The Denison review. [volume] (Denison, Iowa) 1867-current, 1914-06-10
RURAL CREDITS
IN EUROPE
Administration Hopes to Get Similar
Measure Through During the
Present Session Of Congress
COMMISSION MAKES A REPORT
Farmers Temporary Requirements to
Finance Moving Of Crops, Called
Short Time Credits.

Finance Moving Of Crops, Called
Short Time Credits.
The commission appointed to study
the European National Rural Credits
systems, and recommend q system
best adapted to the United States has
riade its report.
According to the commissions find
ings, agricultural credit naturally di-
vides itself into two greater classes
namely; long time or land mortgage
cerdits, which is defined as credit to
meet the capital requirement of the
farmer" and short time or personal
credit, which is defined as 'credit to
meet the current or annual recurring
needs of the farmer"
In the European system of agricul-
tural banks the distinction between
these two classes of credits is sharply
drawn. In considering the question
of whether the conditions in our coun-
try demand segregation of insttu-
tons designed to meet these two
classes of credits, the commission at
tempted to define in the first place
the needs of the American farming
population in financial sense.
The farmers capital requirements
are described as his need for large
sums of money to be used in aiding
him to pay the purchase price OF the
farm, improvement OF the farm, such
as construction of buildings, drainage.
irrigation and clearing, or the equip
ment Of the farm SO as to bring his
operations to the highest state OF eff
ticiency.
The money needed for these pur
poses must be in shape of a more or
less permanent Investment, or in the
shape OF loans extending over such
long period of time that they can
be reduced gradually and paid Off
out of the Increased earnings derived
from the improvements.
The farmers temporary require
ments. by which is meant the money
needed by him to finance his orer
atoms during the time the crops are
being produced. may call for short
n1e"credtt ranging from ninety days
to one year.
In the opinion of the commission,
the report says, these two general
classes of credits must be largely Sc
gregated. although the two systems
will naturally touch at many points.
Further, in the judgement of the com
mission, the deveOpement of a land
mortgage system of banks is the most
important and the primary step to be
taken in order to improve our agricpl-
tural credit conditions.
In this country it is urgently neces-
sary, IL is declared, to create land
mortgage security which will be en-
tirely liquid, which will run for
long time, which can be paid off in
small annual or semi annual INSTALL
ments and which vii enable a man
owning farms to use most advantas
eously his best banking asset-land--
as the basis of credit.
At first some of the members of the
commission were stronly imbucd with
the idea that both mortgage credit
and personal credit should be dealt
with in any proposed legislation
But after the recent widespread pub
IlC uISCuSSlUll VI llle pipD!tiii5 AiNOI-
we'd In the pending federal reserve
act, and after more careful and
thorough investigation of the relation
of the state and national governments
to the two questions under consider
alton, the commission unanimously
decided that personal credit could be
and would be more suitably met by
state rather than federal action in
those respects in which the pending
federal reserve act failed to meet the
REQUIREMENTS of the farmer.
The provisions of the commercial
banking system which will be estab
benefit the farmer as we'll as the other
great industraln classes of the coun-
try. According. to the commissions
report, while it would seem that many
of the requirements Of the farmer
could not be provided for in a pure
system of commercial banking, yet
it was felt that with the proposed
changes in the commercial banking
system the needs of the farmer would
be met partly. while those not spccif-
ically covered are met through lcgis
latiOn.
Another great question which con.
fronted the commission was the Qucs-
ton as to whether they should re-
commend central bank. which alone
should issue land bank bonds based
ON mortgages, guaranteed by local in
situations and forwarded through the
central bank.
Recognizing TIT public sentiment
which seems to exist against q cen
trail institution, in any banking prop
osition," the report says. the com
mission became convinced that the
system it outlines possesses advan-
tages which a central bank would not
possess and will encourage free bank
ing to an extent that would not be
possible under a bill providing for a
central institution"
Under the provisions of the propos-
cd bill any ten people can organize a
separate and Independent bank with
Q minimum capital. with fixed ratio
between that capital and the value of
land bonds which they may issue, and
with an area of operations as wide
as the state in which they are organ