TO THE SECRETARY OF THE TREASURY, WASHINGTON, D. C.: ..... We, the undersigned farmers of the TOWNSHIP of.. COUNTY of and STATE of hereby respectfully request that the Federal Farm Loan Board send us the necessary official papers with which to make application for a charter for our own National farm loan association. We understand this local association is to be a member of the federal land bank for this district, through which we may obtain long-time loans at reasonable rates upon easy terms of repayment, when secured by a first mortgage on our farms in accordance with said law. Please send the official papers to NAME POSTOFFICE COUNTY STATE whom we have appointed to act for us temporarily. In making this request, we do not bind ourselves in any way to a contract. August 19, 1916, the Federal Farm Loan Board issued circular No. 1, treating of the organization, management, powers and limitations of National farm loan associations. Said limitations are as follows: 1. No loan may be made except upon the security of first mortgages. 2. The amount of the mortgage can not exceed onehalf the appraised value of the land and twenty per cent. of the permanent improvements thereon, which must be insured. 3. The proceeds of the loan must be used for the extinguishment of preëxisting indebtedness or for productive purposes, which includes the purchase of live stock, fertilizers, equipment and improvements (see section 12, farm loan act). 4. Every mortgage must contain an agreement to pay off the debt (principal and interest) in fixed annual or semi-annual installments. 5. The amount of each installment may be fixed by the borrower, but can not be less than sufficient to pay off the debt in forty years, nor greater than to pay it off in five years. 6. The rate of interest charged any borrower can not exceed six per cent. per annum. 7. The borrower can not be called upon to pay the debt except by the installments he originally fixes, unless he defaults, but after five years he may pay off the whole or any portion at his option at any installment period. HOW FARMERS MAY FORM AN ASSOCIATION August 23, 1916, the bureau issued circular No. 2, stating how farmers may form a National farm loan association. It states in effect that if a farmer has a mortgage on his farm and borrows money from the land bank, his mortgage lien must be paid off with the money. If any surplus of his loan remains, he can apply it for any purpose which will improve the farm's value. But if a farmer has no mortgage on his farm and desires to borrow for improving it, he can borrow money from the land bank by giving a first mortgage on his farm. After the charter is granted the applicants no longer act in their individual capacity, but become merged as shareholders into a corporation, which has a separate existence created by law, under the same name which has been chosen and set forth in the original application and organization certificate. This corporation will have officers selected by the shareholders to do its business in accordance with the by-laws which the shareholders make for their guidance. (Consult section 7.) These associations are organized for the primary purpose of giving to each borrower the benefit of the combined credit of all its members to the extent of the capital contributed and the limited liability they each incur, and hence the associations are required to indorse every loan made to members. It is also through these associations that the borrowers will ultimately become the owners of the federal land banks. The association decides whether any loan shall be made or not by refusing the application for every loan which is considered doubtful. No loan can be made unless it is approved by the loan committee after examination of the land offered as security. The National farm loan associations are not limited as to the number of their members. Each association may obtain in loans for its members twenty times the amount of its stock in the federal land bank, no matter how large its holdings of stock may become by the growth of the association. NEW YORK LEGISLATIVE ACTION AS TO THE LAND BANK In connection with the Rural Credits Statute the action of the Legislature of New York during the year 1916 is of exceptional importance. It enacted two statutes as follows: CHAPTER 139 AN ACT to amend the banking law, in relation to the borrowing of money by savings and loan associations and the lending of money and issuing of bonds by the land bank of the State of New York. Became a law April 6, 1916, with the approval of the Governor. Passed, threefifths being present. SEC. 1. Section three hundred and eighty-eight of chapter three hundred and sixty-nine of the laws of nineteen hundred and fourteen, entitled "An act in relation to banking corporations, and individuals, partnerships, unincorporated associations and corporations under the supervision of the banking department, constituting chapter two of the consolidated laws," is hereby amended to read as follows: POWER TO BORROW; RESTRICTIONS THEREON SEC. 388. Any savings and loan association may borrow money for a term not to exceed one year if: 1. It has been authorized so to do by the vote of a majority of its board of directors, taken by ayes and nays and recorded in its minutes. 2. The aggregate of the money borrowed by it and the prior or underlying mortgages, liens or encumbrances upon the real estate upon which it holds mortgages or to which it has taken title does not exceed twenty per cent. of its accumulated capital, or two thousand dollars if its accumulated capital does not exceed ten thousand dollars. This restriction shall not apply to money obtained from the land bank of the State of New York through the issue of bonds on its account and secured by the assignment of bonds and mortgages or other securities by such association. Any such association, however, may accept from its members advance payments of dues upon its installment shares and advance payments of interest and premium upon its loans; but such payments shall not be accepted in advance for a longer period than one year, nor shall the interest paid upon such advance payments exceed the rate of six per cent. per annum. SEC. 2. Section four hundred and twenty-four of said chapter is hereby amended to read as follows: GENERAL POWERS. SEC. 424. In addition to the powers conferred by the general corporation law the land bank of the State of New York shall, subject to the restrictions and limitations contained in this article and its by-laws, have the following powers: 1. To issue, sell and redeem bonds and notes secured by bonds and first mortgages made to or held by member associations. 2. To receive money or property from its members and from other associations, corporations and persons with whom it has contracts, engagements or undertakings, in installments or otherwise; to enter into any contract engagement or undertaking with such associations, corporations or persons for the withdrawal of such money or property, with any increase thereof, or for the payment to them or to any association, corporation or person of any sum of money, at any time, either fixed or uncertain; to lend money to savings and loan associations upon the security of their promissory notes with or without collateral. 3. To invest its capital and other funds in bonds secured by first mortgages of real estate situated within the territory in which its members are authorized to make loans and in securities which are authorized as investments for savings banks by section two hundred and thirtynine of this chapter. 4. To receive by assignment from its members and to deposit in trust with the Comptroller of the State of New York to be held by him as security for its and their outstanding obligations any first mortgages of real estate and the bonds secured thereby that are legally receivable by savings and loan associations; to empower such savings and loan associations as agents of the land bank, to collect and immediately pay over to the land bank the dues, interest and other sums payable under the terms, conditions and covenants of the bonds and mortgages; to return to, or permit such savings and loan associations to retain any sums of money so collected in excess of the amount required to meet the obligations of such associations respectively. 5. To purchase in its own name, hold and convey real property for the following purposes and no others: (a) A plot whereon there is or may be erected a building suitable H for the convenient transaction of its business from portions of which not required for its own use a revenue may be derived. (b) Such as shall be mortgaged to it in good faith, by way of security for loans made by it or moneys due to it. (c) Such as shall be conveyed to it for debts previously contracted in the course of its business, and such as it shall purchase at sales under judgments, decrees or mortgages held by it. 6. To designate as depositaries of its funds any bank, trust company, or savings bank of this State, or any National banking association located in this State doing a banking business under the laws of the United States. SEC. 3. Section four hundred and twenty-six of said chapter is hereby amended to read as follows: ISSUING OF BONDS SEC. 426. Bonds shall be issued in series of not less than fifty thousand dollars. All bonds issued by the land bank may be called on any interest day at one hundred and two and one-half per cent. and interest by giving notice of not less than sixty days in a newspaper published in the city of New York. Any member association which is not indebted for borrowed money and has made no investments upon the security of real estate or taken title to real estate upon which there aré prior mortgages, liens or encumbrances may pledge seventy-five per cent. of its mortgages with the bonds secured thereby, to the land bank, as collateral security for bonds issued on its behalf. Whenever such obligations do not exceed ten per cent. of the accumulated capital of the association, fifty per cent. of such mortgage securities may be pledged to the land bank; and when such obligations exceed ten per cent. of such capital, twenty-five per cent. of such mortgage securities may be so pledged. Whenever all the members of a member association shall execute and deliver to such association bonds secured by first mortgages of real estate and shall each give his collateral bond to such member association guaranteeing the payment of the bonds and mortgages of all the other members, one hundred per cent. of the mortgage securities of such association and the bonds secured thereby may be pledged by such association to the land bank. The amortization payments upon all mortgages accepted by the land bank as collateral security for bonds shall be sufficient to liquidate the debt in a period not exceeding forty years. In the event of any default for more than ninety days in the payment of the principal of, or for more than ninety days in the payment of any installment of interest upon, any of said bonds, the superintendent of banks may, of his own motion, and shall, upon the request in writing of the holders of said bonds in default to the amount of fifty thousand dollars, forthwith take possession of and proceed to liquidate the land bank. Upon such liquidation he shall be entitled in the name of the land bank to enforce all of its rights and securities and to collect and |