Newspapers / The Carolina Union Farmer … / Jan. 16, 1913, edition 1 / Page 4
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Page Four THE CAROLINA UNION FARMER [Thursday, January 16, 1913. f. i I- i . I > ': :: ■ I ^■J M Land and Loan Associations. Jas. R. Young, Insurance Commissioner. Ours is a great country. Our pride in our State is justifiable; but no State’ or country can be great in its highest sense unless its greatness is founded upon the stability of its dif ferent classes of citizens. No class of our citizens can expect to become great and prosperous unless due care is taken to provide for the protection and prosperity of the members of its different classes. No member of any class of citizens need expect to build upon or above his fellows. If he should thus rise, it will be only for a generation; and his children, or at most, his grandchildren, will be drawn back into the average vortex of his class. These considerations, as well as the desire to better his fellow-men, should, and no doubt do, prompt your Union and each of you individ ually to study, plan, and work for the uplift of each and every farmer and his family, financially, educationally, and morally. I come to you to-day with some suggestions along a line much need ed, and they are, in my opinion, en tirely feasible. The financial problem is ever with the farmer. His crops must be made, harvested, and mar keted. Much money is needed, and can generally be obtained only with trouble and at high rates. It is gen erally understood that our farmers, while the main producers, and com prising the bulk of our citizens, are required to pay the highest rates for funds and all financial accommoda tion. I do not claim to be a finan cier, but I do not believe that just reasons exist for this condition of things, and am sure that if they do, they can and ought to be remedied. I am free to say that the needed help must come, not from outsiders, but from the farmers themselves. They need not look to the bankers, merchants, lawyers, politicians, or, in fact, to any class of their fellow- citizens; and in saying this I mean no reflection upon any of the classes named. I am merely naming them by way of illustration. The farm ers, as class and individually, must learn thrift and system, economy and co-operation, pride and self-reliance. President Taft. In a letter to the Governors on in creasing the farmers’ profits, Presi dent Taft said: “The twelve millions of farmers of ,the United States add each year to the National wealth $8,400,000,000. They are doing this on a borrowed capital of $6,040,000,000. On this sum they pay annual interest charges of $510,000,000. Counting commis sions and renewal charges, the inter est rate paid by the farmer of this country is averaged at 8 ^ per cent as compared to a rate of 4 ^ to 3 per cent paid by the farmer, for in stance, of France or Germany. “Again, the interest rate paid by the American farmer is considerably higher than that paid by our indus trial corporations, railroads, or muni cipalities. Yet, I think it will be ad mitted that the security offered by the farmer in his farm lands is quite as sound as that offered by industrial corporations. Why, then, will not the investor furnish the farmer with money at as advantageous rates as he is willing to supply to the indus trial corporations? Obviously, the advantage enjoyed by the industrial corporation lies in the financial ma chinery at its command, which per mits it to place its offer before the investor in a more attractive and more readily negotiable form. The farmer lacks this machinery, and lacking it, he suffers unreasonably.” Further commenting on the situa tion, by way of suggesting some rem edy, the President says: “It is not my purpose here to lay down any one plan as necessarily the one most suitable for adoption in the United States. From the reports of our Ambassadors and Ministers in Europe, and from the recommenda tions of Ambassador Herrick, to whom was given the task of compil ing from these the general report, I am inclined to suggest the suitability of organizations similar to the Ger man land-mortgage banks for incor poration under State charters in this country. It will be most desirable, if, indeed, not essential, that the laws creating and governing such institu tions should be uniform throughout the States, in order that they might be. well understood by the investor, and their debentures should be given character both at home and abroad. As a later step it may prove advisable to urge the enactment by Congress of laws permitting the creation of Na tional land-mortgage banks similar to those of Germany and France, with limited privileges, and surround ed and guarded by strict supervision, but with sufficient appeal to Ameri can initiative and opportunity, with the power to guarantee and market a guaranteed debenture bond of the State mortgage bank or co-operative society. Securities issued by such National institutions would probably find a ready market in Europe at low rates of interest, since they are a favorite and .familiar form of invest ment in those countries by the con servative investor.” Mr. Harvie Jordan. Of course, you have many sugges tions along this line, and in your meetings consider and discuss the dif ferent plans to bring about these de sirable ends and conditions. Another statement of the situation, with sug gestions practically along the same line, came recently from one of your foremost and most practical leaders, and may well be classed with the sug gestions of President Taft as worthy of your careful thought and consid eration. I allude to the recent ad dress delivered in New Orleans by Mr. Harvie Jordan, of Atlanta, Ga. I have only seen a partial newspaper report, in which Mr. Jordan is quoted as saying: “The credit system as employed by American farmers is not only primitive and out of date, but it has persistently kept the producers of the agricultural wealth of the Nation as much enslaved and as helpless in the proper distribution of their products as were the peasants during the de cadence of the Roman empire. “Place an American farjner on the same footing as the European farm er through his co-operative societies, his rural banking system, his mar keting methods, and the use of. a dynamic money, and he will manage his affairs with safety to himself and satisfaction to the public at large. “We must establish a credit sys tern of, for, and by the farmers of the United States. And this system must be put into practical operation by the co-operative efforts of the far mers themselves, under the enact ment of wise, safe, and sound State and Federal laws. “While commerce has all the ac tive or dynamic dollars at its com mand, our great agricultural inter ests have but little if any kind o . money at their command, and that is mostly static or dead money which is capable of being turned over but once a year.” And in suggesting a remedy, Mr. Jordan says: “You ask me how it is proposed to obtain for the farmers the benefit of the dynamic dollar. It is believed that this can be successfully done by adopting the methods employed in European countries through their systems of rural credit banks.” European Co-operative Banks. In view of these statements and suggestions by President Taft and Mr. Jordan, practically the same, it might be well to review briefiy the different kinds of co-operative banks or mutual credit associations operat ed in different parts of Europe, and the plans upon which they work. This will enable us to get some idea of their work, and whether either of the plans is suitable as a whole to the conditions surrounding our farmers m this country, and if not, at least to see if we cannot form some feasible plan by adopting and combining sug gestions from the several different plans in use among the co-operative janks and associations in Europe. Landschaften. The Landschaft of Germany was founded in 1770, in Prussia, by a roy al decree of Frederick the Great, who forced the impoverished land- owners to combine together in order to obtain funds to rehabilitate their run-down estates. It is the most an cient form of a mortgage-bond com pany, as they take only real estate as security. As an association of landowners they form a syndicate of borrowers, and bind themselves joint ly and severally for their debentures, by which the association is financed. These debentures are secured by the mortgages, the accumulated reserve, and the unlimited liability of the members. Its sole object is to obtain cheap and facile credit for its mem bers. It has no capital and pays no dividends, all profits being passed to the reserve. All loans are for long periods—thirty to seventy-five years -and are gradually extinguished by semi-annual payments for interest and part of principal under an amor tization plan. Raiffeisen Bank. In 1849, in Weyerbusch, Germany, Herr Frederick William Raiffeisen, a weakly and partially blind man, start ed the first agricultural mutual so ciety. The pure so-caled “Reiffeisen” Bank is simply a co-operative associ ation in which all members bind themselves to be jointly and several ly liable without limit for all the debts it contracts. The chief feat ures are that the association is abso lutely local, its membership and busi ness being confined to a restricted neighborhood. Its officers and em ployees must be members and give their service gratuitously, except the cashier, who is allowed a small sal ary. The value of the capital shares is nominal, only small dividends be ing paid. Most all the profits are put in the reserve. The society accepts deposits from members and outsid ers, and has savings bank regula tions as to withdrawals. They lend only to members, and'when they have no money on hand for this purpose they borrow on the collective guaran tee of their solidarity and their re serve. They lend principally on per sonal credit of one or two sureties, but sometimes on mortgages. Their loans run from a month to fifteen or twenty years. The short loans are renewable, while the long-time loans invariably are extinguished by amor tization. There is little delay or red tape in getting the loan. The farmer submits his application, and inquiry is made into the solvency, or rather lonesty, of the farmer and his guar antors, and as to what use the money s intended for. Both of these must je satisfactory. It is absolutely re quired that the loan be used for a creative purpose and the use speci fied in the application under a pen alty of immediate recovery and dis missal of the applicant from the so ciety. Schulze-Delitzsche. About the middle of the nineteenth century the Socialists fiourished in Germany, and a great leader. Dr. ^arl Marx, w’as at the head of the nternational Association, but in op position to this, Herr Schulze of De- itzsche devised a people’s bank, or co-operative credit bank. Morier de scribes co-operation as the “child of Socialism, rescued by the economists from the dangerous custody of its parents.” So that no one need be alarmed that this form of credit bank or association was the outcome of Socialism. The shares were fixed at ::orty thalers (less than $30), and could be paid up in installments. Each member could borrow up to 50 )er cent more than the value of his shares. The society or bank borrow ed money at a low rate of reloan to Its members. If necessary, the mem bers could withdraw the amount paid upon shares on leaving the associa tion and be relieved of liability after tw oyears. Under this system a loan to acquire something merely for con sumption was not tolerated, no mat ter what security was offered. The oan was required to be strictly for creative purposes. This was the first principle, and was so rigorously ad hered to that the society invited only those who were producers of wealth to its membership. Credit Foncier. The Land Banks in France are es tablished and aided by the Govern ment, and since 1896, under the “Credit Agricole,” a Bureau of the Department of Agriculture, are su pervised and managed. The official publication by the French Ministry of Agriculture thus speaks of their establishment: “The reason for estab lishing the system of agricultural credit is to enable agriculturists who are members of the local association (caisse locale) to obtain on the most favorable terms advances of sums of money which may be used for what is necessary in their business.” These land hanks in France are furnished with a large sum of money, which, under statute, the Bank of France was required to advance without in terest. The amount first called for was $8,000,000, and an annual tax which amounted to about $1,000,- 000.00. This fund is distributed among the local associations to be loaned to their members at a low rate of interest. They operate on the unlimited liability plan, are careful in the selection of their members and in making loans, and have never lost a dollar. They aid the farmers to purchase stock, artificial manures, select seed, harvest and market their crops, and, when necessary, to hold them for better prices. The money is usually furnished by the local banks to their members at 3 ^ per cent per annum. Tlie Scotch Cash Credit. In Scotland many banks deal with the farmers under a system called the “Cash Credit System.” A number of farmers get together and jointly bor row money. They bind themselves jointly and individually, for the whole amount, and then agree as to how much shall be used by each man, while he is allowed to draw out of the bank as he needs it. The bank opens an account with the In dividual, allows him to draw out as needed, and whenever he is ready he can deposit payments with the bank.
The Carolina Union Farmer (Charlotte, N.C.)
Standardized title groups preceding, succeeding, and alternate titles together.
Jan. 16, 1913, edition 1
4
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