Evening star., 1933-11-03

perviSory powers over them once they
have been established
Production credit corporations al
ready have been set up by the Farm
Credit Administration in the regions
served by Baltimore. Md: Columbia,
S. c.: St Louis, Mo; st. Paul. Mimi;
Berkeley, Calf; New Orleans, La, and
Houston. Tex. The corporation in Bal
t:mcre will serve the States of Virginia,
West Virginia, Maryland Delaware and
Pennsylvania and the island Of Puerto
Rico. Corporations will be established
in the remaining five Federal Land
Bank districts within the next few
weeks and the business OF setting up
associations will be under way within
the next two months Production
credit associations cannot be Organized
until the corporation of the district is
functioning. Loans are already being
made by the associations organized in
the St Louis district
The Production Credit Corporations
will supply about three-fourths of the
capital of the local Production Credit
Associations. In fact they provide all
Of the capital of the association in the
beginning. The borrowers contribution
to the capital of the local association
will be made at the time of obtaining
his loan, since the law requires that
each borrower must own capital stock
equal to per cent of hissloan at the
time of borrowing. Il
Is Additional CoNecral
The stock thus purchased by the
farmers and the corporation affords
additional collateral behind the bor-
rowers' notes which are discounted by
the Federal intermediate Credit Bank
for the Production Credit Association
This bank normally will handle farmers
notes in amounts equal to four to six
times the capital of the association
Thus the farmers by investing per
cent Of the amount Of their loans. may
bring into their respective communities
new money amounting to four or five
times the amount of the total paid-in
stock of the association. This new
money, as stated, comes from the inter
mediate credit bank OF the region, a
unit of the regional organiza ton of
the Farm Credit Administration. This
bank secures its funds by the sale of
debentureS to the investing public.
To borrow from a production credit
association entails no more activity
than should be required in obtaining
loan from careful commercial bank.
For instance. if Mr.. Smith wishes to
borrow thousand dollars to buy feeder
cattle, he files his application with the
Secretary-treaSurer of the Production
Credit Association and indicates the Sc
curlty he has to offer. Usually this
will be the live stock and feed. The
application is referred to an inspector
for the association. who looks over the
security offered and makes his recon-
mendationS to the local committee of
the association. We will say it is IA
vorable. The Loan Committee reviews
the application and the inspectors re-
port and decides to make the loan,
Smiths note is then indorsed by the
association and sent together with the
apphcatlon and inspectors report. to the
intermediate Credit Bank This bank
approves the security, discounts the
note and sends the proceeds of the loan
TO the association and the farmer.
Thus within a very short time the ap-
pllcant has the money for which he ap-
piled.
Purposes Vary Widely.
The purposes for which farmers have
to borrow at one time or another to
carry on their numerous activities are
many indeed. Since the loans made
by the Production Credit Associations
will be discounted with the Federal
intermediate Credit Bank. only such
loans will be made as will meet with
the banks approval; these cover long