The Washington herald., 1912-10-12
CREDIT SYSTEM
FOR FARMERS
URGED By TAFT
PIssldolt llrltvs euysIlsrs 10
cen0 ngru to Dis
cuss PIan.
GERMAN WAY THE MODEL
Sessions Planned for December.
Chief Exsestlvs Acts Is Result
Of Reports from Diplomats.

For the purpose Of discussing proposed
uniform legislation by the various
States, looking to the establishment IN
this couptry Of an agricultural credit
tsystem for the American farmer. Presi-
ldent Taft has invited the Governors of
all the States to meet with him At the
white House next December. The an
nral Congress of Governors is to meet In
lDecember, and the State executives are
invited to come to Washington after
their deliberations as a congress are
lcompleted.
President Taft's invitation to the Gov
efnors comes as the result OF investi-
CATIONS made, at his direction. by diplo-
matte omcers Of the government abroad.
into the farmers credit system adopted
liz European countries. The President
is convinced. from reports already re-
Iceived. that similar institutions might
well be founded In the United States for
the purpose Of financing the farmer. In
a letter written yesterday to the Gov
ernor Of each State. the President de-
clares that the adoption Of such a system
Iof agricultural credits as he proposes to
submit to the Governors and Congress in
december will mean, besides cheaper
loans for farmers, greater productivity.
at less cost, from the farms now under
cultivation. and the development OF new
farm lands.
Pattern After German System.
In his letter to the Governors the Pres
ident says, in part:
"A study OF the recommendations OF
Ambassador Herrick. which am send
ing You. convinces me of the adaptability
to American conditions of the Raiffeisen
h
and conduct Of such banks are matters
for State control I suggest also the es-
tablishment Of land mortgage banks un-
der State charters and the formation Of
| cooperative mortgage-bond societies
| along the lines OF the Landschaften So
cieties Of Germany. provided that uni
| form State legislation can be secured to
As a later step ! favor the enactment
of laws by Congress permitting the Or
ganization Of national land-mortgage
banks, to be operated under strict gov.
| ernment supervision. with the power to
| guarantee and market the guaranteed de-
benture bonds of the State land-mortgage
| banks or cooperative societies. rec
ommend for your consideration the report
and Recommendation OF Ambassador Her
rick. now published by the Department
| of State for general distribution.
| The 100000 farmers in the United
States add each year to the national
wealth s., 400 0Oo.0o0 They are doing this
on a borrowed capital Of s.. 400, ,0oo. 900. On
this sum they pay annual interest charges
Of $S10. 900. .oo0 Counting commissions and
renewal charges, the interest rate paid
by the farmer Of this country is aver
| aged at S1 per cent, as compared to a
rate Of ~ to 81 per cent paid by the
farmer of France or Germany.
Interest Rates High.
| Again, the interest rate paid by the
American farmer is considerably higher
than that paid by our industrial corpo-
rations. railroads. or municipalities Yet.
think, 1t will be admitted that the Sc
cufity offered by the farmer in his farm
lands is quite as sound as that offered
| by industrial corporations Obviously
the advantage enjoyed by the Industrial
corporations lies in the financial ma
chinery at its command, which permits
II to place its offer before the investor
| in a more attractive and more readily
negotiable form. The farmer lacks this
machinery, and, lacking II, suffers un-
reasonably
| THE proposal which make is not to
subsidize the American farmer. Fbrtu-
| nately for this country he does not need
II. nor would he accept 1t. What this
plan offers Is q means to secure to this
country greater productivity, at less cost,
from the farms that are now under cul-
tivation, and. above all, to give us more
farms and more farmers. 1t will make
IL more profitable for the farmer to
return to the cultivation of the aban-
doned farms of the East and to open
up the vast areas of untitled land IL the
West
Under State Control.
The entire field Of agricultural CO.
operative credit is properly divisible in
to two parts: First. the cooperative
credit societies Of farmers, formed for the
purpose OF obtaining personal credit;
and, second. the societies or private cor
porations formed to create a sound Sc
curity in land mortgages for the purpose
of gaining q national or international
market for bonds based upon farm land
mortgages.
1T is not my purpose here to lay
down any one plan as necessarily the
one most suitable for adoption in the
United States. The most essential point
| to bear in mind 10 the need for the as
sumption by the Federal and State
governments Of the responsibility for
economically and honestly conducted in
stitutions. Such assumption is the es-
sential precedent for obtaining the con-
fidence OF the American as well as the
EurOpean investing public"