The Washington herald., 1922-01-21
Joint Congress Commit.
tee Would Extend Fed
eral Bank Powers.
LONG.TERM LOANS
FOREMOST-NEED
Report Deplores Lack of
Machinery for Agricul-
tural Requirements.

Legislation to extend credit ia
cilities of the farming industry Is
recommended in a report of the
joint Congressional committee of
agricultural Inquiry just made pub
lie.
Broader powers should be grant,
ed TO the Federal farm loan banks
to enable them to provide a greater
volume of long term loans. the
commission believes.
Existing machinery Is incapable
Of supplying sufficient credit for
long periods. IT was found. This
was held to be the principal de-
feet of banking and financial re-
sources as they relate to farm
credits.
Added Importance attaches to the
commission findings in view of the
fact that the Presidents agricul-
tural conference will convene here
Monday and has farm credits listed
as one of its principal topics.
Subject of Controversy. w.
The question has been the sub
ject of endless controversy since
prices began to decline after the
war. Farmers contended the re-
striction OF credit forced them to
sell their products in glutted mar
kets, and Interfered with their le-
gitimate operations. The Federal
Reserve Board was bitterly as
sailed; It has, in fact, been the
object Of almost daily attacks in
Congress.
The joint commission studied this
controversy Thoroughly. and found
things to criticlse in the policies OF
the board.
1t reached this conclusion: The
outstanding deficiency Of the pres
ent bank ing system of the country
Is the lack OF credit machinery
which can furnish credit running
from six months to three years Tor
production purposes"
The commission pointed out that
while II is generally considered that
farmers have an annual turnover,
the period may in fact be as long
as three years. This was said to
be particularly true ,of the stock
man. who profits from the increase
of his herd.
1T is imperatively necessary"
said the commission, IF the farm
er's credit requirements >are to be
fully met, that permanent machin-
cry be established, or at least that
such notifications of existing ma
chinery be made as will provide
credit for a period OF from six
months to three years, to fill the
gap between short-time credit now
furnished by the national, State and
commercial banking systems and
the long time credit only partly
furnished by the farm mortgage
institutions and tae Federal farm
loan system"
No Broad Change Urged.
The commission said no broad
change in banking practices Is
urged. and advises against a central
system. But essential credit needs
of the farmer. 1t was thought, would
be cared for by legislation contain
ing these provisions:
l. Federal farm loan banks to be
permitted to rediscount long-term
paper for national banks. State
banks, trust companies, and other
Institutions: and to permit them to
loan directly to cooperative asso-
Citations on warehouse receipts.
.. Federal farm loan banks to
be permitted to issue debertures
maturing up to three years secured
by loans like those described above.
3. That Federal Reserve hanks be
permitted to purchase these deben-
lures, under the terms by which
they may now purchase farm loan
bonds.
4. That Federal Reserve banks be
permitted to rediscount paper issued
to mature within six months by
farm loan banks. secured by ware
house receipts as described in the
first recomme ndation.
Farmers are being victimized by
loan sharks, Secretary of Agricul-
ture Wallace declared in announc-
ing his intention of bringing the
question of farm loans before the
agricultural conference.
Interest rates OF 6 and per cent.
plus commissions of or 6 per cent.
ape being charged. Wallace declared,
on Ave and ten-year loans. The
loan companies, he charged. are TAX
ing advantage of the farmers dis
tress "heartlessly to extort rate
of interest and terms of loan which
cannot be justified"