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Show AGRICULTURAL, CREDIT ACTS On the last day It was In session, Congress enacted the Agricultural Credits act. This act is designed to give the farmer the sort of credit he needs to produce efficiently and market mar-ket In an orderly way the products of the farm. It Is an effort by Congress Con-gress to meet a need which ha3 been f It for at least fifty years. The act may not be perfect. Quite possibly experience ex-perience wiLl show the need of some amendments from time to time. But it furnishes the basis for a system of Intermediate credit adapted to farm conditions and farm needs. Aao- It should bring about a reduction in the interest which farmers must pay for money borrowed. Tho act Is divided into two parts. In the first, it provides! government agencies for handling agricultural loans. In the second it authorizes the organization of private agencies under government supervision for making loans on livestock security and on farm commodities on the way to market. The government loan activities will be carried on in connection with the Federal land banks. At the present time the country is divided into 12 districts, and in each of these districts dis-tricts there is a Federal land bank which makes land mortgage loans, these twelve banks being directed by a central Federal Farm Loan bureau in Washington. In connection with each of these land banks there is to be established an intermediate credit, cred-it, bank, located in the same city with the land bank and under the supervision super-vision of the officers and directors of the land bank. The Federal government govern-ment supplies each of these intermediate inter-mediate credit banks with a capital of not to exceed $5,000,000. These intermediate credlit banks are authorized author-ized to discount farmers' notes which have been taken by banks and other financial institutions, and then can carry such notes for a term of from six months to three years. The banks may also loan direct to farmers' cooperative co-operative associations under conditions condi-tions set forth in the act. These intermediate credit bSnks may issue debentures which will have back of them the farmers' notes which the banks have taken. The idea is that these debentures may be sold to people who wish a safe investment. They are exempt from taxation, just as the bonds issued by the Federal land bank are exempt. The interest charged by the intermediate credit banks may not exceed by more than one per cent interest paid on the debentures de-bentures issued, and the farmer who borrows must not be chctrged an interest in-terest rate of more than one and one-half one-half per cent above the interest charged by the intermediate credit bank. ' No doubt some time will be required re-quired to get this machinery in good working order. It will be just like building up a new business. It should not be very long, however, until the benefits will be apparent and the farmer far-mer will find that he can borrow the needed capital for a period up to three years without having to pay an unduly high interest rate, without having to renew his notes every ninety nin-ety days or six months, and without being in danger of having to sacri fice his crops or livestock because of a sudden financial flurry. The second division of the act authorizes au-thorizes the organization, under a federal charter, of national agricultural agricul-tural credit corporations, these to be organized by private capital. They will be under the supervision of th6 Comptroller of the Currency, just as are the other national banking institutions. insti-tutions. They must have a capital stock of at least $250,000. They may issue collateral trust debentures up to ten times their capital and surplus. Such corporations will probably be organized in the Western states, where the livestock industry is important im-portant and where now cattle loan companies are in operation. In addition to the provisions of the act designed to furnish the farmer much needed intermediate credit, certain changes have been made in the law under which the Federal land banks operate and in the Federal Feder-al Reserve act. Provision for the establishment es-tablishment of the so-called permanent perma-nent organization of the twelve Federal Fed-eral landi banks ds made by providing that three out of seven directors for each bank are to be elected by the borrowers from the bank and three are to be appointed by the Federal Fed-eral Farm Loan bureau. The seventh director, who will be the president of the board, will be chos-end chos-end from the three persons who have received the highest nomination vote for the position by the borrowers or stockholders in the bank. Heretofore the maximum amount which might be loaned to any individual indi-vidual by the Federal land banks has been $10,000. This has been Increased Increas-ed to $25,000. Also the purpose for which mortgage loans may be made has been broadened to include the repayment re-payment of any existing indebtedness The Federal Reserve act is amended amend-ed by broadening the definition of what is called agricultural paper, making it include the grading and processing of agricultural products by cooperative marketing associations. associa-tions. Heretofore the Federal Reserve Re-serve Banks have not been permitted permit-ted to discount agricultural paper for a longer period than six months. This period has been increased to nine months. A large number of state banks are now members of the Federal Reserve system, some of them because their capital is not large enough to meet the requirements of the law. An amendment am-endment to the Federal Reserve act is carried in this bill designed to encourage en-courage small banks to join the system. sys-tem. A bank which has capital equal only to sixty per cent of the capital required of national banks may now be ad'mitted, if within a reasonable time the capital will be increased to correspond with the capital required of national banks. The life of the War Finance Corporation Cor-poration .s extended up to February 29, 1924, the expectation being that by that date the new credit facilities provided for under this agricultural credits act will be sufficient to meet the needs. This Agricultural Credits Act of 1923 is one of the most important acts passed by the last congress. It marks an earnest effort to provide the farmers with the sort of credit he must have to carry on efficiently. It is not class legislation. The results will be helpful to business in general, because the effect will be to stabilize agricultural production and marketing. |