DEFICIENaES IN FARM FINANCE 69 



then a new proposal, had not yet been tested. 

 It was believed that the Federal Eeserve System 

 would furnish to a large extent the flexible 

 financial aid which is needed by agriculture for 

 crop movements at harvest time. Though it 

 was known from the outset that the Federal 

 Eeserve System was dominated by banking in- 

 terests, directed by bankers, and was several 

 steps removed from the country bank with whom 

 the farmer deals, still it was hoped and expected 

 by many that it would remove the need for a 

 special system of rural credits for short-time 

 personal loans. 



The experience immediately preceding the 

 war and during the few months following 

 showed without question that prompt action 

 must be taken by the Government. The call for 

 aid from farmers to the banks was rejected and 

 the country banks joined the farmers in appeals 

 to Congress. Country banks were obliged to 

 close their doors because they could not collect 

 from farm debtors who were unable to pay be- 

 cause of the slump in prices in farm products 

 which within a few short weeks had dropped to 

 one-half what they had been. In addition to 

 the inability of the banks to collect loans out- 

 standing they were faced by a new crop year's 



