The Delta independent., 1921-09-09
FEDERAL FARM BANKS
ARE GIVEN $25,OOO, 900
MORE MONEY TO USE

Washington, Sept There ap-
pears to be some confusion in the
public mind regarding the exact pro-
visions of the recent amendment to
the Federal Farm Loan Act, the
amendment known during it's discus
sion as the Curtis-Nelson bill, not
withstanding both Senator Curtis and
Representative A. P. Nelson fully ex-
planned the amendment when it was
before the congress. The following
is brief explanation of it:
The capital stock OF the federal land
banks is $25,000.000 The original
farm loan act authorized the Secre-
tary of the Treasury, in his discretion,
upon request OF the Federal Farm
Loan Board. to deposit for the tenn
porary use of any federal land bank
any money in the United States Treas
ury not otherwise appropriated, pro-
vided that the aggregate of all sums
SO deposited with all the federal land
banks should not exceed the sum of
5000, 900. 1t required that the land
banks in which such deposits were
made should issue to the Secretary
debtedness for the deposit. secured by
farm loan bonds or other collateral
satisfactory to the Secretary, and
bearing a rate of interest not in ex-
cess of the current rate charged for
other government deposits.
The land banks took up these GER
tificates of indebtedness and returned
the deposits to the United States
Treasury as fast as they sold their
bonds. With the proceeds of the
| bonds they made new loans until the
funds were exhausted. when they re-
| peated the process. This amount of
land banks and paid back many times
since the law was enacted. 1t is
handled in exactly the same manner
as the Federal Reserve banks which
receive deposits from the Treasury
upon which they pay interest.
The Curtis-Nelson amendment pro-
vides that in addition to this $6.000.-
600 the Secretary of Treasury may
deposit with the farm banks. in his
discretion. a sum not exceeding the
difference between the capital stock
of the farm banks ($25 900. .000) and
$4,000. .000 until such time as the
capital stock of the farm banks shall
be $50,000.00O. Under the law with
every loan made there must be sub.
scription to the capital\ stock of the
bank equal to 5 per cent of the loan,
so the capital stock of the farm banks
is increasing constantly at the rate of
5 per cent of their total loans.
To prevent the possibility of land
banks needlessly calling for these de-
posits. the Curtis-Nelson amendment
provides they must pay interest on
these deposits of one-half of one per
cent more than the rate of interest
on the land bank bonds This makes
1t desirable on the part of the banks
to sell their bonds to get funds rather
than use deposits of the United States
| Treasury.
At the same time 1t enables the
farm banks always to have access to
s56. 900, 600: their present capital
stock OF $4,000, the difference be-
tween their capital stock and $780,
100000. which at present is $25,000.0 900
and the original provision of S6,0O0.-
600. As fast as the capital stock is
increased. the difference between it
and s5O,O00,00O will correspondingly
decrease. and the United States Treas
ury will be subject to correspondingly
less deposits.
While this makes ample provision
for funds for the farm banks. it is
also good bargain for the govern
ment and the public taxpayer. Farm
bank bonds now bear 5 per cent in
terest. AS stated above farm banks
pay the United States Treasury one
half of one per cent more for use of
the deposits than they pay for their
bonds. or 5ih per cent This is a
higher rate of interest than the gov
ernment gets from other deposits.