104 



DRY-FARMING CONGRESS, WICHITA, 1914 



spend good money for things which one only guesses he may pay. It 

 is, therefore, hazardous to lend money for such a purpose. 



Now if the banker, with his expertness in the matter of investments, 

 could form an alliance with Jones, with his expertness as a grower of 

 crops, we should have an ideal arrangement. The banker should have 

 studied for years the investments of hundreds of farmers in all the sur- 

 rounding country. He ought, therefore, to have pretty clear ideas as to 

 whether a silo will be money in Jones's pocket or not; whether a purebred 

 bull, or a herd of dairy cows, will provide Jones with enough money to 

 enable him to pay back a loan, and leave him a profit besides. If so, 

 it is safe to lend him the money. Being honest, Jones will pay his debt 

 if he can possibly raise the money. The purpose for which he borrowed 

 the money being a profitable one, he will have the money. And there 

 you are. 



It is, of course, much easier for a banker to sit in his office ami 

 scrutinize the notes offered, their security, or the collateral on which they 

 are based. It, is a much harder job to estimate Jones's character, and to 

 determine whether it will pay Jones to borrow or not. Character is not 

 self-registering. Therefore it requires judgment and discretion on the 

 part of the lender if character is to be made a basis for credit. But 

 while this job is harder, it is infinitely better worth doing. Besides, the 

 banker who performs this function will be an active builder of agricul- 

 tural prosperity in his community. In the end, it will add to the pros- 

 perity of bankers because of the increased volume of business, and the 

 greater wealth and prosperity of the entire community. After all, that 

 is what banks exist for. Agriculture does not exist for the support of 

 banks. Banks exist for the support of agriculture and other industries. 



Bankers owe it as a duty to the country to see that the capital 

 which they control gets into the hands of those who can make the best 

 and most productive use of it, and that it is used for productive rather 

 than for unproductive purposes. Suppose that on an irrigation project, 

 water were used on poor land, where it would not produce much, merely 

 because the owner were able to pay for it, while good and highly produc- 

 tive lands were deprived of water. That would clearly be a waste of 

 good water. The total productivity of the project would be increased if 

 the water were put where it would produce the most, that is, where the 

 land would respond most abundantly. It would be an equally bad waste 

 of water if a poor farmer were permitted to use a quantity, merely because 

 he were willing to purchase it, thus depriving some better farmer, who 

 could produce more with it. Again, it would be a waste of good water if 

 it were allowed to be used in the irrigation of crops which didn't pay, 

 while highly profitable crops were suffering for water. 



It is similarly a waste of good capital to allow it to be used by less 

 productive men when more productive men might use it, or for a less 

 productive purpose when it might be used for more productive purposes. 

 The productivity of the would-be borrower does not always depend upon 

 the amount of tangible property or collateral he can put up as security, 



