The Donaldsonville chief. [volume] (Donaldsonville, La.) 1871-current, 1917-02-24
BENEFITS OF LOAN ACT.
Ways in Which New System Furnishes
Aid to Farmer.

TO secure money Co make neeuSu LII
provements or for the purchase OF
live stock, and it will be easier also
for the landless man to purchase
farm.
The federal land banks established
under this act will stand ready at all
times, it is expected, to lend money
to farmers on farm-m Mortgages securl-
ty. The interest charges will be not
more than 6 per cent, nor more than
l per cent above the rate paid on the
bondssold by the banks. If a IL per
cent bonds should be issued, there
fore, the rate charged on loans would
be S 1-2 per cent or less. There will
be no commissions or Bonuses. The
loans will be made for periods OF
time ranging from five to forty years,
thus doing away with the trouble and
expense of frequent renewals.
The payment of certain part OF
the principal annually or semi-an-
nually, with the interest, will be re-
quired. The total payment, includ-
ing the interest, will be the same for
each year, and will be just large
enough so that the entire principal
will be paid off at the end of the
period. The annual payment thus
required to pay off loan OF SlOOO,
with interest at per cent, IN twenty
years, is $80.24.
After loan has run five years the
| borrower will be permitted to pay Off
| the whole amount, if he desires, on
any interest date, or to make partial
| payments in addition to the regular
installment.
The requirement of installment
payments on the amortization plan,
as outlined above, will serve, first, to
cultivate habits of thrift in the Dor
rover, and second, to make possible
the placing of the loans at a lower
rate of interest, since the gradual re-
duction of the principal constantly
improves the security for the unpaid
balance The privilege of optional
payments after the first five years
| leaves the borrower free to discharge
his indebtedness before the end of the
loan period, if he finds it convenient
to do so.
The federal land banks will per
form three important services. ~
They will convert the security which
farm mortgages afford into negotl'
able form, known as farm-loan bonds
| (2) They will furnish additional Sc,
curity for the protection of these
bonds, through their capital and sur
plus, and thus make the bonds more
attractive to investors. 81 They viii
sell the land-bank bonds in the oper
| investment market, which, for obvi
ous reasons, the small farmer coulc
not reach to advantage.
The bonds are to be issued IN de
nominations ranging from $25 te
$1,000, and it is expected that the
bonds of small denomination will en-
courage saving through their appea
to individuals who have not been II
the habit of making investments. The
bonds will be secured not only by
farm mortgages deposited in trus1
with government official (the regis
trar for the land-bank district), bu'
also, as indicated above, by the capita
and surplus of the twelve land banks
| Both mortgages and bonds will bt
exempt from all forms of taxation.
4 Farmers who wish to obtain none!
from the federal land banks will or
dinarily be obliged to form local loai
associations, and get their loans
through these organizations. The 10
cal loan associations will improve thu
credit of their members and reduce
the cost of their loans through thu
performance Of certain definite ser
vices. among which are the following
The committee called the "loan com
mittee" of the association will ap
praise the property offered as securl
ty and approve all applications TO
loans which are sent to the land bank
The secretary treasurer of the asso
citation will transmit the papers ant
: carry on all correspondence with tn
land bank relative to the loans. Th'
association will guarantee the mort
cages of it's members, the liability o
any individual member being limited
however, to an additional sum equa
| to the amount of his capital stock, o
approximately to 5 per cent OF hi
own loan.
One important function of the nev
system will be to establish safe stan
dards for the arm-rnortgage business
of the United States; for it is not pro
J posed to extend any credit except OF
: the basis of proper security. In ad
dition to the Endorsement of the loca
association, every loan must have thu
approval of one of the salaried ap
| praisers appointed by the government
for the several land banks.
!. Further, not more than $4,000
may be loaned to one borrower, no:
more than so per cent of the value
of the land offered as security plu
20 per cent of the value of thu
buildings; and the money must b
used for specified productive pur
poses, such as the purchase Of farm
land, improvements, equipment, fer
tilizers, or live stock, or for the pay
ment of existing indebtedness.
!; The federal farm loan board of thu
treasury department has genera
charge of the system. The Depart
ment of Agriculture will cooperate
with this board in supplying informa
ton and rendering assistance to farm
ers who desire to take advantage o:
the federal farm loan act, especial!
with reference to the organization o:
local loan associations.
!. Surfeited with Street Fairs.
L L