The Nonpartisan Leader Newspaper, August 10, 1916, Page 7

_ join, for this 5 ‘ ‘ NE cannot but feel that this is delayed justice to the farmer,” said President Wilson as on July 17 he signed the rural credits bill before an audience in which representatives of several farm organizations were ineluded. 5 The new rural credits bill or farm loan act provides that the president shall appoint four members who will constitute “a federal farm loan boeard. This board will be non-partisan as only two of the members may come from any one political party. . They, with the secretary of the treasury, an ex-officio member, make up _the mem- bership of the governing board. The members must give all their time to the work and must not be connected with any bank loan agency or mortgage business. The .president has appointed as members of the board Charles E. Lobdell and George W. Norris of Penn- sylvania, W. S. A. Smith of Iowa and Herbert Quick of West Virginia. Messrs. Norris and Quick are Democrats. As soon as the board is organized it will divide the country into twelve federal bank districts in each of which shall be established a land bank with a paid up capital of $750,000. Each bank will be managed temporarily by five directors appointed by the board and each bank is to charter national farm loan associations within its district, which shall® consist of one or more states. STOCK OF NEW BANKS TO BE SOLD TO PUBLIC The stock of the federal bank will be sold to the public at five dollars per share but if enough is not sold to make up~the capital required the government will buy sufficient stock to make the $750,000 necessary. The banks will loan only to farmers or national farm loan associations in sums- of not less than $100 and not more than $10,000 to a single borrower. The interest rate will never exceed six per cent but it may be'less than that for the law pro- vides that the rate of interest shall be not more than 1 per cent above the last previous issue of bomds. Thus if land ' bank bonds have been sold to the public on a 4 per cent basis, the rate of interest on borrowed money would be 5 per cent. ’ Every loan shall be made on the amortization basis, that is, a fixed sum may be paid every year so that the loan is steadily cut down to the vanishing point at the time of maturity.~ The method of forming national farm loan -associations is simple. Ten . or more persons who own-and cultivate a ° farm or are about to own a farm may " form . a national farm loan asseciation, . provided that ‘the total sum they desire to borrow is not less than' $20,000. - Every member must subscribe for stock in the assoeia 'gp i per cent of the amoun borrow, but a man wit together - resident Wilson signing the Rural Credits act. The Moss-Hollis Rural Credit bill has become a law, having been adopted by congress and signed by the president. The Leader opposed the passage of this law because it believed it to fail in vital respects of giving to the farmers what they had a right to expect and that its passage would delay for many years the ‘enactment of a really effective rural credit system. Now that the bill is a law it should be understood just what it is and what it is expected to accomplish. = Here is a short digest of the law written from an impartial standpoint, with the attitude of friends of the law set forth and a summary of a few of the objections. The attempt to put it into operation in North Dakota will be watched with much interest by the farmers. Meanwhile the farmers will need to continue their efforts to find a solution for the more important features of the rural credit problem which the law does not attempt to touch. e ————————————————————————————————————————————————————————————————————————————————————————————————— stock may be included in the loan that he makes. The loan limit will be fifty per cent of the valuation of the land and 20 per cent of the value of insurable improvements. Only first mort- gage loans will' be made and the time limit will be not less than five years and not more than 40. The federal land bank furnishes the farin loan associations with money to lend its members. Thus a borrower from the national farm loan: association is paying his interest to an organization of which he himself is a stockholder and the gilt edge security thus resulting to the investor is free from federal, state, or local taxation. The system of rural credits has been severely criticised and this particular bill- has been denounced, not only by the eastern press, but by representatives of many farmer organizations. Those in favor of the present law claim that it will now be possible for - owners of farming. land to borrow money on long time and at low rates of interest. “It means as much to the farmer,” says “one advocate, “as the federal reserve banking and currency law means to the business man who has no, intimate asso- ciation with the few financial autocrats of Wall street who formerly ruled the loan market despotically.” L Nearly forty per cent of the:farms of the United States are operated by tenants and of the farms operated by owners one third are mortgaged. It can thus be seen that the problem of land loans which the bill attempts to: solve is an enormous one. that American farmers are paying eight and one-half per cent on their loans or about twice the sum paid by the farmers of Germany, France and other countries where land banks.havevlong existed. " PRESIDENT THINKS. BILL A BOON TO FARMERS “I cannot go- through the simple ceremony of ' signing this bill,” said ~the president as he took up. his .pen, It is estimated’ “without expressing the feeling that I have in signing it. It is not only a feeling of profound satisfaction but of real gratification that we have com- pleted this piece of legislation which I hope will be immediately beneficial to the farmers of the country. ”The farmers it seems to me, have occupied hitherto a singular position of disadvantage. They have not_had the same freedom to get credit on their real estate that others have had who were in the maunfacturing and commercial enterprises, and while they have sus- tained our life, they did not in the same degree with others share in the benefits of that life. “Therefore this bill, along with the very liberal provisions of the federal reserve act, puts'them upon an equality with all others who have genuine assets and makes the great credit of the country available to them. One cannot but feel that this is delayed justice to the farmer, and one cannot but feel that it is a very gratifying thing to play a .part in doing this act of justice. “I look forward to the benefits of this bill, not- with extravagant expectations, but with confident expectation that it will be of very wide reaching benefit and, incidentally, it will be of advantage to the investing community, for I can imagine no more satisfactory and solid investment than.this system will afford those who have money tq use. “I sign this bill, therefore, with real emotion, and am very glad indeed to be honored by your presence and .sup- ported by your feelings in what I have said regarding it.” In signing the bill the president used two pens, one of which will be presented to the Southern Commerical congress and the other was given to David Lubin, one of the originators of the bill. HIGH INTEREST RATES IN NORTH DAKOTA .As’the rural credit problem is acute - in North Dakota the law’s - operation in this state at least will be watehed .with deep interest, espeecially by tlose pd Copyrighted photo by Harris & Ewing. New Rural Credit Act From Standpoint . Both of Enthusiasts and of Skeptics who remember the statement made ig! congress last January by the Comptro] ler of the Currency John Skeltornt Williams. 4 “In North Dakota,” said ] Wiliams, “there are 151 nationdl bam‘] of which 96, or approximately twos thirds, were charging usurious rates of | interest during the year 1915. Th legal rate in North Dakota is 6 per cen and the maximum allowed by contrac is 10 per cent. ! “A very large proportion if not the, bulk of the loans of most of the banks in f North Dakota were made at from 10 tg 15 per cent. et “A considerable proportion of th { i _North Dakota banks reported that 10 per cent was the minimum charged any, borrower. While 12 per cent is a common rate in that state, comparas | tively few loans were made at the exorbitant rates of interest charged in other sections, although from 28 to 48 per cent is charged in some instanceg for comparatively small-loans. About & dozen banks in North Dakota reported loans aggregating from $1000 to $8000 at rates ranging from 15 to 24 per cent.” CRITICS POINT OUT WEAKNESSES OF BILL Those who object to the bill point 0;1:3 however, that usury does not often en into the first-mortgage loan question and that lower rates on first mortgages do not, after all, solve the main financial problems of the farmer. The plan is a first-mortgage loan plan only. Commenting on this feature of the bill-a Washington correspondent says: . “The bill makes no mention at all of personal credit, which is the paramount need of American farmers today. The bill “establishes various sorts of pawns shops where farmers can hock their | good acres, but it doesn’t provide & cent to be loaned on personal credity The report of the joint committee which framed the measure declares that the need-of agriculture is for cheap money, to finance farming operations, and then purports” to furnish such money by the land bank system. But it is the exper« ience of the whole earth that money, borrowed on the security of land for long periods is not*used to finance farm« ing operations, but is used either to pay off existing debts, or to comstruct pers manent improvements, or for the pur« chase of land. None of these uses par« ticularly builds up American farming. NO PROVISION MADE FOR PERSONAL LOANS “The money that does build up farm« ing is the short term loan, with which the farmer buys seed or young stock, or - pays for farm labor. These things increase his - production. The adoption of better farming methods often depends upon: the farmer’s ability to get the use of money through the growing ‘seasons The present bill makes no provision for this ‘sort of loans. The ‘farmer must still apply to national, state, or private (Continued on page 23) N e e P, 5 AT N 1SR 7 28T { R R . PRI X T Sy