88 UNIVERSITY OF ILLINOIS 



the Federal Reserve Board, in regard to their dealings with the agri- 

 cultural needs of the country, it being claimed that the farmer has 

 not received his just proportion of assistance during the trying times 

 we are now passing through. A careful analysis of the situation proves 

 the very opposite of this to be true. 



According to a report made by Governor McDougal in January, 

 1921, all the member banks of a great agricultural state had borrowed 

 at one time 470 per cent of their reserve deposits, or in other words 

 almost five times their required reserve; while the largest borrowing 

 bank in the district had 233.3 per cent of their reserve deposits bor- 

 rowed and all member banks in Chicago had 143.8 per cent borrowed. 

 On October 1, 1921, all member banks of this agricultural state had 

 344.4 per cent borrowed, while the largest bank in the district had 

 21.9 per cent borrowed, and all member banks in Chicago had 40.1 

 per cent borrowed. I don't believe that we farmers have any fault 

 to find with the Federal Reserve System, in the treatment we have 

 received through the country banks, when the facts are known. 



Another thing, the Federal Reserve Banking System saved every 

 section of this country while the whole world was going on to the 

 rocks of financial chaos. The Federal Reserve Banks of the North, 

 without compulsion of any kind, went to the assistance of the agri- 

 cultural interests of the South and West. At one time the Federal 

 Reserve Bank of Cleveland alone, loaned to the Reserve Banks of the 

 West and South no less than $145,800,000. 



While the Federal Reserve System has performed its duties in 

 supplying the farmer and others with short-time credits, the Federal 

 Farm Land Bank has not done so well in supplying funds for the 

 permanent, or investment, side of the farmer's business. This busi- 

 ness has been handled by country banks, investment bankers, mort- 

 gage loan associations, lawyers, or most anyone else who could get 

 enough money together to make a loan on the most favorable terms 

 possible to themselves. I do not wish to be understood as finding 

 fault with the men in this kind of business, because I am one of them ; 

 it is the system that we are after and hope to correct if possible. 



For the past eight or ten years I have been profoundly impressed 

 with the need of some means whereby the investing public and the 

 holders of farm mortgages could be brought together, but until about 

 a year ago our ideas have all been of an abstract nature. In the 

 latter part of February, 1921, the Executive Committee of the State 

 Bank Division of the American Bankers Association met in New 

 Orleans and this subject was thoroly discussed by the farmer member 

 (your humble servant) of that committee. At the next convention, 



