Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-01-23
MONDAY EVENING. JANUARY 90, 1922.
FARM CREDIT PLANS.

E5 The JOINT commission OF agricultural inquiry
has presented its report to congress, with recon-,
mendations. The report declares the conviction OF
all but one OF the members that the Federal Reserve
board could have averted much of the difficulty
which has developed in the credit situation had it
taken steps to restrict credit i'll the early part of
1919, and that such steps should have been taken,
even though it might have been more difficult to
float the Victory loan then pending. The COM
mission believes that this course would have pre-
Vented much Of the imitation which characterized
the succeeding year, and would have rendered need
less the drastic detlation policy of which there has
l5een so much complaint.
- AS to the course now to be pursued, the COM
mission believes that provision can and should be
made for the more liberal extension of temporary
credit to farmers, and that this provision can and
should be made through existing agencies rather
than by the creation OF new machinery for that
purpose. The peculiarities OF the farmers business
make it irnpracticable for this credit to be handled
dHough+he ordinary commercial banks, as the loans
mast be for a longer term than would be wise for
those banks. 1t is proposed, therefore, that the
farm loan banks shall handle the business as a sep
arate function, making loans for a period which will
make possible payment out of the proceeds of the
farm. The length of term will depend on the char
acter OF the product, six months being sufficient in
many cases for the grain farmer, while the stock
raiser may require as much as three years.
The plan conteraplates the re-discount by farm
land banks of paper based ON such COLLATERAL, the
funds for this purpose to be derived from the sale
OF deDentureS. 1t is also suggested that the land
banks be authorized to make loans direct to CO.
operative associations on the security of farm
products in store.
Itsis quite apparent that the ordinary banks
cannot invest any considerable portion of the funds
entrusted to their care in loans which must run any,
where from six months up to three years, as this
would make it impossible for the banks to perform
the very funrtion for which they exist, namely, the
accumulation of the working funds Of the commun-
ity in such a manner that they will be available at
all times for the transaction of the comnunity's
current business. Yet the 30 or 60-day loan is not
what the farmer needs. His grain crop natures
once a year; his crop of steers once in two or three
years. When he borrows it must be on that basis.
The land banks are already engaged in the making
Of long time loans. They receive their funds from
persons who are DESTROYS Of a comparatively long
time investment, hence they can make such loans
without embarrassment.
The class of business under discussion comes
midway between the regular business of the COM
mercial bank and the farm mortgage business of the
land banks. The land banks are apparently in a
position to handle it on some such terms as those
proposed.
4 It the plan is followed its success will depend
seqaa the methods employed to insure it's efficient adj
rllnlstration. If proper provision is made to insure
the security of the loans a good many people who
would like to borrow will be unable to do SO. That
will provide the basis for a further grievance and for
a demand for the expansion OF the system until
every need is met. If such safeguards are not pro-
Vlded, losses will be entailed, and these losses will
fall on the taxpayers of the country. We shall have
repeated on a magnificent scale the deplorable his
tory of the Bank of North Dakota.