Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1921-07-22
FINANCING THE FARMER
Government Institution Now Makes
Loans at Cost.
SYSTEM NOW FIRMLY ON ITS FEET
Loans May Be Had at Six Per Cent,
and If There Is Profit, It Comes
Back to the Borrower In the Form
Il RoL,to
By Frederick J. Haskln.

By Frederick J. Haskln.
Washington, D. c., July ia MEM
ber of the Federal farm loan board has
sailed for Porto Rico for an inspection
trip of this island possession with
view to uscertalng whether the provi-
sions of the farm loan act can be ex-
tended to the Porto Rican farmers
with certainty Of success.
About six months ago congress
passed an amendment to the farm loan
act granting the board authority to ex-
tend it's work to Porto Rico, but max
ing this extension discretionary with
the board. 1t is the confident belief of
the members of the board ti!at the Is
land farmers will fit into the farm loan
scheme without any hitch. If favor
abe report is made by w. S. A. Smith
of Iowa, who was chosen for this mis-
sion, a branch of the Federal land bank
situated at New Orleans will be estab-
lished at some point in, Porto Rico.
The cities of San Juan, the capital,
and Ponce, on the southern coast, ap-
pear to be the only contenders.
So great have the demands on the
funds of the land banks become that
congress recently amended the act Gre
ating the system, so that the treasury
may have on deposit with these banks
at any one time as high as s31,0OO,OOO.
Until few days ago this figure was
but $4,000, 900. =.
This additional fund will enable the
twelve banks to make loans to farmers
throughout the summer without the
necessity Of seeking to sell another Is
sue Of bonds when the market for them
is not at the best 1t is believed that
by October the farm loan board can
advantageously sell another issue Oh
bonds and provide itself with addi-
tional funds for farmers.
The law requires that within fifteen
DAYS after the sale Of an issue OF bonds
that the deposits made by the treasury
in land ba: KS be returned.
The system has grown so tremend-
ously since its inception that members
of the board estimate that ten times as
much money could be used as even the
tremendous amounts now handled. up
until the last of May, a resume shows
that 141,OOO farmers throughout the
United States had taken advantage Oh
this Federal credit, and that total Oh
1854, 900, 900 had been loaned to them,
On these loans, the farmers have 10
pay six per cent interest at present.
TO balance this huge loan, the Fed
eral farm loan board has sold bonds
amounting to about s325,OO0,OOO. The
difference in the money secured from
the sale of bonds and the actual cash
lent to farmers was made up from the
slender capital on which the twelve
land banks started $4,000 ,OO0-and the
profit on the operations of the banks.
Method Used.
The feature which has tremendously
popularized the farm loan system IS
the amortization part of it. which is
obligatory upon all farmers who bor-
row money from the banks. Thus, OF,
each $1,000 borrowed. the farmer must
return each year to the land BANK
from which he got it $65. These pay
ments, which apply alike to principal
and interest, in the course Of 80 Id
Years pay off the whole loan. 80
The land banks have been so sue
cessful in their operations with the
farmers that each year it has been
possible to pay dividend Of SIX per
cent to the national farm loan associa-
lion. This association is made up OF
the farmers who have borrowed money
to carry on their business. and this DIV
idend on the capital stock of the bank
is distributed among these men, is' IN
effect, a rebate on the Interest they
pay for their loans.
The national farm loan association Is
made UP of nearly 1000 county farm
loan organizations, and as there are
but $500 agricultural counties in the
United States. there is an average
of considerable better than one orGanl-
cation to each farming county.
Before the board was created, thcro
was a great deal Of criticism from
members representing the more pros
porous agricultural states that the es-
tablishing Of the loan system was in
tended almost solely for the poorer
farmers OF the south. This criticism
was made at a time when southern
representatives and senators headed
nearly every committee of congress
and was Il hard one to combat. The
denials made at that time have beer
amply borne out by later developments
however. The state Of Iowa, for in
stance, which saw little need or the
farm loan board at that time, when It's
farmers could get all the credit they
needed for five or six per cent is no"
the greatest patron of the Federal land
bank with the single exception of Tex
as, which is tremendously larger
commonwealth.
The bonds sold to provide the funds
to loan are issued largely at the dis
cretion Of the board. However, con-
Grcss has retained certain powers, ono