The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1923-04-06
AID FOR FARMERS
UNDER new LAW
Financial Relief Through
Credits Measure
TELLS ABOUT ACT
Secretary Wallace Says Needs
Felt BY Farmers Fifty
Years Supplied
tAssociated Press Dispatch.l

Agriculture. Henry e. wallace
SAYS soon will be functioning. Mr..
Wallace. in describing the new act,
says: "On the last day it was in
session congress enacted the agri.
cultural credits act. This act is de
signed TO give the farmer the sort
of credit he needs TO produce cffl-
ciently and market in an orderly
way the products of the farm. II is
an effort by congress 10 meet neeu
which has been felt for at least
fifty years. The act may not be per
feet. Experience may show the
need of amendments from time 10
time. But it furnishes the basis for
system OF intermediate credit
adapted to farm conditions and
farm needs. Also it should bring
about a reduction in the interest
which farmers pay for money bor-
rowed
The act is divided into two parts.
In the first it provides government
agencies for handling agricultural
loans. In the second 1t authorizes
the organization of private agencies
under government supervision Tor
making loans on live stock security
and on farm commodities on the
way TO market.
The Ioan Activities
THE government loan activities
will be carried On in connection
with the Federal land banks. At the
present time the country is divided
Into twelve districts, in each oil
which there is d Federal land oank
that makes land mortgage loans
These twelve banks are directed by
a Federal Farm Loan Bureau In
WASHINGTON. In connection with
each OF these land banks there is
10 be established an intermediate
credit bank. located in the same
city with the land banks and under
ahe supervision of the officers AND
directors of the land bank. The
Federal government supplies eacr
of these intermediate credit banks
with capitai of not to exceed SIS,
Oe0. 900. These intermediate credit
banks are authorized to discount
farmers notes which have been
taken by banks and other financial
institutions, and then can carry
such notes for a term OF from sin
months to three years. The oanKs
may also loan direct TO farmers CO.
operative associations under con
.Ii;tons set forth i'm the act.
These intermediate Credit bank:
NAV issue debentures which viii
have back of them the farmers
notes which the banks have taken
The idea is that these debentures
NAV be sold to people who wish q
safe investment. They are exempt
from taxation. just as are the bonds
issued by the federal land banks
The interest charged by the inter
mediate credit banks may not ex'
Ceed nv more than one per cent ths
interest paid on the debentures is
sued, and the farmer who borrow:
must not be charged an interes
rate OF more than one and one hal
per cent above the interest charged
by. the intermediate credit banks.
Time 10 Needed
NO doubt some time will be re
uuired to get this machinery II
smooth working order. 1t will b'
Just like building up new business
II should not be very long, however
before the benefits will be apparen
and the farmer will find that he cal
borrow needed capital for periot
IN 10 three years without having u
nav an unduly high interest rate
without having to renew his note
every ninety days or six months
and without being in danger Of hay
ing TO sacrifice his crops or NV
stock because OF a sudden nnancia
furry.
THE second division OF the &C
authorizes the organization, under i;
federal charter. of national agricul
turaI credit corporations, these I.
he organized by private capital
They will be under the supervision
of the comptroller OF the currency
Just as are other national bankin,
sssnstitutions. They must have cap
it'll stock OF at least $250,ooo; me.
Imay issue collateral trust deben
lures up to ten times their capita
and surplus. Such corporations viii
.spzobably be organized in the west
syD states where the live stock In
dustry Is important and where cat
. lt1e loan companies now are In op
eration. Il
the act designed to furnish the far
mer much needed Intermediate
credit, certain changes have bee
made in the law under which tn
Federal land banks operate and il
the Federal Reserve Act. Provision
for the establishment OF the so
called permanent organization O
the twelve Federal land banks j
made by providing that three out o
the seven directors for each ban
are to be elected by the borrower
from the bank while three are I
be appointed by the federal farm
loan bureau. The seventh director
who will be president of the board
will he chosen from the three per
sons who have received the highes
nomination vote for this position b
the borrowers or stockholders j
the bank.
The Maximum Sum
Heretofore the maximum amour
which might. be loaned TO any in
diyidual by the federal land bank
has been $4,000. This has been in
creased to $4,000. Also the purpos
for which mortgage loans may b
made has been broadened to includ
the repayment OF any existing In
debtedness. ...
THE federal reserve act is amend
ed by broadening the definition G
what is called agricultural papel
making 10 include the grading an
processing OF agricultural product
by cooperative marketing associs
tons. Heretofore the federal re
serve banks have not been permit
red to discount agricultural paper 10
longer period than six months
This period has been increased
nine months.
"A large number Of state bank
are not now members of the fedora