The Richmond Virginian. (Richmond, Va.) 1910-1920, 1912-12-07
SEEK SOLUTION OF
RURAL CREDIT
PROBLEM
Five Governors Will Investi-
gate Systems in Vogue and
Present Uniform Bill to Le-
gislatures of the States

The first and only decisive action
taken by the house of governors since
It's Inception, and one of far-reach-
ing importance, was reached at the
concluding session yesterday, when
the conference decided to appoint a
committee of five of its number to IN
,estigate thoroughly the subject Of
rural credit banks and draw a bin
to be submitted to the legislatures of
the States providing for the estab-
lishment of a uniform system OF insti-
tutions to meet the needs of all the
people of the union engaged in the
pursuit Of agriculture.
The committee which Is TO under
take THIS important work will pro0a-
bly, be appointed after the govern 9rs
confer with President Taft today.
An Important Step.
The action of the conference came
aftc- the governors had heard the re-
port CT Ambassador Myron T. Herrick,
VIII, has made an exhaustive study
of tile rural credits system OF France,
and an able address on the same sub
ject from Governor O'Neal. OF Ala
bama. WHO has made. a study of ex-
listing conditions. and offered sugges-
tlens that harmonized with the plans
outlined by the ambassador. The re-
solution, which inaugurates acs1on
upon this all-important matter was
offered by Governor Mann. and with
sight smenc ment by Governor O'NeaI
was en-: Enthusiastically adopted. In the
action teker yesterday the executives
believe they have taken the iniatitory
step toward the solution of one of the
most perpiexing problems that now
confront the nation.
Ambassador Herrick's Address.
No digest of Ambassador Herrick's
address would give even a fair con-
eeption of its thorough treatment of
the subject which the ambassador, at
the direction of President Taft, has
been investigating for some time. Am
bassador Herrick's findings have been
passed upon by the president, and APP
proved and he appeared before the
conference of governors as the per-
sonai representative of the president.
Though his address was of some
length, there was not a supertlous
sentence. 1t showed the most pro-
found study of the subject that Is
now engrossing the nation. and the
executives listened attentiveiy
Mr.. Herrlck based his entire fabric
on the problem of the increased cost
OF living, which, he declared. TO be
the most serious this country was
facing and expressed the belief that
at the bottom OF the trouble was the
inadequate food supply, and that If
more acres were put under the pillow
and greater productivity obtained for
the acreage already titled, substan-
ttal progress would be made toward
the solution Of the problem.
Capital the Question.
But intensive cultivation, and an
enlargement of the improved area
would require enormous capital
VI - fa T.
the present financial system able TO
supply It?
Agriculture. according TO Charles
| Rayneri. the French expert. requires
two kinds OF capital-one for the real
estate, and the other for operations.
The first represents the buildings and
permanent Improvements along. with
the land. The second represents the
live stock. implements. machinery, the
seed, fertilizers and all that goes to
make production. Each can support
its own proper credit But 1t is all
important to carefully distinguish
real estate credit from agricultural
credit. The land must not be con-
fused with agriculture as an opera
ton.
Now In the United States the land
mortgage business Is not specialized
except in the cities, and never has an
effective attempt been made to adopt
the principle OF amortization. with
out which," said Mr. Roger. "a land
credit system remains an uncompleted
and fragile scaffold, endangering tn :
good name and the public welfare OF
any country trusting upon it," This
remarkable statement uttered IN
France IN 1S45-on a principle dis
covered In Sweden in 1854. brought
into general use in Germany in 1899.
and now made obligatory on long time
loans all over Europe-was proved a
bitter and terrible truth by the ruin
that was wrought by the failure OF
the 40 farm mortgage companies
which tried to finance the farmers In
the South and West score of years
ago on three and five-year loans. at
excessive interest rates, without care
fully contracting for what purposes
the money so advanced should be
used.
The National Bank Law.
The law forbids national banks to
extend real estate credits. and limits
the dealings which other banks ,.tay
have In 1t. The restrictions appear
highly reasonable when one considers
front,o"~d m Second PsxsD
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