The gazette-times. [volume] (Heppner, Or.) 1912-1925, 1917-03-08

uOVII 6UOtItI QuUGtt
NEW FARM LOAN ACT
Washington, Feb. 27,-By reason
of the facilities created by the federal
farm loan act, which passed last
summer, it will be easier in the fu-
ture for a farmer to secure money
to make needed improvements or for
the purchase of live stock, and it will
be easier also for the Iandless man
to purchase farm, according to re-
cent publication of the Department
of Agriculture (Farmers' Bulletin
1929 entitled "How the Federal
Farm Loan Act Benefits the Farmer"
The Federal land banks established
under this act will stand ready at all
times, it is expected, to lend money
to farmers ON farm mortgage securi-
ty. The interest charges will be not
more than 6 per cent, nor more than
per cent above the rate paid on the
bonds sold by the banks. If Az per
cent bonds should be issued, there
fore, the rate charged on loans would
be 51a per cent less. There will be
no commissions or bonuses. The
loans will be made for periods of
time ranging from s to 40 years, thus
doing away with the trouble and ex-
pense of frequent renewals.
The payment of certain part of
the principal annually or semi-annu-
ally, with the interest, will be re-
quired. The total payment including
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 a loan of $1,000 with in
terest at per cent, in 20 years is
$8O.24.
After a loan has run 5 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, tC
cultivate habits of thrift in the Dor.
rover and second, to make possible
the placing of loans at lower rate
of interest, since the gradual reduc
ton of the principal constantly i'm
proves the security for the unpai(
balance The privilege Of optiona
payments after the first years leav
es the borrower free to discharge hi
Indebtedness, before the end of tn,
loan period, if he finds it convenien
to do so.
| The federal land banks will per
, form three important services. (1
They will convert the security whic
farm mortgages afford into a negC
table form, we'll known as farm-loa
bonds. (2) They will furnish ad
ditional security for the protectio
of these bonds, through their capita
and surplus and thus make the bond
more attractive to investors. 6
They will sell the land-bank bond
in the open invesement market whic
for obvious reasons, the small fal
mer could not reach to advantage.
The bonds are to be used in d.
: nominations ranging from $25 I
d $1,000 and it is expected that tn
n bonds of small denomination will er
g courage saving through their appe;
! to individuals who have not been i
S the habit of making investment
n The bonds will be secured not onl
: by farm mortgages deposited
n trust with a government official 9th
v registrar for the land-bank district
:. but also, as indicated above, by til
v capital and surplus of the II Ian
" banks.
Both mortgages and bonds will /
S exempt from all forms of taxation.
e Farmers who wish to obtain none
: FROM the federal land banks will o.
dinarily be obliged to form locs
e loan associations, and to get the
/ loans through these organization
r The local loan associations will in
S prove the credit of their member
Il and reduce the cost of their loar
e through the performance Of certai
e definite services among which are II
It following: The committee calle
the "loan committee" of the associ
r ton will appraise the property OF
Il cred as security and approve all a.
plications for loans which are sci
a to the land bank. The secretar
6 treasurer of the association wi
:. transmit the papers and carry on a
0 correspondence with the land ban
0 relative to the loans. The associ
tion will guarantee the mortgages
n its members, the liability of any il
= dividual member being limited, hoy
n ever. to an additional sum equal
'f the amount of his capital stock,
approximately to 5 per cent of h
l. own loan.
l. One important function of the ne
Is system will be to establish safe stan
0 ards for the farm mortgage busine
d of the United States; for it is not Or