586 TWENTY-SECOND ANNUAL YEAR BOOK— PART VII 



associations; third was a bill to create a change in our incorpoartion laws 

 making possible the formation of this Iowa Farm Credit Corporation, and, 

 fourth, a bill permitting state banks, savings banks and trust companies 

 to invest a certain per cent of their funds in the stock of this Farm Credit 

 Corporation. These bills were all referred to committees, every safe- 

 guard possible was put around them, and finally in both house and senate 

 they were passed unanimously — there wasn't a vote against them. After 

 the bills were signed by the governor, the Farm Bureau sent word to us 

 to go ahead and form this great corporation. I called in the executive 

 council of the Bankers' Association and went to work on the proposition, 

 and we appointed a committee and the Farm Bureau appointed a commit- 

 tee, and those committees worked together for six weeks going over these 

 various plans, and finally on June 8 of this year the articles of incorpora- 

 tion were filed with the auditor of state. 



Now, how will this corporation benefit the farmers of Iowa? Under the 

 law we can take only one class of paper, and that is farm paper. We 

 cannot take manufacturers' paper or store paper or anybody else's paper 

 — but only farm paper. And that paper is divided up into four different 

 classes: 



First — We can take the note of any Iowa farmer which is secured by a 

 warehouse receipt for grain or other farm products. 



Second — We can take a note secured by a chattel mortgage on live 

 stock, and endorsed by any Iowa bank. That classification takes in a 

 large class of paper. 



Third — We can take a note secured by a first mortgage on Iowa farm 

 land, and endorsed by an Iowa bank. 



Fourth — We can take paper secured by any collateral which is accept- 

 able under the Iowa banking law. 



After we have invested as much capital as seems wise in those classes 

 of farm paper, we have a right to trust-deed these notes and issue deben- 

 ture bonds, and these debenture bonds may be sold in this state, as well as 

 other states, thus creating a large investment fund which will amount to 

 twenty million dollars on each million dollars of capital. The Farm Credit 

 Corporation will be a larger rediscount corporation for the benefit of the 

 farmers of this state and the banks of this state, and it will do several 

 things. Perhaps you men do not know — you ought to know — that the 

 class of farm paper in this state today is not subject to rediscount. It is 

 a serious thing; it affects you directly; it affects the farmer of this state, 

 and it affects the banker of this state. I will give you two examples: Sup- 

 pose you own 320 acres of land free and clear of all liens and incum- 

 brances, and you want to put a corn crop on that farm, or put tiling in 

 that farm to increase its fertility, or send your boy to college, and you go 

 into the bank that is a member of the Federal Reserve System and want 

 to borrow $1,000 and if that bank has to rediscount that note with 

 the Federal Reserve bank in order to make the loan, he cannot make it, 

 because that note is not subject to rediscount. Suppose you have $20,000 

 first-farm mortgage in your possession. We, here in Iowa, think there is 

 nothing better than a first farm mortgage, and we are right, and the rest 

 of the people will find it out a little later. Supposing a man has a $20,000 



