INFORMATION RE1,ATIXG TO CREDIT 55 



The Federal Farm Ivoan Board believes that loans will now be made 

 with increasing rapidity. The Federal Ivand Banks were ?t first handi- 

 capped by lack of funds. Some of them made loans in excess of their 

 capital stock, themselves borrowing money to do so in the outside market. 

 The sale of farm loan bonds is however now well under way. The Land 

 Banks and the private banking syndicate which are marketing these secu- 

 rities have already obtained subscriptions aggregating about $30,000,000. 

 As soon as this money is collected it will be issued to the farmers at the 

 5 per cent, farm mortgage rate which has been established by the board. 

 The bonds jield interest at the rate of 4 Y> P'^r cent. The banks expect 

 to pay the expenses of operation out of the margin of 14 P^^ cent. It is 

 the intention of the board ultimately to bring about such complete organi- 

 zation and so to perfect its machinery that this margin will be only Vs 

 per cent. The policy will be to put the saving into the pocket of the farmer 

 rather than the investor in bonds, that is to reduce the mortgage rate rather 

 than increase the yield of bonds. What effect an increase in the war bond 

 rate will have on the sales of these land securities is conjectural. The board 

 believes that the land bonds will go on selling because it will tell the public 

 that to finance the farmer is as important to the war as to finance the sol- 

 dier, if not more so. 



Two elenients retard the making of farm loans — the lack of trained 

 men in the banks and the difficulty as to farm titles. 



The Federal Xand Banks are paying small salaries to appraisers of 

 land, which has made it difficult for them to secure the competent service 

 needed to make their loans safe. Their work is moreover new and they 

 cannot yet be presumed to have passed the experimental stage. 



As regards titles it has been found on examining applications for 

 loans that an unexpectedh' large number of farmers cannot furnish legal 

 evidence of these. They are not uncertain but merely unattested. Under 

 the statute the Land Banks cannot lend on lands held by such uncertified 

 titles. There is further a lack of uniformity, the attestation of titles being 

 more difficult in some States than others, and every farm loan district 

 embraces several States. 



The banks have been led to advocate the adoption of a uniform sj's- 

 tem of registering titles. Should it be made universal b}^ Federal law far- 

 mers would have no difficulty in proving their titles by a reference to the 

 registers. It may be expected that the Farm Loan Board will make some 

 recommendation of this kind to Congress in next winter's session. 



The board originally contemplated selling from §100,000,000 to 

 §150,000,000 in farm loan bonds a year. Unless the machinery for the 

 actual granting of loans is made to work more quickly it is unlikely that 

 they will be able to do this. 



A considerable access of business was expected this autumn because 

 farmers would want money for autumn planting. The board hopes that 

 before next spring — the first full planting season since the system has been 

 completely at work — it will be able to grant loans more expeditiously on 

 all properties which deser^-e to be financed. 



