Morris tribune., 1917-02-09

a given number of years. After ave
years the borrower has the right on
any interest date to make additional
payments on the principal In sums of
$25 or any multiple thereof, thus dis
charging the debt more quickly.
Funds Available For Loans.
After a federal land bank has loaned
to first mortgage $4,000 it can obtain
permission from the farm loan board
to issue $4,000 In farm loan bonds
based on these mortgages, sell such
bonds In the open market and use the
money thus obtained to lend on other
mortgages.
This process Of lending on mortgages
and selling bonds in issues of $4,000
may be repeated until bonds to the
amount of twenty times the banks
paid up capital are outstanding. If
each bank should have only its re-
quired minimum paid up capital of
$75O,OOO this plan will provide eventu-
ally, If all the authorized bonds of
the twelve banks are sold, over $780,
100000 to lend on first mortgages on
farm land. The banks, however, can
Increase their capital stock above the
required minimum and so increase the
amount Of bonds they can sell and thus
Increase the total amount of money
available for loans on farm mortgages.
To make these bonds attractive to in
VestOrs the bonds, together with the
mortgages upon which they are based,
are exempted from federal, state, mu-
n1cipal and local taxation and are
made legal investments for fiduciary
and trust funds. The capital stock of
the federal land banks is also exempt
from taxation. Federal reserve banks
and member banks Of that system are
empowered to buy and sell these bonds.
They are to be issued In denominations
Of 500, $50, 800, $500 and $1,000.
Organization Of Banks
The temporary management of the
federal land banks is to be in the
hands Of five directors appointed by
the federal farm loan board. AS soon,
however, as the subscriptions from the
loan associations total 100000 regular
directors are to be appointed as fol
lows: Three district directors, resident
in the district, shall be appointed by
the federal farm loan board to repre-
sent the public interest, and six local
directors, resident in the district, shall
be elected by the farm loan associa-
lions, who must be stockholders in the
bank. The federal farm loan board
shall designate one Of its appOintees to
act as chairman. The act requires
that at least one of the three district
directors shall be experienced in farm
ing and actually engaged at the time
Of his appointment in farming opera
lions within the district ANY com
pensation paid to the directors must
be approved by the federal farm loan
board
Each loan association must have
board Of directors and a secretary
treasurer. The directors shall serve
without pay. The secretary-treasurer
shall receive such compensation as
may be determined by the board of di-
rectOrs. The association must appoint
an appraisal committee for the pur-
pose Of valuing lands offered as Sc
curity for loans. No member of such
committee shall have any interest in
the property upon which he passes.
To provide funds for current ex.
penses the loan association may re,
tain as commission from each inter
est payment not to exceed one-eighth
Of 1 per cent semiannually upon the
unpaid principal Of the loan. This
commission is to be deducted from the
dividends payable to such farm. loan