The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1921-08-10

classes of Banks, Federal Land Banks
and Joint Stock Land Banks. The
atock of the Federal Land Bank was
furnished by the Government original
ly, and is finally to be paid up by with
holding per cent of all loans made
to the farmer and the money returned
to the Government. Part of this has
been returned, but not all of it. The
Joint Stock Land Banks could be own
ed by 10 or more people and the farm
ers making loans to the Joint Stock
were not obliged to purchase any of
the capital stock, although the Joint
Stock Land Banks have quite general
ly invited the farmers to take stock if
they cared to. AS rule the farmers
preferred to get all of their money on
these loans. Hence, the Joint Stock
Land Banks have proved to be quite
popular in some localities.
The Farm Mortgage Bankers AS
sociation, whose business was being
decidedly curtailed, brought suit in the
Circuit Court to declare the Act un-
constitutional. The Joint Stock Land
Banks and the Federal Land Banks
employed council and fought it out in
the lower court and won there. 1t
was then carried up to the Supreme
Court of the United States and was
in that Court something like over a
year, and decision was given favora-
BILE to the Act on or about March first,
1921. During the time of this hold up
in the Supreme Court the money
stringency overlook this country, and
the farm loan rates were pushed from
5 and per cent to 7 and 8 per cent,
and in many instances in the more un-
developed parts of Minnesota to 9 and
10 per cent. The Farm Mortgage
Bankers Association was entirely un-
able to fill the needs of farmers, and
this for something over year and a
half it has been very difficult to dis
pose of first mortgage farm loan, only
those based on about 25 to 33 per cent
on the value of the farm that is at all
saleable and at an exceedingly high
rate.
The Federal Land Bank and Joint
Stock Land Banks were very anxious
to begin to operate. About the time
that they were planning on selling
bonds in March, and early in April the
Mortgage Bankers Association again
took up their fight against them and
this time in Congress. A bill was
introduced in Senate to curtail their
operations decidedly. On top of it the
money market was getting harder ev-
cry day and it was found that it was
almost impossible to sell per cent
bond without paying large premium.
The fight in Congress was largely
centered on the Joint Stock Land
Banks. This however, has been
fought out to finish and all bills cur
failing the operations of the Banks in
anyway, either the Federal Land Bank
or Joint Stock Land Banks have been
defeated.
The Clague bill permitting the
Banks to issue bonds as high as 51a
per cent was then introduced to help
the Banks to begin to function i'm
mediately. They were not permitted
to charge the farmer over 6 per cent,
but could issue bonds as high as 511s
per cent. it was clearly shown in
Congress that the situation in the
middle west was critical Farmers
were badly in need of funds, banks
could not furnish them, farmers should
be able to borrow on their land to pay
up their short time obligations to the
Banks who were facing falling depos-
it's and the need of the bill was great.
This line of argument finally won
out. Influential business men from
all over the country took a hand in
pushing the bill through. The Ma
tional and State Farm Bureau AssDci-
ations got behind the bill and finally,
through the tireless efforts of Mr..
Clague, who saw the great need the
bill has become a law.
The bond market in the East has
improved very greatly the last few
weeks. Money conditions as whole
Continued on last page.)