Arizona republican., 1921-07-25
By. Frederic j. Haskin :

WASHINGTON, ID. C., July 15-A member of the federal farm loan board has sailed for Porto Rico for an inspection trip of this island pos session with view to ascertaining whether the provisions of the farm loan act can be extended to the Porto Rican farmers with certainty of sue cess
 About six months ago congress passed an amendment to tine farm loan act granting the board authority to extend its work to Porto Rico. but making this extension discretionary with the board. It is the confident belief of the members of the board that the island farmers will fit into the farm loan scheme without any hitch. If a favorable report is made by w S. A. Smith of Iowa, who was chosen for this mission, branch Of the federal land bank situated at New Orleans will be established at some point in Porto Rico. The cities Of San Juan, the capital, and Ponce. on the southern coast, appear to be the only contenders
 So great have the demands on the funds of the land banks become that congress recently amended the act creating the system so that the treas ury may have on deposit with these banks at any one time as- high as $31. .000. .000. Until few days ago. this figure was but s6.000,00
 This additional fund wifi enable the 12 banks to make loans to farmers throughout the summer without the necessity of seeking to sell another issue of bonds when the market for them is not at the best. It is be- lieved that by October the farm loan board can advantageously sell anoth- CT issue of. bonds and provide itself with additional funds for farmers.
 The law requires that within Is days after the sale of an issue of bonds that the deposits made by the treasury in land banks be returned.
 The system has grown so tremend- ously since it's inception that mem bers of the board estimate that 10 times as much money could be used as even the tremendous amounts now handled. Up until the last of May, a resume shows that 1000 farmers throughout the United States had taken advantage of this federal credit and that a total of S354, ,000. 900 had been loaned to them. On these loan: the farmers have to pay per cen interest at present.
 To balance this huge loan the fed 6fdi 1dTIQ loan DOdTu Has sOiQ DOlitii amounting to about s325 .000. GOO. Th' difference in the money secured iron the sale of bonds and the actual casl lent to farmers was made up iron the slender capital on which the l, land banks started-s9. 900, ,00o-ant the profit on ithe operations of tn banks
 The feature which has tremend ously popularized the farm loan sys tenn is the amortization part of il which is obligatory upon all farmer who borrow money rom the banks Thus, on each s1,000 borrowed, tn farmer must return eacn year to tn land bank from which he got it s65 These payments, whicn apply alik | on principal axh interest, in tn course of ,33 1-3 years pay off tn l whole loan.
 | The land banks have been so sue cessful in their operations with tn farmers that each year it has bee | possible to pay a dividend of 6 pc | cent to the National Farm Loan as sociation. This association is mad | up of farmers who have borrowe money to carry on their business. an this dividend on the capital stock c l the bank is distributed among thes | men as in effect. a repate on the in
 
 | The National Farm Loan assoeia tion is made up of nearly 4,000 coun ty farm loan organizations, and a there are but 2.S00 agricultural coun ties m the United StaIes, there is a average of considerably better tha one organization to each farmin county.
 Before the board was created, ther was a great deal of criticism fro. l members representing the more pros porous agricultural states that tt establishing of the loan system wa | intended almost solely for the poore | farmers of the South. This criticisl | was made at a time when souther 1 senators and representative heade
 nearly every committee in congres
 and was hard one to combat. TT
 denials made at that time have bee
 amply borne out by later develop
 ments, however. The state of low
 for instance, which saw little need {
 the farm loan board at that tim
 when it's farmers could get all IT
 credit they needed for and p'
 cent. is now the greatest patron
 the federal land bank with the sing
 exception of Texas, which is a tr'
 mendously larger commonwealth.
 The bonds sold to provide u
 funds to loan are issued largely
 the discretion of the board. Hoy
 ever, congress has retained certa
 powers, one of which is fixing u
 maximum interest rate the bonds e
 bear. The present legal limit is , p
 cent. Also, existing law limits Il difference between the bond inter'