St. Johnsbury Caledonian. [volume] (St. Johnsbury, Vt.) 1867-1919, 1916-09-13


believed the Rural Credits act would
be of little value to the farmers Of
the East, and that it might lead to
wildcat investments in the far West
or South. That there are other OBJ
tections to the bill is shown by the
following statement by William r.
Wilcox, chairman of the republican
national committee. He said:
The Rural Credits Farm Mortgage
law (known as the Hollis law), has
been exploited so preposterously as
TO raise the most inflated expecta-
tons. AS 1t contains dual system
two conflicting systems bound to
fight each other-it is certain to
prove abortive.
There is the one system based on
cooperation of farm borrowers which
involves a government subsidy in the
purchase of all the stock. 100000
and a deposit of $4,000, 900 of govern
ment funds. Then there is a very in
tricate system of organizing farm
borrowers in mutual liability for each
others loans, and an immense army
of appraisers, attorneys, and other
employees. not to omit four commits
sioners at $4,000 annually apiece.
The 2 federal land banks under this
part of the system are to market
bonds based on farm mortgages. The
rate of interest at which investors will
accept the bonds controls the rate of
interest which cooperative farmers
must pay on their mortgages. Com
mon business sense then would induce
the promoters of such a system to so
~ -
sale at the lowest possible interest.
But, through some unexplained influ-
ence, the law also establishes a rival
system of joint stock capitalistic
profit taking banks to compete with
the cooperative system, both in TAX
ing the cream of farm mortgages and
in offering their bonds to investors.
This competition in the sale of bonds
will raise the rate of interest on the
bonds one per cent, according to nc
less an authority than w. A. Flanni-
gan, the Democratic secretary of the
federal farm loan board. That one
per cent increased burden put upon
the $4,000, 100000 farm mortgages of
the country takes 100000 a year
out of the net profits of struggling
farmers and passes it over to the cap
italists. This is good, Democratic ex-
highly Wanted measure of the Demo-
cratic program to aid the farmers.
The joint stock land banks them
selves, while fighting the cooperative
land banks, are not likely to have
easy sailing so far as private invest
ors go. They get no subsidy from the
government and as their gross profits
are limited by law to one per cent
spread between the interest they pay
on their bonds and the maximum in
terest with no commission) on their
farm mortgages, their stock does not
appeal to experienced financial in
vestors. However, this is only a slight
Inconvenience, for promoters are al
ready organizing an army of stock
statesmen to sell shares to farmers at
5000 each (par value 5000. Farmers
have heard so much of the promised
blessings Of the new rural credits sys-
tenn that they are counted on as easy
marks for the sale of the stock at
double it's par value. The exploiters
boast that they will reap $50 per
share as their own profit, and will ex-
plain to the farmers that the excess
over par will go to the surplus after
paying the slight cost of organizing"
This is not an imaginary story; i'll
is the statement of certain promoters
who actually offered the presidency
Of a 100000 bank to Secretary
Flanagan, of the federal farm loan
board, and explained that the capital
was all to be raised from the farmers
on this plan; also, that other banks
were to be established in the same
way all over the country. with cash
to be extracted from farmers. This
is the browning exploit of the Demo-
cratic administration in farming the
farmer for political purposes.