New-York tribune., 1917-12-24
Farm Loan Board Urges
Admitting Private Banks
Asks Amendment of Congress to Enlarge Sys-
tem-Investors Are Reassured That Court At
tack on Law Will Not Affect Their Bonds

-
WASHINGTON, Dec 23.-The Fed
eral Farm Loan Board announced to-
day that il advocates an amendment
10 the farm loan act under which
many private farm mortgage bankers
may enter the government system as
ioint stock land banks. At the same
time the board also gave warning that
il expects interests seeking 70 break
down the system 70 file suit soon to
test the constitutionality Of the act
Amendments 70 the existing law
which will DC specifically recommend
cd to Congress in the boards forth
coming annual report are:
To remove the present restriction
permitting a joint lsNd bank to do
business only in the state where IT is
situated and one contiguous state.
To permit bank 20 issue bonds 10
the amour; oi twenty times Its capt.
tai stock, which must be S25O,OOO or
more, instead Of fifteen times, as un-
der existing law; and
To raise from 6 10 o. per cent the
maximum interest rate which joint
stock land banks may charge on loans
10 farmers.
Association Seeks Changes
Al these amendments have been
sought By the Farm Mortgage Bank
ors' Association, whose leaders pre-
dicted that d large proportion Of the
members would seen government,
charters and opcratc under supervision
Of the Farm Loan Board if the modi-
feations were mace. Their plea 20 be
allowed to use The name National
Land Bank instead of Joint Stocs
Land Bank has not been received ia
vorably by the board, owing TO fear OF
confusing the private institutions with
the governments twelve Federal Land
banks.
Joint stock land banks would still
bc compelled TO limit interest rates on
, loans within ! PCT cent more than the
selling price Of their bonds. even
shough the maximum we're raised 70
Gis per cent. They also would have TO
compete with The Federal land banks
new rate Of 5's per cent.
Loan Boards Statement
In a statement to-day explaining the
financial condition OF the Federal land
banks the Farm Loan Board said:
I've arc advised that the next move
i of those who are seeking to break
down the system will be 20 institute
suit contesting the coustitutlonallty OF
the farm loan act. The purpose Of this
. suit will be to alarm investors VINO
have already bought bonds, and to dis
suade others from buying them.
There is not the slightest reason 20
fear il, however. The system is SO
strong, and its administration IS OF
such paramount importance to the ag-
,ricultural development Of the coun-
try. that attacks on il are bound TO
fail. II is only proper, however, that
,This warning should be given in order
that the farmers and all friends of the
system should grasp the sinister pur-
pose that is behind these attacks.'
Charges Arc Explained
Recent charges that the Federal land
banks are not self-supportiug, based on
the boards application 10 Congress for
an appropriation of SlOO,OOO.OOO a year
on this year and next. with which the
Treasury might absorb any farm lean
bonds not sold privately. were met by
= explanation that the average impair
mcut of the s750.O00 capital with which
each bank started six months ago. rep
lcsentinC government stock subscrip-
tions. amounts 20 per cent, or S4o,-
600 each.
This is more than counterbalanced by
farm loan associations subscription TO
additional stock, amounting to more
than 81 100000 or about Sl25,00O for
. each bank. Actual capital of all banks
consequently is about Sl0,0OO,OOO, or
81 100000 more than their original cap
ital, furnished by the government.
Moreover, says the boards statement,
the volume of loans TO farmers is in
cressing so rapidly that Several Of the
more active banks. If permitted 10 con-
tinue their present rate Of growth, will
be able TO begin the repayment of the
Government subscriptions 10 their stock
inside OF eighteen months"
For the last six months, says the
statement, the banks have paid out
money continuously, with hardly dol
lar Of receipts Expenditures were for
organization furniture, stationery,
rent for quarters, Office force, etc
salaries for legal advisers to examine
land titles and for land appraisers.
On November l the banks paid six
months interest on their bonds, and
the first payment on loans made TO
farmers are only now beginning 20
tricklc in.
Assets Not Appearing in Books
The banks assets not appearing on
The books are the interest accrued but
not yet due on loans and charges for
appraisement and determination of
title. payable by borrowers when their
loans are closed Banks have made ap-
praisements and examination of title
on more than Sl00,OOO.OO0 Of which
only $S0,0O0000 has been closed. and
fees are TO be collected on the remain
ing Slo,OOOOO0 loans approved but not
closed.
Allowance for the fact that the farm
loan system has been in full operation
for only six months must be made,
says the boards statement. IL adds:
"The business Of the banks is sim