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About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (July 1, 1914)
nmiv,fiF nr yii ij-- ' The Commoner VOL. 14, NO. 7 .ijr C .. ff r IV The Commoner ISSUED MONTHLY Entered at the Postofflcc at Lincoln, Nebraska, as nccond-clasB matter. Wijiiam J. Hhtav (i.mn W. Hrya Editor and Proprietor Ahoc ate Editor and PublWier Edllnr'al Jloonis and Hmtncw Offlo?. Stnte iff. Press Hntldlng One Yrnr $1.00 Three 4IonlU j SIX Month JjO Slnprle Copy 10 In Clubs of Five or Sample Copies Free, more, per year... .75 Foreign Post. 25c Extra. .SUIISCHIl'TIO.VS can bo sent direct to The Com moner. They ran also be sent through newspapers which have advertised a clubbing rate, or through local agents, where such agents have been ap pointed. All remittances should be sent by post offlco money order, express order, or by bank draft on New York or Chicago. Do not send Individual checks, stamps or currency. KEN i:VAIiS Tho dato on your wrapper shows tho tlmo to which your subscription is paid. Thus January H means that payment has been re ceived to and Including the Issue of January, 1914. CHANGE OP AIJDHESS Subscribers requesting a change of address must give old as well as new address. ADVEUTISING Rates will be furnished upon application. Address all communications to THE COMMONER, LJncoln, Neb. Mr. Roosevelt's criticism of President Wil son's part in the enactment of the present tariff law recalls the fact that the self-same Roose velt, although in the White House seven years, never tried to reduce the tariff. Tho tremendous crops already garnered and in process of growth are just another form of announcement that the junior member of the firm of Tho Republican Party & Providence is withdrawing for reasons not difficult to guess. Secretary McAdoo has balanced up his books for the fiscal year just ended and finds that the receipts of tho government have exceeded the ordinary expenditures by over $33,000,000. This disposes of another long-cherished delusion of the republican leaders, that a democratic ad ministration is capable only of creating a deficit. A piece of idealism was the comment made by New York newspapers upon the recent utterance of President Wilson that his great desire, in tho enactment of trust legislation, was to obtain "certain justice for the man engaged in busi ness." On tho contrary it was the statement of a practical truth descriptive of conditions that must obtain before wo can possess real pride in our government. Just laws administered by judges with the sense of equity is the essence of freo government, and was one of the foundation stones of tho republic. ' A prominent New York broker has given out 'an interview in which he states as his opinion that tho now currency law provides a mechan ism that will furnish the money needed for tho annual movement of crops without any signs of tho Btrain that this demand has put upon the banking power of the nation every fall for years. This man but voices an opinion generally hold by bankers. Yet this law is tho subject of harsh criticism by partisan opponents who did noth ing whilo they were in power to relieve this annually recurring condition. The railroads aro bombarding the people with appeals not to permit tho postofllco department to reduce the price paid them for carrying tho mails until after a committee appointed two or three years ago has been allowed to report that their pay ought to bo increased. The chances are that tho people will concludo that tho post office department, which is trying to save them money, is a bettor judge of tho matter than tho railroads. They remember that the express com panies wero much, perturbed because the post office department insisted on establishing thn parcels post, since which time the express com- panies have been operating under greatlv re duced rates. ' ROGER "STEADYING THE BOAT" Sullivari of Illinois explains his candidacy by saying that they need someone to "stoadv thn boat" The secret Is out at last. The monopol? boat Is rocking in progressive waters and the crew is scared. Roger would bo just the man if the democrats wanted to protect monnnniv ", IA I unvinT " JUXVXiUNt Rural Credit Legislation The problem of extending the banking ma chinery and facilities of the country into the rural districts more intimately for the con venience and assistance of the rural population has been receiving profound attention in this country, especially in the last few years. The difficulties arise partly out of the diffusion and sparseness of population in country districts, and partly out of the class of securities which the farming population normally has to offer for loans. The national banking system up to the present time has labored under restrictions im posed by law which made it impossible for the national banks to solve the problems in the most effective way. State banks with fewer restric tions, with smaller capital requirements, and ability to lend on real estate have established more intimate touch, and have perhaps rendered greater assistance. Likewise certain agencies, such as building and loan associations, insur ance companies and mortgage debenture com panies and cooperative credit associations recent ly created by state legislation in Texas, Massa chusetts, New York and Wisconsin, operate to extend capital to the farming districts and there by in a measure to cut down the rate of interest. irncu iiic uauuuai uuuaiug iuiy, vuiujluuuij called the federal reserve act, was under discus sion in congress the matter of farm credits was considered and debated, but it was decided that the subject as a specific program should be sep arately dealt with in another act. The federal reserve act was passed with a view to the im provement of the banking conditions of the country in the interest of all the classes; to the restoration of normality in the banking law; to the establishment of a reserve of banking power which could beutilfzed in times of emergency, and therefore with a view to the securing of good banking at all times, and to the preven tion of panics. It is not a banker's law, nor a business man's law, nor a manufacturer's law, nor a farmer's law; it is a law for all classes, for all the people. However, there were incor porated into the act several very important pro visions which had in mind specifically the needs of the farming classes and the possibility of ex tending banking facilities to the rural districts more satisfactorily. It was specifically provided that a federal reserve bank might "discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for AGRICULTURAL, industrial, or commercial pur poses, or the proceeds of which have been used or to be used, for such purposes." The federal reserve board was given the right to define the character of paper thus eligible for discount It was further distinctly provide! that nothing in the act should be construed to "prohibit such notes, drafts, and bills of exchange, secured by staple agricultural products, or other goods wares or merchandise from being eligible for such discount." It was provided that the ordi nary notes, drafts, or bills admitted to discount should have maturity at the time of discount of not move than 90 DAYS, but that notes, drafts and bills drawn or issued for agricultural pur poses or based on live stock and having a matur ity not exceeding SIX MONTHS, might be dis counted in an amount to be limited to a percent age of tho capital of tho federal reserve bank to be ascertained and fixed by tho federal re servo board. u It will bo noted that not only is paper arisintr out of agricultural transactions rnXSelbll under tho act, but that it is permitted to have a longer maturing period than other forms of paper. This discrimination aroso naturallv oSJ of the fact that agricultural operations arj sea oonal and nvolvo a longer period than ordinary commercial transactions. Again, it was nrovE in tho act that national banking aLSC not situated in the central reserve cities might lend on improved and unencumbered farm lands wUh n tho federal reserve district, and that such loans might bo made for any period up to five years. Such loans must not exceed 60 per cent of tho actual valun nf h,a n.n.. Km cont lonal bank under this pwtolon oftho wf m loan on farm lands an amount in the . wJSreSK 2oB!f cent of its capital and ewpta! J? one-third of its tlmo deposits. Tho federal r servo act, therefore, so far from Zcrimii " in mind, and whilo not discriminating in uSm of them takes just and particular knowledge of their requirements. The matter of additional legislation concern ing farm credits waB promptly brought to the at tention of congress by the president in the regu lar session in his annual message, and many ex perts have been giving persistent and careful at tention to the problem. The explanation as to why special banking ar rangements were devised abroad and have not been extensively planned and operated in this country is to bo found in the difference in the economic, social and banking habits and condi tions. This is the only large country that may be said to have the banking habit developed in a high degree with banking and lending associa tions democratized and in intimate touch with the masses of the people. The great masses of people in a number of European countries do not have the ordinary banking habit and know little about banking practices. The habit of deposit ing money in banks, of checking against such deposits, and of making loans through banks in such countries is not general. This will bo illus trated by a reference to the Bank of France. This bank, with a billion dollars of bank notes has only 285 million dollars of deposits. A bank can utilize its assets either through notes or through discount and deposit and checking. In this country the assets of a bank are utilized to a slight extent through bank notes, the total volume being about 725 millions, while the total deposits in all the banks are 17 billions. This testifies to an almost universal use of banking facilities in the nation. Partly because of the lack of the ordinary banking habit on the part of European peoples, partly' because of the lack of banking facilities, and partly because of other social and economic factors special agencies had to be devised. There was great need for some addition to their machinery,, The land mort gage and the cooperative credit arrangements grew up of necessity. Likewise, the savings banks were created for similar , reasons. It is noteworthy that only recently have saving insti tutions been established in great numbers in this country, and still more recently that the government postal savings system has been evolved. Notwithstanding the fact, however, that tho people of the United States have ampler finan cial agencies than any other in the world, and have developed the habit of using these agencies to a greater extent than any other peoples, students of rural problems have been keenly alive to the necessity of further Improvements and hence have insisted upon extensions of the national banking facilities and the creation of special agencies in intimate touch with farmers with a special view to the betterment of financial conditions in the country. At least two. definite measures have been prepared and have received definite consideration. They are similar in many respects; they provide, in brief, for land mort gage associations with a smaller capital, which may make loans on farm mortgages within a district of a state, or within a state to the ex tent of 50 per cent of the real values of tho farms. The money arising from such loans is to be used for productive purposes on the farm on which the security is based. It is contem plated in one way or another either through separate associations or through a central agency that debenture bonds may be blanketed on tho mortgages and offered to the public. It is con templated that the operations of the act shall be supervised by a central agency in Washing ton, and that there should be adequate safe- Buui-us m ine way of examination and inspec tion. It is the underlying thought in the minds of the most serious students of the question that such debenture bonds would be safe and would attract capital and would bring into the invest ment field especially smaller holdings scattered through the .country which do not now easily find satisfactory investments. In short, it is contemplated that tho resources, especially of the rural population, will be mobilized and used in the Interest of the farming classes. The chief difference of opinion arises over whether there should be special aid furnished in this direction by the government either by the utilization of cash on hand In the purchase of debenture bonds or by the utilization of cash arising from the sale of government bonds for the same purpose. There soemg to be no emergency that would require governmeat assiitance to the farmers J) :i
