Evening star., 1920-02-22

Emphasizing that in his opinion de-
posit banking is inadequate for many
agricultural needs. and that there
must be cooperation for conservation
of capital, Representative l.. r. Nc
Fadden. republican, of Pennsylvania.
member of the House committee on
banking and currency. has introduced
a bill providing for establishment OF
cooperative system of farm credit
based OIL personal security as iiStin-
Suishrd from land mortgage security.
This biII Mr. McFadden explained.
is 'sin adaptation of the bes; features
of the European systems to meet the
conditions in this country. lie points
out that il follows the Credit Asrico!e
"f Franc, in limiting the activities OF
thc proposed system to the use of bills
Of exchange. or to pa n KING Win
bills" as distinguished from the sys-
tom of banking with deposits, thus
broadeuin. the market for productive
agricultural paper. reducing the cX-
perse Of management and improving
our whole banking or credit system.
Pro, idrS One Central Bank.
The bill provides for one central
bank fortN-eight branches, one for
each state. and innuniera bic local as
sociationS or commGnes. The cen
trai bank viii have a capital of va
fNU,bbt, IL bt' u pE 'hN CIV
crnmcut hut a sinking fund is ere
atrd TO reimburse the government Tor
th,, capital So advanced by 1t Each
branch viii have a capital of S5O,oOo,
20 b.. furnished by one of the Dig nie
insurance companies. This capital
viii carry with il the right to elect
,hc auditor and deputy auditors OF the
rural credit system. and will be paid
AN annual dividend of per cent. The
stock of the communes or community
associationS will have par value OF
81. which will be subscribed for ana
carried by the farmer members of the
system. Both limited and unlimited
liability Co:rmuneS are PROVIDED 1or
iiut only members of the unlimited
liability communeS Will exercise
voice in control
Deposit banking does not meet man.
of -he productive requirements OF
agriculture. l believe ! am entitled to
speak OF this subject as have spent
my whole life in deposit banking. TO
illustrate the inadequacy of our pres.
emf banking or credit system. lets
take the cattle-bTeeding industry. 1t
.line months before 4 COW calves ana
fifteen TO twenty-one months more De
fore that calf may be converted into
beef Altogether, it requires from two
and a half to three years before that
credit reproduces itself. 1t also re-
quireS abou; the same time for credit
used to build a silo to reproduce Itself.
That is not safe business for deposit
banker whose borrowed capital is
payable principally on demand. But
this business is done with perfect
safety by European rural credit sys-
TENS doing open market operations.
our beef production is not keeping
pace with the increase in our popula-
lion or Industrial activities. and un-
less we provide adequate credit ma
4 hinery to meet the requirements of
that industry we may expect even
higher beef prices than we now have.
No animal is such a consumer of farm
roughage as the COW, and the ad-
Vancement of that industry means
Increased soil fertility.
Market to BE Developed.
IT will be asked, and properly so.
where will be the market for such
paper. This market. like the market
for every other commodity, must be
developed through sound business