772 AGRICULTURAL ECONOMICS 



is well developed and thoroughly understood, and the existing banking 

 machinery is adjusted to it. It does not lock the money up for too 

 long a time, as is the case with land; and the security if seized is more 

 readily salable. Close local supervision by interested fellow members 

 would insure the best care for cattle, crops, etc. A use of the chattel 

 mortgage would facilitate the securing of funds from commercial 

 banks. Say there a*re twenty-five members, each of whom borrows 

 $300; their aggregate notes secured by chattel mortgage amount to 

 $7,500. Instead of going to the storekeeper, who now acts as credit 

 middleman between bank and farms (at a rate of over 20 per cent), 

 these twenty-five farmers give their notes to their credit unions, which 

 deal with the bank for them. * With unlimitedjiability, which wejire 

 supposing, it is likely that a bank would lend the association the full 

 $7;5oo~ at the lowest commercial rate of interest and angels could 

 do no more. Even if limited liability prevailed, the association 

 would merely make it's note for enough less than $7,500 of mortgages 

 to allow a safe margin, and so, by risking $7,500 for, say $6,000, the 

 lowest rates might be secured. 



Such utilization of chattel mortgage security would make it pos- 

 sible to gain the most from existing banking agencies, which is highly 

 desirable. The country banks of Texas at present extend a wide 

 range of service to farmers and desire their business. The best atti- 

 tude to take toward co-operative associations is to regard them as 

 feeders for commercial banks. The great source of funds is the same 

 under any credit system. What^q^emtwejorganization should seek 

 is to become an effective credit middleman between latent or ill-used bases 

 of credit among farmers and the funds held in commercial banks. To 

 replace the storekeeper in the existing system would be a large part 

 of its service. 



248. THE GOVERNMENT MUST GIVE DIRECT ASSISTANCE 1 

 BY SAMUEL M. TAYLOR 



Aid to enable farmers to procure money to purchase homes and 

 to carry on agricultural pursuits has been extended by every enlight- 

 ened government save our own. We have extended governmental 

 aid in one form or another to every line of business except agriculture. 

 Millions of acres of public lands were given away to corporations to 



1 Adapted from extension of remarks in the Congressional Record, 6*th Cong., 

 ist sess., pp. 3468-69 (February 23, 1916). 



