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Production Credit Explained 

 By James M. Huston 



President of Credit Corporation, 

 St. Louis, Describes Oper- 

 ation of Local Associations 



Government plans for production 

 credit associations, which promise to 

 form the foundation of the future co- 

 operative banking system for farmers, 

 were described by James M. Huston, 

 president of the Production Credit 

 Corporation of St. Louis, before the 

 large Friday morning audience the 

 closing day of the recent I. A. A. 

 convention in Danville. 



Mr. Huston stated that local credit 

 associations are being set up on a 

 permanent basis and are not temporary 

 emergency organizations although 

 they are filling emergency needs. 



There has been a shrinkage of 40 

 per cent in commercial banks since 

 July 1, 1928, he said, furthermore the 

 credit situation in the country became 

 even worse than is indicated by these 

 figures. There seems to be plenty of 

 credit available for short time cattle 

 feeding loans but credit for periods of 

 12 months or longer is almost non- 

 existent in rural communities. The 

 production credit association will fill 

 this gap and provide money at reason- 

 able rates to farmers having no local 

 banks open who are now at the mercy 

 of loan sharks. 



To get a production credit loan, the 

 borrower must file an application and 

 statement of his financial condition. 

 He must give, in most cases, collateral 

 in the form of a chattel mortgage on 

 livestock, crops, the property to be 

 purchased and additional security if 

 demanded. He may give other kinds of 

 security in lieu of a chattel mortgage. 

 At present the rate of interest is 6% 

 and the borrower must pay a minimum 

 inspection fee of $2. Such fee may 

 not exceed 1% of the loan. He must 

 also pay for recording the chattel 

 mortgage, and for other expenses if 

 any are incurred in examining title, 

 etc. But no official of the local as- 

 sociation, employee, or agent is al- 

 lowed to make any ch rge for as- 

 sistance in preparing applications, 

 notes, mortgages, etc., unless such as- 

 sistance requires employment of per- 

 sons not regularly employed by the 

 association. 



Illinois is the first state to be com- 

 pletely organized, Huston said, with 

 production credit associations, 38 of 

 which have been or will soon be set 

 up and ready for operations. 



The full text of Mr. Huston's ad- 

 dress will be published in the Illinois 

 Agricultural Association Section of 

 the February Bureau Farmer, since it 



DUE to the limited space 

 available in this issue of 

 the RECORD, additional 

 reports on the recent annual 

 convention of the I. A. A. and 

 associated companies at Danville 

 are being published in the Illi- 

 nois Agricultural Association 

 Section of the Bureau Farmer 

 for February. Read both the 

 RECORD and Bureau Farmer 

 for February to get a complete 

 report on the annual meeting. 



Auto Insurance Co. 



In Thriving Condition 



Annual Meeting Authorizes In- 

 surance Company Offering 

 Different Kinds of 

 Service 



Enthusiasm and optimism reached 

 an all time peak when more than 500 

 agents and County Farm Bureau direc- 

 tors and members who attended the 

 19th I. A. A. convention met for the 

 annual meeting of the Illinois Agri- 

 cultural Mutual Insurance Company, 

 held in the Danville Armory on Jan. 

 24. The remarkable showing and 

 strength of the company as reported 

 by A. E. Richardson, manager, along 

 with the highly inspirational and in- 

 structive address delivered by Law- 

 rence H. Wood, merchandising coun- 

 selor, Chicago, imbued listeners with a 

 new spirit that promises even greater 

 accomplishment for farmer-owned and 

 controlled automobile insurance in 1934. 



Mr. Wood, who is a business ad- 

 viser to all types of merchants, said 

 that, "friendship, enthusiasm and per- 

 sistency are the main factors in the 

 makeup of any successful salesman 

 and do not forget that while you may 

 not have the title of a salesman you 

 are really one regardless of the ac- 

 tivity you are following. Everyone in 

 this world has something to sell and 

 if you are friendly, enthusiastic and 

 persistent you are in a position to ac- 

 complish great things." 



Business is entering a new era, said 

 Mr. Wood, and the farmer should real- 

 ize that he is a merchant just as much 

 as anyone else in business. Turning to 

 "high pressure methods," he said, 

 "salesmanship is persuading a person 

 to accept your viewpoint. . . . You 

 agents and salesmen of farm com- 

 pany insurance should be convinced 

 that you are in an excellent spot to do 

 the farming industry a great good. 

 Forget high pressure methods as they 



clearly sets forth full details about 

 this less understv^od branch of the 

 federal credit system. 



I. A. A. Record — February, 1934 



are worthless. Supplant them with 

 salesmanship of facts." 



In reporting on the 1933 accom- 

 plishments of Illinois Mutual, A. E. 

 Richardson said that at the year's end 

 the company had 32,992 policies in 

 force, assets of $990,794.49, and a sur- 

 plus over liabilities of nearly a half 

 million dollars. During the year more 

 than $47,000 was added to surplus, ap- 

 proximately $200,000 was paid out to 

 Illinois farmer policyholders on more 

 than 6,000 claims. The average claim 

 amounted to $33.37 as against $33.50 

 for 1932. 



Deviating from his report upon the 

 company's condition, Mr. Richardson 

 made some interesting remarks re- 

 garding the superiority of mutual 

 companies during the depression years. 

 "Experience shows," he said, "that 60 

 per cent of all mutual fire and casualty 

 companies have survived since organ- 

 ization, whereas only 25 per cent of 

 stock companies and 14 per cent of at- 

 torney-in-fact companies have con- 

 tinued in operation. During the past 

 three years, 20 per cent of all stock 

 companies writing fire and casualty 

 insurance have retired from business 

 while during the same period only 4.2 

 per cent of mutual companies were 

 forced to quit. During the past quar- 

 ter century the premium income of 

 mutual insurance companies in the 

 field mentioned has increased 286 per 

 cent while stock companies gained only 

 129 per cent." 



Ratification and delegation of au- _ 

 thority for the organization of a new 

 company was given the board of di- 

 rectors. This new company will offer 

 a complete casualty and liability serv- 

 ice including such forms as compen- 

 sation, public liability, mistaken de- 

 livery of petroleum products, fidelity 

 bond, accident insurance, etc. 



President Earl C. Smith gave the 

 annual report of the board of direc- 

 tors. R. A. Cowles submitted the treas- 

 urer's report. V. Vaniman made the 

 report on acquisition and also em- 

 phasized the good the year's campaign 

 on accident prevention had in reducing 

 the average claim paid. G. R. Williams 

 and M. E. Roberts talked briefly on 

 field service. Following the summary 

 of the year's business, there was gen- 

 eral discussion of plans and business 

 policies for the coming year. 





Greatest In the World! 



Some delegate remarked about the 

 big sign strung across the street from 

 the Wolford Hotel. He said the line 

 read, "Greatest State Farm Organiza- 

 tion In the World." Actually it read 

 "in America." But it's a good idea. 

 So next year we'll take in some more 

 territory. And why not? 



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