The independent-reporter. [volume] (Skowhegan, Me.) 1909-1955, 1923-03-15

OH llt last hdS II vas III StSSlOu
Congress enacted the Agricultural
Credit Act. This act IS designed To
give the farmer the sort of credit he
needs to produce efficiently and mar
ket in an orderly way the products of
10 meet need which has been felt for
at least fifty years. The act may not
be perfect. Quite possibly experience
will show the need of amendments
from time to time. But it furnishes
the basis for a system of intermediate
credit adapted 10 farm conditions and
farm needs. Also it should bring
about a reduction in the interest
which farmers must pay for money
borrowed.
The act is divided into two parts.
In the first it provides government
agencies for handling agricultural
loans. In the second ii authorizes
the organization of private agencies
under government supervision for
making loans on livestock security
and on farm commodities on the way
TO market
The government loan activities will
be carried on in connection with the
Federal land bank AT the present
time the country is divided into twelve
districts and in each of these districts
there is a Federal land bank which
makes land mortgage loans, these
twelve banks being directed by a cen
"a al L.
Washington. In connection with each
of these lapd banks there is to be
established an intermediate credit
bank. located in the same city with
the land bank. The Federal govern
ment supplies each of these intermedi-
ate. credit banks with a capital of not
to exceed $5.000,000 These interme-
diate credit banks are authorized to
discount farmers notes which have
been taken by banks and other finan-
cial institutions. and then can carry
such notes for a term of from six
months to three years. The banks
may also loan direct to farmers CO.
operative association under conditions
set forth in the act.
These intermediate credit banks
may. issue debentures which will have
back of them the farmers notes which
the banks have taken. The idea Is
that these debentures may be sold to
people who wish safe investment.
They are exempt from taxation, Just
as the bonds issue by the Federal land
banks are exempt The interest
charged by the intermediate credit
banks may not exceed by more than
one per cent the interest paid on the
debentures issued. and the farmer who
borrows must not be charged an inter-
est rate Of more than one and one
half per cent above the interest charg-
ed by the intermediate credit bank.
No doubt some time will be required
to get this machinery in smooth work
ing order. II will be just like build
ing up new business. 1t should not
be very long. however. until THE bene-
fits will be apparent and the farmer
will find that he can borrow needed
capital for period up to three years
without having to pay an unduly high
interest rate, without having to renew
his notes every ninety days or six
months, and without being in danger
of having to sacrifice his crops or live
stock because of sudden financial
furry.
The second division of the act
authorizes the organization, under a
Federal charter of national agricul-
tural credit corporations, these to be
organized by capital They will be
under the supervision of the Comptrol-
Ter of the Currency, just as are other
national banking institutions. They
must have a capital stock of at least
$250,000. They may issue collateral
trust debentures up to ten times their
capital and surplus. Such corpora
tons will probably be organized in
the Western States where the live
stock industry is important and where
now cattle loan companies are in
operation.
In addition to the provisions of the
act designed to furnish the farmer
much needed intermediate credit, GER
tain changes have been made in the
law under which the Federal land
banks operate and in the Federal Re-
serve Act. Provision for the estab-
lishment of the so-called permanent
organization of the twelve Federal
land banks is made by providing that
three out of the seven directors for
each bank are to be elected by the
borrowers from the bank and three
are to be appointed by the Federal
Farm Loan Bureau. The seventh
director, who will be the president
of the board, will be chosen from three
persons who have received the high
est nomination vote for this position