The national farm loan associations are co-operative credit associations, modeled upon the credit unions prevalent in Europe. They consist of ten or more natural persons who are owners, or who are about to become owners, of land that qualifies as security for mortgages under the law. The shares of these associations are $5, and the members have to make a one-share subscription for each $100 borrowed. The members have one vote per share, but no member is allowed more than twenty votes. The association has control of its membership and elects its own officers. The associations select the loans, appraise the security, transmit blanks and forms to and from the federal land bank, handle the funds, distribute the dividends on the basis of the amount of loans to members, guarantee the mortgage by their joint indorsement and stock ownership, and attend to the upkeep of the loan and security. Five per cent of the loan is subscribed to the stock of the association, and the association then subscribes 5 per cent of its borrowings to the stock of the federal land bank. The maximum loan to any one person is $10,000 and the minimum $100. The loans may not exceed 50 per cent of the value of the improved real estate and 20 per cent of the value of the improvements. The loans are determined upon by a local loans committee, but the appraisals of the security are made subject to revision by an appraiser appointed and controlled by the Federal Farm Loan Board. Statistics indicate that about 8 per cent of the proceeds of the loans is used to buy land, 10 per cent for buildings and improvements, 60 per cent to pay off existing mortgages, 10 per cent for payment of other debts, 5 per cent for purchase of the federal land bank stock, 4 per cent for purchase of livestock, and 3 per cent for implements and equipment. It is provided that the loan rate to the local borrower cannot exceed the rate on the last issue of bonds by more than 1 per cent, that is, the total expenses of the system are to be covered and dividends declared out of this maximum margin. The secretary-treasurer is the most important person connected with a local association, and for the most part he renders his services for a merely nominal compensation.

These associations, which are being organized throughout the United States - the fewest in the region northeast of Indiana and in the mountain states of the West - amounted in 1920 to approximately 4,000. The loans made by them are distributed among the districts as follows:

Table Showing Distribution Of Loans By National Farm Loan Associations

District

Federal Land Bank of

Aggregate of Loans Made from Date of Organization in March, 1917, to December 31, 1920 (In millions)

No. 1

Springfield, Mass.....

...................$ 13.6

2

Baltimore, Md...........

.................. 14.7

3

Columbia, S. C..........

.................. 20.4

4

Louisville, Ky...........

................... 27.8

5

New Orleans, La......

................... 25.8

6

St. Louis, Mo...........

.................. 31.2

7

St. Paul, Minn.....

................... 49.6

8

Omaha, Neb.............

................... 48.9

9

Wichita, Kan.......

.................. 31.6

10

Houston, Tex................

.................. 40.8

11

Berkeley, Cal.........

.................. 18.6

12

Spokane, Wash.........

.................. 46.2

Total

$369.2