The Richmond Virginian. (Richmond, Va.) 1910-1920, 1918-01-20
GIVES R[A''ON Fer
A VANCE CT RATE
More for Money Being Loaned
TO Farmers.

The action of the farm loan board
in advancing the interest rate has at
tracted much attention and has not
passed without some criticism. The
state council of defense has received
from Washington on explanation or
this action as follows:
The federal land banks on Decem-
Der advanced the interest rate on
farm mortgage from s per cent to
Ia per cent All farmers under
stand that the banks are not loan'ns
government money. bat are obliged
to get money for the farmers by sell /
ing federal farm loan bonds. The
government did advance 10 the banks,
without interest, sa,o0o,ooo of the
GA ital OF the banks. which the farm
ers now have the use OF at 5 per cent
interest. But this 100000 was
loaned to the farmers long ago, and
now the only way in which money
can be provided for loans to the farm
ers la by selling bonds to investors.
THE law gives to the banks the
right to charge per cent interest but
the federal farm loan board. after
looking the country over. dec ded that
Federal farm loan bonds could be sold
to investors at Ia per cent. BY
charging the farmers per cent the
banks would have one-half of / per
bent to pay their expenses. Up to
the first of November these IL per
cent bonds were brought readily by
investors at a small premium. and as
a matter of fact about 5000 investors
did buy them and are now holding
them. The amount of money raised
BY the sale OF these bonds at 4 Ia
per cent interest II nearly $50, eoo.e GOO.
The small premium which the hanks
4 were able to make on these bonds
helped to some extent to pay the eX-
psnses OF the banks.
Ls about November the federal farm
loan board ana the banks were unable
to sell the la per cent bonds any
longer at any cons derab BILE prem 'um.
1.-The war emergency has called for
such enormous investments OF money
/ that interest rates have risen to Dor
rowers everywhere.
Federal farm loan boards are ex-
empt from taxation OF all sorts, but
sven tax-exemp pit bonds now have 10 be
sold ut higher rate OF interest than
1.-the market called for three or four
months ago. The increase In this
EintArast rate has been from one-half
Ito I per cent on the choicest state
ana municipal bonds TO rates exceed
Ling Z and s per cent for large indus
trial ana transportation generations.
EThe farmers of the United gates are
Ezn0W
E0f Interest through the federal farm
! loan system than any other class OF
Ehorrowers In the country. This IL the
| 1rst time in our history that the farm
- m d class have been able to do
|stAis, but It Is no longer possible for
Ethem to obtain quite as low rates
~ have recently obtained.
ssThe farm loan board and the land
banks believe ~thet it - Infinitely bet
Iter to advance the interAst rate t.
Eth~ farmers now than to fail 10 meet
1.-THE needs OF the farmers nv sticking
Ito an interest rate so low that while
n met the conditions OF six months
arc. Il does not meet the conditions OF
today.
Through the federal farm loan
systern the farmers as borrowers. are
/ In the market for large sums ~
money on a longtime bond nerma-
Rnent investment has's and thev mus
become used to the rise and fall OF
Emonsy rates according 10 the auctua-
Ition Of the market II has heaN 10
EnoW, ana always will be the desire
Eof the farm loan board and the Off
Fc0ra OF the federal land banks to get
ImOney to the farmers Of the country
Eat the lowest possible rate, and no
4Rort will be spared to bring that
Ecoudition about at all times II In not
|spo9slhle. however, 20 establish or
lsmairtAin rate in defiance OF condi-
L tions existing In all the markets OF the
kvOr1d. II Is honed that 1t NAV soon
Ebe possible to lower the loaning rate
tfo per cent hut whether or not tbs
lean be done depends nnor conditions
sWktch are bevord the control ~ the
#henka or Of the farm loan board.
Es NY establishing a. difference 81
fsper rant h~twser 'he rate maid on the
e60nAs and the rate charged by the
Ebanks situation is created which
Twill ENABLE the h.~ts ~ ass,,s. +hn
Eprjce o. their bonds to the prevailing
noncy rates.
N ion win be rie.v 70 evary
E3arYt,er who remembers. first. that the
ElaAnks must borrow the raonev before
EtA&x can loan = 70 tho farmers: 500