The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1923-06-24

tho idea arose OF establishing inter-
mediate credit Institutions, which
should advance money for longer Pc
riods than tho merchant or manufnc-
turer desired It, but yet not on the
longtime basis OF the farmers
Various forms have peen taken by
these institutions In different coun-
tries and under different conditions.
But I doubt If there has ever before
been set up system of intermediate
farm credit so we'll adapted to serve
the needs of the farmers in America.
Tho legislation designed to fur
for production purposes, taken in
connection with the federal farm
loan system, which provides long
time mortgage credit, and with the
new law making easy the organiza-
ton and conduct of cooperative as
federal warehouse act, provides what
seems to be complete, scientific
and we'll rounded. efficient and
workable system OF Agricultural
finance. Quite possibly experience
may show the need of minor amend
ments here and there to the credit
act. but the principle underlying IL
1t is sound and needed changes can
readily be secured.
Under the agricultural credit act,
which became law last March, two
classes of corporations are author
lied. First come the federal inter-
mediate credit banks. They are IL
federal reserve banks and IL federal
farm loan banks. Each intermediate
credit bank Is to have $4,000, 900
capital, subscribed by the Secretary
of the Treasury in the name of the
United States and paid for from the
treasury There is to be one of these
banks in connection with each fed
eral farm loan bank, and they may
be under the same or separate man
agements
The federal intermediate credit
banks are to make loans to banks,
or Operative marketing associa-
tons of farmers, which associations
are carefully provided for. The loans
are to be made specifically for agri-
cultural purposes.
O O o
Issue Debentures.
Whenever the loans made from
the original capital reach an aggre-
gate justifying 1t, the farm loan
board, which supervises the system,
may issue debenture bonds against
the securities which the intermediate
credit banks have taken. The sale
of these debentures will put the
banks in funds once more fortIa new
loaning campaign; and so, in the
revolvingfund fashion which has
been made familiar through the op-
erations of the farm loan board in
real estate mortgages, the endless
chain goes on and on, drawing in
with each sale of debentures a new
supply of cpaital for loaning to the
farmers.
The intermediate credit banks are
fundamentally different from the
farm. loan banks in this: that while
the farm loan banks advance money
only on real estate MORTGAGE secur-
ity, the intermediate credit institu-
tons are to discount farmers notes
taken by local banks and to loan
on personal and chattel security
live stock. farm equipment. growing
crops, and the like. The debentures
sold by the intermediate credit banks
are tax-exempt precisely as are the
debentures of the farm loan banks.
The debentures will be sold to the
public at rate sufficiently below
that charged the original borrower,
TO insure that all expenses will be
met by the margin of difference.
These banks are authorized to make
loans en- these debentures to the
amount of ten times their capital;
that is, each bank may carry $780,
100000 of business, which places the
total for the system, of twelve banks
at 100000. 900.
Under the same law. another ana
entirely distinct set of corporations
are provided for, called National
Agricultural Credit corporations,
These are to- be set up, their capital
furnished, and their management
controlled by private capital and en-
terprise, under the general super
vision of the comptroller of currency
National Agricultural Credit cor
poration may be formed with capt.
tai not less than s250,000 and ma
tional banks are authorized on
proper conditions to subscribe for