The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1919-09-05
LAND BANKS FOR
FINANCING FARMERS


The organization of Joint Stock
Land Banks has brought inquiries as
to what relations these banks have to
the Federal Land Banks. This being
a matter of such interest to farmers
we give from a study of the Federal
Farm Loan Act, and the actual oper-
ations of the Federal Land Banks the
following brief statement for their
information:
These two kind Of Land Banks
have no relation with each other, ex-
cept that both are chartered by the
Government under the provisions OF
the Federal Farm Loan Act; both
make First Mortgage Loans on the
same percentage of valuations on
farm lands for a period of five to
forty years under the same ammorti-
zation plan of payment; both use ap-
paisers appointed by the Farm Loan
Board; both are under the supervls-
ion and examination of that board,
and both have the power of issuing
tax free bonds, based on the Mort
cages made by them. Neither bank
can charge in excess of six per cent.
interest nor collect directly or lndl-
rectly any commission for making
loans. In their control and plan OF
operation they are quite dieffrent as
shown under the following headings:
Capital.
Originally the capital (S7o0,ooo.-
90 each) of the Federal Land Banks
was paid in practically all of it by
the United States Government, but
hat is to be gradually returned to
he Treasury by the capital stock
which every borrower from these
banks is required to take to the ex-
tent of five per cent. of his loan.
The capital stock of Joint Stock
Land Bank, which must be at least
s25O,OOO.00, is paid in by private
ubscribers, the same as in National
Bank. No borrower is required to
AXE any of this stock to obtain a
loan.
Management.
The Federal Land Banks are now
managed by five directors, appointed
by the Farm Loan Board and the
Joint Stock Land Banks by five or
more directors elected by their own
Stockholders.
How Loans Are Made.
. The Federal Banks loan only to
members of the Local Associations,
who must also be stockholders in 1t.
The Joint Stock Land Banks loan d.
rect to the farmer, the same as an
individual, or any ordinary Bank
would except that as stated above
both Banks use Federal Appraiser,
but in the Joint Stock Banks no other
appraisement is required by low. The
borrower from a Joint Stock Bank
assumes no obligations except his
own regular semi-annual payments.
Subsection 4 Of section. II OF the
Farm Loan Act restricts borrowers
to four specific uses for their loans.
Subsection 6 restricts loans to
those who are actually cultivating
their farms, or who bind themselves
to do so shortly.
Subsection z limits the amount to
any one borrower to $10,0OO.oo.
Subsection 10 imposes the penalty
of foreclosure at the option OF the
Land Bank if the borrower uses any
portion of his loan for purposes not
specified in his oroginal application.
These restrictions, however, apply
to the Federal Banks only, since Sec
ion 16 of the act states that they do
:ot apply to the Joint Stock Banks,
so that it. would seem that those
Banks can loan for any legitimate
purpose to any farm land owner ac-
ceptable to the Banks, and for any
amount above 100000 his proper
ty will justify. The Farm Loan Board
however, has made a regulation that
no Joint Stock Bank can make any
one loan in excess of 100000.
Cost to the Farmers.
The borrower from Federal Land