a controlling interest in the federal land bank, all under the constant supervision of the federal farm loan board with its unlimited national authority.

17. Further Safeguards. Bona fide farmers only, "actually engaged in the cultivation of the farm mortgaged," may obtain loans. Such farmers will take pride in paying their dues promptly and in encouraging thrift so as to create a better market for farm loan bonds. In this way the borrowers will be able to insure the stability of the system in such manner as gradually to reduce the rate of interest. Thus borrowers may earn further benefits without loss to lenders or investors.

18 Purposes of Loans. You may not borrow money by this system for extravagant or foolish purposes. For privileges conferred upon him by the act, the borrower reciprocates by using the money in ways that should permanently increase the value or productiveness of the farm, and enable the borrower more readily to meet his dues of interest and principal. The law on this point should be carefully read-section 12, paragraph four. The borrower may comply with these require

ments, without inconvenience and with decided benefit to himself.

19. Free of Tax. No taxation whatever upon your note or mortgage or shares, nor upon the capital and surplus of your national farm loan association or federal land bank. This is a matter of justice to you as a borrower, or as an investor, which is not the least of the many advantages of the system.

20. Transferable. A mortgage may pass with the title of the premises to a new owner, should he become such by purchase, trade, gift, bequest or otherwise; that is to say, the debt does not necessarily become due and payable should the property pass into other hands, but may be continued in accordance with the terms of the original contract, if agreeable to the land bank which holds the loan. This may make a mortgaged farm all the more salable, because of the smaller amount of cash the buyer will have to pay upon the purchase price.

21. Co-operative. When in full vogue and effect, borrowing farmers will hold all the stock in the federal land bank through their share holdings in the national farm loan asso

ciations of which they are members. You have one vote for each share in such local association, but not exceeding twenty votes in all, and the association has one vote for each of the shares it holds in its land bank. As these are held in the same proportion that farmers own shares in the locals, the system becomes entirely co-operative and profit sharing.

22. It is a national system, under national law, supervised by national authority. This implies both strict integrity and adequate ability in administering the affairs of local associations and also of district land banks.

23. Implicit confidence therefore may be bestowed upon the method by borrowers, investors and the whole public

Another unique feature of importance to the thrifty borrower: While you must pay your dues regularly, you not only have the privilege of paying larger installments upon the principal and of paying it off in full at any interest date after five years, but such larger installments you may pay either in cash or in federal farm loan bonds at par.

By watching the market, you may have a chance to pick up some of the bonds at a trifle

most

under par. Such opportunities are likely to occur during a period of business depression, when funds for commercial purposes may be relatively dear. At such times some holders of farm loan bonds may be forced by their necessities to sell their bonds, because these bonds then may be more salable and upon relatively better terms than any other securities which the holder may possess. You will watch out for such chances, for should you ever be able to buy bonds at say 98 or 97, you can turn them in to the bank at par, 100, to apply upon the principal of your loan. Thus you will profit by the full difference between 100 and what the bonds cost you below that figure.

2

You also will notice that, because of the work and expense involved in making your loan, it must run for not less than five years. At the earliest, you cannot get your mortgage discharged until five years after its date, even though you may be able to pay it off in full before the five years have expired. However, you can pay it up in part or in full at any interest date before the five years, as well as thereafter, by tendering farm'loan bonds to the bank as described in the foregoing paragraph.

CHAPTER TWELVE

WHY BUY SHARES IN FEDERAL LAND BANK

NDIVIDUALS of any age or either sex,

IN

firms and corporations, should be quick to buy shares in any or all of the federal land banks and hold the same until redeemed at par and accrued interest, for these reasons:

1. Non-Taxable. The shares are exempt from any and every form of taxationlocal, municipal, state or national. They are free even from inheritance tax, death duties or succession taxes, as well as from all income

taxes.

2. Without Liability. The law does not provide for any liability upon the shareholder in excess of the par value of the shares owned by said holder.

3. Dividends. Each share in the federal land bank is entitled to unlimited dividends over and above the legal reserve and suspense account required by law.

4.

Retirement. If certain conditions are attained, shares held by individuals, firms,