370 IOWA DEPARTMENT OF AGRICULTURE 



termine -whether these were proper security for some farm loan bonds. 

 In the last sixty days, $3,000,000 of bonds resting upon those mortgages 

 have been sold to the shrewdest bankers in financial centers, who don't 

 buy any doubtful security. And when we come to put in along with 

 those the mortgages which we are now getting at the rate of about 

 $1,000,000 a week on these highly improved farms in Nebraska and Iowa 

 and South Dakota, we are going to have a demonstration of the fact 

 that it is possible for the farmers to finance themselves by the use of 

 their joint credit. 



It is in a certain sense a government enterprise. It is a bank which 

 has been chartered by the treasury of the United States. It is operated 

 under government supervision and regular government inspection. The 

 government of the United States has invested three-quarters of a million 

 of dollars in the capital stock of the institution which I represent. That 

 money is loaned to this bank and to the farmers by the United States 

 government without any interest charge. In due time this loan will be 

 repaid to the government by a sinking fund composed of a very small 

 percentage of our earnings in the future, and gradually, as this govern- 

 ment loan is extinguished the bank will pass into the complete owner- 

 ship of the farmers who are borrowers. And so when you borrow from 

 this institution of yours, you are simply anticipating the profits which 

 you ordinarily pay in commissions to the loan agent, and the numerous 

 items of expense which you pay at the end of five years from one period 

 to another, and you are leaving that money in your own pockets. The 

 small amount of money which you put into the stock of this institvition 

 as one of the requirements for securing a loan is invested for you, as 

 the law requires, in a mortgage just like your own, based upon the same 

 kind of sound and properly examined security, at the same interest rate 

 which you pay upon your own loan, and all the profits which may be de- 

 rived from the handling of that money are returned to you in annual 

 dividends when the balance sheet is taken off. 



Everything has to have a system of organization. I fancy that you 

 have some requirements for membership in this association; you may 

 have a constitution. You undoubtedly have some officers whom you 

 elect at certain specified times; you may have some membership fees. 

 Anything that is -worth organizing, that accomplishes anything, de- 

 mands some system of organization, and so there must be a fundamen- 

 tal unit localized down in the farming community where the farmer 

 lives, whose credit is used as the security for this thing invested, or re- 

 sponsibility to look after his interests. That local unit, the great foun- 

 dation stone of this whole thing, is what is called a "National Farm 

 Loan Association.''' That is a co-operative organization composed of 

 ten or more farmers who are eligible to borrow money upon the secur- 

 ity of their lands. How do they become eligible? This man who bor- 

 rows money, must be what the law terms an actual farmer; that is to 

 say, he must first hold the title in fee siuple to the land, and be 

 capable of executing a mortgage. He must operate that farm himself, 

 either personally or with hired- labor, or with the labor of some member 

 or members of his family; or he must have a partnership arrangement 



