8 BULLETIN 968, r. S. DEPABTMEXT OF AGEICULTCEE. 
It seems clear that, in general, persons borrowing to buy land have 
borrowed a larger proportion of the value of the land mortgaged 
than the average for ail borrowers, which was found to be 37 per cent 
for $2 5 1 ,42 : . out of the total $282, . . 7.751 outstanding Federal land 
bank loans Xovember 30, 1919. 1 For owner-buyers the loan is 41.5 
per cent of the value, while non-owning buyers appear to have found 
it necessary to borrow nearer the limit allowed by the Federal farm 
loan system, their loans averaging 445 per cent. 
The figure 44.2 per cent is very close to the limit allowed by law 
for. although the loan may be 50 per cent of the value of the land, 
only 20 per cent is allowed on the value of permanent insurable im- 
provements, so that the average percentage must be considerably less 
than 50 per cent of the value of the farm. In fact, on the basis of 
the ratio of the value of land to the value of buildings for the entire 
United States, as shown by the 1910 census, the average maximum 
that could be loaned under the law would be 44.5 per cent of the value 
of land and buildings combined. Thus, it is obvious that those bor- 
rowing for the purpose of purchasing land have approximated the 
maximum that may be borrowed under the law. 
COST OF OBTAINING A FEDERAL FARM LOAN. 
Objection is sometimes raised to the use of Federal farm loans on 
the ground of their initial cost. If it is expensive to obtain these 
loan^ the v.rchaser of land may not be willing or able to stand the 
added expen- -;■ at the start over what it might cost him to obtain a 
temporary loan from some other source. Lack of comparable infor- 
mation makes it difficult to compare the cost of obtaining loans from 
the Federal land banks with the cost of obtaining farm loans from 
other sources. Answers to questions designed to elicit information on 
the cost of Federal farm loans were received from 1.765 borrowers, 
and these answers make it possible to present information on the 
average cost of these loans. This average cost amounted to $50-84, 
or 1.43 per cent of the mortgage given to the Federal land bank, 
which averaged S3. 541. 
Borrowers of small amounts find the loans from the Federal land 
banks relatively more expensive than larger borrowers do. and tins 
makes it more difficult for the buyers of inexpensive or smaller 
:s of farm land to finance their purchases. There were 347 bor- 
rower i :-"' rting the cost of borrowing who gave mortgages to the 
Federal land banks for $1,000 or less, and the 1c ans : : st these 
borrowers an average of - 1, or 4.82 per cent of the mortgage 
given. On the other hand, while the cost of borrowing aver; _ 
Third Annual Eeport of the Federal Farm Loan Board, GC :'_ ngress _ aesskiH 
House Docnmei.- 55 | 12. 
