104 



THE IRRIGATION AGE. 



Reclamation Act;' that it would be demonstrated 

 that this class of constructive legislation was a suc- 

 cess. 



In this state of mind it can easily be imagined 

 how the settlers will feel when they are asked to 

 surrender their present contracts and consent to the 

 payment of an uncertain sum for their water, which 

 they know will be largely in excess of the present 

 water charge. Secretary Lane, with great beauty of 

 language, filled with sympathetic notes, has ex- 

 plained how he expects his plans to work out as 

 shown in his letter, to be found in another portion 

 of this issue. While at this time he has the un- 

 shaken confidence of all water users, and could he 

 remain as secretary of the interior for all time there 

 is no doubt that justice would eventually be done, it, 

 however, is the general opinion that it will be long 

 delayed. We fear he will have a hard time to ex- 

 plain the actual situation through sympathetic let- 

 ters or otherwise. 



Facts 

 About 

 Rural 

 Credits 



President Wilson has asked Con- 

 gress to follow up the passage of 

 the currency bill with early legisla- 

 tion on rural credits. The President 

 seeks a law by which the farmers of 

 the nation can obtain money with 

 which to handle their crops more easily than at 

 present. President Taft inaugurated along prac- 

 tical lines this movement for rural credits by the 

 appointment of a special commission to investi- 

 gate the various systems now in use in Europe, and 

 congress will have a wealth of information upon 

 which to work once it takes up the farmer's financ- 

 ing. 



There is no legislation contemplated of more 

 importance to the nation than the rural credit law, 

 and it stands out as of utmost importance to the 

 settlers on the national irrigation projects. One of 

 the biggest handicaps of the homestead irrigators, 

 nearly all of them men and women with little cap- 

 ital, has been inability to borrow money with which 

 to carry on the development of their lands. The 

 government project settlers are particularly handi- 

 capped because they cannot obtain title to their 

 lands until they have paid in full to the government 

 for their water rights. Therefore, their real estate 

 is of no value as security for loans. 



The executive committee of the National Fed- 

 eration of Water Users' Associations has devoted 

 a great deal of time to the study of rural credits 

 as means of helping the government project irriga- 

 tors. There are several plans in operation in Eu- 

 rope, which are successful, but the one which now 

 seems most feasible to some members of the ex- 

 ecutive committee is that of "farmers' banks." 



Under this system, a national law provides for 

 the organization of "farmers' banks" with five or 

 more members in a community or district. The 

 membership is upon a copartnership liability basis. 

 That is, each member becomes responsible to the 

 full extent of his property holdings for the acts of 

 his fellow members. Such a bank can loan money, 



under the law, only to its own members. All farm- 

 ers in the district, which it serves, can, however, 

 apply and under proper conditions obtain member- 

 ship, thereby getting the right to borrow money. 

 The rate of interest is limited and the conditions of 

 each loan are stringent. Loans are made only for 

 specific and creative purposes. The borrower must 

 state fully in his application for a loan for what he 

 desires to use the money leveling a new piece of 

 land, additional ditching, seeding, harvesting a crop 

 or constructing new buildings. Any diversion of 

 the borrowed money to any other purpose than that 

 stated in the application for the loan makes the loan 

 due immediately and its payment can be enforced 

 by process of law. 



The "farmers' banks" are authorized to receive 

 deposits from any person. These deposits are se- 

 cured by the partnership liability of the bank mem- 

 bers and are backed by the government. Sectional 

 government banks or depositories receive and care 

 for the surplus deposits of "farmers' banks," and all 

 are under the supervision and control of the national 

 banking department. 



Careful investigation has convinced the officials 

 of the water users' federation that a plan along this 

 line can be worked out on the government projects, 

 if the "banks" are made a part of the various water 

 users' associations. The various projects are rich in 

 latent wealth. In addition to the vast bodies of land 

 under cultivation and being brought into develop- 

 ment annually, the water users of nearly every proj- 

 ect own equities in valuable water power, telephone 

 lines, roads, machinery and other improvements 

 worth millions of dollars. The wealth, now unavail- 

 able as security for loans for the individuals of each 

 project is sufficient to finance all the federal irriga- 

 tion settlers many times over, once' it can be put to 

 work. 



It is also figured that the note of the borrower, 

 backed by the endorsements of the members of the 

 farmers' bank, as it would be if offered in the 

 market, would be a most salable security. If it was 

 short-time paper, that is for six months or less, it 

 would be of the highest class of security under the 

 new federal currency law. If the' note was for a 

 long time, it, with other similar notes, would, say 

 those who have studied the subject carefully, fur- 

 nish proper and suitable backing for bond issues, 

 paying a rate of interest which would make them 

 attractive on the various exchanges. 



When it is realized what has been accomplished 

 toward creating easier loans for the farmers in other 

 nations and when it is fully recognized that no 

 farmers in the world are more certain of their crops 

 each year than those on the government irrigation 

 projects, a solution of this big problem seems quite 

 easy. It will be easy, once congress is thoroughly 

 aroused to its necessity and its possibilities. 



It is a subject to which every water users' as- 

 sociation should give closest attention. Several bills, 

 including one introduced by Senator Fletcher of 

 Florida, which may be the administration measure. 

 The western congressmen must be stirred to action 

 to a man. They should be thoroughly awakened so 

 that the Federal project settler will be taken care of 

 in this rural credit legislation. 



