The Birmingham age-herald., 1923-03-07
FARM CREDIT LAW
 MADE ROCK RIBBED. TRAINERS BELIEVE
Some Believe It Could Be lm- proved, But South Caro- lima Congressman
 Praises It
WASHINGTON BUREAU
 THE AGE-HERALD WashinrtOn. ID. C.. March 6

Agricultural credit legislation, passed the last day of the session. may. prove to be inefficient because of lack of time for thorough consid eration, as some members of Con- gress predict. but it would be inpos sible so to convince the members of the banking and currency committee of the House.
 Alabamas member of that commit tee is Representative Henry B.. Steagall. He believes that while it might have been possible to improve the measure, as a whole it will con fer benefits on the farmers, espe cially those in need of quick, short time credit.
 An interesting feature of the bill is it's provision establishing in each city where farm loan bank is lo- cated an intermediate credit bank with a capital of 5000, 900, to be pro- vded by the government. Of the main features of the measure, and especially the Intermediate crdit bank, Representative w. F. Steven son of South Carolina has prepared the following statement for The Age Herald Washington Bureau:
 'tThe bill first turns over control of the federal farm loan banks to permanent organizations, consisting of seven directors, of whom the farm loan board selects three and the stockholders four
 Tt provides for an increase in the amount which can be loaned to one man from S10,000 to $16,0OO.
 Tt provides for selling consoli- dated farm loan bonds of all the banks, which will reduce the rate of interest to the farmer l per cent
 Intermediate Credit Bank
 Then the bill established an inter- mediate credit bank in each city, where there is sland bank with d capital of s5,000,000 furnished by the government and controlled by the di- rectors of the federal farm loan banks. This intermediate bank will discount farm paper of not less than six months and not over three years maturity. One of these will be at New Orleans and will serve that farm loan district of which Alabama is a part. This bank will discount paper principally for six to nine months, but paper secured by herd of cattle for breeding purposes can be discounted for as long as three years.
 You ask how the farmers will get at this money?
 Well, Mir. Jones wants $1,000 for | nine months. His cotton is marketed
 
 gives his note showing it is for agri- cultural purposes and properly secur- ing 1t. The bank can take that note and if it has not charged the farmer over [ 12 per cent, may sell it to the intermediate credit bank. We tried | to arrange 1t so as to maintain the I loyalty of each community to it's local bank, for they are the foundation Of our financial system.
 Source of Money Supply.
 Then you say where will the in- l termediate credit bank get its money? After it has used up the S5,0OO, 000 it can go to the federal re- serve bank and sell Jones' paper to that bank. although it runs nine months. It can lend that $1 1000 again to smith. Also it can sell five-year tax free bonds secured by farmers rotes just as the land banks sell 40- year farm loan bonds secured by farmers real estate mortgages.
 But you say, will not that get aw- fully extended and dangerous? For two reasons, no. These banks are not allowed to take deposits, hence there are no depositors to be drawing out money; and, secondly. we limit them 10 10 times their capital stock in re- discounting at federal reserve banks and selling debenturcs together
 ''The New Orleans bank will start with $5.O00,000. It can borrow 10 times that amount, making it's Iend- ing capacity $55.000,O 900. The local banks can sell all papers up to six months to federal reserve banks so that the New Orleans intermediate te credit bank will have paper from only six to nine months to run, and