6 BULLETIjST 968, U. S. DEPAETMENT OF AGRICULTURE. 



debtedness is largely owing to the newness of the system, and the 

 rapid progress made in the past few years would seem to guarantee 

 that its relative importance as a source of farm loans will be greatly 

 increased in the future. It is also probable that the influence of the 

 system has resulted in more favorable terms for loans made, and 

 has thereby indirectly facilitated the acquisition of farms by land- 

 less farmers. 



One might well expect that the proportion of loans made for the 

 purpose of buying farm land would be smaller than the proportion 

 made for the refunding of existing indebtedness for farm improve- 

 ments and for other productive purposes. Because of the short 

 period for which the average farm mortgage runs, as made by pri- 

 vate agencies, the proportion of renewals to the total number of loans 

 is large in any one year ; and, except in " boom " periods, the rate of 

 turnover in farm land is small. 



Some light on the relative extent to which loans made by private 

 agencies are used for various purposes is obtainable from previous 

 studies made by the Department of Agriculture of rural credits. In 

 1913 it was shown that for the entire country loans were made for 

 various purposes in the following proportions : To improve, 49 per 

 cent ; to purchase, 28 per cent ; to refund, 23 per cent. Of all loans, 

 74 per cent were renewed.^ Taken on this basis, the per cent of Fed- 

 eral land bank loans made for the purchase of land does not appear 

 to have reached the proportion of private loans made for the same 

 purpose. 



It appears that the Federal farm loan system has demonstrated its 

 possibility as an aid to the landless farmer in acquiring land. Fur- 

 ther analysis of its use by borrowers indicates that it provides condi- 

 tions considerably more convenient for the buyer who must finance 

 a large part of the purchase price on credit than are afforded by the 

 great majority of private agencies engaged in farm mortgage busi- 

 ness. This, however, does not imply that the sj^stem could not be 

 further modified so that it could be more readily employed in financ- 

 ing the purchase of farms by landless men of small capital. 



USE OF THE FEDERAL FARM LOAN SYSTEM BY TENANTS AS AN 

 AID IN BUYING FARM LAND. 



As shown in Table I, 36.6 per cent of the Federal land bank borrow- 

 ers reporting the purchase of land were tenants. No attempt was 

 made in the inquiry to ascertain the status of the remaining borrowers, 

 but various replies indicate considerable numbers of nonf armers, both 

 owning and not owning land, as well as of farmers operating as 

 owners of all or part of their farms. Of the total number of ten- 



1 Testimony of Mr. C. W. Thompson before the subcommittee on Banking and Currency. 

 House of Representatives, 63d Congress, 2d session, Dec. 3, 1913. 



