The Oakes times. [volume] (Oakes, N.D.) 1906-current, 1920-12-16
SOUTH DAKOTA,S
FARM LOAN LAW
Sister State Has Rural Credit Act
Which Might Well Be Copied
BY Our Legislature
LOANS ON AMORTIZATION PLAN
Has Resulted in Making Land Owners
Out Of Tenants


law that is a source Of pride to resi-
dents in more than one sense. Credit
or working capital il one Of the ne
cessities Of a young and developing
state. Land is valuable in proportion
% 1t can be made to produce. In or
der to make the land produce, work.
ing capital is needed in order to car
~ out the activities which are neces-
sary to production. Land without
men to till and perform the necessary
labor is idle and unproductive. Men
on the land representing labor on fix
ed property are sorely handicapped
without the necessary capital to pro-
vide tho needed machinery and equip
ment.
South Dakota has recognized this
principle Of the need Of credit--jn
other words, the need on the part Of
her people for working capital in
the Rural Credits Law now on her
statute books. "South Dakota" says
Governor Norbeck, "like every other
new state, has been held back greatly
in its development by not sufficient
capital. In the western one-half Of
this state are vast tracts Of undevel-
oped land. In the eastern part, which
is more thickly settled, the tendency
is toward big farms. The successful
farmer in that section has been in tho
habit Of putting his profits into moro
land. This has tended to increase the
demand for more capital, and has also
caused the price Of farm land to in
crease, and this in turn has tended
to cause an increase in farm ten
ancy.
"1n the western section much land
is not productive because Of lack Of
capital. In state 30 exclusively az
ricultural as this, whatever will fos-
ter and encourage, develop and inn
prove farm property will tend also
for the general good and welfare Of
the entire people Of the state"
The business of the state farm loan
plan is managed by rural credits
board which is given authority almost
without restriction as to the method
to be used. The board consists of
five members, Of which the governor
is chairman. The other four are ap-
pointed by the governor for terms
ranging from one to six years. Two
members are classed among the best
bankers Of the state. The other two
are successful farmers whose wide
experience gives them an intimate
knowledge Of land conditions and val
ues. OF great Importance is the fact
that all five men are in hearty ac-
cord with the purpose of the law, and
have tried in every way to get, and
have succeeded in getting, the results
hoped for.
The state borrows the money which
it lends to farmers, borrows it from
outside the state, from men who will
lend cheaper to a state than they will
to an individual. South Dakota is
sues its bonds for the money, takes
the mortgages from the farmers and
files them in the vault in the state
house, collects from the farmers a.
interest and principal becomes due,
and pays the bondholder as the obi.
cations mature.
There is nothing complicated about
the rural credit loan act. It provides
a simple plan through which the bor-
rowing farmer may secure loan ON
adequate security at low interest rates
without paying commissions or being
burdened with renewals Of the loan.
This is accomplished by what is known
~ the amortization plan. Amortiza-
tion consists Of the payment Of fixed
and regular installments which pay
both principal and interest in q given
term Of years. The addition Of
small amount to the interest payment
reduces the principal Of the debt with
each successive payment, 80 that the
borrower is paying interest on con-
stantly decreasing principal.
The borrower cannot fix the rate Of
interest, for this is determined by the
rate Of interest the rural credits board
must pay in order to sell its bonds.
II the rate which the borrower must
pay 10 5heo and the borrower has 80
years in which to pay of his mort
gage, then he must pay $6S.81 every
year on each $1,000 he borrows. II
the rate 10 so, he must pay $72.6l
each year on each 81, 900; and IL the
rate IL 7ee he must pay 5000 each
year on each $1,000, paying propor-