The Ontario Argus. (Ontario, Or.) 1???-1947, 1916-03-30
BANKERs AND RURAL CREDIT.

Many of the banks are making the
same mistake in regard to rural cred
it as they made in regard to postal
savings banks. Fearing the entrance
of new competitors into the field with
Government backing, they are oppos-
ing rural credit bills and are raising
the old cry of the reactionary: Let
well enough alone" They are as
suming, as a basis of criticism facts
which do not exist-that Government
funds are to be permanently invested
i'm farm loans; that a special favor Is
TO be shown farmers; that there IL
no demand among farmers for the
new system; that present borrowing
facilities are ample at fair interest
and that It is proposed to use Gov
ernment funds IN establishing banks
to compete with and lnjure existing
banks.
The terms Of the Joint committee
bill now before Congress are such
that, II the farmers do not desire the
rural credit system, none will be es-
tabllshed. for Il can be established
only on their initiative The first
step TO be taken is organization by
farmers OF farm loan associations
within each OF the twelve districts TO
subscribe 500. 900 TO the capital OF
farm land bank. This sum will rep
resent applications for loans OF S2.-
900, 900. The Government is then TO
OFFER the remainder OF the minimum
capital-S500,0 ,000-to the general
public for ninety days. II any OF the
stock remains unsubscrlbed after that
period, Il IN TO be taken by the Gov
ornment and paid for out OF the Ma
tlonal Treasury
But this Government capital is not
20 remain permanently In the busi-
ness; Il Is only 10 help In getting the
loan system started and then TO be
withdrawn by degrees as the farmers
Increase their holdings. The bill re-
quires that each farmer who desires
20 borrow shall subscribe per cent
of the proposed loan TO the stock OF
his farm loan association and that
the latter subscribe an equal amount
of stock In the farm land bank Az
loans Increase. the banks capital will
Increase. always being 8 per cent OF
It's aggregate loans. After the mini
mum capital OF $500. 900 has been ex-
ceeded, as new stock Is subscribed by
farmers the Governments capital Is
TO be refunded and It's stock can
celled. This arrangement assures that
n the farmers generally enter into
the scheme. Government funds will
soon be withdrawn and the farmers
will control the entire system under
Federal supervision and control
Private capital Is not. however. TO
be denied an opportunity to engage
In the business aside from what stock
Il may subscribe TO the cooperative
banks. Joint stock banks may be or
ganized to operate within single
states and to lend not more than fif-
teen times their capital and surplus,
II they can make better terms with
the farmers and II the farmers should
prefer the freedom from publicity OF
scrutiny OF their affairs which these
banks win afford private investors
can successfully compete with the CO.
operative banks.
The rural credit system will not be
special favor to one class; II will
simply remove discrimination against
that class which has resulted from
the operation OF the National bank
ing system. In practice that system
has provided banking facilities for
every business except agriculture. BY
forbidding loans on real estate, II
has Disseminated against farmers,
II has gathered the savings of the
farmers into the cities to be lent
chiefly to merchants. manufacturers
and railroads. The conditions gov
erning agriculture require a special
credit system different in character
from that provided for other bust
ness, The short-term credit given to
merchants is no more adapted to the
farmers needs except for seasonal
purposes than is the iong-term amor
tization system TO the needs of the
merchants, Rural credits will not
be an excrescence on the banking sys-
tenn; they will simply fill gap
This system is justified on broad
grounds of public policy II is neces-
sary TO correct a social maladjust-
ment whereby the urban has grown
out OF all proportion TO the rural pop
ulation. One of the main causes of
that evil is the high cost of capital
10 the farmer and the short terms
for which private capital is lent.
There has resulted. II not deteriora-
tion of farms and in the type of men
who engage in farming, at least a