FARM DEBTS FUNDED IN THE LAND BANKS
Federal Board Shows High Percentage of Loans is used for Refinancing.
LOWER INTEREST IS PAID
Cheaper Money Enables Amortizing of Mortgages and Other Debts Over Long Periods.
Special to the New York Times

WASHINGTON, Oct. 22.--Following the lead of the Federal Government, farmers have been refinancing their short-term, high interest rate debts with long-term cheaper money this year according to the Farm Loan Board.

"During this period (nine months of 1932) 86 per cent of the loans were used for refinancing, whereas 77 per cent of the loans made by the banks prior to 1932 were used for this purpose," the loan board said.

"Far from encouraging the farmer to get into debt, the facts show that the main activity of the Federal Land Banks has been to enable the farmer to amortize on a reasonable basis debts which he already had," the statement continued. "Most of the indebtedness refunded was on a short-term basis providing for frequent renewals with commissions and high interest rates, costing the farmer in many instances from 8 to 10 per cent per annum.

"In this way the farmer has been enabled to replace such onerous loans with Federal Land Bank loans bearing an average interest rate of slightly less than 51/2 percent amortized over a long period of years.

"The Federal Land Banks are strictly limited by law as to the purposes for which loans can be made and the borrowers state in their applications the purposes for which the funds are to be used. 'To pay off existing mortgages' and 'to pay other debts' have been the chief uses to which the borrowed money has been applied. Other purposes for which loans have been made include purchasing land, equipment and livestock and providing buildings and improvements.

"The Federal Land Banks do not maintain local representatives to solicit new loans. Applications for loans are made first to national farm loan associations composed entirely of farmer borrowers of the Federal Land Banks. Members designated by each association as a loan committee review the applications received from their neighbors and, if approved, the loans are recommended to the bank."