The New York herald., 1922-01-14

only per cent. in banks situated in
agricultural and semi-agricrltural
counties.
Nevertheless the events of the past
two years convince the council that the
machinery OF agricultural credit is not
complete. In two respects especially it
needs Strengthening.
I'm the first place there are about
20,OOO state banks and trust companies.
nearly two-thirds of the total number
of the banks OF the country, which
through their unwillingness or through
inability because OF their insufficient
capital, are not members of the Federal
Reserve system. Unfortunately the ag-
ricultural sections are largely served by
the small member banks whose operat-
ing power Is quickly exhausted and by
non-member State banks. The resources
of the system, through no fault of its
own. are therefore not as directly or
readily available to agriculture as they
might be. since these many non-mem-
Der banks in the agricultural sections
are able to tap those resources only
through the other member banks. There
are azores of agricultural counties in
which there is not a single member
bank. 1t may. therefore. be desirable
to devise ways and means by which the
vast resources OF the Federal Reserve
banks may become available for assist
ance to the large number Of small
State banks now non-members of the
system.
"In the second place there Is no me-
dunn through which the farmer or live
stock man may secure adequate loans
for periods of from six months to three
years.
"The Advisory Council has learned
with great satisfacti Of the plan under
consideration by the Joint Commission Of
Agricultural Inquiry, the outline of
which was recently sketched by its
chairman. Mr. Anderson. This plan con-
templates strengthening the Federal land
banks and extending their powers so as
TO permit them TO discount agricultural
or live stock paper with maturities run
ming from six months to three yea<s. and
to permit them to rediscount this paper
with Federal Reserve banks when its
maturity falls below six months and
when it conforms to the requirements Of
the Federal Reserve act. or to pledge the
loans having the longer maturities as
collateral for debentures which 1t is con-
templated they should have power to is
sue to the investment public. A plan of
this character would place at the dis
posa of the agricultural sections vast
sums IN a sound and businesslike man
ner, would open the Federal Reserve
banks to their credits at the appropriate
period and would I'LL serious gap in
cur present credit machinery.
Repeats Objection to Bill.
ITO perfect in these two respects the
credit machinery available to the farmer
would be a great constructive accom-
plishment. But merely to compel the
President to appoint farmer to the
Federal Reserve Board would. in the
end only prove an illusion and a disap-
pointment to the farmers themselves. 1t
should be observed that none of the acts
creating the Interstate Commerce Com
mission. the Federal Trade Commission
or even the Federal Farm Loan Board in
any way restricts the Presidents power
of appointment by requiring him to APP
point to these boards representative
of agriculture or any other special in
terest.
THE appointment of a farmer to the
Federal Reserve Board by special act of
Congress would not. as we have shown.
improve or add to present agricultural
credit facilities. 1t would, however. be
fateful notice to the entire country that
the Federal Reserve system had come
under the domination of a powerful po-
litcal group designed to secure spe-
cial privileges for a single class. OF
which the approximately thirty bills al
ready introduced into Congress serve as
a sufficient and significant illustration.
'The menace of the inclusion of poll
tics in a banking system of the vast
powers of the Federal Reserve system,
which reaches into the remotest corners
of the country. is so obvious that the
council does not believe 1t necessary
further to elaborate this point; the more
so as 1t feels certain that these views arc
fully shared by you. Mr.. President In
deed, they are in entire accord with the
1920 platform CT the Republican party,
which provided that the Federal Reserve