Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1913-10-10
EASIER CREDIT FOR THE FARMER.

EASIER CREDIT FOR THE FARMER.
Criticism OF the currency bill under
discussion in the senate committee
because OF its alleged failure to pro-
vide easier credit for farmers, is made
in ignorance of the facts. While the
bill does not go as far in the direction
Of solving the problem of rural credits
as some would have it go, the reason
is not Discrimination on the part Of
the administration to approach this
problem, but 10 approach it in the cur
rency bill. The administration plans,
as one reform to be undertaken at a
regular session Of congress, the mat
ter of rural credits, in the study of
which a commission is now engaged
and soon will report. President Viii
son and the democratic majority be-
lieve in doing one thing at a time,
and doing that well.
Precisely as the needs of business
commercial. industrial and fiscal will
be served by the new bill, so will the
needs OF agriculture be met. Section
IA of the measure provides for the
rediscounting Of paper possessing a
maturity OF not more than 80 days
In one case and in another case paper
possessing a maturity of not more
than 120 days. In the same section
provision is made for the making of
acceptances by national banks (or
such other banks as become stock
holders in federal reserve banks) and
the rediscounting of these acceptances
by federal reserve banks.
The criticism of the measure is that
the farmer doesn't borrow on 90-day
or l20day paper, that his loans have
longer duration, and that consequent
ly the banker is not positioned to loan
\ TO him under the bill since the banker
can rediscount no paper possessing a
maturity of more than 120 days, with
! federal reserve banks. In his address
to the house presenting the major
ity report on the currency bill, Chair
man Glass took cognizance of this crit
icism, saying:
There has been a great deal
of Misrepresentation In many quar-
tiers with reference to the meaning
of the 90-day provision in this par
agraph. The claim has constant
ly been made that this -90-day pro-
vision would be of no service
whatever to the farmer, because
the farmer never bothers with so
short a loan as 80 days. This, of
course, is an entire misapprehen-
sion Of the whole situation. The
} terms Of the bill do not provide
that it shall not be discounted un-
I'll it is within 80 days Of matur-
ity. In other words, the bill en-
ables the banker who holds the
farmers paper to shorten the life
OF the farmers paper by 80 days
and to that extent get new funds
with which to aid the farmer. Now,
just what does this mean? Sup
pose that the loans Of a farming
community made by national
banks will average 80 days, with
a renewal for 80 days, or six
/. months in all. II is evident that
a bank which has loaned, let US
say $4,000. for four months
would be able TO present this
paper a. the end of the first 80
D days Of the life Of the loan and to
!. get rediscount for the remain.
ing 30 days. That is to say, It
would be able to draw back the
amount of the farmers credit at
g the end of the first 80 days and
d TO relend that sum to other people.
}. When the time same for renewal
, the bank would, of course, have to
be in position to pay its loan or
3 rediscount 10 the federal reserve
IT bank If II extended the farmers
Il accommodation for another 90
:, days out Of new funds that have
come In meanwhile: but It could
again rediscount at the end of
IS another 30-day period. In other
"a words, II the community were do
ing its banking upon a four
months period Of credit, the bank
would be able TO shorten this
a In practice to 30 day period of
- credit. It. is entirely conceivable
- that by this process it should prac.
teally treble the amount OF bank.
Ing capital which II could, If neces-
= sary. pace at the disposal Of the
community.
Now, let US suppose that the
country bank. as is no doubt fire.
quently the case, does not have a
steady run of loans such as would
4o Justify the use Of the method lust
DC described. Let us suppose instead
VI or that that the demand for loans
Is likely to be punched" in the
late spring and then to slacken
~ so that the funds OF the banks
are tied up on, let us say. sir
at months paper. Under the 12O-day
Is provision Of this bill such banks
to- would be able TO take six months
IN paper as soon as IL was tvso
months old to a federal reserve
at bank and rediscount il. In other
ed words, funds that would ordinar,
ng lily have been tied up for four
Oh months longer will now be actual.
sh ~ available to meet such addition.
10 a. demands as may come 70 the
in oank IN the course of the summer
and early autumn. Here. again
he II 10 evident that the loan period
ire being practically cut down by two
he thirds the loaning power Of tbs