THE FARM BLOC, 1920-23 337 



bloc, announced on the very same day that this group met in Washington 

 that his administration would promptly take up legislation for further 

 relief of the farmers. It was expected that certain of the progressive de- 

 mands, such as the restoration of excess-profits taxes, would be ignored, 

 but those which had formed the basis for the bloc program and had 

 tempted some of the newly elected senators to fall into the progressive 

 fold were expected to become part and parcel of the administration 

 program. 50 



This soon became evident in the rural-credits campaign of 1923. The 

 progressives were only partly responsible for this legislation. Republicans 

 and Democrats who were not affiliated with the progressive cause con- 

 tributed to its passage. Perhaps they had been prompted to vote for it 

 because of the November elections and the fear that unless the farmers 

 were placated, they would go over into the progressive columns en masse. 51 



The big difference between the credit demands of the early twenties 

 and those of previous years was that the demands of the later years were 

 for the purpose of keeping farm prices up rather than of stimulating 

 production as in the earlier ones. Farmers had been complaining per- 

 sistently that the lack of credit was one of the basic causes for low prices, 

 a condition which they felt had been aggravated by the policies of the 

 Federal Reserve Board. If only credit agencies were established that were 

 peculiarly adapted to the special needs of the farmers, the deflationary 

 spirals that they had earlier experienced would disappear. 



The Joint Commission of Agricultural Inquiry had devoted an entire 

 volume to the study of farm credits. It found that the complaints of the 

 farmers that the Federal Reserve System had inaugurated a deflationary 

 policy were not justified, but their demands for short-term credits were. 

 The commission found that the lack of short-term credit was due largely 

 to the fact that bank credit was extended usually for periods of six months 

 or less. The reason that banks would not extend credit for a longer time 

 was that the Federal Reserve Bank would not discount paper with a 

 longer maturity period. Neither could mortgage companies handle loans 

 of this type; their procedure was too cumbersome for it. The commission 



50. Literary Digest, LXXVI (March 31, 1923), p. 9. 



51. John W. Owens, "The Progressive Bloc," New Republic, XXXIV (March 

 14, 1923), p. 61. 



