Farm Credit System The first federal agency founded after the Federal Reserve Board, dedicated to providing credit for a specific sector of the American economy. The system evolved from a need to make credit for farmers more easily available and provide a mechanism by which credit could be allocated on a national scale. | F Farm Credit System The first federal agency founded after the Federal Reserve Board dedicated to providing credit for a specific sector of the American economy The system evolved from a need to make credit for farmers more easily available and provide a mechanism by which credit could be allocated on a national scale. As a result a system of federal farm banks was designed that closely resembled the model originally used for the Federal Reserve. The original legislation creating what would become known as the Farm Credit System was the Federal Farm Loan Act of 1916. At the time private farm credit ranged from 7 to 12 percent per annum depending upon the source and was widely recognized to depend to a great degree on the nature and reliability of the lender. The act provided for the creation of 12 federal land banks organized under the aegis of a Federal Farm Loan Board FFLB located in Washington . The board had five members. Private banks were given the opportunity to sign up and become members of the system and the banks rushed to join since as members of a regional land bank they would be eligible for loans. The FFLB was authorized to borrow on the bond markets and the proceeds were used to provide funds for the local banks. The Farm Credit System was enhanced by several pieces of legislation. The first came in 1923 when Congress passed the Agricultural Credit Act creating 12 intermediate credit banks to be supervised by the federal land banks. During the Depression the Farm Credit Act of 1933 was passed establishing another layer of credit institutions standing between the land banks and the intermediate credit banks. This also created the Farm Credit Administration. In 1939 President Roosevelt ended its agency status by issuing an executive order that passed its jurisdiction to the Department of Agriculture. It remained there until 1953. Then it was returned to agency status so that it could become farmer-owned as quickly as possible. It remains .
