The Washington herald., 1921-08-20
ASSERTSFARMERS
REQUIRE LIBERAL
BANKING SYSTEM
Classics ALI Farm Loans
Into Three Main
Divisions.
CITES EXAM NIPPLES
Appears in Interest of Nc
Fadden-Kenyon Credit
Bill.
CITES EXAM PL E S


DR.. W. J. Spiliman. who orga-
nized the ONCE OF Farm Manage
msnt Of the United States Depart
ment Of Agriculture and for more
than sixteen years was its chief
APPEARED before the Joint Congress
sionu Commission Of Agricultural
Inquiry yesterday IN the interest of
the -MeFsddsn-Ksnyon rural credit
and multiple insurance bill.
Dr. spinman declared this to be
the most important bill affecting
American agriculture which had
been introduced In this Congress.
In enumerating the classes Of farm
credit, he said: I'VE should keep
in mind these three types of credit:
Land credit. which Is provided by
the land banks, IN 80 far as their
capital permits; marketing credit.
which will probably be provided by
cooperative organizations through
their financial departments: and
productive credit which heretofore,
so far az Il has been extended. has
been extended by landlords, by
merchants and occasionally by
banks, but inadequately, and espe-
cially when extended by landlords
and merchants At enormous rates,
rates which keep the poor man
poor.
Credit for Poor.
Productive credit Is the most
important Of all three. the kind OF
credit Q poor man needs who wants
to buy . cow and has no money
with which to pay fer her. He
needs TO buy that COW in order to
ada to his productive possibilities.
and he wants to buy fertilizer In
order TO increase the yield Of his
land. but he has no money. He
does, get credit but he pays not
only usurious rates for IT, but
enormously increased prices In ad-
dition-
"A man wants to buy . Irvine
buys 10 On credit He pays. per-
binder than ~ he paid cash and he
pays Q Per cent interest OIL the note
he gives for II. 30 that his credit
costs him IL per cent when he buys
the binder.
Price OF Fertilizers.
The same thing applies to a man
who buys fertilizers on credit.
Take O man who raises cotton in
the South He will pay IS per cent
more than the cash price for the
fertilizers and then pays 10 per cent
On that amount for the credit that
70 extended TO him by his landlord
or by Q merchant. So II costs him
IS Per cent to get that credit Now.
under those conditions men do not
do things they need 90 do in order
to Increase their production.
This bill provides credit for pro-
ductive purposes, but not for mar
keting purposes. 1t will not pro-
vide a single dollar for marketing
purposes. and should not do so. be-
cause IL is a different kind of credit
and is to be used for a different
purpose. II will not provide credit
for a man to buy land: II will not
provide credit for a man to build
a house. but II will provide credit
for a man TO plant corn. to extend
the acreage of his corn, to plant
cotton. to buy fertilizers. and to
hire labor. That is the kind of
Deposit Bank Danger.
DR.. Spillman emphasized the
danger of deposit banks making
loans for agricultural production by
citing the recent experience IN
North Dakota in these words:
There are no organizations in
North Dakota at all similar to those
organizations contemplated in this
bill. Il is true that the State has
gone in the banking business and
that they have established a num-
Der of banks that are virtually
branches of the State bank, and
ally to farmers-too literally, I pre-
sumo, because when this crash
came II was found that those banks
had loaned too much to farmers,
the very trouble this bill is to rem
edy.' As said awhile ago, our
banks do not dare loan a great
deal on longtime loans to farmers,
because II they do they are liable
to 70 broke"
Or. Spillman emphasized the
necessity for the multiple insurance
feature Of the bin. This feature
provides for the use of a big life
insurance company to furnish cheap
multiple insurance to the members
OF the credit society and to insure
the credit obligations OF the rural
credit society. This Is analogous
90 the British acceptance house,
which 10 nothing more nor less than
. credit insurance company. They
are the outgrowth OF the merchant
importing nrms which, after estao-
fishing their credit in the markets
OF the world, were called on by
merchants OF second-rate credit to
become Their acceptors, which
enabled the latter to place their
paper on the market at the lowest
discount rate.
To Standardise Paper. =
Many OF those second rate mer-
chants were as good for their obli-
cations as the great acceptance
houses. but that fact was unknown
to the investing public. So are
many farmers just as good for their
obligations as our largest corpora
tiops, but that Is unknown to the
investor living 5000 miles away,
and such investor cannot and will
not investigate the financial stand
ing. Of Ruch a faru,Ar Ruf ri. LIN