The Bemidji daily pioneer. [volume] (Bemidji, Minn.) 1904-1971, 1914-03-26
AID TO Be GIVEN
AMERICAN FARMER.
Rural Credits Bills Will be Reported
8, out of Joint Committees of House
and Senate and Put Upon Passage
MEANS CHAIN OF BANKS
Money Will Not be Loaned Except to
Progressive Borrowers-Small In
terest to be Charged

From Congressman G.. H. TaVenner
Washington, March 26-Within the
next few days the long-awaited rural
credits will be reported out from the
joint committees of the House and
Senate and put upon it's passage. The
bill will be the product of the best
thought of some of the best farm eco
nomists in the United States While
nothing definite about the bill is yet
known, it is rumored the two COM
mittees will reject the plan for the
government to issue bonds and loan
money directly to farmers. My in
formation today is that the keyword
of the new banking plan is to be CO.
operation.
The government will probably fOs
ter the creation of a chain of rural
banks. The farmers themselves can
become the owners and proprietors
Of these banks. To the banks those
farmers desiring loans to carry on
farming operations will bring their
mortgages. On these mortgages the
banks will lend money for longtime
periods. While it will be impossible
in advance to calculate the exact rate
Of interest to be charged, it is the
estimate of experts who have appear
ed before the committees that the
rate will be close to five per cent.
This rate is not revolutionary in
some of the eastern farming states
where there is plenty of money for
loaning and where the interest rates
are accordingly low. But it will prove
to be a great boom to farmers of the
west and south, where interest rates
frequently soar to 10 and IL per cent.
The average interested rate on farm
mortgages in this country is over
eight per cent.
The banks will use the mortgages
deposited them as securities on which
to base general issues of farm deben-,
ture bonds These bonds the farm
bank system, as a unit, will market
in the principal money centers of the
world. Backed as these bonds will
be by the best security in the world
the farm land which produces the
food which the people must have
they will prove to be gilt-edged Sc
curities, and ought to sell at par al
though carrying very low rate of
interest. No government bond will
offer better security to an investor.
The principal of repayment of
these loans by, the farmers will be
the so-called amortization plan, or
annual repayments of principal and
interest. Thus while the bank will
make available to agriculture great
reservoirs Of money at easy rates, it
will permit of the repayment Of this
money on such low terms that they
will not prove embarrassing to the
poorest borrowers. '
The bill will provide that the bank
will retain supervision over the man
ner in which the borrowers spend the
money they get. The borrower will
have to declare the purpose for which
he wants the money. The only pur-
pose for which the bank will lend
will be, for the uses Of agriculture. If
farmer is dissipating his loan in
any way the bank will shut down on
him. This plan aims to make the
farm loans dynamic instead of bur
dens with the borrowers. There i:
to be no paying for dead horses witt
these loans. The money must be ap
piled by the farmer to making mor'
money. If the system works as /
enthusiasts think it will it ough
ito prove to be the greatest stimula
tion American farming has ever had
1t will enable the tenant to becom
an owner; It will enable the poo
farmer to become Independent. I
means prosperity for American farm
ing.