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Federal Farm Loan Act Pros And Cons

1068 Words5 Pages

The Federal Farm Loan Act of 1916 was enacted by President Woodrow Wilson and would have an lasting effect on the rural farmer by allowing them to receive a loan against their land. This paper will explore how President Wilson and President William Howard Taft sent ambassadors to study institutions in Europe to help mold the Federal Farm Loan Act. It will also discuss how the law was implemented and how the federal law was structured. Finally, it will discuss the different ways that the farmers benefitted from the Federal Farm Loan Act and if it helped them or put them in debt. Starting in the year 1912, President Taft and President Wilson commissioned a group of ambassadors to Europe to study different financial and developmental institutions. …show more content…

It also allowed them access to credit that they had previously never had access too. The Federal Farm Loan Act was highly touted, passing both branches of Congress by almost an unanimous vote (JSTOR 292). The act allowed for the Federal Land Bank to open in 12 districts across the country, with hundreds of National Farm Loan Associations to serve as agents for the Federal Land Bank. It has been considered as one of the most important measures that Congress had ever enacted. Before the Federal Reserve Act of 1913, farmers found it difficult to secure credit at reasonable interest rates. Up until then, national banks were prohibited from making loans on real estate security. Their land was all many of the famers had, and faced high interest rates that were on the borderline of breaking many usury laws (JSTOR 292). Many of these rural farmers had to pay interest rates from 5.3% in New Hampshire, and 9 to 10% in western and southern states. There was even evidence of farmers paying as high as 25% interest rate to secure a line of credit. Had it not been for the farmer’s land being high in value, they would have suffered many losses due to the high interest rates and commission charges. From the year 1900 to 1910 the U.S. census revealed that the value of land for rural farmers more than doubled in that timeframe (JSTOR

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