The Nonpartisan Leader Newspaper, October 31, 1921, Page 5

L & .~ mighty good excuse. oz .We’fe By.thé WorSt; Says John Lord * Financial Writer Unexpectedly Contributes Another Article, Summarizing His BY JOHHN LORD While we announced the conclusion of Mr. Lord’s articles " in the last issue, he has unexpectedly sent us another arti- cle—a sort of a review of what he brought out previously and a prediction of the future. He wrote. it after returning from a trip to the farm districts, and it is so good we gladly give him this additional space.- 1INCE writing the_series of -articles which hayve appeared in the Leader, 1 have made a vacation trip to my old home in Iowa. I spent a week on a farm in southern Iowa, which is the joint property of my wife and her brother. I am in the habit of renewing my contact with country life once every year by spending some . time, usually in the fall, on this farm. I lived on this farm at one time, and operated it. I was born on a farm. I suppose I have done everything that any other farmer ever did. Like every ‘other city man who was country raised, I attribute whatever success I have-had in the city to the fact that I laid a basis of health and vigor in the sunshine, iaixfxd by the hard work and hard knocks of country e. to the country this time to make a first hand study of farm conditions. I wanted to analyze the farm- “er’s mind—to find out what he is thinking about, and who he is cussing, because the farmer is usually cussing somebody. _I wanted to see if he had any intelligent understanding of the causes of the con- ditions which have flattened him out financially. This and a lot ofrother inquiries I stored away in my mind and then went to the country to see what I could find out by actual contact. I found my brother-in-law.cutting corn. I wanted to go out and help—rest my mind and work my ~muscles. I asked for the loan of a pair of overalls. “The only-pair I've got,” said my brother-in-law, “I have on.” . R looked at him somewhat puzzled and asked: " “What is the matter?” o “The matter is,” said my brother-in-law, “that I am nof buying anything that I can get along without.” =~ ° it \ Before I.left the country I found, that every other farmer was doing the same thing. An atmosphere of gloom seemed to hang over the whole com- munity. Hard times were in the air, like a pestilence or an epidemic. I kave seen hog cholera séize a com- : munity and scare all the farmers into a fit of despondency. I have seen an epidemic of typhoid fever break out - and do the same thing. A country . community has a community mind, what we call “mob psychology” in the city. Before I had stayed very long in the country, I wanted to get away, because all conversations began and . ended with the hard times. BANKS SEEM. TO BE LOOSENING UP A BIT . I went into the local bank to write some letters. The banker is an old friend. He was my banker when I lived -on the farm. While sitting in the bank I was an unintentional audi- tor of a conversation. A farmer came in to borrow $25. The farmer’s talk to the banKer reminded me of the - elaborate explanations I used to make to my father when I wanted a dollar, . sometimes only a quarter. This farm-' er knew that if he got $25 out of the bank;” he would have to put up a ‘While debating . the matter, another man came in and . paid the farmer the exdct sum he was trying to borrow. This made the loan unnecessary. But I have wonder- ed a good many times since whether or not the farmer would have. got the - $25. : : S "After I had finished my correspond- ‘ence I had g chat with the banker. While visiting this banker just about - But this is not what I want to talk about. I went ~ _His overalls were not in very good condition. I a year ago, he had told me that the banks had all —received instructions from the federal reserve bank to stop loaning money. He said at that time: “We have been advised by the reserve bank to force the payment of all loans where payment is possible and to let out no new money.” } I wanted to find out how things were now, so I said: ' “Jim, what is the situation now in loans ?” < “We have been advised,” replied the banker, “by regard to our reserve bank to loan money on cattle which are to go into the feed lot. This also includes hogs. ~ Our bank has put out $10,000, and we will put out a-great deal more if there is a demand for more of such loans, but we are discouraging all other kind of loans.”’ “How about public sales?” T asked . “We are not handling any sales paper at all,” he replied. “There won’t be any public sales in this territory.” 3 : Before I returned to the city, I visited another community and found the same situation with re- gard to auction sales. In this community a few sales were being held, but the banks were not hand- ling the paper. The farmer making the salé had to carry the paper himself, with the result that the - notes were. made to run only six months and to bear 8 per cent interest from date. “When I lived on a farm, sales paper was made to run a year without interest. The notes were all handled by the banks., These sales made things lively. The sales made business. Farmers got to- . gether, indulged in a great deal of friendly rivalry and were made to feel prosperous whether they ‘were or not. I-found that with the exception of hogs, stuff was not bringing anything at sales. Good cows were selling around $30 per head. Teams of horses for $50 and other things accordingly. There is a big corn crop in Iowa and there is quite a scramble for hogs. Corn is cheap and hogs are high in re- lation to corn, hence there is a rush to get hogs. _ Discussion of Deflation, Hard Times and the Federal Reserve Bank System It is better, of course, to feed this corn than to burn it, but I am afraid that a lot of cattle and hog feeders will be disappointed when they market their stuff next year. / Now, to cut this story short, I found the farmers in a very depressed state of mind. Some of them are comfortable. Some have bank accounts. The " bank account farmers could make a lot of money buying the cheap stuff which hardup farmers are forced-to sell, but even those farmers who are com- fortable are in the grip of the community- feeling of hard times, and they are wearing patched over- .alls also. I found hardware stores with no hard- ware, lumber yards with no lumber, -implement stores with no implements, and dry goods stores with not much dry goods. g WHY ADMINISTRATION CALLED A HALT ON DEFLATION POLICY I wish I could take Governor Harding of the fed- eral reserve system out to an Iowa farming com- munity, put him in overalls for a week and make him feel what has happened as a result of deflation. I think he might have some such’feelings as Kaiser Wilhelm had about the days of the armistice. When the Kaiser looked over a battered and broken Ger- many which had obeyed the rattle of his sword, he must have thought, “And this is what my mad act has done!” : Yes, I think if I could get Harding into overalls and take him out to the country, he would see something. k Now, I am not quarreling so much with deflation as the manner in which it was done. - God knows we needed deflation; but.God also knows that the federal reserve banks began to de- flate in the wrong spot. Deflation, bungling and _ brutal, began where it should have ended. It be- gan with the farmers and destroyed their purchas- ing power. When the farmers went out of the market, the manufacturers began to close down _their plants and then an army of unemployed work- men developed. The chief profiteers were not hit at all, or if they were hit, were hit last. ’ It was a bad job. - The process con- tinued. until business was about para- -lyzed. The process would be going on yet if the politicians at Washington hadn’t got badly frightened. . These politicians saw that if the thing kept up, it was going to put the Republican party out of business. When this .became so apparent that even - our complacent golf-playing president saw it, a halt ‘was called on the deflation process. ; . You may set it down now as a cer- didn’t stop soon enough, but it- has stopped. The reserve banks are show- ing some signs of sanity. They have "let up on the -farmer and they ar actually trying to help him. z The process was stopped too late to do much good this year, but it has been stopped, and that means that the worst is over. ' Whatever happers from now on, however, the reserve banks have taught us something. They have taught us that the reserve system "is a machine which, if badly handled, will just as surely wreck the country as, if rightly handled, it could save the situation. ~ Don’t mistake me, however, and conclude from what I have said above that I think everything is lovcly now and the goose hangs high. I DON'T think so. ~What I say is, that we have passed through the worst of the de- pression.. ~ If the banks will further extend - their policy of accommodation to the farmers and if they will continue to - reduce -the interest rate, then, recov- ery will pe certain and sure. What * the farmers need now more than any- thing elseis reduced interest. Millions Py b s tainty that deflation has stopped. It =~