AGRICULTURAL CREDIT IN THE UNITED STATES 945 



the entire agricultural mortgage indebtedness. They operate in 

 all parts of the country where agricultural conditions are suffici- 

 ently well established and where land values are high enough to 

 furnish adequate security for a fairly large loan. Great caution is 

 exercised and the inclusion of a locality in the territory of one 

 of these companies is evidence of that locality's prosperity and 

 good standing. But even in good sections, loans on small farms 

 are not favored. The companies not infrequently make their 

 investments through well-established mortgage companies, but 

 they usually act through local agents thoroughly acquainted with 

 the conditions in their districts. These agents make the apprais- 

 als and exercise general supervision over the loans. The com- 

 pany, however, employs its own attorney and inspectors, who pass 

 final judgment on the valuations, titles and papers submitted by 

 the agents. 



Each year sees an increase in the investments of life insurance 

 companies in farm loans. This is due to the improvement of the 

 average risk, to growing confidence in the security of such loans 

 and to the comparatively high rate of interest which they yield. 



(3) In general, it is not the function of a bank to make mort- 

 gage loans. Not until the passage of the Federal Reserve Act 

 of 191 3 were national banks permitted to loan on real estate, 

 though it has been their common practice to take real-estate 

 mortgages as added security for personal loans. Section 24 of 

 the Federal Reserve Act provides that any national bank not 

 situated in a Central Reserve city may make loans on improved 

 farm land, not to exceed 50 per cent of the actual value of the 

 property offered as security and for a period not exceeding five 

 years. The bank may make such loans in an aggregate sum equal 

 to 25 per cent of its capital and surplus, and to 33^ per cent of 

 its time deposits. What is likely to be the result of the new 

 policy thus inaugurated ? 



For years there has been agitation both within and without 

 the ranks of the national banks for the adoption of this policy ; 

 and now that it has finally been adopted, it is heralded as a great 

 boon to agriculture. In a recent statement from the Treasury 

 Department (reported in the daily papers of June nineteenth) 



