BEGINNING OF COOPERATIVE CREDIT IN AMERICA 177 



ties. Yet, I think, it will be admitted that the security offered by the farmer 

 on his farm lands is quite as sound as that offered by industrial corporations. 

 Why, then, will not the investor furnish the farmer with money at as advant- 

 ageous rates as he is willing to supply it to the industrial corporations? Obvi- 

 ously the advantages enjoyed by the industrial corporation lie in the financial 

 machinery at its command, which permits it to place its offer before the investor 

 in a more attractive and more readily negotiable form. The farmer lacks this 

 machinery, and, lacking it, he suffers unreasonably." 



This quotation is given at length because it so clearly states 

 the credit problem of the United States and at the same time 

 suggests its solution land mortgage credit and cooperative credit. 

 These principles announced by President Taft bore fruit in the 

 year 1916. This is the date of a new era in credit in the United 

 States on account of the Federal Farm Loan Act enacted then. 



Long- and Short-Time Credit. The farmer uses two kinds of 

 credit, long-time credit and short-time credit. The long-time 

 credit generally takes the form of a mortgage on real estate. The 

 short-time credit is commonest found in the form of a book account 

 at the village stores. Less frequently the farmer signs notes at 

 the bank. It is impossible to state the rate of interest charged on 

 short-time loans for the whole United States, so much do conditions 

 vary in different sections. In the newer sections, and in the cotton- 

 crop sections of the South, conditions are burdensome almost 

 beyond belief. Take Texas as an illustration. " Texas debtor 

 farmers," says an official bulletin from the Agricultural and Me- 

 chanical College of that State, "have been paying to banks 10 

 to 40 per cent interest per annum, or to credit merchants 10 to 

 60 per cent above cash prices. This credit system, either as cause 

 or effect, uniformly prevails with all-cotton farming, or all-wheat 

 farming or any other form of one-crop farming." There are parts 

 of the South, particularly the Delta, where the cotton crop lien 

 system has produced a credit condition even worse than that 

 described in Texas. As the farming becomes more diversified, 

 especially where livestock is raised extensively, credit conditions 

 on short-time loans become better. In old and prosperous farming 

 sections the farmer is able to secure short-time loans from the 

 bank at the same rate as the town merchant. And in all sections 

 the more prosperous farmers get all the credit from local banks 

 that they are entitled to, and at regular banking rates. 



Beginning of Cooperative Credit in America. Alphonse Des- 

 jardins was the first to introduce cooperative credit on the Ameri- 

 can continent (Fig. 33). He began his cooperative people's bank 

 among the French Catholics in the province of Quebec in the year 

 1900. Thus he was favored at the outset with unity of race and 

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