The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1914-02-01
MANN APPROVES
RURAL CREDITS
Final Message of Outgoing Gov
crnor Deals With Impor-
tant Subject.

" tue beherai Assembly, laid before
| the two houses yesterday. deals with
The subjects OF rural credits and the
establishment OF rural credit banks.
The Governor favors the establishment
OF rural credit departments to existing
hanks as the most economical plan of
dealing with the situation without dis
turbing existing and useful agencies.
Text of Messnge.
The message follows in full:
January 81. 1914.
To the General Assembly OF Virginia:
The establishment cf rural credit
banks or rural credit departments to
existing banks Is most important
matter for your consideration, and is
| one which is now receiving attention
from the President and Congress OF
tho United States. 1t is. OF course.
| Impossible at this time to predict lust
what form national legislation may
take Banks for the accommodation
| of farmers may be established indie
pcndently Of State action. or n system
may be adopted which will require leg
isiation by the states, ana as the next
General Assembly viii not convene
( until January, 1916. action at this ses-
| sion may he important
Whatever may be the action taken
| oy Congress. plan is needed by which
farmers can borrow money for agricul-
tural development on notes and bonds
| secured by deeds OF trust on unen-
| numbered real estate, the market value
! of which is 40 per cent greater than
| the amount Of the notes or bonds. The
plan adopted should be simple and
| inexpensive. and must not add high
! fixed charges to the interest charged
There should be Limitations on the
uses made OF the money borrowed that
would confine ii strictly TO agricultural
development. but some discretion
| should be allowed TO meet special AID
! extraordinary cases
Long Term I,onns
! II is deemed of special Importance
| that there should be provision made
| for long term loans, to be evidenced
| by bonds, with interest coupons at
tached. the coupons to be payable every
six months. Provision should also be
made for sinking fund TO be added to
! the interest and expressed on the cou-
/ pons attached to the bonds. The
amounts so added and payable every
/ six months to be sufficient To liqui-
date the bond at maturity. or the loan
could be divided UP into annual and
semi-annual instalments. and so ar
| ranged that reduction OF interest
| would follow each instalment.
| In devisng system for rural credit
/ banks, it must not be forgotten that
! the banks already existing cspeci-
ally in the country districts, will still
/ be necessary to the farmer lie mus:
| have market. and to secure this there
!
| enterprises which depend for their sue
cess. if not for their existence. upon
! the local banks. It will not do. there
/ Tore, to cripple these institutions. But
| 1t must be evident that if rural
credit bank. which gets its funds at
/ low rate of interest. is brought in
competition with n bank which has no
such advantage, that the latter must
go down. 1t seems TO me- therefore,
| after due consideration that where
! local banks exist and are necessary TO
| the prosperity OF the communities in
| which they are located. IL would be
! wise TO permit them TO have rural
credit departments TO conform in all
respects to the rules for the govern
! ment OF rural credit banks
Little Expense Involved.
I The fixed charges OF the banks u
/ which the departments would be at
| fached being already provided for.
! there would be very little expense nee
essary for the maintenance OF rural
credit departments and then as the
banks would be required TO indorse or
guarantee the notes or bonds Of the
farmers. the commercial ana industrial
/ HE OF the community would be linked
UP with the agricultural interest and
oil work together for common advance
! ment and profit The banks having
rural departments could not expect
much direct benefit from their mainte-
nance. but would share in the pros
perity with these departments created.
The principal difficulty in the way of
rural credit banks or rural credit de-
| partments 10 existing banks is how
| TO secure the necessary money at a
| low rate OF interest
| In some States where large sums OF
money are idle and seeking invest
! ncnt the exemption of the class OF
IN 70
and local taxation would solve the
| problem, but in Virginia where bust
ness is active and money in demand.
we might be disappointed If this source
| Of supply should be relied on. 1t may
| be- however. that Congress will per-
| init rural credit banks TO obtain money
! on the notes and bonds of farmers Sc
| cured by real estate valued at 40 per
| cent more than the paper secured in
/ dorscd by the banks through which or
| through whose rural credit departments
| they are 10 reach the farmers. thus
| permitting the 80 per cent in land TO
| take the place OF the so per cent of
| gold reserve required OF other insti-
/ tntlons. As real estate is steadily in
crensing in value in every state in the
| Union, 1t seems to me that the Sc
curity offered would be fully ms good.
| II not better, than that required OF
| other banks.
| The Recommenda ton.
! Wlth thiS introduction, ! recommend
| mat the State Corporation Commits
sion be clothed with power to charter
rural credit banks or rural credit de-
partments to existing banks, and that
! II have power and discretion to give 10
| these banks or departments such pow
ers and put upon them such
: limitation as will enable them either
| To act as State institutions or TO come
under the provisions of any act OF
| Congress which may be passed before
| the next meeting OF the General AS
sembly.
| II will. of course. be noticed that I
favor the establishment OF rural credit
! departments to existing banks as the
most economical plan OF dealing with
| the situation without disturbing exist
| ing and useful business agencies. and
as most likely to harmonize and CO.
! ordinate the commercial. industrial and
I agricultural interests OF our people.