The weekly soliphone. (Paragould, Greene County, Ark.) 1907-1918, 1917-01-25
EXPLAINS WORKINGS
OF FARM LOAN ACT
(By Frank r. Wilson, of the Fed
eral Farm Bureau-W Written Tor
The United Press)

/
Washington, Jan. 19.-As ex-
planned before in these articles, the
Operations Of the farm loan act are
divided into two main classes
money assembling agency and a.
money lending agency
| The government puts the first
nest-egg into the farm loan plan by
buying the original capital stock
of the twelve Federal Land Banks
! if necessary. When this has been
loaned and farm mortgages taken
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 offer
ed to American investors. AS eX-
planned before, trainers are permit
lied to borrow only UP to 80 per cent
of the value of their land. This
means that every dollars worth OF
lbonds issued represents $500 worth
of land as security.
The fact that each Federal Land
guarantees the bonds Of all the 9TH
er 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 annual
deduction of the mortgage loan.
Besides this, the security con-
stantly increases proportionately by
reason of the constantly increasing
capital contributed by the Farm
Loan Association.
So the investment end of the
farm loan act is fully as important
as the moncy-lending end, because
it creates for the benefit Of small
and large investors security back
ed by pooled first mortgages on
farm lands, the proceeds being used
to increase the productive power
and enhace the value OF these mort
gagged 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 q low interest rate
| The bonds are exempt from all form
of taxation. The government will
not even collect any income tax up
on them. No state or municipality
may tax them for any purpose.
In order to make these bonds APP
peal to investors of all classes they
are issued in denominations OF from
ISIS to $1,000. In order to protect
them against cohnterfeiting they
Iare issued by the United States
Government Bureau of Engraving
and Printing and are protected
from counterfeiters by the whole
force of the United States secret
service.
Heretofore it has been practically
impossible for the small investor
to buy real estate securities,
man or woman who wanted to buy
500 worth of farm securities was
not able to find 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
lmade it almost impossible for the
small investor to get first mortgage
securities.
Hereafter it will be possible for
any investor who wants to buy
farm securities from $25 up merely
to apply for Federal farm loan
bond of the denominations desired.
The investor will know that this
bond represents $500 worth OF
land appraised under government
supervision and that the bond was
under government regulation.
The rate of interest at which
: these bonds will be issued has not
vet been determined by the Fed
eral Farm Loan Board. 1t is safe
, to predict that in the beginning il
will not be less than four and not