borrower, put more CAPT.
tai in the hands of the best users, and
protect the lender against security
that is not very liquid.
One good feature of this proposed
| practice is the incentive it will give to
, good business practice among farmers
! The farmer that makes the most is to
be worth the most
To know what the real earning pow.
er of the farm is. farmers must keep
accounts, and keeping accounts will
point out many ways to increase the
earning power of the farm.
Good accounting is the key to sue
cessful business management. For any
information on bookkeeping, or for a
simple method of keeping farm &C
counts, fill the following coupon and
send it in. The service of the Division
! of Extension is free to residents pt
Tennessee