Orleans County monitor. [volume] (Barton, Vt.) 1872-1953, 1917-07-18
The Farm Loan Bank


ton to the Federal Loan Bank at
Springfield to secure loans. It seems
worth while at this time to review
briefly how this bank can assist farm
ers and what it cannot do
The United States has been divided
into districts with a Farm Loan
bank located in each district. The
center for New England is the bank
at Springfield, Mass. Amy persons
who are the owners or are about to
become the owners of farm lands and
who are or intend to be actually en-
gagged in farming, may borrow money
from this bank. Before any money
can be borrowed from this bank, it is
necessary for ten or more men who
wish to borrow, to form Farm Loan
Association. The minimum is ten
members and any number over this
may join. The total amount re-
quired to be borrowed by these ten
men is at least $4,000, no one per-
son being allowed to borrow over
$4,000 or less than 800. This rul-
ing is made so that actual farmers
may be benefited and not spectators.
This prevents the use of this act for
the purposes of land speculation and
monopoly. After the association has
been organized, other members may
be admitted by two thirds vote of the
directors of the association.
It is necessary in the formation of
farm loan association that certain
rules as prescribed by law be follow
ed. At the organization meeting, a
board of five or more directors are
elected and this board elects a loan
committee of three: president, a
vice president, and a secretary-treas-
xx-ho 1c hopIoJ Tho
secretary may, or may not
be a member of the association.
These ten or more farmers then
make application to the Federal Land
Bank at Springfield, Mass, for loans
to the aggregate amount of $4,000
and for a charter to do business.
The directors, as elected, are the
governing body of the association and
determine what course to pursue IN
all matters of business which arise.
The loan committee, as elected, by the
directors, make an appraisal of all
the property offered as security by
the members of the association.
These appraisals when made out in
due form are forwarded to the Land
Bank at Springfield. The bank
sends a man who knows nothing of
the appraisals made by this loan COM
mittee also to make an appraisal of
the same property. Thus two sepa-
rate independent appraisals are made
so that the prospective borrower may
be dealt with as fairly as possible.
| Up to so per cent. of the appraised
value of the land and 20 per cent. of
the appraised value of the permanent
insured improvements may be Dor
rowed. That means that if one pros
| pective borrowers land was appraiS-
ed at $4,000, he would be entitled to
borrow up to $4,000, and if his per-
manent insured improvements are
worth $4,000, he could borrow $1,000
more or $4,000 in all.
/ All members of a farm loan asso-
citation are required to subscribe for
stock in the Federal Bank at Spring.
field, Mass, equal to per cent. of the
amount which they borrow. If a
member borrows $4,000, he will use
! $500 of this amount to purchase
stock in the Land Bank. This stock
receives dividends while it is being
held as collateral security by the asso-
citation, and each borrower receives
his proportion of this dividend ex-
cept what is necessary for the local
farm loan association to use in meet
ing expenses.
Below are some points in connec-
ton with this Federal Farm Loan
Act:
1. The loans may run from five to
forty years at the option of the
borrower. A borrower may pay
all or any part of his loan at any
interest paying date after the mort
gage has run five years.
2. All security offered for loans
must be first mortgages on prop
ty.
3. The rateof interest charged will
not exceed 6 per cent. and may be
as low as five. Not over 1 per
cent. margin may exist between the
rate of interest on the bonds issued
by the bank and the rate charged
on loans made. To illustrate: if the
bonds carry per cent. interest, the
rate of interest on money loaned to
farmers cannot be more than per
cent.
4. The voting strength of each mem
Der of an association is determined
by the number of shares of stock
which he holds One vote is al
lowed for each S. share of stock
But no stock holder may have more
than 20 votes regardless of the
amount of stock which he holds.
Tn the 7qaar1 hnrSEaiv LIST rr-Issob VIC :