FARM MORTGAGE LOANS BY BANKS, ETC. 23 



State funds or loan agencies constitute a source of importance only 

 in a few States, the State of South Dakota being particularly note- 

 worthy in this respect. 



While the banks operating under the Federal Farm Loan System 

 as yet hold but a small percentage of the total farm mortgage loans 

 they are a potential source of far-reaching significance. In spite of 

 the brief period of their existence and the handicap under which 

 they have hitherto operated, these banks now hold more than one- 

 tenth of all the mortgages in 14 States. In Florida, Mississippi, and 

 Utah they hold one-sixth, and in West Virgmia more than one-fifth. 

 These banks are no doubt a leading factor in bringing about a closer 

 approach to uniformity in interest rates for various sections of the 

 country and in keeping such rates more nearly on a par with charges 

 for loans on urban real estate. While the maximum loan that may 

 be made by the Federal land banks to any one individual is at present 

 too low fully to meet the legitimate demands of borrowers in certain 

 of the more highly developed sections of the country, the type of 

 loan offered by these banks is particularly well adapted to the pur- 

 chase of land by prospective farmers, as well as to the funding of 

 existing mortgage indebtedness. The long term of these loans and 

 the amortization plan of repayment further tend to make it easier to 

 obtain an additional loan on second mortgage than is the case where 

 the first mortgage runs for a short period and is not diminished from 

 year to year by an amortization payment. This is also an advan- 

 tage to the landless farmer, since it makes it more possible for him 

 to become an owner even when his available cash resources are 

 relatively small. 



It seems probable that other loan institutions will be influenced by 

 the example of the Federal land banks to make the terms and methods 

 involved in their loans more generally adapted to the farmers' needs; 

 hence that the time of enforced short-term mortgages, heavy com- 

 mission charges, and the necessity of frequent renewals, coupled in 

 times of depression with danger of foreclosures, is about to give way 

 to a farm-credit situation more favorable to agricultiKal stability and 

 prosperity. 



ADDITIONAL COPIES 



OF THIS PUBLICATION MAY BE PROCURED FROM 



THE SUPERINTENDENT OF DOCUMENTS 



GOVERNMENT PRINTING OFFICE 



WASHINGTON, D. C. 



AT 



5 CENTS PER COPY 

 V 



WASHINGTON : GOVERNMENT P^^I^•TING OFFICE : 1922 



