The sun., 1918-07-21
By AGNES c. LAUT.

hlo Is nol u SUI Bull Stoiy. IL ~
Il were it would not be what it is,
record of an achievement of as great
moment to farm industry as the Federal
Reserve Bank system has been to sound
finance; for the Federal Land Bank act
of 1916 did for the farmer what the
Federal Reserve Bank law did for the
banks and what the banks for forty years
have been doing for railroads and fac
tories and business in general-it pro-
vided an elastic system Of finance which
makes it unnecessary for the farmer to
consume his daily revenue on capital ac-
count and enables him to apply it to
operating expenses and to leave capital
account to take care of itself in a long
serm Of gradual and easy payments.
The railroad issued long term bonds to
raise capital. So did the factory. So did
the trust, and that left them free to use
current revenue for operating expenses
and expansion and profits. Only the
farmer attempted the impossible task of
paying capital costs out of revenue, still
attempting also to pay out of revenue
overhead, expansion, profits.
The Western farmer could do it, for
he got his land for nothing, and every
stroke of labor he put on it added to its
capital value; but the Eastern farmer at
the very same period attempting TO pay
capital out of revenue found himself
swamped or embarrassed with short term
credit or without any profits or with re-
turns less than a hired mans wages. 1t
was TO correct these conditions, to put
farm industry on par with other
Industries, that the Federal Land Bank
act was passed.
Could Easily Be Sob Stuff.
All this in terms of general finance,
but when you reduce these terms to the
concrete man or woman it might easily
be a sob stuff story. There never was a
time when farmers needed more money
to expand. There nAyer was a time
when bigger returns were available if
they could expand. Also there never was
a time when money was scarcer for
expansion.
Liberty Loan following Liberty Loan,
tax piled on tax, to quote Leonard G.
Robinson, president of the Federal Land
Bank in District No. 1, 'has created the
greatest financial stringency. There is
scarcely national or State bank in the
United States which is not borrower
to-day.
Savings banks are not making new
loans and are drawing in their old ones.
Life insurance companies have exhausted
funds for months to come. The mort
gage situation in the country has seldom
been so uncertain.
"Private investors want to realize on
their mortgages" They can realize cash
on mortgages, when they cannot turn
their other investments into cash without
loss.) Farmers are being pressed for
payment of their mortgages, while the
raising Of money for a new mortgage Is
little short of impossible"
Take an example. One OIL the nilest
valley farms in county was bought
few years ago by the payment of $4,000
down and the assumption Of an old mort
gage of $4,000, which had been running
for years and presumably could run for
years. Buildings were in perfect repair.
The buyer had family of sons and so
could keep the wage bill low.
Mortgage Was Called Suddenly.
Then came the war. Somebody died.
The bank handling the mortgage was
asked TO lquidate the estate. The mort
gage was called. The bank had abundance
of loose money, but nobody would loan.
The bank did not know how much of the
next Liberty Loan it would be asked to
finance, and it was afraid to let its loose
funds 90 out. Private investors could not
sell stocks and bonds without loss. and
wanted ready money for uncertainties.
The borrower stood to lose the $4,000
already put in, if, he could not find an
Al Il % ral,a,-n 81 Ful