The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1922-12-01
GOVT. LOANS TO
FARMERS ADVOCATE
ED BY REICHERT
HEAD OF EQUITY PLANT SEES
THIS A SOLUTION OF PRESENT
DEPRESSION.

| L
I DEPRESSION.
Government loans to the farmers
| direct at AN interest rate of about 8
per cent, is the remedy advocated by
G. w. Reichert, president of the Equi-
| ty Cooperative Packing Company, for
the economic ills the country is now
suffering from. Mr.. Reichert points
to the provincial goernment of Alber-
ia, Canada, as hacing set a precedent
along this line. He points out that
the farmer government of that prov
ince has issued bonds and deposited
these bonds in the government treas
ury and the government then issues
currency against the bonds, loaning
the money directly to the farmers at
3 per cent interest.
Discussing the plight in which the
farmers of North Dakota and the
othe rstates now find themselves and
in which the business men will also
find themselves unless some drastic
remedy is produced soon, Mr.. Reich
ert says: ass
"The farmers in the United States
are practically broke, and it will only
be a question of time until the mer-
chants and bankers will also be
broke. The overhead expense of the
business world is passed onto the
farmer, and when he is unable to
meet this obligation, the whole fnan-
cial system will have to fall.
S1,75O AVERAGE LOAN
"The records of the census bureau
at Washington, gives the average
farm loan in the United States as
S1,75O per farm in 1910 as against
$3,361 in 1920. We note from these
statistics that the average loan indebt-
edness perform in the United States
has practically doubled in ten years.
Where will the farmers of this free
America be in 1920 at the rapid in
crease of Indebtedness in the face of
deprecated values of farm products
and enormous increase of our national
debts caused by the late World War?
"The greatest evil, as I see it, is our
interest bearing bond system and that
includes the loaning of credits. The
term "loaning of credits is not taught
in our schools. The capitalistic papers
do not give the people the information
as to who is benefited by that system.
The law permits the banker to loan
credits as no other citizen is permitted
to do. For an example:
80 WHAT HE GETS
..'If farmer produces a thousand
bushels of wheat and gets 1000 IN
cash for his wheat, he has produced
the real wealth. If he loans that
$1,000 to the banker for one year, he
gets 5 per cent or $4,000 for the use
of that 1000. That $1,000, according
to law, makes up what we call the
illegal cash reserve" Under the law,
the banks have only to keep on an av-
erage of 10 per cent as a legal cash
reserve. You can readily see that
the banker is able to loan several
thousands of dollars in credits be-
cause all he has to do is to keep up
a legal cash reserve according to law.
''The history of banking in the
United States is that on an average
they loan SIS in credits to every 81
they have in their possession. So,
then, the example would figure out
that if they paid this farmer $50 for
the $1,000 they borrowed from him,
and they loan $4,000 in the way of
credits at 8 per cent they, under the
present banking system, would get
$500 for the loaning of credits and
would pay the farmer $50. In other
words, the banker would have $3.50 for
his profits and overhead and the
farmer, who has produced this thous-
and bushels of wheat and received
$1,000 for it, would get $50 for the
use of his money for one year.
BANKERS NOT CRITICIZED
IT do not wish to be misunderstood
as finding fault with the bankers for
putting that sort of deal onto the till
ers of the soil. It is perfectly legiti-
mate as long as the law permits them
to do it. It is what the people are
taught to believe is good business-to
accumulate wealth by law regardless
of what the principles involved may
be. But what is going to be the ulti
mate result of this system? Our
farmers are broke and are no longer
able to pay their taxes and interest
on the loans; they are going into
bankruptcy Hardly a day goes by
that we don't receive notice of bank
ruptcy proceedings Of two or three
farmers owing either the packing
company or the Consumers United
Stores company.
"The banker, as a rule, has security
on the farmers stock, machinery and
grain but because of the Debated
prices his security is probably worth,
on an average, from 40 to so cents on
a dollar. The merchants, as a rule,
have no security for bills that the
farmers owe them. 1t naturally fol-
lows that when farmer goes through
bankruptcy the loan the banker has
on the property is a first lien and
the banker will take possession of that
Then, there is nothing left
for Mr.. Merchant and he is owing the
banks and eastern houses large sums
of money and is unable to iquidate
his accounts. Consequently, it is only
a question of time until the merchant
will have to fall in line with the farm
err.
MONEY DEMANDED
'Then along come the banks in the
4ba;y ,,oono1y frox,o II,