180 CREDIT 



as they appeared, wrong in principle. He advocated the principle 

 of an association or voluntary union of persons, preserving the 

 equality and personal responsibility of members, on the one-man- 

 one- vote plan; with or without share capital; liability limited or 

 unlimited; shares payable in installments and withdrawable at 

 any time. He claims that such a plan would in the beginning 

 produce small results, but it would grow rapidly. The community 

 would finally finance itself. The three sources of loans would be 

 share capital, savings deposits, and occasionally borrowed funds. 

 This plan is very much like the Canadian system. In many 

 respects it resembles the North Carolina plan, particularly in that 

 it provides for receiving savings deposits from both members and 

 non-members. Deposits from non-members are forbidden in 

 most of the State laws. It is an interesting question for the student 

 investigator, why States like Wisconsin, with a model law on 

 credit unions, have no credit unions. Does it mean that the 

 present banking system furnishes the farmer all the credit he is 

 entitled to? 



Land Credit The Federal Farm Loan Act. The distinction 

 should be borne in mind between long-time credit and short-time 

 credit, between land credit and cooperative credit. Both are 

 needed. Each supplements the other. One is needed for perma- 

 nent investment in the purchasing, equipment, and improvement 

 of farm land; the other is needed to finance the farm operations 

 from one harvest to another. One can be used only by the land 

 owner; the other can be used by the landless man or by the 

 insolvent farmer. 



The Federal Farm Loan Act became a law July 17, 1916. It 

 is, in principle, self-help plus government aid in getting the system 

 into operation. But, once in operation, the government merely 

 supervises the system, but grants no State aid to it. A careful 

 examination of the main provisions of this epoch-marking Act 

 shows that the government merely " primes the pump," but does 

 not furnish the money. 



The Federal Farm Loan Act provides certain channels for the 

 farmer through which he obtains cheap money, on the long-time, 

 easy payment plan. It introduces the amortization principle into 

 agricultural finance in America. This law furnishes to the investor 

 on the money market a standard liquid security, in place of the 

 old farm mortgage, which is neither liquid nor standard, as the 

 old-time farm mortgage could not readily be turned into cash and 

 no two farm mortgages were exactly alike. Hence the general 



