102 



THE IRRIGATION AGE. 



ELWOOD MEAD OUTLINES HIS RURAL CREDIT 



EXPERIMENT 



The Orland, California, Reclamation project 

 extension has been thrown open to the settlers, the 

 date fixed by the government being June 15. 



It is especially interesting, as it is to be the 

 scene of a great object lesson in rural credits if 

 Secretary Lane and Congress approve the plan sug- 

 gested by Dr. Elwood Mead. 



On March 8 a celebration was held at Orland, 

 and the principal speaker was Dr. Mead. The fol- 

 lowing reprint of that meeting is taken from the 

 columns of the Orland Register, of March 8: 



"We are not only attempting to bring about 

 a new development in the land system, needed here 

 at Orland, but to make Orland the object lesson of 

 one of the greatest reforms in rural development in 

 the United States." 



Dr. Mead with these opening remarks gave the 

 keynote of his entire address before the local water 

 users last Saturday afternoon. He brought home 

 most impressively that the Orland project is to be 

 used as a means whereby the system might be ap- 

 plied to every farming community in the West. 



Dr. Mead, who was introduced by President 

 Lindstrom of the Board of Directors, explained the 

 proposed land settlement project according to the 

 Australian plan, told of the need in every new 

 country for such a credit system, and explained the 

 action necessary to obtain favorable consideration. 



The proposed credit plan would be to the young 

 farmer and the poor farmer of this generation what 

 the homestead act was to the past generation. It 

 would not only affect the local project, but would 

 have a great quickening influence on the rural life 

 of the entire country, declared Dr. Mead. The 

 homestead act made this country a nation of farm 

 owners. We are fast losing this distinction, becom- 

 ing tenant farmers, because of the inability of the 

 young man to get a start without large capital. 

 There are no 160 acres of Iowa land which can be 

 homesteaded. Land is high, water is high, labor is 

 high and equipment is much higher. 



Dr. Mead showed by statistics from six irriga- 

 tion districts in California that the financial condi- 

 tions were almost insurmountable. The average 

 holding was twenty acres, costing $190 an acre, the 

 initial capital was $3.130. while the first payment 

 was $1,384 with the first improvements, $904, leav- 

 ing for working capital only $750. This amount is 

 left to meet a short term debt of $2,512 and to pay 

 an annual interest of $197, Added to this was the 

 average income for the first year which varied 

 from $85 to $400. Could the interest charge 8 

 to 9 per cent be cut in half and the repayment 

 of the debt extend over twenty or thirty years 

 these people would be sure of success. 



"The high rate of interest charged the farm- 

 ers, who are the greatest creators of wealth in the 

 nation today is the greatest menace to the success 

 of the rural population today." 



Added to this prime cause of failure on new 

 tracts is the waste and loss due to lack of organi- 



zation. Cut your interest rate in half, extend the 

 time for repayment to a long period, complete or- 

 ganization in every activity and you have cut the 

 risk of land settlement in half. This has been 

 proven time and again by actual experiments in 

 Denmark, Ireland and Australia. 



In 1899 Denmark was poverty-stricken and the 

 young men were emigrating in great numbers. The 

 government in order to stop this, bought 40,000 

 farms, turning them over to the young men on long 

 time payments, advancing nine-tenths of the money 

 for improvements. Fifty years was given to repay 

 these loans, interest being charged at 3 per cent and 

 one per cent being paid on the principal each year. 

 The plan stopped emigration, placed Denmark 

 among the most prosperous countries in Europe. 



The same thing has been accomplished in Ire- 

 land, to such a success that Irish newspapers refuse 

 advertisements for settlers from other countries, 

 claiming that the thing they have fought for, has 

 been brought about in Ireland by the government, 

 namely, Ireland for the farmers of Ireland. 



Australia offers a striking parallel to California. 

 The same conditions and sequence of events prevail 

 in both sections. First, the gold rush, then the 

 great grain rush and finally the small farms. The 

 system, which is recommended for the Orland pro- 

 ject, was put into effect in 1910, when the farmer 

 was paying nine per cent on short time loans. Now 

 he pays 4^ per cent interest and \y 2 per cent on 

 the principal each year, so that at the end of 

 thirty-one years his entire debt is paid he having 

 paid six per cent annually on the original debt 4^ 

 per cent interest and \y 2 per cent on the principal. 

 Of course the 4 l / 2 per cent interest is interest on 

 the amount remaining unpaid so that each year the 

 amount paid on the principal increases with the 

 decrease of the interest total. 



The Australian also includes a scheme whereby 

 the lack of organization is done away with. Instead 

 of buying raw land with only the water right, the 

 farmer buys land leveled and seeded, with a farm 

 house and buildings erected. He goes onto the land 

 and is ready to make a living the first year. The ex- 

 pense of individual leveling, building, etc., and the 

 loss of time is done away with. A thousand acres 

 are leveled and seeded by the government at once 

 in the most scientific manner. A dozen houses, 

 each with its own individuality but all with certain 

 features which are duplications, are erected at once. 

 The government is able to take advantage of buy- 

 ing and working in large quantities. The mistakes 

 made by each individual farmer and the loss of time 

 and effort is entirely eliminated. An expert 'farm 

 adviser is also at hand to aid the settler. 



Dr. Mead showed by half a dozen instances that 

 the system is not paternalism in that it does not kill 

 individual initiative. Reducing a man's interest 

 charge from nine per cent on a short time loan to 

 4y 2 per cent on a thirty-one year loan, is hardly 

 paternalism. Of course this debt need not run the 



