78 OUTLINES OF AGRICULTURAL ECONOMICS 



Would it be desirable for each state to have one built upon some other 

 pattern ? Give your reasons carefully. 



45. Do you see a field for state activity in extending the facilities 

 for short-time loans ? by making loans itself or by creating favorable 

 conditions for the making of loans by regular credit agencies ? Why ? 



46. Explain the organization of the federal land banks; the 

 national farm-loan associations; joint-stock land banks. Show the 

 relationship and proportion of government aid, co-operative action, 

 and private enterprise in the system. 



47. Is it likely that existing mortgage companies will transform 

 themselves into joint-stock land banks? Why? How many new 

 joint-stock land banks have sprung into existence ? 



48. Does it appear that existing farm-mortgage companies will be 

 put out of existence by the coming of the farm-loan system ? Why ? 



49. Does the new system give the farmer an opportunity to reduce 

 the actual expense of making a loan to the minimum ? How ? Does 

 the longer time for which mortgages may be made operate to reduce 

 costs ? 



50. Does the system put the farmer in touch with cheaper sources 

 of capital ? How ? Does the government guaranty have any bearing 

 on this question ? How about tax exemption ? 



51. Explain the method of issuing and selling bonds. Will the 

 land banks sell these bonds direct to the public ? Is there any other 

 method of sale ? 



52. Explain the meaning of " amortization " and the method used 

 in the federal farm-loan system. 



PROBLEMS 



1. "Our federal reserve system will undoubtedly serve as an 

 important step in connecting farmers with outside capital, especially 

 because of the opportunity afforded for the discounting of agricultural 

 paper. At the same time, it is clear from the study of present sources 

 of short-time loans to farmers that there is a large portion of our 

 farming population that is not in a position at present to take advan- 

 tage of the federal system." Explain both these propositions and 

 show how the difficulty is to be met. 



2. "The business ability and business habits of the farmer are 

 tested when the banker asks for a statement of the borrower's busi- 

 ness. If he is in the habit of keeping accounts and can explain the 

 nature of his resources and liabilities and thus indicate accurately his 

 financial standing, the wisdom of granting the desired loan as well as 

 the proper terms thereon can readily be determined. If this informa- 

 tion be lacking, the banker is in doubt about the safety of the loan, 

 he is likely to charge up his uncertainty to the borrower's account in 



