TWENTIETH ANNUAL YEAR BOOK— PART VII 589 



from a railroad and he may wish to borrow $1,000 to pay for his wheat 

 farm. The Iowa farmer must bear part of these excessive expenses of 

 making the loan and bear his proportionate share of the loss in case the 

 farm mortgage is foreclosed. 



The Federal Land Bank is making farm loans in Wyoming at a much 

 lower rate of interest than private capital has charged. Is there any rea- 

 son why Iowa should pay a higher interest rate in order to lower ths 

 rate in other states? The Federal Land Bank is doing a big business in 

 Iowa and on the whole is providing more satisfactory farm credit than 

 any other loan institution doing business in the state. 



In South Dakota the Federal Land Bank is not doing as large a busi- 

 ness as in Iowa. In South Dakota the risk is greater, the average loan 

 smaller, and loans are made at the same rate as in Iowa. But, a state 

 farm loan bank has taken most of the business, and a similar institution, 

 modified to meet Iowa conditions, would gradually get the business in 

 Iowa. 



This land bank of the sister state is known as the South Dakota 

 Rural Credit. The rural credit commissioner believes most people do not 

 know what rural credit means and suggests South Dakota Loan Bank. 



Farm Loan Bank of Iowa would be entirely expressive for an institu- 

 tion in this state. No attempt will be made to give any of the details of 

 organization and operation of this proposed institution. The followinf, 

 letter dated January 20, 1920, from the rural credit commissioner, givei 

 some idea of what is being done in South Dakota: 



"Your letter of 16th inst. was duly received, and in reply would 

 say that the writer is not familiar enough with general conditions in 

 Iowa to venture an opinion as to any modifications in our rural credit 

 law, necessary to make it applicable to the state of Iowa. I suppose that 

 on account of the uniformity of values in your state that the limiting 

 factor as to the assessed valuation, would not be necessary, while this 

 feature has been found very valuable and useful in this state, where 

 there is a wide variation in the assessed valuation. 



"Answering your inquiry as to what is meant by 70 per cent of the 

 value of the land, would say that this means the land only, and not 

 including the buildings. Our law provides that this board can loan 70 

 per cent of the value of the land, plus 40 per cent of the insurable value 

 of the buildings, provided, however, that the buildings shall not be con- 

 sidered as worth more than $5,000. 



"In our pamphlet this is quite fully explained, and an example is 

 given of how it operates. We think of no anticipated change of our law, 

 except that the maximum amount which can be loaned to any one bor- 

 rower will probably be raised at the next session of our legislature, 

 as there is a large and reasonable demand for larger loans than we can 

 now make, under the law. 



"The system has proved tremendously successful and has far ex- 

 ceeded the most sanguine expectation of its promoters. Our first loan 

 was closed October, 1917, and up till last night we had closed 4,963 loans 

 for a total of over $20,000,000, all at 5i/^ per cent on thirty years' amortized 

 payments. 



