The Washington times., 1922-12-11

upon his note secured by this GER
tificate representing marketable
commodities. The new institution,
intended to be independent of the
present banking system, would
place the farmers note, secured by
his products, in its treasury, and
issue Its own obligations, as ls now
done by the Federal Land Banks in
their field The paper 80 issued
should be discountable In the Fed
eral Reserve System when having
not more than nine months to ma
turity.
paper issued by a federally regu.
lated institution Of this kind would
have the widest kind of q, mar
ket and would place the farmer
who deserves credit, In q position
where he can obtain 1t at the
lowest rates of interest in the credit
markets of the world.
For Cattle Raisers.
1.-THE basis of the issuance to
cattle raisers would be, OF course.
the cattle, which would have to
be properly inspected, with restric-
tions that would be applicable In
the circumstances. Debenture for
this purpose should run for as long
as three years, but only notes or
debentures having nine months OF
less before maturity should be dis
countable In the Federal Reserve
banks.
In the matter of credit for pro.
duction, because here we do no.
have collateral Of unquestioneo
value and marketability, as In the
two other Instances, we have more
to consider the character and In
dividuality of the farmer himself
what bankers call the moral risk.
Heretofore, the country banks ana
merchants have furnished this sort
"The raifheisen banks in Ger
many and the credit agricile In
France have as their basis the
sound principle of mutual In
diyidual endorsement; but I can see
there are very grave difficulties In
the way of that In this country.
Guarantee Organizations.
"These could be overcome by the
formation of financial associations
or corporations In localities so de-
string, whose purpose would be 10
provide the necessary guarantees.
These associations or corporations
would be somewhat analogous 10
the farm loan associations OF our
FEDERAL Land banks. They would
be controlled by the farmers and
others by whom the capital would
be subscribed. Notes for produc-
tive purposes would be required TO
have the endorsement Of the local
orra nisAtion, which would have the
riSht to endorse and forward to q
REGIONAL institution for sale An
amount Of notes equal to ten times
the IocaI's capital. The procedure
under this plan would be somewhet
~The farmer, II he cannot borrow
srom the present banking facilities,
snes TO the local credit organization.
II n decides to lend him money, II
takes his note, endorses 1t, and
passes 1t on to the regional institu.
ton, which, In turn. places the local
body's note in it's treasury and issues
its own obligations against II for
sale in the credit markets OF the
world. This latter paper ought to be
discountable In the Federal Reserve
System when it, maturity ID within
nine months. *.
Provide Central Urn.
There 10 no reason why one cen
tral organisation should not be- the
agency for all of the three above
purposes, i.e., for more orderly mar.
keting Of crops. for the raising and
marketing Of cattle, and for produc,
tive purposes. However, this insti.
tuition should be rigidly depart.
mentAlixed and q certain percentage
Of It's funds allocated to each branch
OF the organisation.
Its obligations for the three dif.
ferent purposes enumerated would
thus stand on their own bottoms,
separate each from the other. each