The Washington herald., 1921-08-29
OCTOBER ALLOTTED
FOR REOPENINC OF
CREDIT HEARINGS
Four Days Discussion to
Be Resumed, Mace cGregor
Announces.
MEASURE ISLAUDED
Cures Defects of Banking
System and Standardizes
Same, Backers Claim.

Further hearings were postponed
until October on the McFadden-
Kenyon rural credit and multiple
insurance bill, it was announced
Saturday by Chairman MacGregor
of the subcommittee Of the House
Banking Committee, after conduct
ing hearings on the bill for four
days. The joint commission of ag-
ricultural inquiry had several wit
nesses before them on this measure
before Congress recessed.
The interest manifested on this
subject in Congress was illustrated
by the incidental reference to 1t by
Representative Ogden L. Mills, a
member Of the joint commission OF
agricultural inquiry. in his speech
on the revenue bill. when he pre-
dicted that three months later Con-
gress would be considering 1t. Mr.
Mills sounded a note of warning
which every expert who testified at
these hearings accentuated - the
danger Of using ordinary bank de-
posits for agricultural production
There Is no way to speed up nature
in agricultural production, a device
frequently resorted to by the manu-
facturer; but the farmer must lei
nature take it's course. The Ameri-
can farmer is now suffering by rea-
son of the fact that he has used a
credit system not commensurate
with the needs and hazards Of agri.
cultural production. All who vic.
late natures laws must pay the
| penalty.
Measure Is Lauded.
The McFadden-Kenyon bill cures
the defects of our present banking
! system by broadening the market
for farm paper and standardizing
| the same. There are farmers ir
! Kansas who are as good for the OBJ.
legations they may make as the
| strongest corporation in the land
but the wage-earner OF Boston
1900 miles away, does not know
| that fact and he does not possess
the credit machinery Of ascertain
ing that fact. Therefore the paper
must be standardized. so that the
| investor will look to the system
rather than to the individual farmer
maker of that paper.
The McFadden- Kenyon bill brings
about the Standardization of thi.
paper by creating two corporations
a rural credit society with a central
bank, forty-eight branches-one for
each State-and any number o;
community associations composed
of farmers and one multiple insur.
ance league. both by separate Fed.
eral charters. The multiple insur.
ance charter is broad and liberal
authorizing the corporation to In.
sure against any contingency, jusl
as is provided by the charters oi
many of the British insurance COM
| panies, some of which have oper.
ated more than two centuries. II
is proposed to induce one of the
big life insurance companies to ac.
! cept this Federal multiple insurance
charter and surrender it's State
| charter.
Purpose of League.
The multiple insurance league is
to serve two purposes; first, to fur.
nish sound and cheap multiple in
surance to the members of the
credit society, as security fol-
credit, and second, to become {
guarantor of the credit society
itself by furnishing the capital fol
its branches aggregating $2,400.000
electing it's auditors who would in.
spect the credit society and hol;
one of the keys to it's securitie:
vaults. There is nothing novel ir
the plan Of furnishing cheap mul'
| tiple insurance to the members OF
h. tANu 4.
the tenant farmer to furnish as
richest farmer. as this has been
tried for years in Europe. This ha.
placed European agricultural credi,
on a sounder basis than prevails
here. where the tenant farmer is
required to furnish an indorser
But that is a protection to tht
seller rather than to the tenant, fol
| if the credit is for the purchase o.
cow and she dies, the tenant will
owe the debt and have no COW
whereas if he takes cattle insur,
ance on the COW, the debt would be
Cancelled and the tenant placed In
position TO buy another COW.
The novelty of the plan consist!
| in the use of a life insurance com.
pany to become a credit insurance
company as we'll as a multiple in.
surance company. This is analo.
gous to the British commercial
credit system in the use of the sac:
ceptance house." which Is nothing
more nor less than q credit insur
ance company. Those acceptanc,
houses are the outgrowth Of tn,
old British importing merchan
firms, which, in the course of thei
supporting business, established theii
credit in all the important mart.
of the world. Now. merchants o
second-rate credit found that b,
paying a small commission to tn,
acceptance house for q more exalted
name than their own, they ccuI,
place their bills Of exchange on tn,
open market where they woul,
command the lowest discount rate
In this way the British bill Of ex