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Duffus, William M. / Report on agricultural settlement and farm ownership. Part I: state loans to farmers
(1912)

Chapter VIII. Conclusions to be drawn from experience with state loans to farmers,   pp. 144-146 ff. PDF (636.0 KB)


Page 145


STATE Lo.kNS TO FARME.4S.
  1. The system should be self-sustaining. It should receive no-
support from general taxation except at its initiation and at
times of widespread calamity and the support given in such
cases should be returned to the general funds of the state with
interest as soon as possible.
  2. The system should be managed by competent men giving
their entire attention to this work alone or to this and other
work closely allied to it.
  3. Loans should be made only for specified purposes such as
the purchase of land, the making of necessary improvements
and the discharge of existing mortgage indebtedness.
  4. Ample real estate security should be exacted for all loans,
in addition to the security offered by the character of the ap-
plicant for a loan. Loans should be limited in amount to half,
three-fifths or two-thirds of the market value of the land, ex-
clusive of buildings, but the value of permanent improvements,
such as the removal of stumps, to be made with the aid of a
loan should be considered in determining the value of the land
as security. If necessary to insure proper use of the loan, the-
loan should be paid in "progress payments," that is, in install-
ments as the improvements to be made reach certain specified
stages of completion.
  5. The aggregate amount of loans to be made to any individual
should be limited to. say. from $5o000 to $10000 and preference
should be given to applications for loans of smaller amounts.
  6. Loans should run for twenty, thirty or forty years, and
should be repayable, principal and interest, in equal annual or
semi-annual installments. Borrowers should, however, be given
the "on or before" privilege, that is, they should be permitted
to pay a larger installment at any time than that required by
the terms of the loan.
  7. Funds for an ideal system of state loans should be ob-
tained by the sale of state bonds and borrowers should be
charged a rate of interest just high enough to discharge the inter-
est on these bonds, pay the costs of administering the system of
loans and create a reserve sufficient to cover probable losses.
Provision should be made by law, where necessary, to permit the'
investment of the state trust funds, such as some of the univer-
sity and school funds and the state life fund in Wisconsin, in
these bonds.
10-P. A.
145-


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