33 AGRICULTURAL DISCONTENT 



course, came as no surprise in a period of low prices and forced liquida- 

 tion, of deposit withdrawals and depleted reserves. Livestock raisers, cotton 

 producers, wheat and dairy farmers, and cooperative marketing associa- 

 tions alike faced trying financial conditions. 



The first move was to revive the lending powers of the War Finance 

 Corporation. This was done early in 1921 to promote foreign trade. But 

 when this failed to achieve the desired ends, pressure was exerted for 

 added legislation. While the Joint Commission of Agricultural Inquiry 

 was trying to find out what was needed in the way of permanent legisla- 

 tion, Congress, because of farm-bloc pressure, amended the provisions of 

 the War Finance Corporation, authorizing it to extend further loans. 



The War Finance Corporation, in passing on loans, had exercised the 

 most careful surveillance. Even though it was authorized to make loans 

 up to the exent of a billion dollars, the loans of the corporation at their 

 highest point amounted to only $201,000,000. This was a negligible sum 

 when compared with the more extensive loans made under the liberal 

 credit policy of the Federal Reserve Banks, which received bitter protests 

 from the farmers who were caught short at the time that the credit- 

 expansion policy was curtailed. The Iowa country bankers were but one 

 group to protest against the war agency because of its rigid security 

 requirements. 



The advances that were made by the corporation, for the most part, 

 were used to convert frozen credits into liquid assets. In Iowa 60 per cent 

 of such advances were to be used for this very purpose and the rest were 

 employed to renew past-due notes of the farmers. Only a very small 

 percentage of the funds went for new credit. But in 1921 and 1922, when 

 cooperatives were finding it hard to get funds, the War Finance Cor- 

 poration was of great help. The required capital was advanced with the 

 understanding that the cooperatives were not to use it for "speculative 

 withholding to create an artificial scarcity for the sake of higher prices." 

 After the War Finance Corporation had showed a willingness to advance 

 funds to the cooperatives, local bankers also displayed a willingness to 

 do so. The money that the corporation provided was a timely help, but 

 by no stretch of the imagination was it to be assumed that it was to serve 

 as a permanent rural-credits agency. 80 



30. Freida Baird and Claude L. Benner, Ten Years of Federal Intermediate 

 Credits (Washington, 1933), pp. 38-52. 



