•the  RURAL  NEW-YORKER 
661 
The  System  of  Federal  Farm  Loans 
Explained 
What  is  the  difference  between  the  Federal  Land 
Banks  and  the  Joint  Stock  Land  Banks?  What  is  the 
occasion  for  both?  Which  is  the  better? 
SEVERAL  INQUIRERS. 
HE  Federal  Farm  Loan  act  of  1916  made  pro¬ 
vision  for  the  organization  of  the  Federal  Land 
Banks  and  authorized  the  organization  of  joint  stock 
land  banks.  The  purpose  was  to  furnish  loans  on 
farm  mortgages.  The  administration  of  the  law  is 
vested  in  the  Federal  Farm  Loan  Board,  which 
originally  consisted  of  five  members,  including  the 
Secretary  of  the  Treasury.  The  other  four  members 
are  appointed  by  the  President  with  the  provision 
that  not  more  than  two  to  be  appointed  from  one 
political  party.  Recently  the  law  was  changed  to 
put  one  representative  of  agriculture  on  the  board. 
The  board  is  required  to  maintain  a  bureau  in  the 
National  Treasury  to  administer  the  law. 
The  country  has  been  divided  into  12  districts,  and 
one  Federal  Land  Bank  has  been  established  in  each 
district.  There  can  be  only  12  such  banks,  but 
branches  may  be  established  in  each  district.  Each 
Federal  Land  Bank  was  required  to  have  a  capital 
of  $750,000.  It  was  furnished  by  the  Federal  gov¬ 
ernment.  The  stock,  however,  can  be  held  by  any 
person,  corporation  or  State  government  The  Fed¬ 
eral  government  draws  no  dividend  on  the  stock  it 
holds  in  the  Federal  Land  Banks,  but  provision  is 
made  to  retire  the  government  holdings  as  fast  as 
the  conditions  of  the  banks  permit.  Other  holders  of 
stock  may  draw  dividends. 
National  farm  loan  associations  are  organized  to 
act  between  the  borrower  and  the  Federal  Land 
Bank.  No  one  but  borrowers  may  become  members 
of  these  associations,  and  there  must  be  not  less  than 
10.  The  amount  of  loan  to  each  was  originally  not 
more  than  $10,000  nor  less  than  $100.  The  maximum 
is  now  raised  to  $25,000.  The  borrower  must  sub¬ 
scribe  for  stock  in  the  association  to  the  amount  of 
5  per  cent  of  his  loan,  and  the  association  must  sub¬ 
scribe  this  amount  for  stock  of  the  Federal  Land 
Bank.  When  the  loan  is  paid  these  stock  subscrip¬ 
tions  are  returned.  Each  association  must  appoint 
a  loan  committee  of  three  members  to  appraise  the 
value  of  farms  on  which  applications  for  loans  are 
made.  The  borrower  must  show  that  the  loan  is  to 
be  used  for  agricultural  purposes  specified  in  the  law. 
The  members  are  responsible  for  the  debts  of  the 
association.  In  case  no  National  Farm  Loan  Asso¬ 
ciation  is  organized  in  a  territory,  the  board  may  in 
its  discretion  authorize  a  bank,  trust  company  or 
mortgage  company  to  make  loans  under  legal  re¬ 
strictions.  All  loans  must  be  made  through  the  as¬ 
sociations  or  their  temporary  agents. 
A  Joint  Stock  Land  Bank  may  be  organized  with 
private  capital  to  loan  money  on  farm  mort¬ 
gages  by  10  or  more  persons,  provided  its  appli¬ 
cation  for  a  charter  is  approved  by  the  Federal 
Farm  Loan  Board.  The  capital  must  not  be  less  than 
$250,000,  all  paid  in.  The  Federal  government  is  not 
permitted  to  subscribe  for  its  stock.  The  sharehold¬ 
ers  are  held  individually  responsible  for  the  debts 
and  obligations  of  the  bank  to  the  amount  of  the 
stock  held  by  each,  and  to  an  additional  equal 
amount.  A  Joint  Stock  Land  Bank  may  operate  only 
in  two  adjacent  States.  It  is  not  required  to  loan 
through  an  association  or  agent,  and  the  borrower 
is  not  obliged  to  subscribe  for  stock,  and  he  is  respon¬ 
sible  for  no  obligation  except  the  loan  and  interest 
on  it.  The  borrower  makes  his  application  direct 
to  the  bank  and  receives  his  mortgage  money  direct 
from  the  bank  or  through  a  local  bank.  He  is  not 
restricted  as  to  the  uses  he  is  to  make  of  the  money. 
Both  forms  of  bank  are  authorized  by  the  same 
law.  Both  are  instruments  of  the  Federal  govern¬ 
ment,  and  under  the  supervision  of  the  Federal  Farm 
Loan  Board.  Both  are  restricted  to  the  business  of 
loans  on  farm  mortgages,  and  all  loans  are  subject 
to  approval  by  the  Federal  board.  They  are  allowed 
to  loan  only  on  first  mortgages  up  to  50  per  cent  cf 
the  value  of  the  land  and  20  per  cent  of  the  improve¬ 
ments.  Both  are  allowed  to  sell  bonds  and  to  pledge 
mortgages  to  insure  payment  of  them.  The  Federal 
Land  Banks  may  issue  bonds  up  to  20  times  the 
amount  of  their  stock.  The  Joint  Stock  Banks  may 
issue  bonds  up  to  15  times  their  capital.  The  in¬ 
terest  charged  on  mortgage  loans  must  not  be  more 
than  1  per  cent  above  the  interest  paid  on  the  bonds, 
and  not  to  exceed  6  per  cent  All  mortgages  are 
amortized.  That  is,  a  small  percentage  is  paid  each 
year  in  excess  of  the  interest.  There  are  no  renew¬ 
als  of  the  mortgage.  One  per  cent  extra  paid  an¬ 
nually  wipes  out  the  mortgage  in  33  years.  Both 
forms  of  bank  are  authorized  to  charge  the  bor¬ 
rower  the  actual  cost  of  appraisal,  and  expenses  in 
search  of  title  and  execution  of  legal  papers.  After 
five  years  the  mortgage  may  be  paid  in  part  or  in  full 
on  installment  dates,  but  payment  cannot  be  en¬ 
forced  by  the  bank  so  long  as  the  interest  and 
amortization  installments  are  regularly  paid.  The 
banks,  the  mortgages,  the  bonds,  and  income  are 
exempt  from  Federal,  State,  local  and  income  tax. 
The  purpose  of  the  two  forms  of  banks  was 
probably  to  satisfy  the  groups  who  contended 
against  each  other  in  an  effort  to  establish  one 
form  exclusively.  The  idea  of  a  competition  in 
rendering  service  was  probably  also  in  the  minds 
of  those  who  framed  the  legislation.  The  system 
seems  to  be  developing,  and  the  two  forms  of  banks 
are  making  progress. 
From  our  view  the  best  agency  is  the  one  that 
gives  farmers  the  best  service.  This  depends  more 
on  men  than  on  forms.  One  kind  of  bank  may  serve 
best  in  one  State  and  the  other  kind  in  an  adjoining 
district. 
The  Federal  Farm  Loan  bill  was  enacted  two 
years  after  the  Land  Bank  of  New  York  was  estab¬ 
lished.  It  follows  the  same  general  lines,  but  the 
State  system  has  superior  features  in  that  it  encour¬ 
ages  initial  saving,  puts  the  business  wholly  in  the 
hands  of  the  members,  and  may  make  loans  for  a 
larger  percentage  of  the  value  of  the  property.  It 
is  the  best  example  of  real  co-operation  we  have. 
The  Federal  banks,  however,  have  an  advantage  in 
the  exemption  from  taxation  which  the  Land  Bank 
of  New  York  does  not  have.  For  this  reason  it  has 
not  been  able  to  make  the  farm  loans  to  the  extent 
originally  expected. 
A  Discussion  of  the  School  Bill 
At  the  request  of  the  Senators  and  Assemblymen  of 
Monroe  County,  there  was  a  meeting  of  the  trustees  of 
school  districts  of  Monroe  County  which  would  be  af¬ 
fected  by  the  Downing-Campbell  bill  upon  rural  schools 
at  the  rooms  of  the  Board  of  Supervisors  in  Rochester, 
N.  Y.,  on  April  6,  1923.  It  was  attended  by  upwards 
of  200.  The  purpose  of  the  meeting  was  to  ascertain 
the  wishes  of  their  constituents.  Three  members  of  the 
Committee  of  Twenty-one,  Messrs.  McNinch,  McIn¬ 
tosh  and  Read,  spoke  in  favor  of  the  bill.  After  a  dis¬ 
cussion  of  over  two  hours  the  meeting  unanimously  re¬ 
solved  that  as  it  had  required  over  three  years  for  the 
committee  to  prepare  its  report,  and  as  the  bill  had  been 
public  for  discussion  for  so  limited  a  time,  the  Senators 
and  Assemblymen  from  Monroe  County  be  requested  to 
use  the  utmost  efforts  to  secure  a  postponement  of  ac¬ 
tion  upon  the  bill  until  the  legislative  session  of  1924,  to 
enable  the  district  to  become  informed  upon  such  legis¬ 
lation  at  the  coming  school  meetings  on  May  1,  1923. 
It  was  “some  meeting.”  c.  f.  m. 
E  are  convinced  that  a  similar  meeting  held 
in  any  of  the  rural  counties  would  have  the 
same  result.  It  is  simply  folly  to  claim  that  the 
rural  people  really  understand  this  bill.  A  hearing 
was  held  at  Albany  on  April  11.  At  that  time  we 
understand  about  20  amendments  were  suggested, 
and  many  of  them  will  actually  be  added  to  the  bill. 
This  will  greatly  change  its  character,  so  that  no  one 
can  claim  that  the  bill  as  amended  is  understood  by 
farmers.  The  fair  and  honest  thing  to  do  is  to 
amend  the  bill  as  its  promoters  desire,  have  it  re¬ 
printed,  and  then  leave  it  over  till  next  year  for  a 
complete  analysis  and  discussion.  If  the  Committee 
of  Twenty-one  would  agree  to  this  reasonable  prop¬ 
osition  and  abandon  their  efforts  to  jam  the  bill 
through  at  once,  they  would  stand  in  a  better  posi¬ 
tion  with  farmers.  As  it  is,  they  are  creating  the 
impression  that  they  are  afraid  to  submit  their  bill 
to  a  popular  verdict,  and  the  inference  will  be  that 
there  is  come  “joker”  hidden  in  it. 
Some  Old  Potato  Poetry 
The  Hope  Farm  man’s  little  story,  “My  First  Wom¬ 
an,”  has  called  out  a  flood  of  comment,  some  of  it  more 
than  interesting.  One  of  our  readers  has  gone  back  25 
years  or  more  and  clipped  the  following  bit  of  verse 
from  The  R.  N.-Y.  That  was  the  time  when  E.  S. 
Carman  was  sending  small  samples  of  his  new  potato 
to  readers.  The  woman  who  now  sends  it  says  the 
verse  ought  to  go  with  the  story  : 
Jehoshaphat  Smith  was  a  terrible  talker ; 
His  wife  took  and  paid  for  The  Rural  New-Yorker, 
And  Smith  kindly  read  it  and  shouted  “  ’Tain’t  so ! 
Them  city  chaps  can’t  fool  this  farmer,  you  know.” 
He  heard  of  the  Carman  potato  last  year. 
“Just  send  one  along  and  we'll  try  it  .up  here.” 
It  came— a  small  nut  of  a  tuber — two  eyes. 
But  wasn’t  Smith  mad  !  “It’s  a  swindle  !”  he  cries. 
He  threw  it  away,  but  his  poor,-  patient  wife. 
Who  couldn’t  oppose  him  to  save  her  own  life, 
Picked  up  the  small  tuber  and  kept  it  till  Spring 
And  planted  and  hoed  it  and  trained  it — poor  thing ! 
And  watered  and  cared  for  it  all  her  own  self, 
While  Smith  dozed  away  like  a  bug  on  a  shelf. 
And,  oh!  how  that  tuber  did  yield  with  such  care, 
And  big  Brother  Smith  took  it  off  to  the  fair. 
“Just  see  what  I  done  with  a  poor  little  nut 
Of  ’tater !”  he  said  with  a  satisfied  strut, 
While  fond  Mrs.  Smith  stood  regarding  her  spouse 
And  said,  “We’ve  a  wonderful  man  at  our  house !” 
New  York  State  Notes 
The  effect  of  the  Dairy  Congress  that  will  be  held 
in  Syracuse  this  Fall  is  already  being  felt  throughout 
the  State.  This  is  most  noticeable  at  this  time  among 
the  juniors  who  are  planning  to  exhibit.  The  Madison 
County  boys  and  girls  are  already  making  plans.  H.  H. 
Harter,  the  county  junior  project  leader,  has  150  boys 
and  girls  enrolled  in  the  co-  ty  clubs.  Calf  raising 
and  milk  testing  will  be  two  of  the  largest  clubs  in  the 
county  this  year. 
So  many  statements  havt,  been  broadcast  regarding 
the  meeting  of  the  Empire  State  Potato  Growers’  Asso¬ 
ciation  at  Rochester  on  the  llth  of  April  that  a  state¬ 
ment  of  just  what  happened  should  be  considered  in 
these  notes.  Six  hundred  potato  and  cabbage  growers 
from  nearly  every  growing  district  of  the  State  at¬ 
tended  for  the  purpose  of  considering  what  improvement 
they  could  make  in  their  present  organization  as  to  mar¬ 
keting  of  their  product.  The  price  of  potatoes  this  year 
has  been  such  that  many  were  discouraged.  There  was 
a  feeling  also  that  the  bulge  in  the  market  this  Spring 
as  against  last  Fall  might  act  as  a  stimulus  to  growers 
to  increase  their  acreage  this  season.  Iv.  C.  Livermore, 
president  of  the  State  association,  presided,  and  pointed 
out  that  the  object  of  the  meeting  was  to  consider  a 
plan  that  would  increase  the  volume  of  business  of  the 
association  and  thereby  cut  down  its  overhead.  The 
specific  plan,  he  pointed  out,  was  one  that  is  in  opera¬ 
tion  in  Maine  and  in  some  of  the  Western  potato  grow¬ 
ing  States  and  would  be  explained  by  Aaron  Sapiro, 
who  had  had  much  to  do  with  the  organization  of  them. 
Mr.  Sapiro  was  already  known  to  the  New  York  farm¬ 
ers,  having  acted  as  the  attorney  for  the  New  York 
State  Canning  Crops  Association.  Mr.  Sapiro,  instead 
of  jumping  into  the  plan  at  once,  discussed  at  some 
length  the  purpose  of  co-operative  marketing  as  he  saw 
it.  He  said  that  the  fundamental  purpose  of  co-opera¬ 
tive  marketing  was  to  prevent  the  dumping  of  products 
on  the  market.  Nothing  whatever  was  said  about 
monopoly  control  of  the  market.  He  illustrated  his 
statement  by  citing  the  experience  of  last  year,  declar¬ 
ing  that  reports  of  last  Fall  caused  farmers  to  hurry 
with  their  digging  so  as  to  beat  their  neighbor  to  the 
market.  The  buyers  of  potatoes  did  likewise  in  hurry¬ 
ing  their  purchases  on  to  the  brokers,  and  the  brokers, 
receiving  on  consignment,  without  loss  to  themselves, 
put  the  potatoes  immediately  on  the  market,  and  as  all 
of  them  were  in  the  same  boat  the  price  began  to  tum¬ 
ble,  -with  loss  to  grower  and  dealer  alike.  What  really 
happened,  said  Mr.  Sapiro,  was  that  as  result  of  this 
dumping  there  were  at  least  70,000,000  bushels  of  po¬ 
tatoes  that  never  were  dug.  He  further  stated  that  un¬ 
der  a  co-operative  marketing  scheme  in  this  State  and 
in  the  other  potato  growing  States  the  amount  of  po¬ 
tatoes  could  not  only  be  determined,  but  the  place  of 
sale  could  likewise  be  determined,  so  that  there  would 
not  be  an  unconscious  dumping  on  any  one  market 
This  developed  his  second  point  in  co-operative  market¬ 
ing,  and  that  was  that  the  price  of  a  commoditv  is  de¬ 
termined  not  at  its  place  of  production  but  at  its  place 
of  consumption.  He  further  developed  this  point  by 
stating  that  at,  the  present  time  potatoes  and  cabbage 
are  shipped  largely  to  large  cities  and  reshipped  to 
smaller  cities.  Under  the  co-operative  marketing  sys¬ 
tem  he  believes  that  the  potatoes  could  be  shipped  di¬ 
rectly  to  the  smaller  cities  and  not  create  an  over¬ 
supply  at  any  one  center.  Mr.  Sapiro  further  stated 
that  with  co-operative  marketing  such  as  he  proposed 
no  individual  grower  could  say  when  and  where  his  po¬ 
tatoes  should  be  sold,  this  being  left  to  the  managers  of 
the  association  and  the  trustees  representing  the  differ¬ 
ent  districts.  This  avoids  individual  selling,  lie  pointed 
out,  which  is  the  cause  of  dumping,  and  makes  co¬ 
operatives  useless.  He  stated  that  over  60  per  cent  of 
the  Maine  growers  were  organized  under  this  plan,  with 
what  he  calls  a  commodity  viewpoint  rather  than  the 
individual  viewpoint,  planning  to  merchandise  their 
product  instead  of  dumping  it  on  the  market.  In  or¬ 
ganization,  the  locals  are  first  formed  to  receive,  grade 
and  pack  the  crop.  Each  district  elects  directors. 
These  in  turn  elect  trustees,  who  form  the  directorate 
for  the  central  exchange.  These  men  select  the  men 
who  are  to  be  the  paid  employes  of  the  association.  He 
suggested  that  the  association  organize  safely  under 
the  State  laws  so  that  the  individual  does  not  assume 
more  than  his  share  of  the  liability  of  the  association 
any  more  than  an  individual  member  of  a  stock  asso¬ 
ciation.  He  pointed  out  that  contracts  should  be  made 
for  at  least  five  years,  so  that  time  could  be  given  to 
get  such  a  tremendous  organization  under  way.  He 
further  stated  that  only  farmer  growers  should  be  al¬ 
lowed  to  join.  The  potatoes  and  cabbage  are  to  be 
pooled  and  the  amount  paid  the  individual  for  the 
amount  and  grade  which  he  has.  Following  Mr.  Sa- 
piro’s  talk  there  was  a  period  of  discussion,  at  which 
time  the  details  of  the  plan  were  brought  out  The 
meeting  then  moved  that  the  association  adopt  such  a 
plan,  but  to  allow  such  time  to  get  it  into  operation  as 
would  meet  with  success.  In  other  words,  not  attempt 
to  put  the  matter  across  in  a  few  weeks  on  a  “hip-lmr- 
rah”  plan  which  was  not  thoroughly  understood  by  the 
growers.  The  meeting  also  passed  a  resolution  that  a 
general  committee  to  work  out  the  plans  to  be  followed 
should  consist  of  at  least  one  member  from  those  sec¬ 
tions  where  the  Empire  State  Asssociation  is  not  now 
operating,  so  that  the  whole  State  would  have  a  voice 
in  the  plan.  It  was  further  passed  that  bankers  and 
other  fair-minded  individuals- be  asked  to  act  in  an  ad¬ 
visory  capacity  with  the  general  committee.  Rather 
than  push  the  plan  so  as  to  get  it  into  operation  for 
the  crop  of  1923,  it  was  planned  to  start  work  at  once 
so  as  to  take  care  of  the  1924  crop.  This  meeting  was 
one  of  the  most  representative  groups  of  growers  that 
have  come  together  for  some  time.  They  agreed  that 
something  must  be  done  to  prevent  a  repetition  of  the 
conditions  of  this  year.  They  also  agreed  that  any  plan 
must  have  its  origin  at  the  point  of  production  so  as  to 
care  for  the  crop  at  the  point  of  consumption.  In  other 
words,  it  is  the  old  story  that  they  must  do  it  them¬ 
selves,  and  why  shouldn’t  they? 
The  early  reports  from  those  intimately  in  touch  with 
the  fruit  growers  is  that  the  amount  of  San  Jose  scale 
is  found  in  great  abundance  this  Spring.  This  is  in 
spite  -  of  the  increase  in  the  use  of  spraying.  There 
have  been  two  reasons  pointed  out  as  a  cause  for  this 
condition.  The  weather  records  for  the  years  1919, 
1920  and  1921  show  that  the  growing  seasons  were 
longer  than  the  average  of  the  past  20  years,  allowing 
time  for  the  scale  to  develop  a  more  complete  second 
generation.  During  the  war  in  orchards  where  there 
had  been  a  very  small  amount  of  the  scale,  the  amount 
of  lime-sulphur  was  cut  down  to  reduce  the  cost  of  the 
spray.  e.  a.  f. 
