Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1917-03-02
FARM LOAN BONDS
GOOD INVESTMENT
BY THE ENTIRE
FORCE OF THE FEDERAL
GOVERNMENT.

(By Frank r. Wilson, Member Fed
eral Farm Loan Bureau
WASHINGTON. D. c.. March 3
The operations of the farm loan act
are divided into two main classes
money assembling agency and a
money-lending agency. The govern
ment puts the first nest egg into the
farm loan plan by buying the original
capital stock of the II federal land
banks if necessary. When this has
been loaned and farm mortgages TAX
en- in return for the money loaned,
the federal land banks may issue
bonds against these mortgages.
These bonds will be among the
most attractive securities ever Of
fered to American investors. AS ex-
planned before, farmers are permitted
to borrow only up to so per cent Of
the value of their land. This means
that every dollars worth of bonds is
sued represents 81 worth of land as
security.
Guaranteed by All Banks.
The fact that each federal land
bank guarantees the bonds Of all the
other banks. also puts behind these
bonds as security the 100000
original capital stock of the banks
and their required surplus earnings.
plus the required annual deduction of
the mortgage loan. Besides this, the
security constantly increases proper
tionately by reason of the constantly
increasing capital contributed by the
Farm Loan association.
The investment end of the farm
loan act is fully as important as the
money-lending end, because 1t creates
for the benefit of small and large in
vestors a security backed by pooled
first mortgages on farm lands, the
proceeds being used to increase the
productive power and enhance the
value of these mortgaged lands.
Since the rate of interest to the
farmer depends upon the rate of in
terest at which these bonds will sell,
congress went the limit to make these
bonds attractive SO they would sell at
low interest 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 order to make these bonds ap-
peal to investors of all classes they
are issued in denominations of from
$25 to $1,000. In order to protect
them against counterfeiting they are
issued by the United States govern
ment bureau of engraving and print
ing and are protected from counter
feits by the whole force Of the Unit
ed States secret service.
Impossible Heretofore. =
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 inspect
ing the security. The cost and the
bother were barriers which made 1t
almost impossible for the small in
weston to get first mortgage securities.
Hereafter it will be possible for
any investor who wants to buy farm
securities from $25 up merely to ap-
ply for a federal farm loan bond Of
the denominations desired.
The rate Of interest at which these
bonds will be issued has not yet been
determined by the federal farm loan
board. 1t is safe to predict that in
the beginning 1t will not be less than
4 and not more than per cent.
So the benefits of the farm loan
act are not limited to farmers who
need the use of cheaper capital. but
they include also those persons who
have money to invest. and are seek
ing g. long time, readily marketable
security of undoubted value.
Officials Cleared; Reporters Blamed.
WASHINGTON. March q A