The midland journal. (Rising Sun, Md.) 1885-1947, 1933-12-08
WHAT ABOUT AGRICuLTURE 2
BY Miles H. Fairbank, Sec. Treas,
Maryland Farm Bureau
Federation
PART Nv

Will Government Credit Save the
Farmer?
The Farm Credit Administration,
headed by DR.. William Meyers is the
supreme credit agency of the govern
ment for agriculture. The rather
highly organized banking machinery
is being built up around the Federal
Land Banks in their respective dis
tricts.
Each Land Bank will now be a
branch of the Farm Credit Admins
tration, with a general agent at the
head, board of directors and a
manager at the head Of each four di-
visions the Land Bank
proper, the Production Credit Cor
poration, the Bank for Coopcratives,
and the intermediate Credit Bank.
Two questions naturally arise
when one considers this form of
farm relief: first, is tt good policy
for the government to set up these
agencies; second, will such service
actually benefit the farmer! Many
good people are asking just that.
The Land Banks were created In
1916 to extend to farmers the priv
lege of long time mortgage credit
and, without doubt, have been of in
estimable good. AS is generally
known, the principal of land
bank loan is paid off on an
amortization plan of 10 per
year, making payment extend over
long period. Again the land banks
are not financed by public funds, but
by bonds which are sold to the in
vesting public. Tax payers cannot
kick about that. The idea of the
Land Bank is supposed to be coop
erative," that is, every farmer bor-
rover has to take five per cent of
his loan in stock and thus become
part of the system" This was done
by forming local associations which
were supposed to pass on the eligi-
bility of other borrowers. To that
extent, the Land bank system is CO.
operative. If any farmer, however,
ever had anything to do with the
policies of the Land Bank, he is yet
to be discovered.
The same act of Congress that
created the Land Bank system also
permitted bankers and investors to
organize similar institutions. These
are known as Joint-Stock Land
Banks and they found favor with
many farmers because it was not
necessary to take out % in stock
in order to get loan. On the other
hand, being private institutions with
limited reserves, they found it neces-
,ary to take foreclosure steps on
many mortgages when the depres-
sion came on. Under the present
set-up, the Joinst-Stock Land Banks
will be gradually liquidated and
their mortgages taken over by the
Farm Credit Administration.
The intermediate Credit Bank,
which was created by Act of Con-
gress in 1928, is discount bank for
agricultural paper, it being argued
at that time that, il county banks
could discount cattle and farm notes,
more money would be loaned to
farmers. This was on the theory of
extending credit from the top down.
Also, the law provided for the form
alton of agricultural credit associa-
lions among farmers to loan money
10 their members and discount thru
the Intermediate. But il takes cap
ital to set up local association and
few have been organized While
banks have used the discount privi-
iege, it is difficult to see much differ
ence so far as the individual, farmer
is concerned.
Heretofore, the government has
loaned money TO cooperative organi-
cations through the Farm Board.
Now, we will have Bank for Co
operatives, with branches in each
Land Bank district.
Direct loans to farmers in The past
have been in the nature of distress
loans, such as the seed ana feed
loans, and were usually handed out
quite lavishly. When the R. F. c.
was created to help banks, railroads
and insurance companies, certain
sum was set aside for an organiza-
ton known as the Regional Agricul-
tural Credit Corporation, to make
loans for buying cattle, for produc-
tion purposes and general indebted
ness. These and the seed loan bust
ness are now being consolidated in
what is known as the Production
Loan Corporation. part of the
Farm Credit Administration.
From all this there is no question
but that the government is going