The Sunday telegram. [volume] (Clarksburg, W. Va.) 1914-1927, 1916-09-03
CREDITS
NOT VERY GOOD

iners. and other expenses without lin
il incurred by the farm loan board.
all must be paid by the national treas
my out Of any funds not otherwise
appropriated. !"
II is expected the bonds will bear
1 u per cent and the mortgages y
per cent interest, but the rate will
vary In the different districts, accord
ing to conditions,
II farmers fail 10 organize into 10
cal credit unions within one year
the federal land bank may appoint a
local commercial bank as agent to
perform all the functions OF the cred
IL union. But that means that tho
commercial bank must apprnise the
farm recommend and endorse the
loan. mako the annual collections or
roreclose the mortgage all for al
split of one per cent margin between
the interest rate on the mortgages
and bonds. Not many banks will
handle such business and assume
such liabilities for onc-half per cont
commission. when they can provide
their own funds and make their own
terms. Unless farmers form their
cooperative credit unions and Dor
row through them there will be no
mortgages in the federal land banks
and no bonds; aud $9,O00,O00 OF
government Investment in the stock
and 100000 deposits viii be idle
in the vaults, though tho expenses OF
the farm loan board and Its hundreds
OF experts will 80 on just the same.
The inertia OF farmers. their inepti-
tude for ready cooperation in Ameri-
ca IS familiar to everybody who is In
touch with agricultural conditions. 1t
will require time and education TO
persuade farmers to get together"
and endorse each other in their credit
unions
II the law stopped with the coop
crativc plan II might eventually be-
come of benefit for its cooperative
feature is good. requiring only cduca-
ton and time TO establish the system.
Provides Method 10 EIndc.
But Mr.. Collins points out that the
other features of the law provide
method for evadinE the cooperative
joint liability: for eyading self-hclp
through the cooperative stock invest
ment; for evading the provision
which makes 1t compulsory for the
farmer who borrows Mt all to give Q
five to forty year first mortgage; in
fact for evading all tho restrictions
OF the cooperative plan The law IT.
/ self provides and plans for all these
eyasions of its cooperative conditions
/ by establishing an independent rival
system OF capitalistic joint-stoclt
banks, without the restrictions which
/ are put on the cooperative plan.
4 These ioint-stock banks will have no
connection with the twelve district
I federal land banks and will sell their
l own bonds in competition with tho
bonds of the federal land banks.
there. thereby increasing the interest
rate on bonds and dividing the loan
field as to farm mortgages.
The joint-stock banks are amply
safe-guarded TO protect their stock
holders (although the limit OF ono
per cent gross profit does not assure
great dividends), but not at all to
protect the financially weak farmer
who comes to them for loan.
The joint-stock banks will not con
| fine their loans to farmers; they will
lend to anybody for any purpose, pro-
vided the security Is acceptable, hence
they are not distInctively farm banks.
They will do PRACTICAL what CONNER
cial banks do, except that they will
make real estate mortgage loans and
will not receive deposits. Their in
terest rate will be six per cent maxi
mum, or one per cent above the rate
on their bonds, and they will not be
limited to five-year minimum terms,
as are the cooperative credit unions
and federal land banks, with which
they will be formidable competitors.
Many ioint-stock land banks will
be in full operation within the next