The Celina Democrat. (Celina, O. [Ohio]) 1895-1921, 1917-02-09
INTERESTING
Facts On Farm Loan LRw-Iederal
Land Banks and the Part
They VIII Play

Washington-B By reason OF the ia
cllities created by the federal loan
act, which was passed last summer, II
will be easier in the future for a
farmer to secure money TO make the
needed improvements about his farm
OF for the purchase of livestock, and
il will be easier also for the landless
man to purchase farm, according to
recent publication of the depart
ment Of agriculture Farmers Boil
letin 1929 entitled How the Federal
Farm Loan Act Benefits the Farm
err
The federal land banks establish
under this act will stand ready at all
times, il is expected, to lend money
to farmers on farm-mortgage secur-
ty. The interest charges will be no
more than six per cent,nor more than
one per cent above the rate paid on
the bonds sold by the banks. If "
per cent bonds should be issued,
therefore, the rate charged on the
loan would be 51a per cent or less,
There will be no commissions or
bonuses. The loans will be made for
periods OF time ranging from 5 to 40
years, thus doing away with the trou-
bic and expense of frequent renewals.
The payment of a 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 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 $1,000, with interest at
5 per cent, in 20 years, is $S0.24.
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
insallment.
The requirement of installment
payments on the amortization plan,
as outlined above, will serve, first, to
cultivate habits of thrift in the bor-
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 conven-
ent to do so.
The federal land banks will per-
form three important services. IL
They will convert the security which !
farm mortgages afford into a nego-
table form, known as farm-loan |
bonds. 2-They will furnish addi-
tional security for the protection of
these bonds, through their capital
and surplus, and thus make the bonds |
more attractive to investors. 3-They |
will sell the land-bank bonds in the |
open investment market, which, for
obvious reasons, the small farmer |
could not reach to advantage.
The bonds are to be issued in de-
ranging from $500 to |
100000, and it is expected that the
bonds of small denomination will en- !
courage saving through their appeal I,
20 individuals who have not been in
he habit Of making investments.
Fhe bonds will be secured not only
1y farm mortgages deposited in trust
with a government official Cthe regis
rar for the land-bank district) but
llso, as indicated above, by the cap
tai and surplus of the IL land banks.
Both mortgages and bonds will be
exempt from all forms of taxation.