The Washington herald., 1921-07-22
IMPROVED DCREDIT
SYSTEM Seen AS
t'ACRICULTURE AID
u E---
Five Types of Loans Out
3Gi lined by Secretary
Hoover.
NEW NEEDS CITED
Would Set Up Organization to
Mobilize Credits in Spe-
cial Field.
NEW NEEDS CITED

Agricultural credit facilities and
their bearing upon the present dis
tressing problems OF distribution of
farm products. are outlined in a
letter from Secretary of Commerce
Hoover to Senator Arthur Capper. In
response to the latter's request for
the Secretary's suggestions.
Mr. Hoover said he believed that
il competent inquiry were made, II
would prove that great deficiencies
lie in our agricultural credit or
ganixation in the systematic provf-
sion for those needs mentioned be-
tween the terms OF six months and
three years: that is, credits that
fall outside the area of both the
Federal reserve and the Federal
farm loan hanks.
Types of Credit Needed
The Secretary in his letter out
lines the types of credit needed In
the AGRICULTURAL industry as follows:
Loans up to six months for either
production or marketing annual
produce.
Loans between six months and
twelve months for these purposes.
Loans from one to three years
for producing and marketing OF
cattle
Loans from one to three years
for. farm equipment
Long-term loans for purchase and
Improvement.
obviously, all OF these needs are
partially covered by the farmers
own capital" he said. "and all of
these fields are partially covered by
present credit machinery, and some
of them fully. All of these credit
areas are suffering in various de-
Srees because the present war-oorn
famine in capital just as are also
building. railways and other indus
tries. This situation is getting stead
ily better with liquidation of high
prices. and therefore a reduction In
the total value Of capital needed
Jeop.rdIze Bank Structure.
ORGANIZATION of farm credits UP
to six months are covered by the
Federal Reserve system, and its
smooth working depends only upon
the member banks and the Reserve
boards This system, however, be-
ing a mobilization of the demand
deposits Of the country, cannot be
called upon for loans of over six
months on agricultural paper with
out jeopardizing the whole CONNER
cial banking structure-upon the
safety of which the farmer is great
ly concerned.
The long-term mortgage loans
are with the alterations proposed
in Congress we'll organized through
the balance wheel of the Federal
farm loan banks. Some farmers
could provide more of their needs
in other directions IL they would
take greater advantage of the sys-
tenn instead of reliance upon short
term loans.
81 am convinced that six months
is too short for farm paper in .
great number of cases The farm
er often has to borrow from plant
ing time to some months after har-
vest unless his produce is to be
forced into the markets just after
harvest instead of over the crop
year, This matter has added i'm
portance at the present time be-
cause of the recent heavy losses
to the farmers, because of the large
carry-overs, because the poverty of
foreign buyers tends to delay their
buying until their own crops are
exhausted. and thus necessitates our
farmer holding on longer unless he
Would depreciate his price. Cattle
obviously cannot be handled on six
months credit The alarming in
crease in tenant farming gives war
ranty for execution of credit facili-
ties for equipment through which
he might be helped into an own
ership.
Mobilize Private Capital
awe have been endeavoring to
meet temporary and acute situa-
items by mobilizing the private cap
ital such as the cattle and cotton
pools. / believe some sort OF def
mite organization should be set up
for mobiliZing credit to cover short
age in this special area in the same
sense that the Federal Reserve or
ganizes very short credits, and the
fafm loan banks mobilize long mort
gage credits. Such credits should
bs supplied from investment cap
-itai of the country rather than from
the commercial pool. Such a pro-
pdsal is not paternalistic any more
than are the other two systems. As
I'd the precise method, whether by
organizing a new department in the
Federal farm loan banks, or other
wise. requires much thought and in
ve5tigation, but such a system is,
| believe, peeded and is entirely
fefsible."
Secretary Hoover's statement
that the Federal reserve system
cannot be called upon for loans of
over six months on agricultural
paper without jeopardizing the
Whole commercial banking struc-
t1re is exactly what the American
Farm Bureau Federation has been
claiming stated ]. r. Howard, its
president, yesterday, commenting
upon the recent letter from Secre-
ta[y Hoover