In the early 1900s, commercial lenders considered agriculture to be a large risk.
Interest rates were high, and long-term financing for farmers and ranchers was
scarce. After congressional and presidential studies, Congress passed the
Federal Farm Loan Act in 1916. The act established the nationwide Farm Credit
System — a network of rural lending co-ops — to be a reliable source of funding
for farmers, ranchers and aquatic producers. This system was based largely on
Germany’s Landschafts, a cooperative agricultural credit system that had
operated successfully since 1769.

The legislation set up 12 district banks across the country to provide funds to
local mortgage lending cooperatives that would be owned by farmers and
ranchers. One of these banks, the Federal Land Bank of Houston, was
designated to serve the Tenth Farm Credit District (now known as the Texas
Farm Credit District) and later would become the Farm Credit Bank of Texas.