The Washington herald., 1921-08-04
Agricultural Credits.

~ OF credit needed by the agricultural industry
OF these, beyond the farmers capital. all
he says. partially covered by present credit ma
cRinery and some of them fully" The FIVE kinds
nShed are: -.
~ Loans up to six months for either pro-
~ ductlon or marketing annual produce.
H Loans between six months and twelve
for these purposes.
Loans from one to three years for pro-
y, ducing and marketing OF cattle.
VI Loans from one to three years for farm
Z, equipment.
~ Long-term loans for purchase and i'm
provement.
= OF these the first and, in normal times, even
the second. partially. fairly we'll, covered by
the present banking system, though, Mr.. Hoo
yer points out, the Federal Reserve system being
a,mobilization OF the demand deposits OF the
country. they cannot be called upon for loans of
oyer six months agricultural paper without
jcopardzing the whole commercial banking struc-
tlie.' The deposits of banks must be readily
atalable for payment at any time and one of the
peculiar conditions agricultural loans is that
the credit demand is largely seasonal coming in
bulk about the date. 1t is chiefly then a
seasonal demand, and six months is longer
period than is warranted a practice, by
Incrcial banks
2. These, also are largely what are in fact con-
Snfnptivc credits They are such show lack
OF. available capital or the use of such in some
form of farm investment They should be restrict
cd far possible banking credits Yet this
noed has been acute beyond the ability of
tile present banking system to fairly we'll peet it
n,'wcll developed and prosperous farming sections
until this year with its emergency conditions. 1t
is never possible to meet it through banking chan
nels in the newer settled regions
n The last named type OF credit is now sufficient
ly covered by the land loan bank system. This
leaves but the third and fourth type unprovded for
save by emergency provisions and they both
credits for production. These are loans for buy
ing, investment in personality which is
ably certain to pay back the loan with a profit
Cattle, farm machinery, cows, pigs explosives for
clearing land, fertilizers and the like will of them
selves, not alone pay their cost in added produc
ton or price, but they will thereafter have con-
tnuing or remaining value which becomes an
asset, or capital
1t is such credits those for which no adequate
provision is made, that cover the whole field
OF increased agricultural production. They all
subject to security through insurance. With such
collateral they become among the very safest of
loans. 1t is this type of credits, secured in this
way, for which the McFadden- Kenyon bill pro-
vidcs 1t makes this the most important agricul-
tural measure bcfort the present Congress and one
whose passage will be of the utmost value to agri-
culture.
There is another result Of this measure which
will be helpful commercial banking Those IA
miliar with ordinary farm management and the
average farmer who is solvent and good credit
recognize general weakness in the usual agri-
cultural financial process When farmers sell their
products and have cash in hand, instead OF saving
enough to carry them through to the next crop
year, they have habit of using too much Of it to
buy something needed the farm. They do not
indulge in luxuries, but in productive needs or
H.. - Eao1 H. IL
chine OF kind, cattle, hogs, other livestock
something by which they may increase income.
Frequently they do this while renewing notes at
bank of banking credits seeking a market
They do it to extent which assures demand
for credits for consumptive needs.
, IF this credit system in operation with
a low interest rate, farmers would use it for such
purposes. They would pay their debts of all kinds
from their crop retrns; they would borrow from
production through their local commune; they
would keep cash in hand, especially, these more
thrifty financial habits would establish them as
sound credit risk with their local commune. Banks
wSuld be relieved Of any excessive seasonal de-
mand for farm credits, quite uniformly over long
ting or known as subject to renewal, and so al
ways an unsafe factor of commercial banking
wbon reaching material volume.
,mJn every way this measure would supply the
need outlined in these five forms of agricultural
credit 1t would close the gap almost wholly
v4Sant, for supplying productive credits, the most
pressing and important in farm development, both
as to the pioneer settlers without fixed credit, and
the established fairly prosperous farmer. 1t would
relieve commercial banks of overdemand for such
accommodation; assure against any possible excess
OF frozen agricultural credit; clean up farm debts;
end purchases partial payment at prices to
match the risk, and put agriculture SAFE sound
development basis free from all paternaiism and
official, political, meddling.
~ Caruso is dead, but his voice lives, and after