The weekly times-record. (Valley City, N.D.) 1912-1922, 1917-01-25
Form Of Securities Created BY
the Federal Farm Loan Act
(By Frank R. Wilson, of the Federal
Farm Loan Bureau,)

(By Frank R. Wilson, of the Federal
Farm Loan Bureau)
Washington, Jan. 18.-As explained
before In these articles, the operations
of the farm loan act are divided into
two main classes-a mOney-assembling
agency and money-lending agency.
The government puts the first nest
egg into the farm loan plan by buying
the original capital stock of the IL fed
Grated land banks if necessary. When
this has been loaned and farm mort
cages taken in return for the money
loaned, the federal land banks may is
sue bonds against these mortgages.
These bonds will be among the most
attractive securities ever offered to
American investors. AS explained be-
fore, farmers are permitted to borrow
only up to so per cent of the value of
their lands. This means that every doi-
lars worth of bonds issued represents
So worth of land as security. The fact
that each federal land bank guarantees
the bonds of all the other banks also
puts behind these bonds as security
the nine million dollars original capital
stock of the banks and their required
surplus earnings, plus the required an
nual deduction of the mortgage loan.
Besides this, the security constantly in.
creases prOpOrtionatelv by reason of
the constantly increasing capital con-
tributed by the Farm Loan associa-
ton.
So the investment end of the farm
loan act is fully as important as the
mOney.lending end, because it creates
Efor, the benefit of small and large in
vestors security backed by pooled
ceeds being used to increase the pro-
ductive power, and enhance the value
of these mortgaged lands. Since the
rate Of interest to the farmer depends
upon the rate of interest at which
these bonds will sell, congress went
the limit to make these bonds attract.
i've so they would sell at low inter
est rate. The bonds are exempt from
all form of taxation. The government
will not even collect any income tax
upon them. No state or municipality
may tax them for any purpose. In or.
der to make these bonds appeal to in.
vestors of all classes they are issued
in denominations of from $25 to $1,000.
In order to protect them against count.
erfeiting they are issued by the Unit.
ed States government bureau of en-.
craving and printing and are protect.
ed from counterfeiters by the whole
force of the United States secret ser.
vice.
Heretofore it has been practically
impossible for the small investor to
buy real estate securities. A man or
woman who wanted to buy 800 worth
Of farm securities was not able to find
a farm mortgage of just that size. In
addition, the investor would not buy
such a mortgage without inspecting
the security. The cost and the bother
were barriers which made it almost
impossible for the small investor to
get first mortgage securities. Here.
after it will be possible for any in.
weston who wants to buy farm securi.
ties rom $25 up merely to apply for a
federal farm loan bond of the denomi.
nations desired. The investor will
know that this bond represents 81
worth Of land appraised under govern.
ment supervision and that the bond
was issued under government regula-
ton. The rate of interest at which
these bonds will be issued has not yet
been determined by the federal farm
loan board. 1t it safe to predict that
in the beginning it will not be less
than four and not more than five per
cent.
So the benefits of the farm loan act
are not limited to farmers who need
the use of cheaper capital, but they in.
clude also those persons who have
money to invest and are seeking a
long time, readily marketable security