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Show imonid Iollii it ought to be eu;v . 1 u a una rnun gd.e ocvau.se j rir-; uvi :-.g'- wuuM he t.-udu- 1 illy :-L-d I - --r - i i.-'.'-ry '-r and wouldn't 'all due lor a Ion. lim. i.i. t!.r. i an I g.-t the benefits or i hi-; sy.-ti-m if 1 1:m- out in a rcnee ; t. i 1 1 i wrien- i; is impi w.-able to get '. , I m or rn-re i o rorrn an asoi latum '.' ! A. If no !u'-al a-"o( :;.;:uii is form- : m1 in your seetiun i'.t'-'-v ifie law has j ieii i:i opt-nt rjori a oar. th eiVd- i 1 -ral land b.'-n; is empowered to up-ioiu up-ioiu t a i is ut..''i:t ai your terri' ory my bank or i rtiM company or mortgage mort-gage company organized under state .harlot'. This bank (r company nay make t iie loan for ou t hrouh .he 1' C'd"ral I-' arm ljoan sysie:ii. pro-."idiiiK pro-."idiiiK you Mtbscj'ib" to the stock if the f-'inb-ral land bank to the imount of fj jier cent of the face of ami' loan. The bank or company uts as agent and guarantees your oaii. For o doing it is allowed a .om mission of one-half per cent per lunum ou the unpaid balance of the ,oau. Q. I have read something about joint stock land banks which may lie organized under this system. Please tell me about them. A. The act provides that private individuals may organize joint stock land banks, with capital stock of at least. $ 2 a 0.0 DO each, and consisting of not loss titan 10 stockholders. One half of the capital stock must be' paid up when the bank starts business, busi-ness, and the other half is subject to call. The joint stock land bank has the right to issue bonds after its capital is paid up, just as the Federal Fed-eral land banks do, and it may make loans at a rale 1 per cent above the rale at which its last issue of its bonds was sold. Joint stock land banks are not permitted to charge over 6 per cent interest. Q. May a joint stock land bank-take bank-take a second mortgage? A. Nothing bu ta first mortgage. Q. Does it operate under the amortization plan? A. Yes. Q. Docs the Federal Farm Loan Board supervise the operation of joint slock land banks? A. Yes. These joint stock land banks are private institutions, but they are supervised and inspected by the government. Q. Then I am given to understand under-stand that themost important unit of this entire banking system is the local cooperative loan association, organized by 10 or more farmers. A. Yes; it is the door through which the farmer borrower entert into the benefits of the system. It is the cooperative agency which gives the "hiachinery for borrowing and investing, for voting and for protection against loss. It is the foundation stone of the whole system. sys-tem. Q. Then to get the full benefit of this system, it is to the interest oi ! the farmers to organize into these ! groups as quickly as possible? A. Yes; they should organize at once, so they will be ready to get their charters as soon as the Federal Feder-al land banks are located. Q. May these Federal land banks accept deposits or do a general banking bank-ing business? A. No; but the local loai associations associ-ations may accept small savings accounts ac-counts and pay 4 per cent interest thereon, and this money must be forwarded for-warded to the Federal Land Bank within six days. When one's savings sav-ings account reaches $25.00 he may exchange It for a $25.00 Federal land bank bond. Q. What is the object of this feature of the act? A. To encourage thrift among the people and make saving money easy and convenient for farmers and their families. ri:uy carry the borru A'tr, but '.he bur- i rower is required 'o pay 5 per ennr ,i intreht on ov-rrdiir payments while It he K in arrears. Tne local a:."-!-iL atlon may borrow money mm :L-!i I Federal laud hank to t'-Niporaril'' meet tiie der'aulled payments. t Q. So the lorul as-ocialiuti : responsible for interest and amur zulion payments from its m-ni hi-r.-" A. Yen. II Is the duty of tf'' . secret ary-lr-asiirHr of the Iu al a- t yuciation to see that there payment ; are promptly made. It is also his duty to see that each member kee -t his taxes paid, to see that insnran - j pulirh'S are kept renewed, and t.. , look after everything thai trods to the wellf'are of the local asyoeh. '. it. n t lie is custodian if the records ar;d -securities of the local assoc. a: tea , , he makes quarterly reports to the Federal land hank as to the contli- , lion of the local association. In fact ; he is the agent for the local associa- tion In its relations with the Federal , land hank. . ; Q. Does he gei paid for doing this? A. , His compensation is fixed by the directors of the local association. All other officers of the local association associ-ation serve without salary unless the Federal Ferm I.oen Board approves ap-proves the payment of salaries. The sesecretary- t reasurer may , serve without salary if he will. Q. Whence comes the money to pay the secretary-treasurer's salary? A. The National Farm Loan association as-sociation has two sources of revenue. It gets dividends fro mine Federal land bank on its land bank stock and is also permitted to collect out of the interest payments one-eighth of one per cent on the unpaid balances of the members' loans, in anticipation anticipa-tion of dividends. Q. What determines the voting strength of each member or the local loc-al association? A. Each member has one vote for each $u.00 share of stock. A man who has borrowed $1,000.00 would necessarily have $50.00 worth or stock or 10 votes. But no one stockholder may have more than 2 0 votes. Q. May any but borrowers belong to these local loan associations? A. No; membership is determined determin-ed by the ownership of stock, and only borrowers are stockholders. Q. Who gets the dividends on this stock while it is held as collateral collat-eral security by the local loan association? as-sociation? A. The borrower, except that part used to pay the expenses of the local , loan association. Q. May a local association in-L in-L crease its membership after it is or-I or-I ganized and in operation? A. Certainly. It may admit any borrower who subscribes to I stock equal to 5 per cent of his loan. He is admitted only by a two-thirds , vote of the directors of the aBsocia-, aBsocia-, lion. , Q. I? here any limit to il e r.um-( r.um-( ber that may be taken in? A. No. Q. Does the act specify how the 1 money borrowed shall be expended .' j A ' Yes; the m ."v m:.y he spent only for the purchase of land, for 'i t-f t-f purchase of additional land, f .-v the ( payment of a mortgage or debt al-3 al-3 ready existing, for the purchase (if 3 ilvestock, or for any kind of yoducu ive Improvements, such as fertilizer, needed buildings, draining, etc. j Q. May real estate speculators 3 borrow to buy land? A. None but actual farmers or s. prospective farmers may borrow. 5 Q. May an absentee landlord bor-I bor-I row on his land? f A. No. Q. What is the object of these f limitations? A. It is the policy of the law r to benefit only the actual farmer, j and especially the farmer of small 3 or medium sized operations who is i most in need of credit facilities. Q. Will the interest rate to farm-, farm-, ers be the same in every Federal s land bank district? s A. Probably about the same. Q. How can this be true when e each Federal land bank issues its . bonds separately. j A. Because the bonds of each bank are guaranteed by every other s bank nad are therefore equally secure. se-cure. 3 Q. Suppose the interest rate is i lowered after the banks are in oper- ation, will the early borrowers be s forced to continue at the high rate? i A. No. They may reborrow after af-ter five years to pay off their first mortgage . Q. Suppose I own a farm worth only $20.00 per acre because It is 1 marshy. Suppose I underdrain it and make it worth $40.00 an acre. t May I double my loan? i A. If you double the appraised - value you may double the loan, j Q. Suppose a prospective land . buyer cannot raise 5 0 per cent of I the value of the land he wants to purchase, would he be permitted to s execute a second mortgage to come y due while the amortized loan was e being paid off? s A. Yes. With a long time . MJl)l:U.L 1 11M LOANS Questions Asked 1'roin the I'ollit of View of the Borrower Q. You say afarmer who borrows is required to buy stock of his local association equal to five per cent of of his loan. What becomes of this stock? A. It is held by the local loan association as-sociation as coallateral security until un-til the farmer pays off his debt. Then the money is returned to him and the farmer may use it as the last payment of his debt. Q. What does the local association associa-tion do with the money the borrower borrow-er pays for his stock? A. It ltAis stock of the Federal land bank, as to increase the land bank's capital so that it can make more loans. Q. Why does the local association associa-tion hold the borrower's stock? A. The stock purchased by each borrower in that association is a part of the assets or the local association associ-ation and is to be used to meet defaults de-faults in case some borrower defaults de-faults and his land does not satisfy the face of the mortgage. Q. Is there much likelihood that this tsock will ever have to be used for that purpose? A. No; because the loans do not exceed ex-ceed 5 0 per cent of the appralsec value of the land. Q. Is there any other possible liability on the part of the borrower: A. Yes. In case of a very severe loss experienced by the local loar association each borrower is liable for another 5 per cent. This is the double-liability feature whicl has always been the rule in nationa bank stock ownership. , , Q. Then the total responsibility of the borrower for the debts o: other members of the association it only 10 per cent of the face of hi; loau? A. Yes. Q. And what is the likelihooe that this 10 per cent might ever he called for? A. It is very remote. It loan: are conservatively made no lost could reasonably occur that, wouk call for either of these 5 per ( . n liabilities. This Illustrates the ne cessity for careful management o the local loan association and dem onstrates one of the reasons foi their existance the creation of i body for the exclusion of bad risk: and for the conservative valuatioi of lands. Q. Then it is not true, as mailt have supposed, that one member of I national farm loan association i the debts of his associates? A. No. He is liable only to th extent shown above, the total liabil ity being 10 per cent of his loan, ane that to be called upon only when th sale of the mortgaged property fail: to meet the debt against it. Q. Suppose a borrower fails t( meet his payments; what happens' A. If, in the judgment of the lo cal loan association, the default wa: unavoidable, the local associatioi |