EASIER MONEY FOR THE FARMER
Powell, W. W.
Easier Money for the Farmer How Wisconsin Is Meeting the Problem of Rural Credit By W. W. POWELL MONEY is the most effective of all fertilizers. This conception carries with it an old...
...Wisconsin is meeting this problem with a complete program of rural credits...
...After the applicant has stated the purpose of the loan and has described the property as to location and dimensions, he is required to make a detailed sworn statement by answering forty-one questions, including a full description of the soil and farming methods, the size, condition and insurance of building, the amount Lack of money has retarded the progress of agricultural development throughout the United States...
...Under this law Wisconsin is undertaking to secure money for agricultural development on the same advantageous terms and by methods similar to those by which railroads and other large corporations have secured funds for their vast undertakings...
...It could not be converted into money readily without a possible sacrifice of value...
...According to figures compiled by the bureau of foreign and domestic commerce, United States department of commerce, the national debts of th« world now aggregate $42,000,000,000, having increased 20 per cent in the last decado and doubled in the last forty years...
...Agriculture is competing daily with other industries—bidding against the mills and the railroads for both money and men...
...Its local character also adds to this difficulty...
...Italy, $2,707,000,000...
...WISCONSIN'S program includes four plans for getting the farmer money upon easy terms...
...Third — LOANS FROM THE COUNTY TREASURY...
...the next largest, Russia, $4,553,000,000 tho United Kingdom, $3,486,000,000...
...Through the Board of Public Affairs, the state is bringing the investors and borrowers together...
...Now the small investor,—the laboring man with a saving of $100—can buy an absolutely safe, non-speculative BOND which has improved farm land as the underlying security...
...Briefly, this regulation provides for an examination of affairs, assets and securities of the company at least twice each year, imposes double liability upon the stockholders and requires that the by-laws and general plan of business be approved by the banking commissioner...
...British India, $1,475,000,000...
...The land mortgage, the farmer's only instrument of credit, cannot compete with the bonds of manufacturing concerns, the bonds of railroad companies or other public service corporations...
...Fourth — LOANS FROM THE STATE TREASURY...
...own battles, as a democracy without aid in the form of private benefactions have constituted one of the inspiring spectacles of modern times...
...The debt of the German empire is stated at $1,178,000,000 and of the German states $3,730,000,000...
...However a careful investigation conducted two years ago by Congress has disclosed the fact that there is nothing more important in Wall street than a huge vault in which the Morgans and Rockefellers have been holding great quantities of this fertilizer which they have shipped in from mines and deposits throughout the United States...
...Rather it is a demonstration of the readiness of capital to invest in any security which, in addition to being an adequate guaranty against loss, is in such form that it can be passed along at its face value to friend, neighbor or banker in any transaction, even as government bonds pass current as money...
...The largest national debt is that of France, $6,2S4,000,000...
...Second—LOANS BY CO-OPERATIVE CREDIT ASSOCIATIONS...
...In addition to a high rate of interest, under the old plan, the borrower often was required to pay a considerable commission to the person securing him the loan...
...Thousands of acres have been drained within the *!ast two years...
...Under this plan the farmers borrow their money on a farm mortgage as before, in every particular...
...Therefore, it has placed the land mortgage association under the supervision of the Banking department of the state, thereby subjecting it to such regulation and control as now apply to incorporated banks...
...While other states were discussing methods, while the federal government was still studying the experiences of European countries, self-reliant Wisconsin put into operation a matured plan' for long-term farm loans at low rates of interest, the loans to be repaid in small installments...
...Japan, $1,242,000,000, and the United States, $1,028,000,000...
...This is not proof that capital is prejudiced against agriculture as an industry...
...The regulation, old-style farm mortgage* was too unwieldy, too clumsy an instrument of credit to be popular with money lenders...
...Many thousands of dollars have been loaned to northern Wisconsin farmers for development...
...The banks sells them to investors...
...Definite and specific information as to the character of the property conveyed in the mortgage is contained in a detailed statement which the applicant for a loan is required to make under the by-laws of the land mortgage association...
...The money to be loaned on the mortgage must not exceed 65 per cent, of the value of the real estate securing the mortgage, and the actual amount of bonds outstanding at any one time must not exceed the total amount unpaid upon the notes secured by the mortgages deposited with the State Treasurer...
...What Is the Program...
...Some money has been loaned for orchard development...
...Fourteen is the nominal minimum legal limit practically everywhere in the United States...
...After it is issued, the story of the land bond is the same as that of the railroad bond...
...Encouraging Results THE result...
...How far can we reduce the productive power of the farmer without making this country dependent upon the farmers of other nations for its food supply...
...The Wisconsin program apparently is based on the proposition that "God helps those who help themselves...
...The underlying security, the mortgage, must be deposited with the State Treasurer, and must be accompanied by an abstract of title...
...The third step was to inform the man with thousands to invest, as well as the man with only one hundred dollars in the savings bank that this great state had provided, for those who wish to loan their money on real estate security, adequate safeguards against fraud and unwarranted risk...
...What about the farmer whose land already is mortgaged, yet who needs money for working capital?—Editor's Note...
...How long can we continue to deny the farmer adequate working capital without destroying the nation's independence...
...At the same time, the bond provision has placed the land mortgage on a par with those securities which larger investors consider attractive...
...Following this, the assessor of incomes is required to certify his judgment and belief as to the value of the property...
...Little Items This is an age of extravagance...
...Accordingly, the state has authorized the organization of land mortgage associations which are permitted to issue bonds secured by farm mortgages...
...This conception carries with it an old superstition to the effect that, like some other commercial fertilizers, it is found only in foreign or distant parts and can be secured by the farmer only by the payment of high transportation charges, plus a broker's percentage and the retailer's profit...
...The initial step in this program was to provide for the financial machinery and to authorize the instruments of credit by which Wisconsin farmers could deal with both the big and the little investors of their own state...
...The state's part in this work is to shut out the fakers and the usurers...
...Their response may be partly a matter of public spirit, but it seems probable that the interest of bankers in agricultural development has been thus awakened because of the fact that the new system of rural credits has made farm loans inviting...
...From every nook and corner of developed America, capital flows to the urban centers because there it can find investment in current securities, industrial and railroad bonds, and mercantile enterprises...
...It passes current in many transactions, because of the fact that it is of standard denominations, from $100, or less, to $1,000, and because of the fact that its value is almost without possibility of fluctuation...
...How hard can we make the task of the farmer and still expect him to stay on the job...
...Now the land mortgage association gives to the farm mortgage the very attributes which have made industrial securities attractive...
...agricultural interests wait upon the slow-moving federal government to put into operation a national system of rural credits...
...The release of a considerable amount of capital on farm mortgages has opened up a new era in the business of farming...
...Sound and Inviting Bonds BUT Wisconsin recognizes that the issuance and sale of bonds under such conditions is a phase of the banking business...
...On the other hand, the fact that farm mortgage loans were given for a short time, five to ten years at the most, made the land mortgage a difficult thing for the farmer to handle...
...Sulf-reliance and Independence have made of the population of Wisconsin a great people...
...Ready Cash For the Borrower NOW what about the convenience of the borrower...
...Because of this currency, it is possible to release a considerable amount oi: money for agricultural investment...
...Heretofore money lenders have not considered the land mortgage as a convenient and desirable security...
...Answers to these questions are found in the broader aspects of the nature and limitations of credit, rather than in the list of small benefits which might be given...
...This BOND provision makes the land mortgage really a liquid security and removes the chief objections formerly urged against it by bankers and other investors...
...This requires a special form of company, a corporation authorized to engage in a particular phase of banking...
...of the average monthly milk check and the distances to the nearest school and the nearest shipping point...
...The bankers of Wisconsin are responding to this call for money to develop the agricultural resources of the state...
...Their courage to grap-le with their own problems, their onfidence in their ability to meet ev-ry emergency, and their determination to fight their...
...Is it any wonder, after all these precautions, that we find the great state of Wisconsin saying in section 2024— 138: "The bonds of a land mortgage association shall be a legal investment for savings associations, trust companies or other financial institutions chartered under the laws of this state and shall be a legal investment for trustees, executors, administrators, or custodians, of public or private funds, or corporations, partnerships or asso-tions...
...That the bonds are issued to mature in twenty or thirty years enables the land mortgage association to make twenty or thirty year loans to farmers...
...The next step was to acquaint the farmers of the state generally with the fact that a new system was in vogue—to get word to those who needed to borrow money that a plan had been devised by which they could secure loans on farm mortgages to run twenty to thirty years, to bear low rates of interest and to be repaid in small installments...
...The greater abundance of capital willing to invest in agricultural enterprises, the long term of undisturbed investment, and the certainty that the value of the underlying securities will constantly increase, all have a tendency to reduce the rates of interest on farm loans...
...that of Austria, $1,434,000,000, and of Hungary, $1,268,000,000.—Engineering News...
...The land mortgage association is described in the first section, printed on this page...
...Co-operative credit associations and other features are to be discussed in the second section which will appear in the next issue.—EDITOR'S NOTE...
...Supervision by the banking commissioner insures the investor against reckless financiering and informs him as to the value underlying every dollar's worth of bonds issued...
...Appraisers, after a personal examination, report their judgment as to the value of the land offered as security and also as to the value of the adjoining land...
...For convenience of publication, this story is presented in two sections...
...Spain, $1,815,000,000...
...Every state has the same problem...
...England and Wales still have thousands of child laborers between the ages of ten and fourteen in all the industries carried on in the cities...
...The interest and other annual charges amounted in 1912 to $1,732,-000,000...
...is possible by rigid regulation and public supervision, had taken the risk . out of this class of securities...
...So much for the protection of the investor...
...In sections which have been settled for a longer time and consequently are in a higher state of development the loans have been made for an entirely different class of improvements...
...What advantages over the old catch-as-cateh-can system does the land mortgage association provide for the borrowing farmer...
...that of Austria-Hungary, $1,051,000,-000...
...Lack of working capital has discouraged men from entering the one underlying industry which feeds the world and sustains the race...
...Even before this superstition was exploded, there were those who did not consider it good business for Wisconsin to dispose of its output of fertilizer to the Morgans and Rockefellers when there was a market for it at home...
...The big benefit to agriculture lies in the two facts that now the farmer can get all the money he needs, and that he can repay it on the amortization plan, which means in small installments...
...Wisconsin money for Wisconsin agriculture" appears to be the central idea...
...Of these four plans, loans by land mortgage associations under the supervision of the state Banking department have proved most popular and up to this time appear to be the most practicable...
...And this element more than any other has denied to the farmer the credit to which his business ability, his industry and his property entitles him...
...First—LOANS BY LAND MORTGAGE ASSOCIATIONS...
...The fact that, whether it be for $500 or $5,000, it has to be taken IN ITS ENTIRETY by one person or firm, makes it a clumsy security for the banker to handle...
...Powell, next month, telling the story of the adaptation of the German co-operative credit association to the needs of Wisconsin...
...This law places the real estate bond above suspicion...
...Some farmers (and some others) have supposed that the Rockefellers and the Morgans were mining this stuff in Wall street...
...In a word, to notify the big and the little investors that the state, as much as...
...This plan has in it enough of private initiative and individual reward to supply the incentive for activity...
...And thereby hangs a tale— a story which needs no figure of speech to adorn it, Wisconsin Money For Wisconsin Farmers THERE is promise and hope for a state which is determined not to beg its loans in the great financial centers, and refuses to make- its own...
...Nothing in the machinery of the Wisconsin system of rural credits suggests dependence upon aid from any big moneyed interest...
...Then the land mortgage association sells the bonds to banks...
...At the same time, the plan has all the elements of generosity and safety which would characterize it if it were wholly a state undertaking...
...In those sections of the state where land mortgage associations are operating, particularly in northwestern counties, thousands of acres have been cleared and fenced...
...W. W. Powetl, assistant secretary of the Board of Public Affairs, has written for "La Follette's" the story of the Wisconsin system of farm loans...
...Dawson, Yukon, is planning to establish a municipal electric lighting and telephone plant at an estimated cost of $165,000...
...Many thousands of dottars have gone into silos, barns, farm machinery of the latest improved types, and into additions to herds and flocks...
...While the Wisconsin system of rural credits is not yet two years old, already northern Wisconsin has felt the impetus given to agriculture through the operation of this plan...
...The land mortgage, association deposits the mortgages with the State Treasurer and proceeds at once to float a BOND ISSUE BASED ON THE MORTGAGES...
...There will be another article by Mr...
Vol. 6 • November 1914 • No. 45
