River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1922-01-19


of farmers. 1t is true that they do
loan great deal of money to farm
ers, but in nearly all cases the term
of the loan is not over ninety days.
If the farmer wants the money longer
than this, and he usually does, he must
come in every three months and re-
new his note at the bank. This works
very well till time of financial de-
preston comes along, when the banks
hurry to call in their loans just at the
identical moment when borrowers un-
expectedly find themselves unable to
pay them off. This makes it necessary
for the farmer to sell something not
ready for sale, and always at severe
loss.
Investment Credit Provided For
1t is quite clear, therefore, that we
need three separate and distinct credit
systems for farmers. One of these we
have called Investment Credit, with
land as the security basis. The Sec
ond is Market Credit, with farm prod
ucts ready for the market as the basis.
The third is Productive Credit, which
must be largely in the nature of per-
sonal credit, with or without security.
The kinds of security that might be
used for Productive Credit will be dis
cussed later.
We have a most excellent system of
land credit in our Federal and Joint
Stock Land Banks. The only trouble
with the system is that when Congress
passed the law creating these banks,
they put limit on the rate Of interest
the bonds of the banks might pay. The
original limit was five per cent, which
has recently been raised TO five and
one half per cent. This limitation did
no harm till the rise in interest rates
that followed the Great War. Then
the bonds of the land banks would not
sell readily, and money could not be
secured to loan to the farmers. At
five and one-half per cent the bonds
are selling well, interest rates being
down, but Congress should remove all
limits and let the land banks pay
whatever rate is necessary to get the
money they need. This, of course.
would make it necessary for borrowers
to pay higher rates at times, but when
interest rates come down again these
borrowers could apply for new loans
at the lower rates, and cancel the eli
high-rate loans with the proceeds.
Marketing Credit Plentiful
There seems to be no. serious diff
Guilty at present in meeting this need,
The large co-operatives recently form
ed find that they have little or no
trouble in securing all the money they
need in the orderly marketing of nom
perishable farm products. They get
a good deal Of money from the banks,
and are also able to issue short term
bonds based on warehoused products,
which sell readily. Much of the 81
600, 100000 of the War Finance Cor
lporation IS being used for this purpose
Apparent ythis kind of farm credit
is in fair way to take care OF l.
self.
We have as yet absolutely no sys'
tenn which enables farmer to bor-
row money on reasonable terms to buy
fertilizer or machinery, to hire labor,
or for any other purpose connected
with producing crop or In getting
started in live stock. Our farmers
usually buy such things on credit, pay
ing lot more for them than if they
paid cash.
Personal Productive Credit Needed
1t is especially the poor farmer or
tenant who needs personal credit for
production purposes at reasonable
rates. For the most part these poor
fellows are not members of the great
farmers organizations, or at least the
membership is made up largely of the
more prosperous ones. For this reason,
apparently, the farmers organizations
represented in Washington are doing
nothing at all to push legislation de-
signed to fill this very great and very
real need, nor does any organization,
as far as / know, plan to establish
such a system on an Independent basis.
1t is not that we do not know what to
do. We have the example of the great
credit societies of Europe; and we
have here and there, as in North Caro-
lima and few other states. successful
Credit Unions doing exactly this job.
There is abundant money for the pur-
pose; the only question is how to make
it available to those who need it.
When the land banks loan money on
farm land they do not require that the
land be insured, for nobody is going
to run off with it. But when they loan
on farm buildings they require that
the buildings be fully insured. Other
wise the security for the loan might
suddenly disappear some fine day.
When a cooperative marketing as
ISOLATION applies for loan on cotton
or grain stored in a warehouse, they
would not expect to get the loan if
the products to be pledged were not
insured.
Insurance is thus at the foundation
4