Washington telegraph., 1923-12-07
EDISON-FORD PLAN
UNFAIR TO FARMER
Third Article Shows How Credit
Test Would Fail Him in
His Need.

The unfSirness to the farmer oi
the Edison-Ford commodity money
scheme, although ostepsibly aimed to
improve his economic position, is dis.
cussed In the present article, which
is the third in series prepared by the
American Bankers Association, re-
viewing the exposure OF the weak
nesses OF the plan as presented by
William T. 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 tc
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 certih'
Gates which he could sell or use for
bank loans.
Restricted Credit
In that provision allowing for Gov
ernment 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
tbat tbo farr,ar ooYld horrouy nm r,oaf
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 a 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. "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
O 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.
tics and too low for most of them
With such details the Edison plan 10
not concerned.
Banks Falrer to Farmers
"The general practice Of the banks
Il 81, pofv g., CO. h,,N fs
sounder business. There is no justi-
fcaton for basing the loan value Of
anything upon "verage prices In past
years. Sound banking practice looks
to the future. A bank-for the pro-
lection of its depositors, II for no
other reason-must consider above
everything the prospects OF getting
its money back. And farmers pros.
poets of repaying a loan from the sale
of his product depend entirely on fu.
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 a
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 a money that is
sognder than gold money; 1t would
not provide a money less subject to
fiuctuation IL value; X would not en-
aSle farmers to obtain larger loans
than they can now obtain; II would
not divorce agriculture from the
banking system; and 1t would not
eliminate speculation in farm prod
ucts."