tional funds to lend. While based on this popular and democratic principle, the local associations by their representatives and shares combine to form and control the federal land bank of their district.

The whole method enjoys the direction of the disinterested federal farm loan board. The idea is that by this plan each individual will be encouraged to help himself by associating with others similarly circumstanced. To this individual effort is added provision for efficient co-operation under expert supervision.

Immediately Effective. Admirable as the plan is, it is so new and farmers themselves are so slow to co-operate, that it may be years before the system is fully established along these democratic lines.

Slowness in approaching the ideal is no excuse for not striving toward it. Üniversally popular as the mutual savings bank system long has been in Massachusetts, for instance, a quarter of a century elapsed between the founding of the first savings bank and the establishment of enough others to make that system seem worth while. But for nearly a century it has been the bulwark of the eco

nomic thrift, industrial potency, social and civic power, and national influence of the old Bay State.

Even though it will take some time for farmers to realize to the full the ideals of the new method, by universally uniting in national farm loan associations in their respective communities, provision is made for putting the method into effect at once.

For the federal farm loan board has authority to make its advantages universal by authorizing existing banking institutions, chartered under state laws, to become agents for the land bank, and also by chartering joint stock land banks.

In these ways the federal farm loan board enjoys duties, responsibilities and powers of largest potentiality for the welfare of individuals and industries, states and nation. From the individual farmer and investor at the bottom, up through the federal farm loan board at the top, the system is worthy of every patriot's kindly interest and intelligent support.

TH

CHAPTER SEVEN

FEDERAL FARM LOAN BONDS

HE creation of a new security of rare attractiveness and unimpeachable integrity is the means by which the federal farm loan system may achieve its largest success. Experience at home and abroad shows that it is entirely feasible to mobilize the land which feeds us as the basis for such bonds.

Their Sixfold Basis. Just a moment's thought will convince the reader that the degree to which federal farm loan bonds come to possess the implicit confidence of the investing public will measure the results of the system. That confidence must be a growth. It must be earned. That it will be achieved is certain, for the American people know a good thing when they see it, and are quick to patronize it. They will not be slow to realize that farm loan bonds have a sixfold basis.

1. The individual farmer: His character reserve-mind, will, soul; also his health reserve-physical, mental, spiritual.

2. The farmer's land: The ground upon which his home is built, the soil from which comes the produce that feeds himself and his family and the rest of us.

3. The farmers' national farm loan association, which is a veritable co-operative reserve that renders efficient "the cohesive power of individual effort wisely associated for the common welfare."

4. These are amalgamated in the federal land bank, which issues and further guarantees the stability of the bonds

5. All twelve of these federal land banks are jointly and severally responsible for the bonds issued by each.

6. Regular installments upon principal constantly reduce the debt and increase the security of the mortgage.

Furthermore, the whole method indirectly is favored by the gold standard and the federal reserve system, which insure the stability of the currency and of finance.

Above all, it represents the newest and broadest efforts of statesmen regardless of party to express in an easily negotiable piece of paper or bond the underlying strength of American agriculture, upon which depends

not only the republic itself but the very life of our people.

Two classes of farm loan bonds are contemplated under the act. Either type

of bond is believed to be superior by far to existing forms of mortgage investment. Both are the outcome of the same federal supervision. The two classes may be briefly described:

1. Federal farm loan bonds are issued only by some one of the federal land banks established under this national law. This bond has back of it in their entirety all of the sixfold reserves enumerated above. Even where the mortgage loan is made to the borrower through an agency for the land bank, instead of through a member national farm loan association, similar safeguards are employed.

2. Farm loan bonds issued by joint stock land banks also are well protected, as is more fully narrated in Chapter Fifteen.

With all those safeguards, however, my own opinion is that federal farm loan bonds are preferable, for either borrowers or investors, to the securities of the joint stock banks.

The safeguards employed in the issuance of federal bonds are carried out to the