FINANCING FARMING 89 



held in Los Angeles, the special committee of five on Farm Finance, 

 of which the speaker is chairman, was appointed. 



This committee met in Chicago, and after considering the matter 

 decided it would be better to develop machinery already established 

 than to build new machinery. A subcommittee was created to fur- 

 ther consider the matter and recommend whether in their judgment 

 an amendment to the Federal Land Bank Act was the right thing. 

 The subcommittee has had a number of meetings and a joint con- 

 ference with a committee of the American Farm Bureau Federation, 

 and our opinion is that the law should be so amended that all in- 

 corporated banks might become members of the Federal Farm Land 

 Banks. Such an arrangement would immediately provide thousands 

 of well-equipped, permanent, local headquarters for the system. It 

 would also insure the services of experienced financial men, would 

 guarantee the making of safe loans based on conservative values, and 

 would save all the overhead costs of local associations, for the banks 

 could handle the additional business with little, if any, additional 

 overhead expenses. Member banks would be required to subscribe 

 to the capital stock of the Federal Land Bank in their respective 

 districts. 



Commissions would be allowed member banks for originating 

 mortgage business, the same as the law now provides for farm loan 

 associations; and the same compensation would be allowed member 

 banks for collections of interest and amortization payments, the super- 

 vision of the payment of taxes, and the submission of occasional re- 

 ports to the Federal Land Banks. 



All the duties of the local associations would be assumed by the 

 member banks ; but while they would guarantee the genuineness and 

 regularity of each loan they should not be required to guarantee the 

 payment of the loan, for it would be unwise and unnecessary for the 

 banks to assume this contingent liability. Any farm loan that cannot 

 stand on its own individual merit, without the aid or assistance of 

 other loans or the endorsement of any organization of any kind, ought 

 not to be made. Under the double safeguard of the judgment of 

 both the bank and the Government, there could be no excuse for ever 

 losing a dollar on a single loan. Under such a system, the farmer 

 would do his business through his local banker, the one person to 

 whom he prefers to go with his financial problems; and the banker 

 in turn could supply his farmer customers with the needed funds for 

 their investments without freezing up the assets of the bank to the 

 danger point. 



