Cottonwood chronicle. [volume] (Cottonwood, Idaho) 1917-current, 1923-08-24
EDIS0N-f0RD PLAN
UNFAIR TO FARMER
Third Article Shows How Credit
Test Would Fail Him in
His Need.

The unfairness to the farmer OF
the Edison-Ford commodity money"
scheme, although ostensibly aimed to
improve his economic position. is dis
cussed In the present article, which
is the third in q series prepared by the
American Bankers Association, re
viewing the exposure of the weak
nesses of the plan as presented by
William It. Foster, Director of the
Pollack Foundation for Economic Re-
search.
Briefly, the plan, sponsored by Thorn
as Edison and Henry Ford, would pro
vide for Government warehousing OF
basic commodities. against which cur
rency would be loaned, during storage,
to the producer without interest, up to
half the average value of the prod
ucts for the previous twenty-five
years. On the other half of the value
the producer would receive certifi-
Gates which he could sell or use for
bank loans.
Restricted Credit
III tudl pIOFlSlOu dlOWluB iOI Wv
eminent loans only up to half the
average value for twenty-five years
Mr.. Foster finds particular weakness
in the scheme. He points out that
prices have risen so high since 1896
that the farmer could borrow on most
products much less than half the pres
ent value of the products-much less,
in fact, than he could borrow directly
from the banks. Loans on the other
half the value, which would be on
virtually second mortgage basis, he
says, would not be desirable for the
banks.
THE plan is not fair even to farm
ers; it involves unjust discrimina
tion," Mr.. Foster says. 1.-The Edison
plan fixes the loan values of all prod
ucts absolutely. uniformly and arbi
trarily. 1t ignores the relative pros
poets of different commodity markets
Only by the merest chance would such
a method give a fair loan valuation
Fifty per cent of the average price
for the previous twenty-five years
would be too high for some commodi
ties and too low for most of them
With such details the Edison plan is
not concerned.
Banks Fairer to Farmers
The general practice OF the banks
is not only fairer to farmers. but 1t Is
sounder business. There is no justi-
hcation for basing the loan value of
anything upon average prices in past
years. Sound banking practice looks
to the future. A bank-for the pro-
lection of its depositors, If for no
other reason-must consider above
everything the prospects of getting
Its money back. And a farmers pros
poets of repaying loan from the sale
Of his product depend entirely on flu
ture prices, not at all on past prices.
Last years runs do not count in this
years game"
AS to the claim that the Edison
plan would curb speculation in farm
products, Mr.. Foster says:
There Is nothing In the Edison
plan that would tend to abolish spec
ulation. Even after the farmer had
stored his products and obtained
loan from the Government, he would
still be free to sell his products out
right to spectators. The farmer
would have all the inducements to sell
that he has today, and spectators
would have all the inducements to
buy.
Clearly, then, the Edison plan
would not provide money that is
sounder than gold money; it would
not provide a money less subject to
fluctuation in value; it would not en-
able farmers to obtain larger loans
than they can now obtain; it would
not divorce agriculture from the
banking system; and it would not
eliminate speculation in farm prod
ucts."