Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-26

recommendation n by the association and
the appraiser, 1.-The bank, If it also ap-
proves. NAV prA coed to close the loan.
Each borrower through an association
is required to sub scribe to shares OF ITS
capital stock in tthe amount OF > per
cent of his loan. This stock Is pledged
with the association as collateral secu-
ritv. and when the loan is paid in full
the stock is retired. These stockholders
are subject to double liability to the
extent of the par value of their shares.
The association, when loan Is
granted to its member, lnoorSes ana
thereby becomes habl = Tor the payment
of the mortgage. Att the sane time.
the association subscl 4 oes for capital
stock in the Federal . land panE: IN
the amount CT 5 per c6Alt OF inc loan
obtained, which stock is pledged with
the bank as collateral sea lrity tor the
payment of the loan.
Bond Sales Vital Faa tors.
Aside from its capital, Abe funds
which are loaned to farmers n req
eral land bank are obtained chleny
through the sale of farm loan oonos,
which may be issued in an amolA II not
exceeding 20 times its capital and sur
plus. Application must be made to the
bond issue is made and the applicatiA n
must be based upon tender of con
lateral security not less in aggregate
amount than the sum of the bonds
proposed to be issued. This collateral
must be in the form Of first mortgages
qualified under the terms Of the act, or
United States Government bonds. II
is held by public official known as
the farm loan registrar. There are
IL farm loan registrars appointed by
the Farm Loan Board, one located in
each Federal land bank district. The
total outstanding bonds of Federal land
banks as of December 81, 1929, was
81, 100, $50 $50.
Each Federal land bank, III addition
to being primarily liable for its own
bonds, is liable, under the conditions
stated in the law, for the principal of,
and interest on, the farm loan bonds
issued by all the other Federal Land
banks.
The banks are required by the act to
carry reserve accounts. Each bank must
carry to reserve semi-annually 25 per
centum of its net earnings until the
reserve account shall show a credit
balance equal to 20 per centum of the
outstanding capital stock of the bank.
After the reserve has reached 20 per
centun of the outstanding capital
stock, 5 per centum Of the net earnings
must be added thereto annually. In
addition to this reserve, each bank
sets up special reserves against delin-
quent installments, notes receivable, &C.
CURED real estate, etc.
Joint Stock Land Banks.
The Farm Loan act also provides
for the creation of joint stock land
banks with private capital. These banks,
like the Federal land banks are regu-
larly. examined by examiners of the
Federal Farm Loan Bureau, and are
subject to the rules and regulations
of the board Capital stock of joint
stock land bank carries liability, similar
to that of stock in a national bank.
A joint stock land bank makes loans
direct, and not through national farm
loan association; it may make loans
only on the security of first mortgages
on farm land and the proceeds of such
loans may be used only for purposes
related to agricultural development.
There is no joint responsibility among
these banks; each is individually liable
for its own bonds and other obligations.
joint stock land bank, before doing
business, must have subscribed capital
stock Of at least $250,000, of which
at least one-half must be paid in and
the balance subject to call It's bonds,
which must be readily distinguishable
in appearance from Federal land bank
bonds, may not be issued in an amount
exceeding Is times the capital and
surplus of the bank. A joint stock
land bank must establish reserve &C
counts under the same requirements
that govern a Federal land bank Mr.
McQuade concludes.