The morning call., 1890-05-24
A FINANCE SCHEME.
Stanford Speaks Upon His Pet
Measure.
The Objects Of the Land Loan Bill EI-
planned 10 The Senate.
Calculated 10 SUDDly the Farmers With
Calculated TO Supply the Farmers With
Money at Low Rate Of Interest.
Limit Of Loans.
Special by the California Associated Press

Ou HIS 1dLu LOdu Din w dS bllO LCdtulO VI
to-day's Senate proceedings. This scheme,
which was at first regarded as somewhat
ehimerical, is now considered by many
Senators and Representatives as perfectly
feasible and practicable.
Representative Ewart to-day introduced
a similar bill in the House.
Stanford had the close attention of the
Senators, and the galleries showed great
interest. Following is his speech in full:
Mr.. Presidents: On the 10Th of March intro
duced resolution Intended o provide for addl-
tional money for the use OF the people and to
effect lhs end suggested that the Government
should issue its money direct to the owners OF
unlncumbeted agricultural property, lndepend-
ent Of improvements. find that although the reso-
luton has been widely commented on, il Is not
always clearly understood. As an aid TO its
understanding have presented bill providing
for loans by !he Government upon real estate.
Ii VIII be observed that the plan is very simple
There is little cOmpeXlty about II, aud the de-
pariment created TO accomplish It's purposes
Will be much less complicated than our Postoffice
Department Is to-day.
sTANFoRDs LOAN BILL.
Tie bill auihO rlZes loans not exceeding one
half the value OF The property mortgaged, but
probably loans VIII never reach more than one
third the va ne OF the security.
The principle OF the Government loaning
m oney upon property Is completely established
IN its present advance OF 80 per cent upon Gov
eminent bonds. The tremendous results of eu-
ergiZng this 80 pei cent In putting 1t into aeuv-
the energzlng OF the latent forces Of real estate
be bill confines IFS provisions for loans TO agrf-
cultural lands. but in time they viii probably be
extended TO other kinds Of property. ana even TO
municipalities with proper restrictions, but for
The present desire 10 be conservative and take
no chances therefore l want loans limited 10
agricultural lands.
will proceed now to consider the practical
question Of how 10 furnish a sufficiency of
money. The bill provides that the Government
shall loan on agricultural property, dependent
OF improvements, 90 per cent of the assessed
value, at rates OF Interest of per cent per an
num- The beSt security that can be offered is
agricultural land. Tie power OF tile Govern
ment TO create money is conceded, and its value
is the same, whether made of iron, conner sII-
YER gold Or pap-r. The important point, there
fore, is that it should be stamped by tile Govern
ment, whose credit is unImpeachable and which
has tue power OF making money.
CIRCULATION OF MONEY
The next important consideration is how can
The Government. without injury to Itself Mace
In circulation that which Is so much needed and
so absolutely essential to commercial and busi-
ness transact Ions of civilized lie. The Govern
neut can accomplish this by taking the agrl-
cultural lands Of The country as security uboD
the terms and conditions Indicated in The DILL
No pressure for redemption can be brought to
bear upon the Government, as only those who
are eutltled or in condition TO have their mort
cages redeemed can make a claim on the Gov
eTnment The paper will always be redeemed
by the Government surrendering the mortgage
upon the presentation Of the amount OF money
necessary for that purpose. The Government
loans its credit TO individuals In order that the
money
with WHICH TO prosecute their business.
The Dill provides that money thus issued by
the Government shall be legal tender payable
Tor all debts and Claims, public and private. eX-
cept Interest on na ational bonds and tile rademp-
tiOn OF national notes. There is no analogy
between this scheme for Government of CO.
100000 people, with Its OOundess resources,
issuing its money secured directly by at least So
for ) on the best possible security that could
be desired, and any other financial proposition
that has ever been suggested.
OTHER SYSTEMS.
II Is true there have been other loans Sc
cured by mortgages, as, for instance, that OF the
Safety Fund system OF New York; but IN that
case The money issued was that Of a bank In
small way money has been loaned CD real estate
before as provided In Pennsylvania in the time
OF William Penn. but never has great nation
such as the United States made It's own money
and put 1t IN circulation with a special security
OF real estate Of double The value OF the money
coined
], therefore, do not recognize any analogy be.
tween the plan embraced In tile bill under con-
sideration and any other that has been proposed
We eau all we'll understand the great advan-
tages TO the people al this time OF a loan made
by the governments OF 80 Der cent upon its own
securities. One hundted thousand dollars OF
Government bonds al per cent only produces
$4,000, YET when its value becomes tneigized to
The extent OF 80 per cent (Which the Govern.
ment adyances) lis power is so Increased that
100000 IN It's activity may in the course Of a
year double It's value aud pass from hand to
hand many times, stimulating the various indus
tries Of the country.
So, TOO. this bill Will have a corresponding
CUci slLllk eueCt. Lie money issued is In
tended IL accommodate the farmer alone, but as
II comes into circulation IL will put the means of
prosperity within the reach OF those engaged in
Ihe smaller and larger industries of the country
TIL the money issued by the Government be-
comes automatic. 1t will become useful aud ex-
pand when there Is greater demand Thus
disastrous financial c0ntractionS Will cease TO be
possible.
THE RATE OF INTEREST.
think there IS good reason for fixing the rate
OF Interest al per cent. With 2 per cent in
terest, no farmer will borrow money unless he
has use for 1t, and when lie ceases to have use
1or 1t lie viii return the money. That, however,
VIII seldom occur, because the very activities
that vii! be created by tile liberal supply of
money will make a demand for It, so that the
ment at per cent will be able TO loan TO various
active interests at higher rate OF interest
The extent to which the rate OF interest he pays
Is burden 10 the borrower is largely deter
mined by the nature OF the business ln which he
may be engaged. The farmer having but one
yearly product, finds the interest which he pays
burden upon that product which he cannot
Tecoup as does the merchant.
AN ILLUSTRATION
For instance farmer owning rarm worth
$4,000 boTows upon 1t $4,000 at 6 per cent
the product OF his property, for his Interest is
$500 per annum, aud the product of his farm
very likely viii not be above $1,000.
a merchant borrOws from a commercial bank
$4,000, perhaps with single lndorser, for sixty
days, aud pays 6 per cent for the use of the
money. He has, say, $4,000 worth of merchant
disc on hand, which lie turns over eyery TWO
months thus making $4,000 TO bear the Interest
OF per cent upon $1,000. Besides this the in
to the cost Of his merchandise or
product, and thus he Tecoups IiIe amount
he pays out and does not feel it. This plan of
loaning money upon land al per cent with lhe
privilege granted tie borrower OF returning it
when lie has no use for it, VIII create money
system that viii meet financial expansion and
contraction they may occur, without incon-
Venience 10 anybody under its provisions. The
real estate OF the country being so vast, there
VIII always be possibility Of obtaining money
necessary 10 carry on the enterprises OF the
country, and When there Is no further use for
money the borrower stops paying interest and
taxes up the mortgage upon hts farm.
RENEWING LOANS.
1 have given this subject a great deal OF
Thought Tor years past aud that thought has at
last matuTed into this bill. / have limited the
time OF loan TO twenty years, but, OF course II
al the end OF that time 1t is found that the value
oil the land has Increased loan can be renewed
Tor an amount In proportion to the increased
value oil property. / believe that II this bill is
adopted with such amendments as shall seem
wise 10 Congress, it will largely Increase tile
prosperity OF the hulnblest classes in their labor
aud Inc Weallhler TO success in their enterprises
1t Will place the means necessary for the enter
prise and employment OF Industry In the hands
OF all that are fitted for its management.
believe that its provisions Will make us In
dependent OF foreign mOney-lenders, and that
many million dollars now going abroad In the
way OF interest will be kept 1t is the duty OF
Statesmen TO furnish the means, II possible, TO
Ihc out the way by which the Creators design
I3f % lIe highest advance OF civilization is to be
ODl aimed. Want, discomfort and misery are moi
necessarily the heritage OF the industriou, and
pIuVldent man. Put the tools OF Industry In
GasI SapaDie nanus that know how 10 use them and
great results VIII follow. The bill provides for
what may perhaps not improperly be termed a
Ievoiution IN nnance, and | DO not expect that II
WIZ be adopted until IL has been fully Considered
by the people and met their approval. | move
mat The Dill be referred to the Committee on
Finance.
FOR THE RAILROAD