New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-07-02
Furnishing the
Capital Needed
To Finance Crops
How New Rural Credits
System Is to Lignten Bur-
den of American Farmer
By HOMER JOSEPH DODGE,
Editor The Bankers Information
Service

ton its civilian population as well az
its armed forces. SO far as the United
States and the present enterprise
against the Imperial German Govern
ment are concerned, the American peo-
pie have been told that the need Of
victory will not be vouchsafed unless
half the world, in addition to the United
States. can be fed.
This situation places upon the
shoulders Of American farmers a heav-
Ter burden than they have been called
upon to bear before. The long drawn
out campaign for rural credits sys-
TEN In the United States came 20
fruition about year ago, and so there
now is a medium through which the
farmer can be aided in his great task.
That such a need exists is doubted b.
few. Because of new and improved
! methods Of producing crops and of mar
keting theL. the farmer cannot now be
entirely successful unless he has the
capital to avail himself Of these new
aids. The rural credits act was de-
signed to fill this niche, and the Fed
eral Farm Loan Board, now sitting at
Washington as a permanent body. Is
CHARGED with the duty of administering
law calculated to provide the Ameri-
can farmer with funds, secured by
mortgage on his acres, which he may
repay in maximum of forty years.
Not so considered at the time of its
creation. this board has now swung
into a position of importance in the
war councils of the nation.
Bonds To BE Sold
Under the rural credits act the CAPT
tai stock of the twelve Federal land
banks totals but S9,00O,000. The act
contemplatcs that the great bulk of the
funds 10 be lent through these bank
to the farmers shall be provide
through the sale of bonds to the gen
eral public In accordance with this
plan. the Federal Farm Loan Board
announced an issue of bonds on July
|, 1917, to bear Az per cent interest
per annum. Within a year the board
plans to authorize the twelve banks 20
issue from sl00000,000 to Sl5O,O0O,OOo
in these bonds.
Farm loan bonds constitute a mort
gage on all farm lands on which money
shall be lent through the rural credits
system. Under the farm loan act the
responsibility of the twelve Federal
land banks is Joint. The act eXempts
these bonds from taxes except inherl-
lance taxes. and Attorney General Greg
DRY, in an opinion. has upheld the con-
stitutionaity of this ard all other pro-
visions of the act A syndicate OF IN
vestment houses has obtained sepa-
rate legal opinion from former Justice
Charles f. Hughes which agrees with
that of the Attorney General. Conse-
quently the securities are regarded as
gilt edged.
The initial issue Of bonds is being
handled in two sections-half by syn
dictate of investment houses, consist
ing of Alexander Brown & Sons, OF
Baltimore; Brown Bros. & Co., of
Of New York. and Lee. Higginson &
Co.. of Boston. and the other hait
directly by the twelve Fedora! land
banks The bonds command premium.
being nut out at 10lis The four in
vestment houses have agreed 70 form
national group, which will include
bond houses in each district. The fact
that the American people are unta-
miliar with rural credits has induced
the board 10 insist that these invest
ment institutions conduct a campaign
Of education as a part of their selling
plan. The Federal land banks also will
follow a similar course.
Cause Of the Delay
The issuance Of these bonds has been
put off TO this date because the Ad-
ministration at Washington did not
desire to have any other active issue
out in competition with the Liberty
Loan, especially since the farm loan
: bonds will pay Az per cent, as com
pared with the 3l2 per cent paid by
the present issue of Liberty Loan
, bonds. The delay has caused some in
convenience TO the banks and to the
| farmers of the country, but the board
now feels that it can procure money
! for the farmers quickly enough TO
: make I'D for lost time. It is Tact,
however. that for the last two or three
: months the Farm LOAF Board has been
in recent of letters almost constantly
: urging that steps be taken to provide
, funds with which to make loans. Farm
: ers and bankers have informed the
board that many husbandmen have
been obliged to postpone the planting
of food crops because of their inability
to provide themselves with funds for
seed, fertilizer, farming implements
and machinery and labor.
The twelve Federal land banks have
applications on file for s10O,OOO,O0O in
loans. The twelve land banks have
lent a total of 50 ,465, 139. or nearly hall
a million more than their aggregate
capital. This has been done by the
borrowing of money by the banks in
order to satisfy some of the most
pressing demands.
Two thousand national farm loan as
sociations have been organized and
have made applications for loans for
their members. More of them are
being arranged, and by the end OF the
summer the board expects substan-
tial increase in the number. This Will
mean heavy demand for funds at the
opening of the planting season next
spring.
II is for this demand that the board
is trying TO raise funds by the sale OF
bonds. Members OF the board assert
that the public will be aiding in the
prosecution of the war as much by
purchasing farm loan bonds as by pur-
chasing Liberty Loan war bonds. In
this assertion they have the support of
the Administration to a large extent.
California Leads
California is the leading state Of the
Union in government farm loans so
far Her farmers already have received
Sl,45O. 900. Other states in which con-