act of legislation
known as the Gardner State Land Bank Act (effective December 1, 1916,
provided a constitutional amendment is adopted in November, 1916).
This authorizes the establishment of a land bank, with power to lend
on the security of farming lands, for buying farms and for productive
improvements, and to issue bonds to be sold to investors.

Following this general plan the Federal Farm Loan Act became law
July 17, 1916. It authorized the establishment of twelve Federal Land
Banks, each with a capital of not less than $750,000 to make loans
through national farm loan associations organized somewhat after the
model of the building and loan associations. The bonds issued by these
banks are to bear not to exceed 5 per cent interest. It is hoped that
they will have the high credit of municipal bonds so that they may
be sold at parity, bearing interest at 4 or 4.5 per cent. The loan
is repaid by the farmers under a regular plan of amortization. The
practical results of these measures are yet to appear. They are
expected to give to loans that are made on the security of farms as
wide a market and as high credit as state and municipal bonds now
have. They bid fair to bring the rate of interest on long-time loans
to farmers down to 5 per cent or less in the remotest parts of the
land. This will stimulate agricultural improvement, and facilitate
the purchase of land by tenants. Where the interest rate has been
the highest it should raise the value of farm lands as it brings them
within the circle of a lower-interest-rate economy. This may hasten
the transfer of the lands from less provident to more provident
owners, who are willing to take the land at a higher capitalization.
But the system of loans will probably help to develop greater thrift
in the younger farming population.

[Footnote 1: See Vol. I, chs. 12 and 13 on proportionality and
usance.]

[Footnote 2: See ch. 25, secs. 4 and 5.]

[Footnote 3: See above, ch. 19, secs. 13, 14, 15.]

[Footnote 4: See above, sec. 3.]

[Footnote 5: See ch. 8, sec. 8.]

[Footnote 6: See Vol. I, pp. 495-497, on the relation between lower
interest rates and productive processes.]

[Footnote 7: See ch. 9, sec. 7 on time deposits, and sec. 9 on farm
loans.]

CHAPTER 27

THE RAILROAD PROBLEM

Sec. 1. Rise of the corporation concept. Sec. 2. The modern era of
corporations. Sec. 3. Beginning of corporation problems. Sec. 4. The era of
canals. Sec. 5. Rapid b