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Show I! "GROWTH OF FEDERAL LAI BANKS AND HOW ASSflCIAH 0N ARE ORGANIZED AND LOANS MADE I (By S. S. Smith. Federal Farm Loan Apprainer.) The Federal Farm Loan Act, was passed by congress In June, 1916, received re-ceived the president's signature, and becamo a law on July 17, 1916. The purpose of the organization of these banks was to enable the fanner to borrow money on long time contracts, con-tracts, at as low a rate of Interest as that enjoyed by the business men of the country. Orjjanizatlon. The act provided for the organization organiza-tion of twelve' Federal Land banks throughout the country, and provided a Farm Loan board of five members with the secretary of the treasury as chair man,v to conduot the business of organizing or-ganizing and operating these banks. This board is a pail of the United States treasury department, and has ofllces In the treasury building, Washington, Wash-ington, D. C. At present, the personnel of the board Is, William G, McAdoo, chairman, George W. Norris, farm loan commissioner, who, with Charles E. Lobdell, W. S. A. Smith nnd Herbert Quick, comprise the board. In December, 191G, the farm loan board, after thorourhly canvassing tho needs of the different sections of the country, selected the cities where these banks should be organized, and the bank that Berves Utah, was located at Berkeley, and hence is called "The Federal Land Bank of Berkeley." ' The Berkeley bank, was organized and ready for business on May 1, 1917, and since the commencement of busi-' busi-' ncss, have received applications from i tho four stales, California, Utah, Ne- H vada and Arizona, which the bank 'k serves, for more than $20,000,000, of H which more tjian 2,000.000 have been ' applied for from Utah. I Each bank was organized, with a , If capital of $1,500,000 the U. S. govern -I j ment buying one-half of the capital stock, so that the banks would have t money to begin business as soon as , I organized. j Method of Obtaining Loans. !t' The method that must be followed in ),' obtaining loans, Is as follows: J Loans are made by the bank, through National Farm Loan associations, organized or-ganized by the farmers. In order to organize an association, and secure loans, It is necessary for ten or more parties desiring to borrow to get together to-gether and perfect the organization of ( 1 an association. The aggregate loans ! desired, must equal or exceed $20,000. , This association of farmers, need only I to apply by letter and instructions to I,. effect their organization. ( Liability of Borrower, i When their organization Is effected, , i I they appoint a loan committee from j their own number. This committee ap praises all the farms which are offered for security for loans; and, as the law provides, that each member of the association as-sociation Is held liable to the extent of 10 per cent of his loan, for all tho loans In his association, It is safe to conclude that this loan committee will not over value farms intentionally. Federal Appraisers. After the loan committee has made its report on each of the proposed i loans, the several applications of the farmers, with the loan committoe's report re-port attached, are forwarded to the bank, which. In turn, sends them to the federal farm limn appraiser, who has been appointed by the farm loan board at Washington. This appraiser goes carefully over each farm to check up tho loan committee's work and see that no mistake is made and submits his report to tho bank. When tho above work Is completed, the bank officials are ready to pass upon tho loans, and notify each applicant appli-cant to forward to the bank, his abstract, ab-stract, or other evidence of title, and tho loan Is closed. Farmers are Bankers. When tho loan Is made, each borrower bor-rower accepts 95 per cent of his loan in cash, and 5 per cent of his loan In stock in the bank. That is to say, if a man asks for a loan of $2000, lie gets $19000 in cash, and $100 In bank stock. Thus, as soon as our bank, the Berkeley Berk-eley bank; has joaned $15,000,000, the stock purchased by the borrowing farmers will be $750,000, or all that remained re-mained in, tho treasury after tho government gov-ernment made the first purchase. This point should be reached In about one year from this time, as the bank has loaned more than $-1,000,000 at the present time, and is making loans now at tho rate of almost $1,000,-000 $1,000,-000 a month. When tho stock of the bank Is all out. loans are continued as usual, and the government releases its stock to tho farmers as fast as it can be taken up. Hence it is safe to say, that within with-in three years, from the date of the beginning of business, the farmers, ifc-ho are borrowing money, will have taken up all the stock of the bank and will be the solo owners, From that time one, the farmers will own and be managing their own banks, the govornment exorcising a supervisory super-visory power, hy appointing three directors di-rectors of the bank, while the farmers will, elect six diroctors. How Money is Secured. Explanation should be made here ns to how and where the money is secured secur-ed to make those loans. As soon as $250,000 of mortgages have been received re-ceived by the bank, they pro sent to tho farm loan board at Washington, D. C;, who, after inspection and being satisfied that they are in proper form and are in compliance with the law, issue upon them farm loan bonds, in the sum of the full amount of the mortgages. mort-gages. Each and .every one of these bonds are secured by the assets of all twelve of the farm banks. Hence they are better securjly than the ordinary farm mortgage, which has always been considered as gilt edge. These bonds sell to the public roadlly. They bear 4A per cent interest, and the farmer Is thus borrowing money at wholesale, ($250,000 at a time) anci loaning it to himself at retail and the cost of carrying carry-ing on the business of the banks, the salary and expense of tho farm loan board, of the bank directors of each bank, of the appraisers, and for rents, stationery, etc.. is mot by the difference differ-ence between what the farmer pays for his loan, which is 5 per cent, and that which' the bonds sell for, which Is 4 Per cent. Amortization Plan. j Loans are made only on what Is known as the Amortization plan, that is, you borrow your money for thirty-five thirty-five years. You pay 5V per cent interest in-terest on the money and you pay 1 per cent year on the principal, your total payment being 6V per cent, and this, In the thirty-five years, pays off both principal and interest. On the other hand, if you desire to pay off your loan at any time after five years, you can do so, or you can pay any part thereof in multiples of $25, being credited cred-ited at all times, with the monoy you havo already paid in on the amortization amortiza-tion plan. Delay In Getting Loans. There has been some citiclsm In regard re-gard to delay In getting loans, in this manner. There have been many do-lays, do-lays, but as a rule, it is because the i farmers cannot get ready to act in unison. uni-son. Tho most of the delays can be charged to this cause. Again. sit has, of course, boon impossible, with the limited capital the bank started with to make all the loans applied for, as rapidly as the borrowers desired. With only $750,000 capital, If the bank loans that amount each mdnth, it moans the turning of their entire capital each month. This, every business man knows, Is all that could be expected, and the Berkeley bank accomplished more than that in both November and December in the former month, they loaned $850,000, and in. the latter $8,-000,000. $8,-000,000. Progress in Utah. In Utah, since the organization of the Borkoloy bank, more than $2,000,-000 $2,000,-000 has been applied for. The writer has visited 403 farms, and has approved ap-proved loanB to the amount of $1,009,-300. $1,009,-300. Of this amount, more than $300,000 has actually been loaned to the farmers, farm-ers, and the balance is being adjusted as rabidly as possible. As there have been other appraisers in the state, It , is safe to say that more than $2,000,000 I have been applied for In Utah. There have been five national farm loan associations organized in Weber county, all of their farms appraised, and the loans either made or are In ' progress of closing. The first organization orga-nization perfected In this county, was Rodalo, taking in tho territory of Roy and Riverdale, with Wm. Jensen as secretary -treasurer. The second or- ganlzation was North Ogden, which has since been consolidated with that 1 of Rodale. Then followed closely, ; Huntsville-Eden. with Ernest McKay as secretary-treasurer, taking In as its torritory all of Ogden valley; Kanos- ville-Taylor, with Charles Kingston, 1 2 b seoretary-treasuror, taking in those .'Crop" precincts,. with a part of Hooper; Farr I a ai West, with Moroni Chugg, as secre- j, itrric tary-troasuror, taking In as their torri- ; tory, their own precinct and that of j yf Pleasant View. j, These four associations as now or- j jiTej ganized, have been approved by the ken appraisers for loans amounting to the 1 M sum of $206,500 more than 75 per cent .' b of which have either already be?a I aiiy made, or are in progress of closing. ; t Lit ' c nut ' '. ucai |