Distinguishing Administrative Aspects of the Farm Credit Administration

The federal farm loan system is a government established, aided, and supervised organization, designed to render an economic service in the field of agricultural lending. Its main purpose is to create and keep open a continuous channel between the farmer and sources of surplus funds in large centers. It was founded nineteen years ago, and has been developed and amplified in order to pool the credit needs of individual farmers with good credit and good farms, and provide for them more nearly the same terms and rates extended to large industrial borrowers. These general rules may be said to govern the operations of its credit policy: (1) without attempting to make all agricultural loans, Farm Credit Administration endeavors to supplement the activities of other agencies, and to set a standard of costs of credit and the terms upon which such credit is extended to agriculture; (2) interest rates charged to farmers should bear a relation to the cost of money to the Farm Credit Administration in the investment market at the time the loan is made; (3) loans should be made with reference to the needs of agriculture and the biological cycle of production; and (4) loans should be made which are within the capacity of the farmer to pay, so that he may repay them out of farm income, minimize his indebtedness, and keep credit channels open for future needs.