The Ocala evening star. [volume] (Ocala, Fla.) 1895-1943, 1920-08-17
STRING TIED TO IT
FARM LOANS HALTED WHY7

The following from James B. Nor
man, assistant secretary Of the fed
eral farm loan board, in the Farm &
Fireside, will be of much interest to
q large majority of the Stars read
ers, whether farmers or not:
What win the farmers do for cheap
loans in the future? For the last three
years the Federal Farm Loan Sys-
tenn has enabled farmers to borrow
money at 5, 5H and 8 per cent inter
est and TO repay their loans little
each year over a "a or 35-year period.
During three years the twelve fed
eral land banks have loaned $34R.-
616,041 to s25,OO3 farmers. and 28a
joint stock land banks have loaned
$79,l11,432 to 1915 farmers. Thus
133, ,318 farmers have reaped the ban-
efits of cheap credit from March 27,
1917, when the first loan was made
under this system, up to April 80,
1920, the date Of the above statistics.
Still thousands Of farmers wanted
to borrow money under these condi-
tions. The federal land banks have
approved loans on hand for SAL ,9G6, =
961 to 1890 farmers. Evidently the
farmers throughout the country not
only want money to carry on their
farms, but they also want it badly.
But this plan of making mortgage
loans to farmers has been halted
temporarily it is to be hoped. An en-
enay hath done this. For more than
six months the Federal Farm Loan
System has been marking time, so to
speak, because the dealers who had
been buying and selling farm mort
cages, and getting good commission
out Of this business, were instrument
tai in having q suit brought to test
the constitutionality of the tax
exempt feature Of farm loan bonds.
The case was argued in Kansas City,
Mo-, last fall. and the United States
district Judge dismissed the case.
But the enemies Of the system
wanted to paralyze it's good work, 80
they appealed to the supreme court
Of the United States. It was argued
there on January s, 1920. but on April
26th the court handed down an order
TO have the case reargued. Since this
cannot take take place until next fall
there is little likelihood that this case
vii be decided until some time nexi
winter.
Now thousands Of farmers are
wondering and asking why the land
banks have to stop making loans be-
cause of this suit. That question ii
easily answered:
While this is known as the fedora,
system, it is not government money
which IS loaned TO farmers. The orig.
inal capital Of the twelve federal lane
banks amounted to $4,000. 900. O1
this sum the government, in order ii
start the system going. subscribed
$8,891 ,27O, the balance being sub
scribed by private individuals. Thus
the only aid advanced by the govern
ment in establishing this system con
sisted In supplying a large part q
the capital without interest. But thi'
capital ID to be repaid, and part b
il has already been paid back to tin
federal land banks.
The money which farmers borrow
comes from the sale of bonds. TIL
mortgages taken by the banks as
result of loaning their original capi
tai were pledged as security for tn
issue Of bonds. The farm loan &C
declared that these bonds should b
exempt from taxation The bonds ar
sold to whomsoever viii buy them
The money received from their sal
is loaned to farmers, and this is th
source Of the more than four hundre
million dollars which have been loan
ed in the past three years
But the enemies of low-interes
rates on longtime farm mortgag
loans said unto themselves: @See ho'
this sytem is undermining cur bus
negsl We can no longer make loan