Page "Federal Farm Loan Act" Paragraph 5

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.