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 Virginia 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 agricultural stability and 
prosperity. 
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WASHINGTON : GOVERNMENT PRINTING OFFICE : 1922 
