The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1916-08-24
COPELAND DOUBTS
BENEFITS TO CONE
FROM FARM BANKS
Local Physician Contends
Farmers Could Borrow
Money From
Banks


to be derived by the farmers of the
country from the operations of the
farm loan banks is taken in a letter
to The Age-Herald yesterday by DR..
Charles p. Copeland He takes a view
entirely at variance with the farm
leaders and publications of the coun-
try, and expresses opinions entirely
contrary to those so frequently and
freely voiced by the farmers and their
organizations throughout the country.
DR.. Copeland mentions certain de-
auctions or expenses attached to the
borrowing of money by the farmers
and declares when all these items are
considered the money really costs s
per cent. The same farmer, in the
opinion of Dr. Copeland, could prob
ably go to bank and get the money
for per cent He also states that
the bank would not deduct the inter-
est, an assumption which. according
to experience of those doing even the
highest class of commercial banking
is declared to be erroneous. Just why,
under the statement of fact even as
laid down by DIR. Copeland, this saw
ing of 2 per cent would not be an
advantage to the farmer is not made
plain in the letter.
One of the principal reasons why
the agricultural interests of the ma
ton have clamored so long and so
diligently for a rural credit system,
it will be recalled is the fact that in
reality farmers could not borrow money
for a year at per cent, but were
forced to pay in addition fees amount
ing to from 2 per cent to per cent
and sometin, es more in addition to all
the other expenses incident to the
transaction and the h1nd1inc of tho
mortgage. Furthermore. the farmers.
due to the peculiar nature of their
business, have cited reasons why they
needed money for five, ten and even
twenty years, which could not be Sc
cured at any rates of interest under
the present banking systems.
MORTGAGED FARMS
Another question concerning the
statement of DR.. Copeland with which
the advocates of the farm bank sys-
tenn have disagreed relates to loans
on mortgaged farms. While they have
admitted that loans can only be made
on farms that are unincumbered, they
have contended that money could be
secured at not over per cent from
the farm banks to pay off mortgages
which were bearing interest at from
10 per cent to Is per cent
The letter follows:
ITO the Editor of The Age-Herald:
I'm your columns this wednesday,
morning I read with much interest
your report of speech delivered yes
terday by Judge N. B. Feagin in which
speech he explained the workings OF
the lately enacted rural credits act
Your report of the speech by Judge
Feagin eulogizes the act far in excess
of it's virtues as 1 understand them
and if 1 am wrong I would appreciate
being set right.
"The bill makes several provisions
before money can be obtained which
I can best explain by taking a hypo-
thetical case. Farmer A wants to bor-
row $1,000 on his farm. This farm must
be clear of all encumbrance. as this
government mortgage must be first
mortgage, 1t must be worth consider
ably over $1,000. He applies for loan.
He must become stockholder to the
amount of 5 per centum of the desired
loan. In this case that is $50. This
amount must either be paid in cash
or deducted from the $1,000 Hence he
gets but $950.50. But does he get this
amount? I will come to that later.
Being a stakeholder, he shares in
the profits of the association of which
the aforesaid so bucks makes him a
member. This percentage on his $50
amount to what is clear profit of the
percentage charged him and others
in his association after all expenses
are paid.
INTEREST PER CENT
"Now, what part of the $3.50 does he
get? First, the law provides that the
borrower must pay for an abstract,
which would average $35sto be con-
sentative in striking an average. He
must also pay registration fee of
about $3.50. Then he must pay the fee
land. This incurs trip from the home
of the appraiser to the farm, with all
the railroad expenses, time and fees,
which would be exceedingly conserva-
tive If placed at $25. Thus we have
deducted from the $3.50 the amount OF
$6250, leaving $SS7.50. This being the
amount that the farmer would actu-
ally get, paying at the same time, 6
per cent on $1,000.
"If the same farmer went to the
bank at which he usually did business
he could probably get money at per
cent. The abstract which he already
has would be approved, his farm would
probably already be known and he
would get the money Immediately and
would get $1,000. I am taking as an eX-
ample one of the best farmers in a
community, for the fact that he has
unincumbered land bespeaks that con-
tingency and I fail to see where the
rural credits act is all that is claimed
for it for political reasons.
IT would appreciate space for this
letter and sufficient comment to put
me right, If wrong. Yours,
"DR. CHARLES P. COPELAND.