Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1915-10-12
|McLAURIN ON RURAL CREDITS
How Land May Be Financed As Read
lily As Cotton.
IMPORTANT SUBJECT FULLY EXPLAINED

L. Mclaur1n, In reply TO d letter iroiii
MI. W. H. Glenn, of Anderson, a MEM
Der Of the board Of penitentiary direct.
ors, has great value:
October 6, 1915.
The Hon. w. H. Glenn, Anderson, S.
C.-Dear Sir: Your favor OF recent
date to hand. =
/ thank you. for commentator OF
my work in establishing a warehouse
system and forcing cheap money for
the small farmer"
You suggest my taking up the ques-
ton Of rural credits. I am in favor OF
a cooperative rural credit system In
| the United States, and there Is a SEN
! timent developing for 1t which ere long
| will sweep out Of office those members
| of congress who oppose it, and cast in
to the junk-heap those VIC lack the
ability to give it expression through
| Federal law. Creating useless judicial
/ districts for the replenishment Of the
| pie counter, postoffice pap and distri-
| buting free garden seed will not
| answer. The people want and are go
| ing to have real financial relief, some
| thing that is solid, substantial and ef-
fective.
The state warehouse bill does not
| meet, in this respect, the situation, as
1t only applies to products and is
purely a commercial proposition.
When great corporations desire to
| make improvements they sell bonds
| based upon the physical value of their
| property and its future earning p
| city. The proceeds Of the sale Of the
| bonds are used in developing the earn
| ing power of the plant. The bonds are
| retired through a sinking fund, which
| after payment Of interest Is made up
from the increased dividends. When
a railroad puts in a double track and
buys rolling stock, it Is by a sale OF
| acknowledgements could be made
in no other way.
Land Is the basis Of all wealth: and
yet if the owner of land wants to Dor
| row none he can only get it on short
time at a high rate Of interest. 1t Is
the same If he desires to purchase
land. No people can be great who are
not home wners. No man can buy
land at present prices and pay for IT
at eight per cent discount. When 1
was in the state senate I introduced q
bill making six per e fiat the legal
rate in this state. I urged its passage,
but it was bitterly opposed on the
ground that money could not be la
in this state at six per cent. The
| idea was hooted at. We have given a
| demonstration with the state ware
house system Of what can be accom-
| plished by concentrated effort. The
banks loaning at six per cent are get
ting 1t at three per cent, a profit of one
hundred per cent, for being merely a
| channel Of distribution. The next ses-
| sion of the legislature will not dare
| to refuse to pass a six per cent bill,
| and If they do not every man who
| votes against it should be marked,
| never again to be trusted in public
Office.
1 make the assertion that, under a
proper system Of rural credits, the
state of South Carolina with no ex-
| pense to herself, can do for land
loans just what has been done for
| cotton, to wit: establish it's value as a
| collateral, and enable the owner to
borrow money at not yer three per
cent, with the financial conditions as
| at present. Germany n rance have,
through their system OF cooperative
credits, been furnishing money at this
rate for many years to their producers.
| OF all the nations in the great war,
| these two are accomplishing more be-
| cause the people nave governments
| England has no chance, and in Russia
he Is no better than a dog. About
one hundred years age Germany and
France, with a SOIL, were
confronted with an enormous and
constantly increasing population. They
met the situation, not with our bar
| barous lien law and land mortgage
| plan, but with a system Of co-opera-
| tive credits. Under the German land
schaftan or the credit foncier Of
! France, such a thing as personal
mortgages are unknown. 1t Is a land
| credit. based Upon a debenture bond
and amortization through a sinking
fund. All of the big corporations in
the United States owe their ire
mendous power and wealth to the APP
| plication Of this principle.
The warehouse system will succeed;
no power can stop it. Selfish interests
may impede, but it Is here to stay, be-
| cause it transforms cotton into a fluid
| asset, it makes a negotiable instrument
| of an unwieldy bale Of cotton. You
can put thousands of bales Of cotton
in your pocket and pass 1t over a ban
counter. 1t is a fluid asset, passing
readily from hand to hand.
That is what we must do with the
land. 1t is what has been done In
| Germany and France. One of the
great obstacles I met in securing the
| passage Of the state warehouse bill
was, people said, "It is so complicated,
We can't understand it." Now when
I go to a New York bank it is so sim
| pie that many of them say, What a
wonder nobody ever thought Of 1t be-
fore"
So it is with rural credits; it only
needs someone to go at 1t practically.
| Amortization sounds big, but it is
merely a method Of paying off a loan
| by returning a little Of the capital each
year. These payments are called an
nuities, and are eagerly sought for in
/ pacfpn ant hv trl1cf QCfQtaS etc If lS
composed of the interest, the contri-
button to the sinking fund and the
cost y. running the cooperative as
ISOLATION. The periods for which
loans run are from twenty to seventy
five years. OF course, the longer the
| period the smaller the yearly cost, just
as the long term government or cor
porate bonds sell better than short
term. The calculation is made so that
at the end Of the loan period the sink
ing fund extinguishes the debt and
there is no principal to pay. This
| sounds like a miracle to a South Car
DINA land owner, but it is done every
day in Europe.
rate of interest in Germany and
France is never over 4 and oftener 3
per cent. Let me give a concrete IL
luStration:
A German farmer borrows ten thou
| sand dollars. He pays an annuity of
| seven hundred and fifty dollars, which
is a charge on the land like taxes.
This loan is for twenty years. The
| seven hundred and fifty dollars covers
4 per cent interest, and the charge to
the sinking fund. How does he stand
| when the twenty year period is t
He has paid out, interest, sinking fund
! and operating expenses, fifteen thou
| sand dollars. The debt is cancelled.
He does not owe one cent Of the ten
thousand dollars.
How would 1t be with a South Caro-
lima farmer?
He borrows ten thousand dollars.
Suppose he gets it straight at 8 per
cent. At the end Of twenty years he
would have paid sixteen thousand dol
lars, and would owe the original ten
| thousand dollars, making twenty-six
thousand dollars, as against the fifteen
thousand dollars the German farme
has paid. No wonder the Germans
fight for such a government as thai
| No wonder German commerce and in
dustrial development threaten the su-
premacy of nations who forget the
| only creators of real wealth. AS a
matter of fact, very few farmers w