loan under section 12 of this act may unite to form a national farm loan association.”

The qualifications referred to in section 12 pertain to the purposes for which loans may be made, payment of interest and principal, etc., as fully detailed in Chapter Ten.

"No persons other than borrowers on farm. land mortgages shall be members or shareholders of national farm loan associations."

"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."

How Organized. Each federal land bank doubtless will furnish a blank form to be signed by the farmers who wish to form a national farm loan association.

"Any person desiring to borrow on farm land mortgage through a national farm loan association, shall subscribe for shares of stock in such farm land association to an amount equal to five per centum of the face of the desired loan, said subscription to be paid in cash upon the granting of the loan." This means that each would-be member must pay $5 for one share of the par value of $5 for each $100 he wishes to borrow.

The only limit to the number of farmers who may apply for a charter for their national farm loan association is that they shall be ten or Other things being equal, the larger the number of farmers who join in making the application, the better it will be.

more.

The application is to be accompanied by an affidavit "stating that each of the subscribers is the owner, or is about to become the owner, of farm land qualified under section twelve of this act as the basis of a mortgage loan; that the loan desired by each person is not less than $100 nor more than $10,000, and that the aggregate of the desired loans is not less than $20,000."

The application for charter is accompanied by a subscription at par to stock in the federal land bank by the would-be national farm loan association equal to five per cent of the total sum desired on mortgage loans. In other words, each national farm loan association agrees to invest in land bank shares all the money it gets from its own members for shares in its own association.

"Upon receipt of the necessary papers, the directors of the federal land bank shall send an appraiser to investigate the solvency and

character of the applicants and the value of their lands, and shall then determine whether in their judgment a charter should be granted to such association." Their recommendation and the papers are then sent to the federal farm loan board at Washington. "If said recommendation is unfavorable, the charter can be refused," but if it is favorable the board "shall thereupon grant a charter to the applicants therefor, designating the territory in which such an association may make loans, and shall forward said charter to said applicants through said federal land bank." However, the board "may for good cause shown in any case refuse to grant a charter."

Authority of Associations. Upon receipt of its charter, such "national farm loan association shall be authorized and empowered to receive from the federal land bank of the district sums to be loaned to its members under the terms and conditions of this act."

The farmers comprising the association choose a board of not less than five directors, which shall elect a president, vice-president, secretary-treasurer and a loan committee of three members. "All officers and directors, except the secretary-treasurer, shall during

their term of office, be bona fide residents within the territory where the association is authorized to do business, and shall be shareholders of the association."

The shares in each national farm loan association have a par value of $5-the true co-operative unit. Each member shall have one vote for each $5 share, but no one may cast more than 20 votes. To be strictly cooperative, it should be one member one vote, but the limitation noted practically means that every member who borrows $1000 or more shall have but 20 votes, while those who borrow less than $1000 shall have one vote for each $100 borrowed.

Admitting Members. After the charter has been granted, "any natural person who is the owner, or about to become the owner, of farm land qualified under section 12 of this act as the basis of a mortgage loan, and who desires to borrow on a mortgage of such farm land, may become a member of the association by a two-thirds vote of the directors, upon subscribing for one share of the capital stock for each $100 of the face value of his proposed loan."

Once the national farm loan association has received its charter, membership therein may be denied or accepted by two-thirds vote of the directors. In this way the farmers' own local borrowing society may control its membership in the interest of responsible farmers, bona fide settlers, and actual workers upon or cultivators of the farms proposed to be mortgaged. Thus speculators in land, nonresident landholders, landlords who own simply to let out their land to tenants, or other persons who are not bona fide farmers, may be excluded.

Even if a "local" should admit members or approve loans which for any reason may be undesirable or foreign to the practice of the act, such application for a loan from any association from any member of the latter could be rejected by the federal land bank.

Farmers Control. These safeguards are set up in order that the bona fide farmers in each community may control the proposed system in their own interest. This purpose is supplemented by the powers granted the federal land banks, also the authority vested in the federal farm loan board. But if farmers do not avail themselves of their powers, rights and privileges under the act, any federal