BUYING FARMS WITH LAND-BANK LOANS. 25 
desirable to restrict the benefits of such a system to those whom the 
act was designed to serve. Not only should it be restricted to the 
single purpose of buying farm land, but it should also be requisite 
that the borrower establish the fact that he seeks the aid of the sys- 
tem as a means of becoming an operating farm owner and for a 
reasonably long time. It might also be possible to devise a method 
of indirectly limiting the benefits of the system to men of small 
capital. The system should not facilitate the acquisition of addi- 
tional farms or even of additional land except when the latter repre- 
sents a Ijona fide attempt to enlarge or round out a holding previ- 
ously inadequate for economical operation. Proper administrative 
safeguards should be provided to insure that the cost of the farm is 
reasonable enough to justify the presumption of the buyer's paying 
out on the investment and also that the buyer has sufficient experience 
and personal ability to justify his undertaking a farm enterprise. 
Provision should be made to prevent the use of the system for specu- 
lation. It seems probable that, thus restricted, the suggested pro- 
visions would serve the purpose of promoting farm home ownership 
on the part of those who would be prevented from attaining that 
status under present conditions of land values and mortgage credit, 
and without involving a heavy drain on the Nation's farm-credit 
machinery. 
Such a system might be developed on thoroughly businesslike prin- 
ciples without committing the Nation to anything approaching a 
class subsidy. It would probably be possible to make such a S3^stem 
pay its way without subjecting the Government to unreasonable 
risks. Prevailing sj^stems of first-mortgage loans, including the 
Federal farm-loan system, are based on the theory that each indi- 
vidual mortgage must be absolutely safe, so that in case of fore- 
closure there will be no reasonable doubt that the value of the farm 
will repay the debt. This policy is largely due to the practice of 
reselling individual mortgages or blocks of mortgages or of assign- 
ing them as security for bond issues. In fact, it is usually the intent 
to avoid even the possibility of foreclosure, for most agencies lend- 
ing on farm mortgages do not care to incur serious risk of having to 
take over the ownership of the land. 
The conservative character of the Federal farm-loan system is 
due to the fact that it is based on this principle ; a fact that renders 
it useful as a general basis of long-time farm credit, but limits its use- 
fulness as an agency to promote farm ownership among those seek- 
ing to establish themselves in the land with limited capital. 
It would seem, however, that a system of second mortgages under 
Government auspices might be developed on the insurance prin- 
