176 CREDIT 



stores, public buildings and city streets. A large part of the development of 

 private corporations as well as the public improvements of cities, has been 

 due to the savings of the people, borrowed largely at 4 to 5 per cent. The 

 land-credit plan is intended to allow the savings of the people to be invested 

 in the land in order that a permanent agriculture may develop. 



"Men in cities now conduct great enterprises, enjoy comfortable trans- 

 portation facilities, occupy luxurious offices, and eat in sumptuous restaurants 

 without having a dollar of their own money invested in these agencies except 

 as they may carry life insurance or invest in stocks and bonds. The phenome- 

 nal development of the cities within recent years would have been impossible 

 were this not so. Farming is the one great industry remaining in which men 

 commonly invest their own money in order to engage in the business." 



United States Studies Credit in Europe. Rural credit became 

 an issue in American political life about the year 1912. In that 

 year President Taft addressed letters to the State Governors, 

 inviting them to a conference at the White House for the purpose 

 of discussing agricultural credit. In this letter, among other 

 things, President Taft said : 



"For some months past, at my direction, the Department of State, 

 through its diplomatic officers in Europe, has been engaged in an investigation 

 of the agricultural credit system in operation in certain of the European 

 countries. Although the investigation is still under way, a preliminary report 

 has been submitted, together with the recommendations of Ambassador 

 Myron T. Herrick in connection with my proposal to adopt this system in 

 the United States. 



"A study of these reports and of the recommendations of Ambassador 

 Herrick, which I am sending you, convinces me of the adaptability to American 

 conditions of the cooperative credit plan as set forth in the organization of 

 the Raiffeisen banks of Germany. The establishment and conduct of such 

 banks, however, are matters for State control. I suggest also the establish- 

 ment of land mortgage banks . . . 



"The need for the establishment of an adequate financial system as an 

 aid to the farmers of this country is now quite generally recognized. The 

 governmental initiative, taken by the Department of State under instructions 

 issued by my direction to the diplomatic officers in Europe on March 18 last, 

 have been effectively supplemented by the American Bankers Association, 

 the Southern Commercial Congress, and by many other bodies by whom this 

 question has been agitated, and valuable work has been done in studying and 

 disseminating knowledge of those great instrumentalities which have been 

 created in foreign lands to extend to their agriculturists credit facilities equal 

 in benefits to those enjoyed by their industrial and commercial organizations. 

 The handicap placed upon the American farmer through the lack of such a 

 system, and the loss sustained by the whole citizenship of the nation because 

 of this failure to assist the farmers to the utmost development of our agricul- 

 tural resources, is readily apparent. 



"The . . . farmers of the United States add each year to the national 

 wealth ,18,400,000,000. They are doing this on a borrowed capital of 

 $6,040,000,000. On this sum they pay annual interest charges of $510.000,000. 

 Counting commissions and renewal charges, the interest rate paid by the 

 farmers of this country is averaged at 8 1 A per cent, as compared to a rate of 

 four and a half to three and a half per cent paid by the farmer, for instance, 

 of France or Germany. 



"Again, the interest rate paid by the American farmer is considerably 

 higher than that paid by our industrial corporations, railroads or municipali- 



