HOME-MADE BANKING FOR FARMERS
Powell, W. W.
Home-Made Banking for Farmers How Wisconsin Is Meeting the Great Problem of Rural Credit By W. W. POWELL NOW what of that considerable number of farmers in every community, particularly in...
...Home-Made Banking for Farmers How Wisconsin Is Meeting the Great Problem of Rural Credit By W. W. POWELL NOW what of that considerable number of farmers in every community, particularly in northern Wisconsin, whose land already is mortgaged, yet who need money for working capital...
...He should have a sufficient loan to enable him to conduct his season's operations with profit to himself...
...This law provides for loans from the county tkeasuby...
...A merchant may not own the building in which his store is located, he may have secured much of his stock from goods on thirty to sixty days" credit...
...The law says that in investing these funds, the public land commissioners shall give preference to loans to school districts for the purposes of erecting school buildings and to loans on agricultural lands...
...It was the purpose of the framers of the Wisconsin system of rural credits to encourage the self-reliance of the farmer and to put him into the way of securing from farmers, prefei-ably his neighbors, the money needed to conduct his farming operations...
...In a word, this law provides that the county may issue bonds to secure money to loan to settlers within the county and to be used by the settlers in draining and clearing land for agricultural purposes...
...Yet he cannot furnish a mortgage on the land itself...
...It was to provide an extension of banking facilities on some plan that would make it possible for the honest industrious farmer to secure working capital on his crop prospects that the Wisconsin legislature passed a law authorizing the organization of the co-operative credit associations...
...A co-operative credit association may be organized by seven or more citizens of the state for the purpose of promoting thrift among its members...
...To enable the farmer to take such a place in the community required the creation of a new kind of bank, one organized to meet his peculiar needs, one which, by its organization, by the rules governing it and by uniformity in the character of Its business would be enabled to grant loans on terms and conditions which could be met by the man who must patiently wait upon the seasons for his increase...
...A New Kind of Bank IT IS NOT enough that the farmer should have a little, penurious loan...
...That is, if he does not own it, or owning it already has it encumbered, the bankers will not extend to him the same privileges that are extended to the merchant, nor anything like equal privileges...
...The public land commissioners may loan money from the state treasury "for the purpose of assisting the borrower to erect necessary dwelling houses, and farm buildings, to build silos and clear his land of stumps, trees, brush and fallen timber...
...The farmer may have a herd of cows with the almost certain prospect that each head in the herd will net him $55 to $70 for the year...
...Up to this time there have been no co-operative credit associations organized in Wisconsin, though several communities are now taking the preliminary steps in the organization of such banks...
...It is in force with varying details in practically all the countries of Europe...
...But, whatever the cause, there is a wide difference between the treatment which the banker gives or can give to the renting farmer and that which he can give to the renting merchant...
...Necessarily, these moneys in the general fund are not available for loans on farm mortgages...
...No farmer would want to put a mortgage on his farm for a thousand dollars when he understood that possibly the state would call upon him the next day or the next week to turn that thousand dollars back into the treasury because it was needed to meet the regular monthly payroll of the state...
...Now there is nothing unstable about the program...
...Most of the money in the state treasury, collected from the people in the form of taxes, is working capital to be drawn upon by the state from day to day to carry on the various lines of work for which the legislature „as made appropriations, such as the maintenance of the charitable and penal institutions, the operation of the University and the construction of highways...
...In Wisconsin, and in every other state in the union, there are thousands upon thousands of acres awaiting thb touch of man's hands to make them blossom as the rose...
...The County as a Banker ANOTHER part of the Wisconsin system of rural credits, which operates to encourage the independence of the farmers of northern counties, is known as the land reclamation act...
...Verily, money is the most effective of all fertilizers...
...But human energy itself is awaiting a touch that can come only from the easy flow of money to all worthy agricultural enterprises...
...This system is not entirely original...
...Most of the features are adaptations from the system in vogue in Germany...
...It may receive the savings of its members and may loan the funds thus accumulated to those members of the association desiring to borrow...
...It is a business proposition and one which encourages the self-reliance and the independence of the communities adopting it...
...The purposes for which the loans may be made, the security and the terms are determined by a credit committee of the association...
...This is not so great an advantage to the farmers of the state as it would appear, because there is not much money in the state treasury at any time which can be loaned on farm mortgages or any other form of security...
...Therefore provision was made for the organization of co-operative credit associations...
...This is partly owing to the fact that the farmer requires a little longer time in which to grow his crop and turn over the harvest product into money than is required by the merchant to turn his stock of goods...
...However, the state has some money to loan...
...Loans From the State ANOTHER law provides for loans from the state treasury on farm mortgages...
...In a word, it is home-made banking, and one of its chief benefits is the lesson of self-reliance which it teaches to the individual, to the group and to the community...
...As a rule, bankers of Wisconsin have been considerate and have endeavored, in so far as customary banking practice would permit them, to supply the industrious farmer with working capital, accepting the borrower's integrity and his ability to pay as security for the loan...
...Nevertheless, commercial banking has its limitations, and "ability to pay" has been judged by conservative standards...
...These institutions in principle and in main characteristics are patterned after the Raiffeisen banks of Germany...
...A Practicable System ALTOGETHER, it is a broad and comprehensive plan of rural credits which Wisconsin has provided—a plan which is dependent upon nothing but the thrift, self-reliance and common sense of the people of the state...
...It has proved to be highly practicable...
...Rusk county was the first, and up to this time has been the only, county to take advantage of this law, though the issuance of bonds is under discussion by the people of several northern counties...
...He may have ten acres of potatoes, which ordinarily could not mean less than a prospect of a thousand bushels, and he may have in addition, twenty acres of corn, with oats and other things in proportion— all in the ground and growing...
...In a word, even though his land be mortgaged, the farmer should take his place in the community as a business man, entitled to the respect, confidence and assistance of his neighbors—a man entitled to the use of the surplus, unemployed funds of the community...
...It originated in Germany in 1790, and since then has been adopted by Denmark, Holland, Belgium, France, Italy, Russia and England...
...The principal and interest of each loan...
...In effect, by this plan, all the people of the county pledge their credit as taxpayers in order to raise a funa which the county itself may loan in smaller amounts to private individuals for the purpose of securing the development of the wild lands within the county...
...This sounds almost socialistic...
...under this law constitute "a special tax lien, prior to all other liens except general tax liens, upon the land accepted as security for the loan...
...No exposition of the benefits accruing to the county as a whole and to all the property in the county is here necessary, though that is a prop er question for discussion by the people of the county issuing the bonds...
...It was not intended to make the farmer an object of charity, nor yet to make him dependent upon the good will, generosity or judgment of another...
...It has several trust funds which the public land commissioners are instructed to invest, or put out at interest...
...Nevertheless it provides a practical plan for helping settlers of northern counties without subjecting them to the sharp practices of the mortgage shark and without making them objects of charity...
...It is one hundred and twenty-five years old...
...However, it so happens that practically all of the trust funds are now loaned to the various school districts, thus leaving nothing to be loaned on farm mortgages...
...Yet the banker permits this merchant to capitalize the good will of his business, or speaking accurately, permits him to borrow money on the prospect of his being able to sell the goods which he has bought on credit...
Vol. 6 • December 1914 • No. 46
