Saturday news. (Watertown, S.D.) 19??-19??, 1915-06-24
The Broader View.

" #.-HrH
The advocates of rural credit
should take the broader view; accept
the principles of the present law, and
insist on its extension SO as to pro-
Vide for equal opportunity for all,
the laborer, mechanic, professional
and business men and women as we'll
as the farmer. Encourage every citi-
zen to become a producer and home
owner by giving each a chance.
A nation of prosperous home own
ers should be our goal.
All those who are directly or in
directly interested in agricultural
development and production, as we'll
as those Interested in the price Of
farm products and home ownership,
should demand and insist on a sepa-,
ate investment system for long time
loans which could be administered
at a mere fraction of the expense Of
the commercial system.
The two systems are not antagonis-
tic or competitive, and nave devel-
oped side by side in Europe to their
mutual advantage.
A Federal Investment Bank.
The solution for rural credits is
the organization of a federal invest.
ment bank to do for investments lust
what the federal reserve bank is sup-
posed to do for commerce. There
need be no expensive commissions.
II we make use of our present units
OF government we can have the maxi
mum of security at the minimum of
expense.
First: A federal investment bank
authorized to issue federal notes for
purposes of production and develop
ment.
Second: Use the several state
governments as the second unit.
Third: Organize a state develop
ment bank, or make use of some -
partment already established, such as
our. South Dakota commissioner Of
school and public lands, which has
successfully loaned our school land
funds on farm lands ever since state
hood.
Fourth: The county commission.
ers who now handle our school funds
for the state department, or a sim
liar county board for other states.
Fifth: The individual applicant
for a loan.
With each Of these units except
No. 4 the work will be largely cler,
lcal, and as the loans will be long
time loans the clerical cost will be
comparatively small; indeed, less
than in any other country where the
clerical work in not done voluntarily.
AS to Security.
Now as to security, we will re-
verse.
First: The applicant. AS the
county would have to endorse the
note the applicant would have to sat
isfy the county authority as to his
personal character, and the so-called
moral risk. The value of the prop
erty would usually be known to some
member of the board; if not the cost
of Investigation Would be nom11nar.
Second: The county board. The
clerical work could be done by one
of the present county officials in the
court house. The security being sat
isfactory, the county would endorse
the note, thus making it as good as
a county bond. For this the county
should receive one-half of one per
cent of the annual interest. Ali over
the actual expense involved should
be placed in a reserve fund to pro-
tect the county against any possible
loss.
Third: The county would then
forward to the state investment bank
or department whose duty it would
be to pass upon the application, and
if approved pass on to the state. For
this they should also be allowed mi
half of one per cent. All over the
actual expense also to go into a re-
serve fund for protection.
49, To-, ~ Il /. SEf5 rNtn ~ az ~ 80 o,,+E -; ~ sf
satisfied would then endorse and
as the asset on which to loan the
bank notes. For this the state should
also receive one-half of one per cent
and likewise place all over the ex-
:, pense incurred in a reserve fund for
The security then would be better
than a state bond.
Fifth: The federal investment
| bank should receive one-half Of one
per cent and all over the expense be
e set apart as a reserve fund for pro-
ntection. This would make a total of
per cent. a conservative estimate
of the expense with the experience
of Europe and Australia as a guide
! would be not more than one per cent.
The reserve funds would not be pri-
nyate profit but would belong to the
npublic.
Il Nothing New.
" There Is nothing new in this meth
,yod as to Nos. 1, 2, 10 and Al. They are
d now and have been for many years
yin successful operation in this and
ether countries. No. 5 is a duplicate
g Of our federal reserve bank law,
lawhich our financial experts claim to
n-he the most perfect financial law
;t-eyer enacted, with the exception that
provide for one1half OF one per
ereent interest to the federal treasury
bias protective reserve fund, and the
d.federal reserve banks pay no inter
aest
III Where would the federal govern,
ldment get the money! Just where
got the federal reserve bank
aenotes. I am not asking for money;
federal investment bank notes,
and ! am in favor OF eliminating any