RURAL CREDITS 79! 



by the methods mentioned above, the bank shall apply semi-annually 

 25 per cent of all sums thereafter subscribed to capital stock, to paying 

 and retiring this original capital stock at par. Thereafter, stock shall 

 be issued only to farm loan associations (or individuals who borrow 

 through agents of the land bank, where no loan association exists) 

 in amountsequal ta 5 per cent of all loans secured by them. At least 

 25 per cent of that part of the capital for which stock is outstanding 

 in the name of national farm loan associations shall be in the form of 

 quick assets at least 5 per cent in United States government bonds. 



Joint stock land banks are organized upon the same plan as the 

 federal land bank so far as possible. Instead of the board of nine 

 appointed and elected directors, they have a board of their own 

 choice, which shall not be less than five in number. There shall be 

 at least ten incorporators, and the government shall not at any time 

 subscribe to the capital stock of such joint stock banks. They may 

 not issue farm loan bonds in excess of fifteen times the amount of their 

 capital and surplus, though federal land banks may issue to twenty 

 times their capital^and^ surplus. Joint stock banks must have a 

 capital of at least $250,000 subscribed and one-half of it paid in cash 

 before they can begin business, and may not issue any bonds until the 

 capital stock is entirely paid up. Their bonds must be readily dis- 

 tinguishable in form and color from those of federal land banks. 



The zone of operations of joint stock banks is limited to the state 

 in which their principal office is located, and one other state which is 

 contiguouTlo it. 



National farm loan associations. It is evident that the joint 

 stock land banks deal directly with farm borrowers. The federal 

 land banks, on the other hand, are expected to carry on their loan 

 operations through local associations of borrowers somewhat similar 

 to our building and loan associations. "Ten or more natural persons 

 who are the owners, or about to become the owners, of farm land 

 qualified as security for a mortgage loan under this act," may unite 

 to form such a national farm loan association: no persons except 

 borrowers on farm land mortgages may become members or share- 

 holders. The general management of the affairs of the loan associa- 

 tions shall be in the hands of a board of directors consisting of five 

 members. Directors and all officers except the secretary-treasurer 

 shall serve without compensation, unless the Federal Farm Loan 

 Board shall authorize the payment of salaries. The secretary- 

 treasurer shall attend to the routine business of the organization; he 



