Pueblo chieftain. (Pueblo, Colo.) 1889-current, 1921-07-18
EXTENSION OF FARM CREDt1

state OF Iowa. for instance. which
saw little need for the Farm Loan
Board at that time. when its farmers
could get all the credit they needed
for and 6 per cent, is now the
greatest patron OF the Federal Land
Bank with the single exception OF
Texas. which Is "a tremendously larger
commonwealth.
The bonds sold to provide the funds
to loan are issued largely at the dis
erection OF the Board. However. Con-
Eress has retained certain powers. one
Of which is fixing the maximum in
terest rate the bonds can bear. Tho
present LEGAL limit is 3 per cent Also.
existing law limits the difference be
tween The bond interest rate and the
interest on loans as not more than /
per cent. Thus the limitation OF the
bonds to an interest rate OF 5 per
cent automatically prevents the land
banks from charging more than per
cent on the loans 10 farmers.
At times whom excellent bonds arc
being flontcd which bear Interest
rates In some cases as hiEh as S per
cent. at first glance II would appear
Impossible to sell farm loan bonds in
the open market. However. this OBJ
Htacle is overcome nv the provision
OF law making the farm loan bonds
free OF Federal taxes OF all kinds.
with tho possible exception OF the in
horitancc tax. The question OF tho
inheritance tax has been broush up.
but not yet settled. As It Is a fundn-
mental rule that states cannot tax In
she Federal Government. the income
to holders Of the farm loan bonds Is
entirely free OF any assessment.
System shows Profit
The land banks. operating on tn.
present basis. are making money.
They arc paying their annual per
cent divid.ndr. and are laying by a
little reserve e1ch year which can be
commanded by the farmers IN n
pinch. The cost OF the Board in
washington. which IL composed OF
four members with the addition Of
the Secretary OF the Treasury, who Is
~ ofrcio chairman, ia In tho neigh
borhood Of 100000 yearly. For
some reason Congress insists on pay
ing the cost of the Board itself. de-
spite tho fact that the members have
HHkcd that these expenses he borne
by the banks. 40 that tho system
would he entirely supporting.
For fear that conditions might
ariao which would make tho Eals Of
bonds too difOcult al the present in
terest rate. there Is Home agitation
or increasing the limit OF interest the
bonds may boar. There ia bill At
present before tho Banking and Cur
renry Committee OF the Senate
which. II passed by Congress and mp
proved by the President would make
tho limit on interest on tho bonds
bL per cont This power vested IN
tho Board would make n certain. nd
vocates Of the bill claim, that the
market value ~ the bonds would al
ways he great enough to compete
with other offerings. and insure their
speedy ssle. 4 failure to sell bonds
would result. they say. in tying up
ttis system now working so smooth
~.
Tho bonds Issued have always been
Of the "ten-twenty year variety
THAT IT, they arc rcdeemRhle NJ par
by the land hanks nt the end ~ 20
yearF. but with the option nm ia" part
Of the banks Of calling the bonds In
Mt the end Of 10 years This pfnNi-
zion was Included 50 IN. tho Hoard
could take advantage of any cpnti-
tons which might arise In the IL
rancial world. without !mpairinG the
bonds as permanent income pro-
durinr investments OF the SAT" AMI
-ana