The Nonpartisan Leader Newspaper, June 10, 1918, Page 13

_age earnings per family on Farm Lbans;—A'Goo.d ]gb Half D Short-Time Money Must Be Made Available at Fair Rates of Interest, O o e ne e or the Job of Feeding the World Will Be Too Much BY W. G. ROYLANCE e JHE truth about the farm loan situation is so plain that he who runs- may read. Though farm land constitutes the best _possible security, until the fed- “eral farm loan banks were or- ganized interest rates were ru- inous. The federal ‘system will more than half save the situ- ation, because eventually it either will absorb- all long-time farm loans or it will compel all private lenders te come down to its rates. What remains to be done is to make some provision that will as effectually take care of short-time loans. THIS MUST BE DONE TO SAVE THE COUN- TRY, AS WELL AS TO SAVE THE FARMERS. No industry can long support interest rates such as the farmers are now paying on season loans. And those rates are highest where the farm pro- + duction is not yet developed to full. capacity; that is, where, though the security is in the long run of the best because soil fertility is not exhausted, the farmers are least able to pay them. Nothing else so greatly retards the growth of the newer sections of . the country, the unexhausted fer- tility of which might be so potent a factor in supplying the nation with food. The interest on farm loans is paid out of farm earnings; \ not out of the increased value of land. Therefore farm earn- ings furnish the true measure of interest-paying ability. According to studies made by the bureau of farm man- agement of the United States department of agriculture, the average earnings on all farms, after allowing 5 per cent on the investment in land, is only 2 $318.22. This being the aver- — age it is apparent that all be- low .the average are barely escaping starvation. The aver- the thousand best farms se- lectéed was found to be little over $1,000 a year. Counting full time for two working per- sons per family, fair. wages would be at least $1,600 per year; so that. if fair wages were allowed on these best farms the earnings do not cover the wages, to say noth- ing about profits. SUCKING NATION’S LIFE BLOOD These figures make it plain that agricultural industry in this country will not support ] the interest.rates the farmers: : have: to pay.. The. fact must be recognized that continuing to pay those rates will im- poxerish . American farmers and rapidly decrease farm pro- duction. We ceculd not go on in this way even if times, were i normal; 'THE FOOD CRISIS, HASTENED AND INTENSIFIED BY THE WAR, RENDERS FUR- THER GOVERNMENT ACTION FOR THE FI-_ . NANCING OF ‘AGRICULTURE IMPERATIVE.: Even though the patriotism of the farmers prove equal to the present crisis, and bring the country through with a record crop next fall, if it be done on 10 iper ¢ent money there williremain for the majority of farmers a deficit' which they can not make ‘up ‘without assistance. ' It' may be possible to ‘defer the reckoning until after the war, pro- vided that the war does not last” over into mext . year. But neither during the war nor afterwsrds ' can we expect that the present banking system, without fundamental changes, will meet the ‘needs '* of agriculture. ‘It never has met these needs, nor does there seem to be much: inclination on the - part of the men who control it even to try to make’. ) In olden da);s “when a good licking. was ¢ it meet them. An amendment to the federal re- serve act now pending in congress apparently was designed to enable local banks that formerly have handled farm loans to take advantage of the fed- eral reserve rediscount system for the purpose of making short-time loans to farmers, but when we remember that banks belonging to the reserve system already have this privilege, and do not use it to the extent necessary to meet the needs of the farmers, we may be excused for some doubt of the efficiency of the new proposition. During the first week in March the federal reserve board reported . rediscount facilities of nearly $2,000,000,000 in ex- cess of the demand from member banks. The rate of rediscount on such paper as the banks were re- quiring for season loans to farmers was 5% per cent. A bank could make a loan to a farmer at 8 per cent, taking his note, and then rediscount the note at the regional reserve bank, at 5l per cent, taking a margin of 21 per cent on the trans- - PUTTING A ROD IN PICKLE - “action. Why would he not rediscount? The true answer to this question would shed a great light on the problem of farm finance in this country. MUST WE LEARN FROM FAMINE? It may be that because of uncertain crop re- turns the risks incurred in making short-time loans to farmers are so great-as to render it impossible for banks to make such loans'under the present rates, even with the rediscount facilities -available to them. But to the outsider it appears that the chief reason is that THE MEN CONTROLLING ‘OR INFLUENCING 'THE POLICY OF THE ‘BANKS ‘HAVE MONEY WHICH THEY WANT TO PLACE AT HIGH RATES, AND' THERE-“ FORE ‘DO NOT” WANT THE BANKS 'TO GET IN ANY CHEAPER MONEY IN COMPET_ITION“ ' PAGE' THIRTEEN: * —Drawn expressly for the Leader by W. C. Morris. ] oming to somebody, father put a good stout willow bough to soak'in a solution of vinegar, saltpeter and alum to make it tough and limber. That’s what the organized farmers are doing. The fat boy known as Profiteer has been swip- ing all the neighbor boys’ valuables. He doesn’t know it, but a good whipping is on.the way. i The ballot is a-whip that will settle the question of whether it pays to be honest. WITH THEIRS. This is unquestionably true in some instances; but whether it is generally true or not counts for little in the present situation. PROFITEERING SHOULD NOT BE TOLER- ATED IN BANKING, any more than in industry; but that is a question merely incidental to the tremendously important problem we have to solve: that of the efficient financing of food production. So far as its service to agriculture is concerned, our banking system stands convicted either of. in- efficiency or extravagance. The whole thing must be radically revised, or thrown into the scrap heap.. Nor does the situation admit of delay. The life of the nation depends on prompt and effective action. With fair and adequate transportation and mar- keting conditions, farming can support interest rates equal to those borne by other industries. If farming were now on an equal plane with other industry and business, with regard to both long and short-time loans, labor, transportation and markets, all farmers would be prosper- ous, and there would be no food crisis. Will the nation awaken in time to the serious- ness of this situation, or must it learn from the bitter ex- perience of famine? This calamity must not be allowed to come upon the nation. The mistakes of 1916 and 1917 must not be repeated. Either by amending the fedéral farm loan act or by state action, the work so well bégun' must be completed. The nmioney needed for food production must be supplied at rates that the in- dustry will bear. Brave Farmers of Iowa (James M. Pierce in the Iowa : Homestead). 1 want to commend our Iowa farmers who have taken steps to organize and .make their power felt in a political way. This is right in line with . the It is right in line with the tendency of the times manifest all over the country. All of us who have at heart the real ad- vancement and welfare of the farmer should indorse it. While our boys are fighting -to make the world a decent . place to live in, we would be derelict to our duty and trai- tors to our country if we did _not fight here at home to keep } America a decent place to live in. We must not exhaust our patriotism in shouting for the boys “over there,” nor must we, content. ourselves with giving 2R 1) ability, to buy Liberty bonds, to 'support the Red Cross and so on. :We must remember that we are American citizens, ¢ with a dut'&' to perform at the polls as,well as-on the battlefield, that we must not let the rascals get complete control of things here at home while our brave boys are fighting the rascals abroad..We have several hundred thousand boys, from. the farms of our beloved-land overseas in France today. .-They are fighting . with bullets. Shall we sit back.and lef. "them do the work to “keep the world safe for de- . mocracy ?” ~Rather, is there not an equally great. . & ' and’ serious -duty ‘for us here at home to perform,. .’ to fight with ballots to” “keep democracy safe for, .. ““the world?” That is why'I am delighted to see pub- “li¢ issues 'threshed out at meetings .of the: Tax-. . payers’ league, the Nonpartisan league and other - representative farmers’ organizations; that'is why I beliéve 'the farmers should make their voices “heard and their influence felt, in Jowa affairs’ and:in’ “ national affairs;, more today than ever before. - = WAL work in our neighboring states. . money, to. the utmost of our - e AT