FINANCING FARMING 



J. D. PHILLIPS, Chairman of the Special Committee on Farm Finance, 

 State Division American Bankers Association, Green Valley 



HE farmer the same as any other business man, is in need 

 of funds to use in the operation and development of his 

 business. Some of these funds are used on the commercial 

 side of his business and are of short-time maturity, and 

 some are needed for the investment side of his business and 

 naturally extend over a long period of years. Before com- 

 mencing on the rural credits end of this address, I want to say some- 

 thing about the Federal Reserve Bank; for the farmers are as much 

 interested in the Federal Reserve System as they are in a system that 

 will provide for them long-time credit at a reasonable rate of interest. 

 The Federal Reserve Banking System is the greatest financial 

 legislation ever enacted into law in this or any other country. It is 

 not perfect of course, but it has been the financial life-saver not only of 

 America but of the Allied countries as well, during the terrible, trying, 

 distressing, nation-wrecking and soul-wrecking time we have been 

 recently passing through in the World War. While this law needs 

 some amending before it will become attractive to the country banker, 

 yet be that as it may, over nine thousand of the thirty-two thousand 

 banks of America are members of the system, with about sixty-nine 

 per cent of the banking resources of the country connected with the 

 Federal Reserve Banks. If in due time, and in the natural course of 

 business events, it is learned by actual experience that the Federal 

 Reserve Banks can pay a small rate of interest on required reserves, 

 and such an amendment should be enacted into law, it would be but 

 a very short time until every eligible bank in America would join the 

 system. The making of over one hundred per cent per annum by 

 several of the Federal Reserve Banks, during the past two years, is 

 probably responsible for the belief that they will always be able to pay 

 at least two per cent on required reserves without encroaching on 

 commercial banking in any way. Should the experience of the banks in 

 the next few years prove the fallacy of such an opinion, it will of 

 course stop the agitation along these lines for all time ; but on the 

 other hand, should actual experience, after due trial, without hastily 

 jumping at conclusions, prove the theorists to be wrong, no power 

 on earth can stop legislation along the above named lines. 



There has been a great deal of unwarranted criticism, principally 

 by politicians, against the officers of the Federal Reserve Banks and 



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