The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-08-31
NATIONAL RURAL
BANKING SYSTEM
The New Law Proposed by Con-
gresham Fletcher in Bill
Before Congress.
PLAIN STATEMENT OF BILL
Comprehensive Plan to Enable
Farmers to Use Their Credit
as Merchants.
PLAIN STATEMENT OF BILL
Especial to Tho Times Dispatch

Especial to Tho Times Oispatchl
washington, August 30.-Next to
tarin revision there Is question be-
fore the American people now that is
attracting az much attention day I'm and
day out ao that OF currency reform.
IN fact, tariff revision and currency re-
form go hand in hand together. or
equal Importance IS the question of
rural banking in the South on the
latter subject, Senator ID. L. Fletcher,
OF Florida, who Is chairman OF the Fed
eral Rural Credits Commission, and
who has just Introduced n bill provid-
Ing national rural banking system"
was asked for a statement OF the bill
This he made. ana 1t Is 10 clear and
comprehensive that any onc, although
he may know little OF the intricacies
and technicaiities OF banking. may UNI
derstand 1t.
In discussing tho hill which Is now
pending before Congress. Senator
Fletcher said.
The bill to provide for the cstab-
lishment. operation, management and
control OF national rural banking
system In the United States. and TOR
other purposes. formulates a plan for
q complete system OF rural banks for
the United States TO be organized under
d Federal charter specially designated
10 meet the financial requirements of
the farmer, which, in the order of their
Importance may be stated to be:
First The need OF capital for tho
permanent Improvement and equipment
OF his farm. This capital must be per-
manently Invested or else borrowed on
SO that It can be repaid in small nm
nual installments. The need Of credit
Arrangements whereby he can acquire
lands and a home.
Second. The need OF banking faciN-
ties TO enable him annually to secure
temporary banking accommodations so
as to provide the money for supplies.
for filling the soil, planting. Guilt
waiting. harvesting and marketing the
crop.
Third The need OF business
methods In the farmers opera
tons. The farmer must be able TO Cur
nish TO his banker statements showing
the condition Of his business
Three Clnssrs of Hanks.
For the purpose Of providing the
means OF supplying these needs. the
bill authorizes the establishment OF
three separate classes OF institutions.
which are follows:
"li The local national rural bank
with a minimum capital Of $4,000. CON
fined in it's operations 10 small dis
trict, and owned and operated by local
farmers. The capital stock, which is
nontaxablc, is divided into shares Of
the par value OF $40 each and is sold
at the price OF s25 per share Possible
control Of the bank by any individual
is prevented. The character OF bust
ness is limited. so that tho banks opc
rations viii conflict as little as possible
with commercial banking.
While the operations OF tho local
banks arc confined to the small political
subdivision OF the state. no limitation
il placed on the number OF banks in
that subdivision. The net earnings are
used to pay a dividend OF per cent on
the amount OF the Investment and then
10 create a surplus. The stockholders
have a double liability until this earn
ed surplus is equal in amount 70 the
capital and paid-in surplus. Thereaf
ter half OF the neg earnings, over
and above the dividend. Is used TO
create an additional surplus. tho bal
ance being refunded 10 borrowers. SO
az TO reduce their interest rate. When
tho earned surplus il double the amount
originally invested, the stock is bought
in by tho bank at what il originally
cost The bank then becomes n mu-
tual bank without capital stock. lend
Ing It's money so as simply TO pay its
current expenses and maintain Its eX
listing surplus, thereby still further re-
ducing the rate of interest on loans.
In case OF dissolution. the surplus of
the bank. after the stockholders have
received back the money invested is to
be used for building maintaining
good roads in the political subdivision
where the bank is located. under the
direction OF the Department of Agri-
culture.
"(2) The State national rural banks
OF these. there Will be one for each
State. The stock Of the State bank is
owned and its operations are controlled
entirely by tho local banks in that
State. The State bank acts as n clear
ing-house and rs reserve agent for
the local banks of the State. Its net
earnings are used to create surplus
and to pay dividends TO the local banks
as its stockholders. All OF it's profits
ultimately go to the local banks.
"(3) The national rural bank OF the
United States.-This bank is to be To-
Gated at Washington. It's stock is own
ed entirely by the local national rural
banks and by tho State national rural
banks 1t will be controlled by nine
directors--fve being selected by the
banks to serve for eight years. and
four being selected by the President
of the United States. subject to the con-
hrmation Of the Senate, to serve during
good behavior or for life. From the
five selected by the banks. these same
banks will nominate two. and from
the four selected by tho President these
same banks Will nominate one. These
three nominees of the banks will be
submitted to the President. who. from