Rural Credit 297 



notice, besides withdrawing them by lot in the usual way. 

 These debentures enjoy an excellent position, the 4 per 

 cents selling usually at or above par. Since cheapness of 

 loans is the sole object of the bank, it is customary to 

 call in debentures selling at a premium and issue a fresh 

 series at a lower rate. 



"Loans are usually applied for to the district com- 

 mittee which each bank has, with a statement of the 

 property, the amount required, and all documents neces- 

 sary to prove title and freedom from encumbrance. 

 Properties may be valued by a special valuation ; or a mul- 

 tiple of the net income, as assessed to the land tax, may 

 be taken. In both cases, however, an inspection of the 

 property is necessary unless under a special rule. Half 

 to two-thirds of the estimated value is allowable as a 

 loan. The interest paid by the borrower on the loans is 

 that paid by the bank on the debentures, the bank being 

 merely an intermediary between the borrower and the 

 actual lending public. But where the bank pays the 

 loan in cash it charges such interest as it thinks proper, 

 in order to make up any loss should the debentures sell 

 below par. Loans are repayable almost entirely by 

 amortization, usually in about 53 years. Some short- 

 term loans are granted with corresponding debentures. 

 The bank cannot demand repayment of a loan except 

 in case of waste, deterioration, or the like. On the other 

 hand, the borrower is at liberty to repay in whole or in 

 part whenever he pleases, but must pay the entire interest 

 for the half year in which he repays. The loan is repaid 

 by an annuity consisting of the interest, sinking fund 

 (usually beginning at one-half of 1 per cent), with a 



