SECURITY FOR OUTLAY 245 



insists that their lending must have " some relation to the primary- 

 declared purpose of the Farm Loan Act," viz., "to provide capital 

 for agricultural development." It also insists upon a purpose being 

 declared for every loan granted and that purpose being adhered to. 

 Nothing, however, appears to be said about means for checking such 

 employment. However, the Farm Loan Board exercises a stringent 

 supervision over valuations or " appraisals " by this, as by every 

 class of organisation named, including the Farm Loan Banks, to 

 check whose " appraising " action it has recently appointed " revising 

 appraisers," whose action in unifying principles of valuation and 

 keeping out abnormities is stated to have proved very beneficial. 

 Valuation, which includes what is in the United States — just as it 

 would be here — a somewhat trying operation, on which more money 

 is said to have been expended than on any other, that is, in 

 the absence of compulsory land registration, examination of title 

 — is, of course, a troublesome point in the mortgaging process 

 provided for by the Farm Loan Act. The joint stock banks — 

 which as a rule, combine their mortgaging with other business — 

 make their own valuations. But all these valuations are — like 

 those made by the Loan Committees of " Associations " — checked 

 by the Farm Loan Board, which has lately evinced particular 

 anxiety to prevent excessive valuations in view of the temporary 

 appreciation of land. In their valuations, avowedly, the " earning 

 power " of a holding in agricultural employment is taken only as 

 " the principal factor " in determination of the figure. Other 

 factors are considered. But recently the Board has forbidden the 

 valuation of any land at more than $100 per acre, though the 

 selling value should rise — as in cases it has done — to $400 or more. 

 As a result it is shown that in place of the 50 per cent, of the value 

 allowed, the average loaning has not exceeded 40 per cent, of the 

 valuation, and that in a number of cases of sale for cash about 

 20 per cent, more has been realised for farms than they had been 

 valued at. Such moderation in valuing no doubt has two sides to it, 

 just as under landschaft mortgaging, and might possibly not be 

 considered in all too favourable a light by borrowers. As a justifica- 

 tion of Farm Loan Board caution, it ought to be borne in mind that 

 of late speculation in land has been particularly rife in the United 

 States, and accordingly prices of land have for the time gone up 

 considerably. 



The United States Farm Loan Act may claim to have achieved a 

 certain measure of success. On November 20th, L919, then were 

 in all 14,018 " National Farm Loan Associations " formed, having 



