The gazette-times. [volume] (Heppner, Or.) 1912-1925, 1921-09-08
FEDERAL FARM BANKS
GIVEN MORE MONEY
Explanation Of How Increase LIS No Ex-
pense to Government.

Washington. Sept. 4.-There appears
to be some confusion in the public mind
regarding the exact provisions of the
recent amendment to the Federal Farm
Loan Act the amendment known during
its discussion as the Curtis-N Nelson BILL
Notwithstanding both Senator Curtis
and Representative A. P. Nelson fully
explained the amendment when it was
before the Congress. The following
is brief explanation of it,
The capital stock of the federal land
banks is s25O00,90 The original farm
loan act authorized the Secretary of
the Treasury, in his discretion, upon
request of the Federal Farm Loan
Board, to deposit for the temporary use
Of any federal land bank any money
in the U. S. Treasury not otherwise
appropriated, provided that the aggre-
gate of all sums so deposited with all
the federal land banks should not ex-
ceed the sum of s6000,000 II required
that the land banks in which such de-
posits were made should issue to the
Secretary of the Treasury a certificate
of Indebtedness for the deposit, secured
by farm loan bonds or other collateral
satisfactory to the Secretary and bear
ing a rate Of interest not in excess OF
the rate charged for other Government
deposits
The land banks took up these certi-
ficates of Indebtedness and returned the
deposits to the U. S. Treasury as fast
-all bai, hn
ceeds of the bonds they made new loans
until the funds were exhausted when
they repeated the process. The amount
of s6,000000 has been deposited with
the land banks and paid back many
times since the law was enacted. 1t
is handled in exactly the same man
ner as the Federal Reserve banks
which receive deposits from the Treas
ury upon which they pay interest.
The Curtis-Nelson amendment pro-
vides that in addition to this S6,000,OQ
the Secretary of Treasury may deposit
with the farm banks, in his discretion
sum not exceeding the difference be-
tween the capital stock of the farm
banks Cs25.000,000) and s50,000,000, un-
til such time as the capital stock of the
farm banks shall be s50,00O,0O0. Under
the law with every loan made there
must be subscription to the capital
stock of the bank equal to per cent
Of the loan, so the capital stock of the
farm banks is increasing constantly
at the rate of per cent Of their tota
loans
To prevent the possibility of land
banks needless calling for these de-
posits, the Curtis-Ne amendment
provides they must pay interest or
these deposits of one-half of one pei
cent more than the rate of interest OF
the land bank bonds. This makes 4
desirable on the part Of the banks t
sell their bonds to get funds rathe
than use deposits of the U, S. Treasury
At the same time it enables the farm
banks always to have access to S56,
600, 00O their present capital stock o
| s25, 900, 900, the difference between thei
capital stock and s5O,0OO,oOO, which a
present is s25,OOO,00O and the origina
provision Of $4,000, 900, As fast as tn
capital stock Is increased, the differ
ence between it and s50,000,0o0 will
correspondingly decrease, and the U,
Treasury will be subject to correspond
ingly less deposits.
While this makes ample provision 10
funds for the farm banks it is also
good bargain for the government an
the public taxpayer. Farm bank bond
now bear per cent interest. AS state
above farm banks pay the q. s, Treas
ury one-half Of one per cent more 70
use Of the deposits than they pay 70
their bonds, or 10 per cent This
a higher rate of interest than the gov
ernment gets from other deposits,