FEDERAL FARM LOAN ACT, The. The Federal Farm Loan Act, which became a law on 17 July 1916, provides for the issuance of farm loan bonds through a bureau in the De partment of the Treasury at Washington for financing a farm mortgage system, covering all continental United States except Alaska. The bureau is managed by the Federal Farm Loan Board, composed of the Secretary of the Treas ury, ex officio, the chairman, and four members appointed by the President by and with the ad vice and consent of the Senate. One of the members, designated by the President to serve as active executive officer, is called the Farm Loan Commissioner. The board must submit a report annually to the speaker of the House of Representatives.
For the purposes of the act, the country has been divided into 12 districts, each embracing whole States. The board, which apportioned these districts, may readjust their boundaries.
In each district are one Federal land bank, established by the board, and such national farm loan associations as the board may deem ad visable to charter. The board appoints one registrar and one or more appraisers for each district, together with such examiners, attorneys, experts, assistants, clerks, laborers and other employees as may be needed for conducting its business. The salaries of the appraisers are paid by the land banks they serve. The salaries of the members of the board and of all its appointees, except district directors, are paid by the United States. The members of the board, the registrars, appraisers and exam iners are public officers, and must not be con nected with any other banking or land-mortgag ing concern. All appointments and dismissals are made without regard to the civil service rules. The system enjoys a franking for the mails of its bureau, besides various free services of the departments of the treasury, justice and agriculture.
A national farm loan association can be char tered only with the consent of the Federal land bank of a district. The territory may be any part of that district. The incorporators shall be 10 or more natural persons owning or about to own farm .land therein. They must also be applicants for loans aggregating at least $20,000.
The capital shall be divided into five-dollar double-liability shares that may be issued to and held by borrowers only. Every borrower must subscribe for shares in an amount equal to 5 per cent of his loan, and pay for the same when the loan is grathed. Admission to membership after the incorporation requires a two-thirds vote of the directors. The capital may be increased from time to time for the purpose of issuing new shares for the obligatory subscrip tions of borrowers. The shares of every bor rower shall be held as collateral security for his loan and be paid off and retired upon its full payment. As a result the capital is vari able, but can never be less than 5 per cent of the outstanding loans. Members cannot cast more than 20 votes each. They shall annually elect five or more directors for the term of one• year, who shall elect a president, vice-president, a loan committee of three and a secretary treasurer. All officers, but the latter, and all directors shall be members and so shareholders and borrowers. They must also be residents of the territory.
The powers of a national farm loan associa tion are: To endorse and guarantee mortgages taken from its shareholders by its Federal land bank, all defaults to be made good within 30 days after notice; to receive funds from said land bank to deliver to the mortgagors; to acquire such property, real or personal, as may be necessary or convenient for conducting its business; and to issue certificates against de posits, bearing interest for no longer than one year at not to exceed 4 per cent per annum. Such certificates are convertible into farm loan bonds, when presented in any multiple of $25 to said land bank. The deposits must be forth with transmitted to said land bank. Any na tional farm loan association, desiring funds to lend to a member, must subscribe for capital stock of its Federal land bank to an amount equal to 5 per cent of the proposed loan. How ever, should the association want any money for current expenses, it may borrow back one fourth of such stockholdings as an advance bearing 6 per cent per annum and repayable only from dividends belonging to it.