Cottonwood chronicle. [volume] (Cottonwood, Idaho) 1917-current, 1923-11-30
THOSE FAILING TO PAY
ONLY A SMALL PER CENT
Bank Must Have Its Money
When Due to Function Pro-
perly Says Martzen.


Spokane, dated November 13,
and published in the Cottonwood
Chronicle, November %, 1923
brings the following comment
from one of our readers:
In this letter the senator c1i-
ticises the methods used by the
Federal Land Bank in collecting
the past due amortization pay
ments on the farmers loans, pos
sibly not realizing, as the case
was last summer that the Fed
eral Land Bank of Spokane had
over 5000 past due accounts. A
good many threatening letters
had to be written and a special
collector employed from Wash
ington, D. c.
The Federal Land Bank, of
Spokane, in order to be of any
lasting benefit to the farmers
has to collect its interest promp-
tly in order to meet it's oblfga-
ton to the bondholder of the
farmers mortgages. Should
they fail to collect their interest
they cannot pay the interest on
the bonds against them and the
investing public certainly should
and would not buy bonds on
which the interest payments
were slow and doubtful.
Many people have the errone-
GUS impression that the Federal
Farm Loan system is owned by
the government or that the gov
ernment furnishes the money for
their loans. The small as we'll
as the large investors buy these
farm loan bonds on account of
the excellent security back of
them and their tax exempt fea-
lures. The management of the
farm loan system is under gov
ernment supervision, therefore
these bonds are easily sold to the
investors and at a low rate of
interest, and the farmers are in
dividually and collectively great
ly interested in the prompt pay
ment of his and his neighbor's
amortization payments in this
way.
Individually, because by
prompt payments of his amorti'
zation payments he pays his
loan off by only paying 51a pei
cent interest and only 341a pei
cent of the principal sum bor
rowed. He has 34i2 years time
to pay the principal sum or only
one per cent per annum fol
thirty-four and half years ant
his mortgage is paid in full.
Collectively, by prompt pay
ments, because the 5 per cent o1
stock he is obliged to take with
his loan, and on which there is
an annual dividend paid of sis
per cent. This dividend is helt
back until all members of ar
association are paid up.
For example,: The Cotton
wood National Farm Loan Asso
citation has over 140 member.
with total amount of loans ol
$800,000; S per cent of this
amount is $4,000, in Fedora
Loan Stock; 6 per cent dividend
on this stock is $2400 per an
mum to be divided among tn,
stockholders of our association
Now if two or three members o.
our association fail to pay theil
installments promptly their de
linquent payments are charge'
against this dividend.
Senator Borah's efforts in thi
instance are certainly wei
meant and appreciated by tn
western farmers, but pu
the proposition up to SO per cen
of the members of the Cotton
wood National Farm Loan Asso
citation that make their pay
= ments promptly, and are willin.
to endorse the action of the Fed
eral Land Bank, of Spokane, in
sisting on prompt payments, o
their desire and willingness t
{ { sacrifice their dividends to a pos
! sible two per cent that does no
and take their financial trouble
to Senator Borah.
Felix Martzen.