Indianapolis Times, Volume 46, Number 200, Indianapolis, Marion County, 31 December 1934 — Page 15

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PETERS CITES , BENEFIT FROM (HOUSING LOANS < \ e Capital Put to Work \Here Due to Federal /fctivity. BY R. EARL PETERS State Director for Indiana Federal Housing Administration. Within the short space of four months and four days, from Aug. 15 to Dec. 19, Indiana has benefited by the Federal Housing program to the extent of $428,937 in insured loans for modernization and repair cf real property ip the state, and at least four times that much in noninsured loans and cash payments, or an estimated total of $2,144,685. This means, roughly, that capital which was lying idle in banks and other financial institutions, and which would have remained idle, has under the stimulus of the housing program been flowing into industry and trade in Indiana at the average rate of about $250,000 a month. The number of insured loans reported to the Housing Administration in Washington in that period, which made up the total of $428,937. was 1316. In “other words, 1316 property owners in Indiana, who would not otherwise have been able to have needed improvements made to their homes or business properties, have been able to finance the cost of home betterment or of preventing deterioration of property. Average at $325.94 The average insured loan was for $325.94. We have no means of knowing how' many properties are represented in the estimated totel of non-insured loans and cash payments, but, if the proportion runs about the same as in the insured IcAns, more than 6.500 properties in Indiana have been improved, homes made more livable, business places more attractive and convenient, farms put in better condition, as a result of this program. In this same period, from the formal beginning of the Housing Administration on Aug. 15 to Dec. 19, there were 66.818 insured loans made throughout the entire United States, to a total of $28,000,735. On the same basis of four times as much work created, in non-insured loans and cash payments, which careful estimate has shown to be the general average, the total amount of new business generated is more than $140,000,000. Building Workers Busy The effect of this program on unemployment is difficult to gauge accurately, but we have reports from our housing chairmen in counties and cities and towns all over Indiana to the effect that good workers in the building trades are busy for the first time in three or four years. In order still further to increase the availability of this service to the people of the Nation, the Housing Administration has just announced a revision of some of its regulations in regard to insurance of loans for modernization. For*instance, the original regulations required that federal insurance on modernization credit loans would .be granted only in cases of improvement or repair on improved real property. The new' regulation leaves out the word ‘‘improved" so that loans may now be made for improvement to vacant property, so long as the amount to be expended does not exceed S2OOO. This makes possible insurance on loans for new small houses, for barns on farms, for summer cabins, garages on vacant lots and other small new' construction which heretofore were not eligible.

Other Changes Cited Another change is in the minimum income requirement. The original regulation was that the maker of the note “or husband ancl wife jointly, if both are signers” must have a stated bona fide source of annual income equal to at least five times the annual payments on the note. The revised regulation says other members of the family may be joint signers of the note, and adds that they must have a combined gross income “or sufficiently in prospect to satisfy the financial institution” equal to at least five times the annual payments. A third change removes the limitation on the number of pieces of property on which one owner may obtain loans. Originally a property owner could obtain insured loans for improvements to not more than five separate pieces of property. Now there is no limit, except the eligibility of the property owner from the standpoint of good credit. So much has been accomplished under Title I of the National Housing Act in a little more than four months. We have one full year of operation of this section of the act ahead of us. as it expires by limitation on Dec. 31, 1935. Under the stimulus of what has been done thus far. and with the support of additional committees to be appointed in many communities throughout Indiana, we expect the total by the end of the year to run into many millions of dollars. But from the long-time standpoint, Titles II and 111 of the act, which provide for mutual insurance of mortgages for construction of new homes and for refinancing of existing mortgages, hold out still greater hope for business improvement and for relief of unemployment. This part of the program has just gone into practical effect.

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Indiana Farm Credit Situation Shows Substantial Betterment During Year

1934 Witnessed Sharp Change in Basic Position. By ERNEST RICE, General Agent Farm Credit Administration The agricultural credit situation in Indiana, in fact, throughout the Fourtn Farm Credit Administration district of Ohio, Indiana, Kentucky and Tennessee, improved immeasurably daring 1934. A year and a half ago thousands of Indiana farmers were forced to borrow at rates

running as high as 3 per cent per month to pay taxes and maintain their families. The past year has worked a marvelous improvement in the basic situation of farmers. Universal farm prosperity is not yet with us. In some of our counties crops failed or were seriously damaged.

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Ernest Rice

Higher prices mean little to a farmer who has nothing to sell. Frices have increased to a level which gives farm producers a profit on their year’s work. Our tobacco crop, including the crop in the important producing sections of southern Indiana, yielded well and the markets are paying nearly double the figures of a year ago. New money is moving in channels of trade, produced from the soil of our states this year. The attitude of farmers reflects confidence in their future and the determination and ability to pay the debts of agriculture. Farms are in demand again. Between July and the middle of December, 197 farms and 12 smaller parcels of land owned by the Federal Land Bank of Louisville were sold for $768,293. Os these 72 are Indiana farms. During the last six months of 1933 but 51 bank-owned farms were sold, for $234,111. Recent sales indicate an increase of $lO to sls an acre above last year, and 228 per cent increase in volume of sales. Farmers are the principal buyers, but investors again are learning to regard farm lands as safe investments. The credit condition of Indiana farmers has been improved immeasurably by the refinancing of their land mortgages, by the introduction of Production Credit Associations, the creation of the Louisville Bank for Co-operatives and by the low'ered discount rate of the Federal Intermediate Bank of Louisville.

BY JOHN E. BROWN, President Louisville Bank for Co-Operatives Since the Louisville Bank for Cos opened for business last spring 60 Indiana co-operatives have rpplied for loans aggregating $1,077.OCO. Grain co-operatives are first, with organizations dealing in farm supplies second and dairy organizations third. Represented also are

co- operatives dealing in livestock, wool, seeds, fruits and vegetables, baby chicks and other farm products Total applications for co- operative loans number 121 for $3,560,000. The sole function of the bank is to serve as a credit source for

John E. Brown

farmers’ marketing organizations. There is no minimum loan and the bank may receive directly applications up to $300,000. Larger applications go to the Central Bank for Co-operatives at Washington, which in turn may turn the application back to the regional bank. Under this arrangement recent commitments have been made by the bank to tobacco marketing associations for amounts of $250,000. $300,000 and $400,000, respectively. To support the loan applications of co-operatives complete financial data is required showing plan of organizations and exact financial condition. Loans are granted or declined upon the showing made, as confirmed or elaborated by studies and investigations by the banks, appraisers and accountants. ' Loans for the acquirement of physical facilities such as creameries and grain elevators may not exceed 60 per cent of the value as determined by the bank's appraiser. Facility loans bear an interest rate of 4’/2 per cent a year, being fixed by the prevailing rate on Federal Land Bank loans. Loans for operating purposes, however, are granted at 3 per cent, this being based at 1 per cent above- the prevailing discount rate of the Federal Intermediate Credit Bank.

Loans carry a “retain” plan of repayment, which officials declare is proving the most satisfactory debt paying plan yet devised for cooperative organizations. The borrower agrees to set aside a stated sum or percentage per unit of product handled for debt retirement. A grain co-operative may “retain” one cent per bushel of grain, while an organization handling farm supplies may devote 1 per cent of its turnover to this purpose. These funds are remitted each month to the bank, reducing the interest charges each month and relieving the cooperative of the necessity of raising large sums for debt retirement' at the close of a year. u a a By COL. F. D. RASH, President Federal Land Bmk of Louisville The Farm Credit Act of 1933 placed upon The Federal Land Bank

of Louisville the emergency measure of a farm loan refinancing program which would halt and avert threatened foreclosure of thousands of farms. Supplementing the resources of the Federal Land Bank, Congress provided funds for

emergency loans on land through the land bank commissioner. The Federal Land Bank was made the agent of the commissioner in granting and servicing commissioners loans. These loans do not add to farm indebtedness. Ninety per cent of the;

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Col. F. D. Rash

sums w'ere used for refinancing debts then existing, w'hich threatened to take the farmers’ lands away from them. Creditors have voluntarily reduced their claims against Indiana farmers to the extent of over $2,500,000 to enable the payment of all outstanding debts with the sums which the land bank and the land bank commissioner could lend. This constructive action by creditors enabled the refinancing of some 3700 Indiana farms which otherwise would not have been possible Interest saved each year on the refinanced loans amounts to $765,003 for the farmers ot this state and about $415,000 saved on their loans outstanding prior to the emergency act of 18 months ago. Savings of at least 1 per cent are realized also through elimination of renewals with accompanying commission charges. The long-term, amortized loans of the Farm Credit Administration and financing system need no frequent renewals. Farmers are showing renewed determination to repay loans and eventually clear their lands of debt. October installment payments to the land bank w-ere 20 per cent in excess of installment,'; maturing that month. The excess amount represents repayments which of necessity had been deferred.

BY WALTER F. GAHM, President Production Credit Corp. of Louisville Production credit corporations were provided to supply short-term farm credit for crop and livestock production and day to day farm operation. The duty of organizing associations in Ohio, Indiana, Kentucky and Tennessee to serve all the farmers thereof was assigned to the

Production Credit Corp. of Louisville, organized a year ago. Ten associations accordingly were formed in Indiana and were ready to receive applications for loans early in the spring. A total of 3059 loans involving $1,094,354 have been handled to date. For the four

W alter F. Gahm

states loans exceed 11.000 and the amount advanced, as of Dec. 15, was $3,835,000. with applications at that time sufficient to suggest a $4,000,000 total by the close of the year. Secretary-treasurers of Production Credit Associations estimate at least double this amount of Production Credit Association loans during the coming year. Production Credit Associations are capitalized by the purchase of non-voting stock by the Production Credit Corp. of Louisville and by the required purchase of voting stock, by borrowers to the amount of $5 for each SIOO or fraction thereof borrowed. All the voting stock being in the hands of borrowers, the co-operative character and operation of each association is assured. Borrowers of production credit funds must provide adequate security. Collateral usually consists of pei'sonal property or livestock and the crops or other product being financed. Borrowers must submit a satisfactory repayment plan. This is deemed one of the most valuable features of Farm Credit Administration financing. The borrower must furnish an accurate financial statement. The association executives will help him prepare this statement if necessary. Use of production credit is causing many farmers to keep accurate records who never did so before, thus adding to the efficiency of farm operation. Every borrower, as before stated, must buy voting stock and become a partner in association management and each is required to pay a reasonable inspection fee and other necessary charges of the loan. When a production credit loan is repaid the borrower may list his stock for resale. Most of them, however, prefer to retain it as a basis for future borrowing.

BY J. B. F. LA PLANTE, President Federal Intermediate Credit Bank of Louisville. Federal intermediate credit banks serve as credit pools in which funds for investment are accumulated and reloaned for agricultural purposes. The Federal Intermediate Credit Bank of Louisville is a bank of discount. It is a wholesaler of farm credit. It receives no de-

posits. It makes no deposits. It m:ikes no loans to individuals. It has been called the Federal Reserve Bank of Agriculture. This bank discounts farmers’ notes for production credit associations, and livestock loan associations and may discount ■ agricultural paper for banks .and

J. B. E. La Plante

other lending instiutions. It lends money to co-operative associations on the security of warehouse receipts, after the farm product has reached a collateral position and is being held for gradual absorption in an orderly marketing program. The secured and endorsed notes of farmers and of co-operatives are held by the Federal Intermediate Credit Bank as collateral, against which it sells debentures. So sound is this agricultural paper regarded that investors heavily oversubscribe every offering of debentures. They buy these debentures at rates so low that twice during the past year the credit bank has been able to reduce its discount rate, first from 4 per cent to 3% per cent, and then from 3 Vi. to 2 per cent. This in turn enables production credit associations to lend at S per cent, the

THE INDIANAPOLIS TIMES

cheapest rate ever enjoyed by farmers generally for this type of credit. Loans and discounts of the Federal Intermediate Credit Bank of Louisville for 1934 with comparative figures for 1933 appear in the following table: TOTAL LOANS AND DISCOUNTS OUTSTANDING Month 1933 1934 January $2,908,038 $2 843.458 February 2,849.207 2.704,933 March 3,027.646 2.661.767 April 3.138,197 2.882,639 Mav 3.290.751 4.092,631 June 3.415 809 4,541,327 July 3 993,158 4.103.201 August 4.188.075 4,238.844 September 4,117.018 4 184.976 October 3.675.249 5.592.874 November 3.128.103 6.196.363 December 2,965,778 x 6.309.267 xUp to Dec. 20. KLEIN HEADS OIL GROUP H. T. Klein of the Texas Cos. rerently was re-elected chairman of the American Petroleum Industries Committee for 1935. E. S. Hall of the Standard Oil Cos. of New Jersey. w?s re-elected secretary. Baird '"m continues as director.

test. Yet, under pressure, he readjusted his business and through economies it was brought to a basis in keeping with changed conditions. Death came suddenly. Its tragedy was tempered because his house was in order. The life insurance was paid promptly. The business is on a sound basis. His widow can educate the children, and live comfortably because of the security provided. Most men of today who have estates of any size did not acquire them all at one time. Their beginnings were small. First a home, then life insurance, as they prospered they added a few bonds, a bit of real estate, more life insurance and finally an annuity—thus building up the whole. In these days young men, who will be the leaders of tomorrow, are proceeding to build their life insurance estate in the same manner. The man who is going to be really successful has m mind a well-rounded insurance program which will meet all obligations permanent income son the family, education for the children, provision for his own retirement —all for a small saving each year. This company keeps pace with the times by providing a service that fully meets the needs of an appreciative public and has a policy to meet every need of the entire family. This company can give you that security, that satisfaction, that peace of mind, that income, that happiness in your sunset years only known to those who have saved through life insurance, the only safe and sure way known to society. / LEADING INDIANA AGENTS ARE: Will H. Adams, Indianapolis; Ernest Alexander, Wabash; Claude F. Alleger, Marion; Allen A. Bassett, Monticello; Floyd Foreman, Logansport; Hugh S. Jeffrey, Ft. Wayne; Harr\ Rosen, South Bend; Everett J. Schug, Berne; B. H. Thorne, Huntington; Russell W hite, Hudson; Lee Wooten, Knightstown; E. D. Hodge, Frankfort; S. H. Newman, Anderson; K. K. Kilty, Bluffton; Jerome Denslow, Elkhart. The Peoples Life Insurance Company of Frankfort, Indiana, is a Legal Reserve “Old Line” Company, organized under the “Indiana Compulsory Deposit Law," and maintains on deposit with the Insurance Department of Indiana over One-Half Million Dollars more than is required by law for the benefit of its policyholders. It has no borrowed money, deferred policy loans, unpaid surrender values, or unpaid death claims. It has policyholder*s surplus of $860,000.00, a strong reserve basis, moderate expenses and very low rates. It is efficiently managed, gives prompt service and stands A-l in the insurance world. Peoples life insurance company FRANKFORT, IND.

AGRICULTURAL RISE SETS REVIVAL PACE Bowker Cites Progress in Face of Obstacles. By Times Special NEW YORK, Dec. 31. —In spite of drought and other unfavorable factors, the agricultural industry is setting the pace toward general economic recovery, Horace Bowker, chairman of the American Agricultural Chemical Cos., declared in a recent review of the past year. Industrial recovery, w'hich would lift the purchasing power of the farmer's customers and a recovery in w'orld trade hold the keys to a further betterment in the agricultural situation, Mr. Bowker said. "Geographically, the gains in agriculture,” he said, "have been w'ell distributed. Kansas shows the greatest increase for the year, with farm cash income of $288,900,000. a 51 per cent increase over last year’s incrm° of $153,000,000.

CITES RECORD YEAR

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Ralph B. Clark

The year just closed far surpasses any previous, as to increases in assets and surplus and low' loss ratio for the Merchants Fire Insurance Cos. of Indiana, Ralph B. Clark, president of the organization, said today.

EMPLOYMENT RISES UNDER TEXTILE CODE Cotton Mills About Break Even on Year. BY GEORGE A. SLOAN i Chairman, Cotton Textile Code Authority. NEW YORK, Dec. 31.—The cotton manufacturing industry is closing the year with employment at about the same level as a year ago and with 90,000 more working on its pay roll than at the end of 1932. Average monthly employment in cotton mills in the last three years has been: 1934. 420.000 persons; 1933, 379.000 (the last half of 1933 was under the Cotton Textile Code); 1932. 301.000. It is noteworthy that the industry in 1934. a full year under the code, employed 40 per cent more workers than in 1932. while the production of cotton goods increased about 10 per cent over 1932 —an effective demonstration of benefits of the shortened work week. From a financial standpoint cotton mills in general in 1934 about broke even, the profits in the first

ONLY recently the death occurred of a friend listed as carrying $50,000.00 life insurance. A wife and two small children w r ere his survivors. A man of affairs in t small community, his business suffered during the depression and he was tempted to draw on his life insurance, his only invest ment that had stood the acid

PAGE 15

half of the year being offset bj* losses in the second half. This record reflects an encouraging contrast to the heavy deficits in 1930. 1931 and 1932 when the aggregate losses amounted to $150,000,000. or nearly 15 per cent on the industry’s investment. NEW INDIAN SECURITY FLOATED DURING YEAR First Issue of Sewage Disposal Plant Bonds Marketed. Anew Indiana security was introduced in the market during the past year. The first issue cf bonds for the construction of sewage disposal plants was marketed the past year by the City Securities Corp. of this city. Although the law under w'hich these bonds are being issued was passed in the special session of the. legislature in 1932. it has taken the intervening time to complete all the necessary legal procedure so that 1934 will really mark th<* birthday of this new type of security. Every city and town in the state now' has the power to own and operate a sew'age treatment plant and all of the appurtenances necessary for the purification and disposal in a sanitary manner of all waste.