No. 8. DEPARTMENT OF AGRICULTURE. 445 



small savings to the best advantage. This suggests co-operation, as 

 a business method. We seek to create a system which, when fully 

 organized, will include farmers from every section and every neighbor- 

 hood in the nation. In the aggregate, the volume of business will be 

 very large; the cost of expert management will be correspondingly 

 small. Thus the individual farmer, though his business will be com- 

 ])aratively insigniticant, will be given every advantage of a stock- 

 holder in a large corporation, officered by experts. His mortgage 

 which is ordinarily an extreme burden is changed into a long time 

 loa.se on a tract of improved real estate which, through his labors, 

 will yield sufficiently to pay him remunerative wages and to meet his 

 liabilities, so that he will enjoy the benefits of proprietorship with 

 a reasonable certainty of attaining a title in fee to his holdings. 



These results require a national organization and national co-opera- 

 tion among American farmers. The very territorial size of our na- 

 tion suggests many difficulties. The many different state laws as to 

 land titles and the exemptions from debt makes the problem a difficult 

 one. The independence of the American farmers, many of whom are 

 in fact, real pioneer settlers, adds to the difficulties of framing a 

 general statute wiiich is applicable to all parts of our natural terri- 

 tory. It is but little wonder that we have spent more than two 

 yeai s in arriving at a satisfactory solution of this subject. 



I am well aware that there is a wide spread interest in personal 

 credit aside from mortgage credit. It is said, and truly too, that our 

 landless tenants need especial assistance in the way of necessary 

 credit. The bill under consideration deals only with mortgage credit; 

 but before I begin a discussion of its terms and conditions, I beg to 

 refer briefly to our new banking and currency law, commonly known 

 as the Federal Reserve System. It is well known that farmers are 

 charged high rates of interest in many sections of the United States 

 on personal loans. The Comptroller of the Currency, Honorable 

 John Skelton Williams, has publicly called attention to some of these 

 usurious rates. He has given instances, taken from the actual bank 

 records, which are nearly unbelievable. For instance, he mentions 

 one case where a woman paid 120% interest on |110.00 which was 

 borrowed to purchase a horse. Many individual loans are instanced 

 where the rate of interest runs higher than 100%. I will not lengthen 

 my addiess to repeat his examples. His address before the Kentucky 

 Bankers' Association can be secured upon application to the clerk of 

 the Commission on Rural Credits at Washington. It is well worth 

 reading by any student of this subject. It naturally brings up the 

 subject, ''What influence has our new banking law had upon the situa- 

 tion so far as it affects loans to farmers for short periods of time?" 



No student of the subject will admit that the present system is 

 fully organized and has as yet exerted its full measure of benefit to 

 the farmers. We have had, however, sufficient actual experience to 

 know that without supplemental legislation, the system will not be 

 able to help agriculture to the full measure of its possibilities. Every 

 modern system of personal credit — rural or commercial — is based 

 upon the power of the government to issue money or certificates of 

 credit. The volume of money available under such a system is in- 

 creased by the government rediscounting notes held by banks, or loans 

 by the bank of issue to the borrower. Thus in times of stress both the 



