Evening star., 1921-05-01
BY Il. &. MILI.lkEN,
Monetary sta fist for the rural cred
II committee of the Association of
Pure-bred Live stock Associations.

Monetary sta list for the rural cred
II committee of the Association of
The enactment into law of the Nc
Fadden- Kenyon rural credit and null
tipIe insurance bill would not only be
a boon to agricultural production. but
would greatly strengthen our whole
banking and credit systems. No Eu-
ropean country relies on ordinary
bank deposits for agricultural pro-
duction, as is the case with us. The
time required for such credit to re-
produce itself is too long to employ
ordinary deposits. and where this bad
banking method is praCticcd we find
the banks loaded up with frozen as
sets which make it impossible for
them to finance the production and
distribution of commerce, the real
mission of the deposit bank.
This bill purposes to create two
federal corporations by two separate
special charters. namely rural
credit society and multipi" insurance
league. Multiple insurance means all
kind of insurance. The principle of
multiple insurance is we'll tried IN
Europe. where some companies have
operated it for more than two cen
turiCS.
Plan for Credit Society.
The Rural Credit Society will COM
prise one central bank. forty-eight
branches. one for each state. and any
number of community associations,
which are dcnominatcd communcs in
the bill. The capital of the central
l,, lys.1 \tsi
be furnished by the government with
out interest. but sinking fund is
created for its retirement. The capt.
tai of the branches will aggregate
S2.400. 900. which will b" furnished by
th. big life insurance company which
accepts the federal multiple insurance
charter. This branch capital Will be-
come guaranty against the loss OF
the governments investment. The
stock of the COmmUncS VIII have a
par value of So and be paid for by
farmer members. This commune stock
will not only be another guaranty
against the loss OF the governments
investment. bat will also be liable
for the debts OF the COmmuncs OF the
several states in which they are sit
uated.
\ members borrowing capacity
will be propOrtioned to the amount of
stock he owns in his commune. For
example. Z member of commune OF
the second class may borrow ten
times the amount of his commune
stock. In COmmuncs of this class
members are jointly and severally
liable for the obi isationS of the COM
mune In other words, the members
are partners. There Is no such !ia-
bility of members OF Communes of the
third class, but i'll that class Il mem
Der can borrow. but iiYe times the
commune stock owned by him. The
ipnit .i liability class
communes have proven to be the most
popular class in Europe. But. in
order 10 induce our farmers to adopt
that class of commune we must pro-
vide d system of sound and economic
multiple insurance for them. just as
was provided for the European far
mers: for with SuCn insurance the
poorest tenant in the community can
furnish as good security as basis
for credit as the richest farmer.
Low Rates in Europe.
Before the war the European farmer
obtained credit for production at
from 81. to AZ per cent. such low
interest rates being due TO two facts
first. the security furnished for such
credit. and. second, because he had
access to the credit markets of the
financial and industrial centerS for
his rural bills OF exchange. whereas
the American farmer Is dependent on
the deposit bank of his community.
The average membership of the Ger
man rural credit societies was ninety
two, each jointly and severally liable
for the obligations Of the othel.
Therefore each piece of their paper
had an average OF nlnety-two in
dorsers. not considering the multiple
insurance. II would be unreasonable
to expect a wealthy American farmer
to enter an unlimited liability COM
mune with a tenant farmer unless We
provide system of sound and eco
nomic multiple Insurance for the farm
credit system.
Seven farmers may organize n
commune. the members of which
would elect officers yearly, the Off
GERS meeting bi-..Outhly to pass on
applications for loans TO members.
If the appliCat!-a for a loan be ap-
proved the borrower draws a rural
bill of exchange. which would he
mailed to tho state branch. and II