credited as interest. At the same time I would pay the mortgage company $50, to be credited as interest only. Each succeeding year I would pay to the bank $60.44 and to the mortgage company $50, until the last year, when I would pay to the bank $59.88, of which only $2.85 would be credited as interest and the remaining $57.03 would be credited on the remaining principal, which it would exactly pay. At that time I would pay to the mortgage company $50 and still owe the full amount of $1,000 originally borrowed. You will note that I would have only paid to the bank $10.44 during each of the first thirty-five years and $9.88 on the last year more than I paid annually to the mortgage company. This only amounts for the thirty-six years to $375.28, and yet a $1,000 debt has been paid. This represents a saving of exactly $624.72. How was it done, you will ask?

Let us see: On the amortization plan I would have paid to the bank in interest the sum of $1,175.28, while to the mortgage company I would have paid during the same time $1,800. Here is a difference in my favor between these two interest amounts of $624.72, which, when added to the $375.28 actually paid on the principal, makes the sum of $1,000, the exact amount of my loan. This is the result when the interest rate is 5 per cent and the term thirty-six years. I have figured it on that basis simply because the tables that I have are based upon these two figures. It is only a matter of calculation to work it out for any other period or interest rate.

The trouble, however, with this illustration is that it assumes the old line mortgage company will loan at 5 per cent. It has not done so in the past, whatever may be its promises for the future. In order, therefore, to make the illustration "true to nature" let us go to the actual facts—to the actual rates that have been and are now being charged to farmers for short-term loans. In your State the legal rate of interest is only 6 per cent, but no one really doubts that the farmers in North Carolina pay, after all, in commissions and fees, etc., all well and properly camouflaged, just as much for borrowed money as his neighbor pays in South Carolina. In

my State he has been paying around 8 per cent. on short-term loans. Substitute, therefore, 8 per cent. for the five in my note to the old line mortgage company, and at the end of the thirty-six years the figures would stand as follows:

I would have paid to the mortgage company in interest $2,880, to the bank $1,175.28; a difference in my favor of $1,705. This represents a saving in an amount not only large enough to pay the entire borrowed principal but an excess even over that of $705. In other words, the bank would have saved me not only enough to pay off the entire loan, but it would also have left me for improvements on my farm the sum of $705.

In addition to these advantages there is the right on the part of the bank to indulge, in a proper case, the farmer who is in default. Under the act the banks have the right to carry a loan for a defaulting farmer for a period of two years. Of course, the exercise of this right will depend in each instance upon the particular facts that give rise to the default. The very best, most industrious and hard-working farmers may have their crops utterly ruined by rain, hail, and wind storms, or droughts and diseases, etc. These are matters absolutely beyond their control. When such a situation has been laid before the bank and it has, through its own means of investigation, found the facts to be as represented, it has full power to indulge the unfortunate farmers until the seasons come around again, when their fields will yield their accustomed harvest and enable them to resume their payments. This privilege is not for the lazy, the laggard, and undeserving. They will be made to pay, or foreclosure will follow promptly upon their default. It is the deserving alone that will merit and receive this indulgence. And since we, before a loan is made, not only appraise the land but also the solvency and character of the applicant, we do not apprehend that we will be bothered to any very great extent with undeserving bor

rowers.

But the benefits of this system to the farmers are not limited to the length of the term of the loans, to the low rate of in

terest they bear, to the amortization plan by which they are repaid, nor to the indulgence which will be extended to the unfortunate and deserving when overtaken by misfortune; on the other hand, the very restrictions and limitations which the act throws around the purposes for which the funds may be borrowed constitute of themselves safeguards which will not only protect the borrowers against a misuse or an unwise use thereof, but will also make sure that these funds are devoted to the improvement of agriculture. Note for a moment these purposes: (a) to purchase land for agricultural use; (b) to purchase equipment and live stock necessary for the proper operation of the mortgaged farm; (c) to provide buildings and to otherwise improve the mortgaged land; (d) to liquidate indebtedness; and absolutely for no other purposes. Should any portion of the loan be expended for a purpose other than those named by the applicant when applying for his loan and as approved by the bank, and he is limited to the purposes just named, then the bank has the option of declaring the whole of the loan due forthwith.

Paternalism do they say? Yes, if you please; such benevolent government supervision of the proper use of the borrowed funds as will prevent not only a waste thereof, but will also direct them into the channels that will do the most good in the upbuilding of the agriculture of this country, as well as protect the farmer from that blood-sucking fraternity of human leeches that is willing not only, but actually seeks by any and every method to sell him anything and everything whatever, whether useful, helpful, or needed on his farm or not, just so a profit can be made out of him.

Class legislation do they complain? Yes, if you please; but in favor of that class upon whom this cruel war has shown how absolutely dependent we are today even for our daily bread. There are in the United States something over 6,000,000 farms; of these, 40 per cent., or about 2,400,000, are under mortgage; that is to say, nearly one-half of all the farms in this country are mortgaged for short-term loans, drawing high rates of interest, with the usual commissions

and fees for financing and refinancing. The total of this mortgaged debt is about $6,000,000,000. You will recall that there is a difference in favor of the amortization plan of the land banks of $624.72 for repaying a loan of $1,000 at 5 per cent. for a term of thirty-six years over a $1,000 loan at 5 per cent. for thirty-six years payable the old way. This means that if these $6,000,000,000 of farm mortgages were held by the land banks, there would be a saving to the farmers of this country of $3,748,320,000 in interest during the next thirty-six years. If, instead of supposing the rate to be 5 per cent. we suppose it to be 8 per cent. which more nearly represents the actual fact, then the farmers of this country would save in the next thirty-six years in interest alone the enormous sum of $10,235,000,000-the middleman's unearned profit.

It may be said that these loans do not and will not run for thirty-six years. If so, the answer is that the aggregate amount of farm loans outstanding during the next thirty-six years, judging by the past, will be as large or even larger than it is now. Where one loan has been paid in the past, another has taken its place; and this will be true of the future. Consequently, the burden of high interest rates is truly pictured by these enormous figures, startling as they may appear.

It was just these very facts that caused both of the great political parties to pledge themselves in their last national platforms to enact a rural credit law to lighten this burden upon our farms, an overload which all economists admitted the agricultural interest of the country could not bear and live, much less prosper.

I have digressed a moment, but to return to the benefits of this law to agriculture, and particularly in the South. The loans from this bank are limited to not less than $100 and to not more than $10,000. The applicant must be an actual farmer; which does not mean, however, that he must actually live on the mortgaged farm, desirable as that may be, but he must conduct or direct its entire operation, either by cultivating the same himself or by hired help, and he must be

responsible in every way, financially and otherwise, for the operation and expense of the farm. The money borrowed, with rare exceptions, must be used on the mortgaged farm. From this you will at once note that this act is anti-landlord, as well as anti-real estate operator and promoter. The land banks are not organized for the purpose of financing a system of landlords and tenants, nor are they allowed to assist the large real estate owner to hold his land, or the speculator to ply his trade. Neither landlordism, the holding of large estates, nor speculation in land help to build up and improve agriculture; on the contrary, they are positive evils. Landlordism makes tenants of our white people, and the large estates drive them to the towns and cities and into our factories; while speculation, though producing nothing, enriches the operator at the expense of the land by mulching it with the gambler's profits, which the ultimate owner must slave, make, and pay. No; the land banks have no funds to loan to the landlords, to the real estate hoarders, or to the real estate gamblers. On the contrary, the act says to these banks: Find the landless man and manless land; bring them together and finance the transaction so that the fields which have lain fallow may bring forth their harvest and the wealth of the nation be increased.

But it is complained that the land banks do not encourage agriculture when they loan to the farmers simply to enable them to refinance their indebtedness at a low rate of interest. It is argued that this is the rankest form of class legislation. Let me quote you a passage from page 785 of the Congressional Record of January 10, 1918. The Senate had under consideration on that day the report of the Committee of Conference on the Amendment to the Federal Farm Loan Act providing a fund of $200,000,000 for the fiscal years of 1918 and 1919, to enable the Secretary of the Treasury to purchase, during each of these years, $100,000,000 Farm Loan Bonds direct from the land banks. The record shows the following debate between Senator Smoot of Utah and Senator Vardaman of Mississippi: