are shown for each separate state, for each of the twelve federal land bank districts, and for the entire United States.

Statement showing loans in the twelve federal land bank districts from organization to October 31, 1919.

Loans in the twelve federal land bank districts-Concluded.

The federal farm loan system is essentially a farmer's banking system, and the law contemplates that the farmers shall eventually own and control it. The borrowers in the farm loan associations will untimately become the entire owners of the federal land banks, as the government stock and the stock originally subscribed by others than borrowers will be gradually paid off and retired, and the subscriptions made by farm loan associations, will supplant the advances which the government made in the beginnig, in order to establish the system on a firm basis. During the year ending October 31, 1919, federal land banks refunded $572,569 to the government, thereby reducing the gov ernment holding of stock to $7,693,240.

Farm loans made by the federal land banks. The following statement compiled from data supplied by the Federal Farm Loan Bureau shows the total number of federal farm loans made by each of the twelve federal land banks in their respective districts from date of organization to October 31, 1919, inclusive.

When a farmer borrows money he is required to buy stock of his local association equal to 5 per cent of his loan. This stock is held by the local loan association as collateral security until the mortgage is paid, when the money is returned to him, or he may use it as the last payment of his debt. The local association uses the money which the borrower pays for his stock to buy stock in the federal land bank; this is done to increase the land bank's capital in order that it may make more loans. The law provides for the automatic increase of the capital of the bank because each local farm loan association must buy stock in the federal land bank equal to 5 per cent of the loans it procures for its members. Now, since each land bank is permitted to lend twenty times its capital to the members of the association, it will be seen that the loaning capacity of the bank is increased twenty thousand for each one thousand dollars added to its capital, the ratio between the capital and the loaning capacity always remaining the same. Accordingly, there is no limit to the capacity of the land bank to meet the needs of the borrower so long as it can sell its bonds. If the loans are conservatively made, no losses can reasonably occur which would at any time. depreciate the value of the bonds.

Terms and conditions of loans made by federal land banks. The restrictions placed on federal land banks in making loans are definitely set forth in section 12 of the farm loan act as follows:

"Sec. 12. That no federal land bank organized under this act shall make loans except upon the following terms and conditions:

"First. Said loans shall be secured by duly recorded first mortgages on farm land within the land bank district in which the bank is situated.

"Second. Every mortgage shall contain an agreement providing for the repayment of the loan on an amortization plan by means of a fixed number of annual or semi-annual installments sufficient to cover, first, a charge on the loan, at a rate not exceeding the interest rate in the last series of farm loan bonds issued by the land bank making the loan; second, a charge for administration and profits at a rate not exceeding one per centum per annum on the unpaid principal, said two rates combined constituting the interest rate on the mortgage; and third, such amounts to be applied on the principal as will extinguish the debt within an agreed period, not less than five years nor more than forty years: Provided, that after five years from the date upon which a loan is made additional payments in sums of $25 or any multiple thereof for the reduction of the principal, or the payment of the entire principal, may be made on any regular installment date under the rules and regulations of the Federal Farm Loan Board: And provided further, that before the first issue of farm loan bonds by any land bank the interest rate on mortgages may be determined in the discretion of said land bank, subject to the provisions and limitations of this act.

"Third. No loan on mortgage shall be made under this act at a rate of interest exceeding 6 per centum per annum, exclusive of amortization payments.

"Fourth. Such loans may be made for the following purposes and

for no other:

"(a) To provide for the purchase of land for agricultural use.. "(b) To provide for the purchase of equipment, fertilizers and live stock necessary for the proper and reasonable operations of the mortgaged farm; the term "equipment" to be defined by the Federal Farm Loan Board.

"(c) To provide buildings and for the improvement of farm lands; the term "improvement" to be defined by the Federal Farm Loan Board.

"(d) To liquidate indebtedness of the owner of the land mortgaged, existing at the time of the organization of the first national farm loan association established in or for the county in which the land mortgaged is situated, or indebtedness subsequently incurred, for purposes mentioned in this section.

"Fifth. No such loan shall exceed 50 per centum of the value of the land mortgaged and 20 per centum of the value of the permanent, insured improvements thereon, said value to be ascertained by appraisal, as provided in Sec. 10 of this act. In making said appraisal the value of the land for agricultural purposes shall be the basis of appraisal and the earning power of said land shall be a principal factor.

"A reappraisal may be permitted at any time in the discretion of the federal land bank, and such additional loan may be granted as such reappraisal will warrant under the provisions of this paragraph. Whenever the amount of the loan applied for exceeds the amount that may be loaned under the appraisal as herein limited, such loan may be granted to the amount permitted under the terms of this paragraph without requiring a new application or appraisal.

"Sixth. No such loan shall be made to any person who is not at the time, or shortly to become, engaged in the cultivation of the farm mortgaged. In case of the sale of the mortgaged land, the federal land bank may permit said mortgage and the stock interests of the vendor to be assumed by the purchaser. In case of the death of the mortgagor his heir or heirs, or his legal representative or representatives shall have the option, within sixty days of such death, to assume the mortgage and stock interests of the deceased.

"Seventh. The amount of loans to any one borrower shall in no case exceed a maximum of $10,000, nor shall any loan be for a less sum than $100.

"Eighth. Every applicant for a loan under the terms of this act shall make application on a form to be prescribed for that purpose by the Federal Farm Loan Board, and such applicant shall state the objects to which the proceeds of said loan are to be applied, and shall afford such other information as may be required.

"Ninth. Every borrower shall pay simple interest on defaulted payments at the rate of 8 per centum per annum, and by express covenant in his mortgage deed shall undertake to pay, when due, all taxes, liens, judgments or assessments which may be lawfully assessed against the land mortgaged. Taxes, liens, judgments or assessments not paid when due, and paid by the mortgagee, shall become a part of the mortgage debt and shall bear simple interest at the rate of 8 per centum per annum. Every borrower shall undertake to keep insured to the satis