Evening Republican, Volume 21, Number 182, Rensselaer, Jasper County, 18 August 1917 — MILLION A DAY TO FARMERS [ARTICLE]

MILLION A DAY TO FARMERS

EVERY STATE IN THE UNION NOW HAS FEDERAL FARM LOAN BOARD. August 1, 1916, the Federal Farm Loan Board were sworm in and began operation under the law passed by the United States congress and approved by President Wilson. Since that time $40,000,000 has been loaned to the farmers of this country and the system is in operation in every state in the union. About 25 farm loan associations are being chartered each day and each association represents nearly $50,000 of loans. After the loan associations are chartered it is necessary that the lands of their members be appraised and that abstracts, of titles be provided. More than two hundred federal farm loan appraisers are in the field placing valuations on the lands as rapidly as they can get to them. According to testimony compiled at the time of the consideration of the federal farm loan act in congress, the total volume of farm mortgages in the United States was nearly $4,000,000,000 and the average interests being paid was 7.4 per cent. If all of these mortgages are taken over by the federal farm loan system at 5 per cent the result will be an annual saving in interest charges to the farmers of nearly $100,000,000. Under the act farmers are permitted to borrow for the purpose of land purchase; refunding existing indebtedness; five stock purchase; clearing and draining lands; construction of improvements and* the purchase of fertilizer and any equipment necessary in the cultivation of the land. The loans are limited to 50 per cent of the appraised value of the land, plus 20 per cent of the appraised value of the permanent insured im-

provements. All mortgages under this act are made on the amortization plan and run generally thirty-six years. The farmer makes annual payments equal to 6 per cent, 5 per cent paying interest and 1 per cent being applied on the principal. The 1 per cent applied on the principal annually, wipes it out at the end of thirty-six years. The borrower has the right to pay any or all of the mortgage after it has run five years. Farmers and prospective farmers may borrow. Land leased to tenants cannot be mortgaged under this act. This cheap capital cannot be used for land speculation and land monopoly, because loans are limited to SIO,OOO each.

This great volume of capital which is being loaned to farmers is procured by the sales of bonds to investors. These bonds bear 4% per cent interest and are free of all taxation. They are being disposed of rapidly at $101.12%. The margin between the 4% per cent which the bond yields and the 5 per cent paid by the farmer is used to defray expenses of the federal land banks. The law permits one per cent to be employed for this purpose, but the federal fawn loan board believes they can be operated for half that amount.