Editing Federal Farm Loan Act (section)

==Effect on the rural farmer==
The most visible component of the Act were the loans to individual farmers and their families. Under the act, farmers could borrow up to 50% of the value of their land and 20% of the value of their improvements. The minimum loan was $100 and the maximum was $10,000. Loans made through the Act were paid off through amortization over 5 to 40 years.

Borrowers also purchased shares of the National Farm Loan Association. This meant that it served as a cooperative agency that lent money from farmer to farmer. This was heavily influenced by a successful cooperative credit system in Germany called Landschaft.

The next most visible component of the Act were the mortgage-backed bonds that were issued. The rate of interest on the mortgages could be no more than 1 percent higher than the rate of interest on the bonds. This spread covered the issuers' administrative costs, but did not lead to a significant profit. In addition, the maximum rate of interest on the bonds was 6 percent, ensuring that borrowing costs for farmers was often much lower than before the Act was passed.<ref>Palmer, Walter B, The Federal Farm Loan Act, in Publications of the American Statistical Association, Vol. 15, No. 115 (Sep. 1916), pp. 292-312.</ref>

The act furthered Wilson's reputation against trusts and big business. By providing small farmers with competitive loans, they were now more able to compete with big business. As a result, the likelihood of agricultural monopolies decreased.

While Wilson's commission suggested that short-term credit also be incorporated in any nationalized credit system, the Act lacked this crucial component. Due to increased competition and the need for agriculture machinery, a system for short-term credit was incorporated into the current system in [[Agricultural Credits Act of 1923]].

Sponsored by Senator [[Henry F. Hollis]] (D) of New Hampshire and Representative [[Asbury Francis Lever|Asbury F. Lever]] (D) of South Carolina, it was a reintroduced version of the [[Hollis-Bulkley Act]] of 1914 that had not passed Congress due to Wilson's opposition.<ref>Thompson, C.W., The Federal Farm Loan Act, in The American Economic Review, Vol. 7, No. 1, Supplement, Papers and Proceedings of the Twenty-Ninth Annual Meeting of the American Economic Association (Mar, 1917), pp. 115-131.</ref>