Economics becomes a science · 1770s–1920s
1916
Credit for farmers
The Federal Farm Loan Act sets up land banks so farmers can borrow for decades instead of a few years.
Farm mortgages in the early 1900s were short and expensive, and a bad harvest could cost a family its land. The Federal Farm Loan Act of 1916 created twelve federal land banks that made long-term loans to farmers through local cooperatives.
Farmers repaid out of each year's harvest. Miss enough payments and the lender could still foreclose on the land.
💡 Why it made sense then
Farming pays once or twice a year, so farmers needed loans that matched their harvests, not a bank's short terms.
🎮 In Journey Shares
The farm co-op finances plots over 140 days; harvests help pay the daily payment, and two missed payments mean foreclosure.
Ideas it gave us
- 🏦 Interest rate
An interest rate is the price of borrowing money, stated as a percentage of the loan per year. For savers it is the reward for lending their money to a bank.
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