The labor journal. [volume] (Everett, Wash.) 1909-1976, 1920-10-08


total value of bills discounted by the
Federal Reserve Banks on September
10. In his Cleveland speech Governor
Harding Estimates" that the total
discounts in support of agricultural
made by the eight Federal Reserve
Banks in the southeast was S6l4,
SCI 900 of which 1902, 101 900 is "the
estimated amount of discounts in
directly in support of agricultural
and live stock interests" OF the
5000, 101 900 discounts indirectly
made in support of agriculture" the
Chicago Federal Reserve Bank is
credited with SIS 100000 Ioans to
industries directly allied to agricul-
ture" This might include the meat
packers, manufacturers of agricultur-
al machinery and implements, eleva-
tor and milling companies, whose
huge profits made off the farmers
hardly entities the loans made to
them to be considered discounts
indirectly in aid of agricultural and
livestock interests"
Farmers Indebtedness Six Billions
Last year the total Indebtedness
outstanding against farm values and
farmers was, in round figures, &c.
600 100000, of which $685. 100000
was long term Indebtedness and
So, 100000 personal and chattel
indebtedness. On this latter indebt-
edness the only one involved i'm
mediately in this connection, the
average cost of interest, commits
sions and bonuses was about 10 per
cent.
Mr.. Carl w. Thompson of the of
flee management of the Federal Re-
serve Department of Agriculture, re-
ported in 1916 that the average cost
to farmers for loans on personal
security ran as high as II per cent
in over six states, and in only 10
states was per cent or less.
The secretary of the treasury for
merly secretary Of agriculture has
issued several warnings against eX-
tension of credit by the government
stating that this does not seem war
ranted by present conditions, and he
has attributed much of the popular
clamor for more credit to persons
desiring to hold their goods for high
er prices. He even declared that the
government could hardly aid in with
holding commodities from the mar
kets without being a party to a con-
spiracy in restraint of trade and
making high price levels more Sc
cure. He claims too, that credit
expansion recently has been able to
provide for the movement of crops,
and the general tendency has been
more toward expansion than restrc-
ton. The secretary's attitude, to-
gether with that of the Federal Re
serve Board, indicates failure to I'M
derstand clearly the relation of
credit to agricultural production to-
ward permanency of agriculture, and
to cheap prices to the ultimate con-
sumer.
A little reflection makes it clear
that the reason cheap credit is due
the farmer is not only to encourage
necessary production but to save the
consumers from eXorbitant high
prices for farm products. No argu-
ment is needed to prove that agricul-
ture on the whole is not paying
industry but in fact a profitless one
and that farmers as whole have
not received the cost of production
and a reasonable profit. This is
proven by farmers cost of produc-
ton and price figures by the decreas-
ing rural population, and by the diff
ficulty of keeping young folks on the
farm. The cost of credit is a big
item in the cost of production. The
farmers have to pay every year close
to a quarter of billion dollars more
for necessary credit than they should
Little, if any additional credit is
needed to meet farmers requirements
but they must get the credit now
given to middlemen hoarders.
There is not the slightest possibil-
ity of initiation through extending
credit upon wealth actually produced
such as raw materials of food and
clothing. The farmers viewpoint in
this matter is not by any means sell
fish. Official figures show there
are ample funds available to finance
the credit needs of all basic indus
tries, if they are used exclusively for
that purpose.
The attack upon the Federal Farm
Loan Board by the Farm Mortgage
Bankers Association of America
which led to the suit to test its
constitutionality now waiting a re-
hearing, and the failure of the feder-
al reserve bank system to meet the
short time credit needs of the farm
ers, gives rise to a we'll founded sus-
piston that financial interests of the
country propose to limit the govern
ment's efforts to assist agriculture
and to keep it from putting farmers
upon borrowing parity with other
legitimate and necessary commercial
and industrial enterprises.
In theory at least the government
recognizes the differences between
basic and other industries. In his
address to the committee on live
stock and banking interests refer
red to above, Governor Harding stat
ed that the Federal Reserve Board
has always stressed the necessity