Federal Farm Loan Act of 1916

The Federal Farm Loan Act of 1916 established a nationwide system of twelve regional Federal Land Banks to provide American farmers with long-term, low-interest mortgage credit for purchasing land and making agricultural improvements, addressing a chronic shortage of affordable rural credit that had left many farmers dependent on short-term, high-interest loans from local merchants and banks. Modeled in part on European cooperative farm-credit systems and cooperatively owned by the farmer-borrowers who used them, the Land Banks gave American agriculture access to long-term capital comparable to what urban and industrial borrowers already enjoyed, and the system became a foundational piece of the federal farm credit apparatus that was substantially expanded during the New Deal.