The Nonpartisan Leader Newspaper, May 19, 1919, Page 3

S 4 . meet their interest and amortization ‘loans, we have three delinquent bor- ‘to men who need it most, Mr. Quamme In the interest of a square deal for the farmers . VOL. 8, NO. 20 Tonparfigin Teader Official Magazine of the National Nonpartisan League ST. PAUL, MINNESOTA, MAY 19, 1919 Federal Farm Loans and State Bank A magazine that dares to print the truth WHOLE NUMBER 191 Rural Credit System Established in North Dakota Is Indorsed by P President of St. Paul Federal Land Bank BY CHESTER W. VONIER N TWO years the Federal Land $28,664,700 to 11,216 farmers in the Northwest, according to a statement by E. G. Quamme, president of the bank. Of this amount $14,086,800 has been loaned to farmers of North ; x Dakota. This record puts the St. Paul bank in the second place in the list of federal land banks in the coun- . try. Farmers now are paying 5% per cent inter- est on their loans, and there are prospects that the rate will be reduced to 5 per cent when the money situation improves. Besides lending money at this low rate, the bank is making good profits. All of the organization ex- penses have been wiped out and the earnings have accumulated to such an extent that the bank is contemplating paying a 6 per cent cumulative divi- dend on August 1, besides setting aside the surplus required by law, and dividends will be paid annu- ally thereafter. “The farmers have shown that they understand and appreciate the service rendered by this federal institution,” Mr. Quamme declared, “and the de- mand for this service is- growing with every month. From the number of applications now being received, present indications are that we will do a ‘greatly increased volume of business in the coming year. “We have found that the farmers payments promptly. Out of the 11,216 rowers, who owe in the aggregate $118.50.” The farm land banks are the first efforts. of the government to come to the aid of the farmers, who were be- ing charged high rates of interest-on mortgage loans. Despite objections of mortgage bankers and opposition and - skepticism of congress, the banks were launched. - They became immediately popular, despite their somewhat un- wieldy machinery, until the total of loans through that agency reached amazing proportions. Loans in the bank are limited by law to 50 per cent ‘of the appraised value of the farm. TAKES 30 DAYS TO GET U. S. FARM LOAN Besides this, in order to obtain a loan, an applicant must be a member of the farm loan association, which must be organized under the rules governing such associations. = These associations now are organized in every county in North Dakota and in all except a few townships. The land is appraised, the loan approved, and the documents necessary are sent to Washington, from where a check is forwarded to the farmers. The average time, ac- cording to Mr. Quamme, to obtain the loan, from the moment that the appli- cation is made to' the day the check is received from Washington, is about 30 days. ; 5 But the restrictions prevent loans said, That is the man who is making a-beginning on his farm, who has nothing but the land on which to start. In order to obtain' a loan from the federal land bank. the farm must be bank of St. Paul has loaned - “It’s the state that must come to the aid of these men,” Mr. Quamme declared. “Your North Dakota bank is fine. It will be a suc- cess. It must be a success. There is such a -crying need for that kind of an institution. “We here are restricted, and those restrictions must exist to protect such a large institution, so that we can not come to the aid of the man who is establishing a’' new farm. When he has his house, some stock and some improvements on his farm, then we can make him a loan. But as it stands now, he must make his way as best he can, or pay ex- orbitant interest rates. I know just how bad the abuses of this kind are. They now are paying 10 per cent and a bonus. “The wonder to me is not how many of those men ‘who start farming under those conditions. fail. It is that any of them at all succeed. And that is the place for the state to come in. I am anxious for the Bank of North Dakota to get started. It can not begin its operations, that is, the rural credit side of it, too soon. Of course, I want it understood that I don’t mean it should be started before the organization is perfected, but I mean that there is such a great need for it. “And that need doesn’t exist in North Dakota alone. It exists in Montana, and Wisconsin, and Minnesota, and South Dakota, and every other state —Drawn expressly for the Leader by W. C. Morris. Opposition to the League consists mainly in “blowing bubbles” 'to fool the other people. Everybody knows they’re nothing but bubbles, and the farmer doesn’t have much trouble in puncturing them. C some of the “bubbles” that the anti-League group has blown up -and circulated - against the farmer: What the farmer did to those he is doing to the rest of them. All the bubbles come from the same bowl of - calumny, and-all are equally full of “hot air” - . - * PAGE THREE In this cartoon, Morris shows in the Union. The farmers in those states are up against the same kind of a problem. “Through the federal land banks, I dare say, we have reduced the interest rates considerably. I estimate that the rate is now, on the average, be- tween 8 and 9 per cent. Before the establishment of the farm loan bank, I should judge it was over 10 per cent. I believe the rural credit system of North Dakota will reduce the rate still further and bring it down to probably 7 per cent. Think of what that will mean! RATES WERE WHAT LENDERS WOULD CHARGE “T am thoroughly acquainted with the struggle the North Dakota farmers made under the old regime. It wasn’t a question of what the money was worth. "It was a question solely of what the men could get. This was how it worked out: “The farmer went to the man in town, from whom he got his loan. It didn’t make much difference from whom he got the money, the rate was bound to be all that the traffic would bear. He probably would pay 12 per cent and .a bonus. But the man who leaned the money didn’t make the transaction. The man who really risked the funds was some eastern man, and he received about 6 per cent on his money. : PRICKING BUBBLES . The man in North Dakota, his agent, made, for his half hour’s work in negotiating the loan, 6 per cent a year on the other man’s money. Of course, a little later, ‘when competition became stronger the .agent cut down his fee to about 4 per cent, but still the amount was excessive. “These high-rate mortgage.men still are able to exist while there is only the federal land bank to compete with them, by reason of the restrictions on our loan-making powers. For that reason, I am anxious for the states to take a hand, and back up the fed- eral land bank plan. “It is for the state, then, to finance the beginner in the farming business. This man need only have his land clear of encumbrance. From the state he will borrow money at 6 or 7 per cent to get him on his feet, to build his barn, his home, buy stock, chickens, machinery and other necessary things, . and get started producing. When he is in that position, he can come into the farm loan association, get his money at the cheaper rate from the government, and release the state’s money for some other beginner on the farm. ; 2 “There is no reason why the state rural credit bank and. the federal ‘farm land bank should not dovetail, should not work harmoniously. There is too much work to be done by both organizations to make them in any sense competitors. The state banks should be in effect feeders for the fed- eral land banks, getting the new farm- . ers of the state on their feet and in a position to get.the low government rate. “Here every day I see the need of " such banks as the rural credit bank - of North Dakota. Men whom I would - like to help, who deserve help- and . who with a little capital could make~” good, have to be turned down because our rules won’t permit us to lend him : (Continued on page 14)