The ne'er-do-well must reform before his neighbors will grant him credit by admittance to the association which must indorse his mortgage. No excessive excessive loans will will be granted by an association whose indorsement thereof is backed by each of its members to the extent of double their holdings in its shares.

Nor will the loan committee be likely to approve the application for a loan if the use for which the money is desired does not appeal to their judgment as sound and wise.

The farmer who wishes to borrow for the 'purpose of buying the adjoining forty acres or farm, may be advised that it will be to his advantage to wait until he owns his present place free and clear before taking on more obligations. A similar suggestion may be made by the loan committee to the farmer whose family is inclined to be extravagant and urges him to borrow for a new house, when a bit of gumption, some work and a little taste outside and in may be all that are needed to make the old house "a thing of beauty and a joy forever."

The "steering," hints or advice which a borrower may receive from the loan committee, frequently will prove as helpful to him

as the money itself. The committee's suggestions will be made quietly, confidentially, kindly, so that the applicant will both know and feel that they are made in his own interest.

All this supervision and oversight, in the granting of loans by the local association and in the subsequent use of the money, further insures the success of the system for the mutual benefit and protection of all borrowers and lenders (investors in farm loan bonds). For this reason, the bonds of federal land banks possess the peculiar and unique advantages over all other farm mortgage investments which are implied in such local control of credits and mutual responsibility for loans.

CHAPTER FIVE

FEDERAL LAND BANKS

E have discussed the individual farmer and the individual farm upon which

WE

this system is based, also the national farm loan association of which the borrowing farmer must be a member in order to secure a loan from the federal land bank of which the association is a member.

The extreme simplicity of the foregoing and the efficiency with which it designs to bring out individual initiative supplemented by cooperative effort, cannot fail to have impressed the reader. We now come to the regional center through which the loans are made and the money furnished.

Federal Land Bank Districts. The federal farm loan board is to divide the continental United States, excluding Alaska, into 12 federal land bank districts, which may be designated by number. These districts "shall be apportioned with due regard to the farm loan needs of the country, but no such district shall contain a fractional part of any

state." The law does not allow the number of districts to be increased, but it does provide that the districts may be readjusted from time to time.

Relative to State Laws. Each district may consist of the whole of one state or the whole of two or more states. It is not permissible for any district to include only a portion of one state.

By thus including whole states in a district, all the laws within said state relative to land titles and mortgage loans may be complied with readily by borrowers, by member associations and by the land bank.

Any state whose laws do not adequately secure land titles and mortgages thereon, may be denied the benefits of the system until it has enacted such laws, as described in section 30 of full text of the act in the appendix of this work.

Federal Land Banks. In each federal land bank district, the federal farm loan board must establish a federal land bank with its principal office located in such city within the district as the board designates. The name of the city must be included in the bank title. This land bank may establish branches within

the land bank district, also agents, subject to the approval of the federal farm loan board, hereinafter called the board.

Temporary Organization. In order to get the system started, each federal land bank is to be managed temporarily by five directors appointed by the federal farm loan board, who must be residents of the district and give surety bond, and receive such compensation and allowance for necessary expenses as the board may fix.

These temporary directors have the power to choose from their number, by majority vote, president, vice-president, secretary and treasurer, and also have power to engage assistants and fix their compensation, subject to the board's approval.

Permanent Organization. When subscriptions to the stock of the federal land bank by national farm loan associations shall have reached the sum of $100,000, the permanent organization shall consist of nine directors, each holding office for three years.

Six shall be known as local directors, to be chosen by vote of national farm loan associations, which therefore will have the control. Through these six directors, the borrowing