No. 6. DEPARTMENT OF AGRICULTURE. 451 



est, and in individual ])aynients small eiionsh that they can be met 

 but of a moderate share of the farmer's income. lie thus escapes the 

 slavery of debt; he avoids iniii<)sin<i; jirivations nj)on his family; he 

 is enabled to live, to educate liis lamily aiul to pay for his farm. He 

 is thus a home builder durinji the jieriod in which he becomes a home 

 owner. The man who seeks to destroy the amortization feature upon 

 mortgages or to discourage legislation authorizing it, has no right 

 to pose as the friend of the farmer or to speak for the progressive 

 element in American farm life. 



I have given the main outline of the co-operative features of this 

 bill; however, I have not mentioned the princi])le of unlimited liabil- 

 ity. There are two classes of loan associations authorized in the bill, 

 one with limited, the other with unlimited liability. Just as the bill 

 does not favor unduly either the mutual or the corporate plan of mort- 

 gage banking, but seeks to j)ermit either to be organized under the 

 most favorable conditions, so does it give preference to neither limited 

 nor unlimited societies. It permits either to be organized under 

 conditions most favorable to their success. It is my opinion that the 

 loans will be made under one form just as cheaply as they will be 

 under the other. There has been much criticism and I may say loose 

 talk indulged in discussing the principle of unlimited liability. As 

 that principle is applied under the terms of this bill, I do not believe 

 that the individual farmer who may join such an association would 

 incur any greater actual hazard than though he were holding a mem- 

 bership in an association with limited liability. I am aware that he 

 assumes a greater legal or technical liability, or you may put it^ a 

 greater contingent liability; but safeguarded as it is, his full contin- 

 gent liability can never develop into an actual liability which he will 

 be called upon to measure in dollars and cents. 



Certain criticisms have been made because the stockholders in the 

 limited associations incur a credit liability equal to five per cent, of 

 the face of ther loans. Such critics may pose as the friends of the 

 farmer, and may actually succeed in persuading some farmers to ac- 

 cept them as such; but the fact is tliat this is a business association; 

 it is neither altruistic nor charitable. Co-operation, as a principle, 

 seeks only to benefit its own members; it has no regard for the in- 

 terest of non-members. It seeks to enable its own members to save; 

 to transform savings into foundation capital; and through the earn- 

 ing power of capital, to give them financial independence. The mem- 

 bers who own a co-operative association secure all the earnings of 

 that association and in terms must assume all the risk of the business. 

 The experience of the world is that under a well managed, honestly 

 conducted and thoroughly supervised system of mortgage loans, there 

 are no appreciable losses. And where there are no appreciable losses, 

 there can be no large contingent liability. It is the exercise of good 

 common sense for an association of borrowers who seek to secure 

 money at low rates, upon favorable terms, to offer a security against 

 which there can be no possible doubt. This is the only reason that 

 capital stock is required and that credit capital is assembled. The 

 five per cent, which the farmer subscribes to the capital of the land 

 bank is not the money which is loaned out to his neighbor, but is a 

 fund which is held as a guarantee and is invested in safe and attrac- 

 tive securities. The income upon it is sent back to the owners in the 

 shape of annual or semi-annual dividends. 



