9»> RURAL NEW.YORKER 
1653 
HowCity Bankers Regard Agricultural Loans 
, i 
Shall The Country Finance The City ? 
CITY AND COUNTRY.—A lengthy correspondence 
between a New York City and a country banker 
relative to the financing of city mortgages by farmers 
has come to The R. N.-Y. with mutual consent. It 
is too long for publication in full, but as it is 
important in showing the attitude of mind of two 
prominent bankers on an important economic prob¬ 
lem, we give the following fair synopsis of the 
correspondence on both sides. 
REAL ESTATE LACCINO.—Mr. II. A. Klahler, 
president of the American Trust Company, New 
York City, writing his fellow banker in the country 
says: Total loans of banks in the United States for 
1913 to 1918 increased 54 per cent; stocks and bonds 
owned by banks and insurance companies increased 
C8 per cent; savings increased 200 per cent; but 
real estate loans by banks, insurance companies and 
building associations increased only 28 per cent; in 
New York City, compared with the 10-year average 
previous to 1914, the last four-year average shows 
a loss of city mortgage loans of 00 per cent. He 
infers from (his (hat accumulated money has been 
driven into short erm credits and that while domes¬ 
tic industry and foreign trade must be financed, the 
great national need is for housing for city industry 
and workers. 
TI1E CITY’S NEED.—In the city the social prob¬ 
lem is most acute, and mortgage money must there¬ 
fore first come into the cities. This money must 
come largely from (he present enormous surplus 
funds belonging to the farmer, the industrial laborer 
and the small business man. Some of his money is 
iu the country hanks, some of it being spent in 
extravagant living. The city needs some of it. and 
as bankers it is proposed that they devise a method 
by which a part of the savings of the people be 
gathered into capital for housing city people. As 
a means to this end he proposes to make (lie country 
bank an agency to sell mortgage certificates to 
country people. 
THE RURAL VIEWPOINT.—To this proposition 
Mr. Ilenry Burden, president of the Cazenovia, 
N. Y., National Bank, replied: 
Perhaps the waning interest in loans on city real 
estate as investments is just as well, since by 1920 
probably there will lie left on tin* farms of the country 
not more than 50 per cent of the population. In 1880 
our farm population was 70 per cent of the whole, so 
complete reversal of conditions will have taken place 
in 40 years. 
It seems to an unprejudiced observer that it will be 
distinctly wholesome if lack of housing facilities pre¬ 
vents, for a time at least, an increase of urban popula¬ 
tion. Transportation problems in our larger cities have 
become well-nigh insoluble because of the short-sighted 
policy of not placing limitations on heights of buildings. 
It will also be necessary for cities to solve their food 
supply problem in a satisfactory manner before they 
can properly defend an increase in population. It looks 
as if natural economic law had asserted itself to make 
up for a lack of common sense on the part of human 
beings. It is not difficult to foresee results if the 
shifting of population continues for the next 40 years 
at the same rate as during the past 40. 
This community has not yet paid for all tjie Liberty 
bonds for which it obligated itself but, even if it had, I 
am inclined to think it would not be interested in loan¬ 
ing money to assist iu draining itself of its population. 
Rather would it do as it is doing, keeping its funds for 
making itself a more desirable place in which to live, 
and in bettering agricultural conditions on lines of 
improved roads, farms and homesteads. By doing this 
it is serving the city population to the best possible 
advantage. 
THE CITY’S REPLY.—The New York banker 
comes back with admission of the relative change 
of city and country population, attributes the change 
to the fact that in these 40 years this nation has 
changed from a distinctively agricultural nation to 
one in which industry has uncovered our other 
marvelous natural resources and brought, us to a 
commanding commercial position. Broadly speaking, 
for every three persons in industry and commerce 
two persons are on farms and small villages, and 
tills lii“ asserts is a healthy balance. He continues: 
Certainly the rural element of our population has 
no cause for complaint over this change. In 1880 the 
total value of all farm produce of all the farms in the 
United States was 2Vy billions. In 1914, before high 
war prices, they had mounted to almost 13 billions, and 
will probably show at the end of 1920 close to 25 
billions. If the actual farming population has not in¬ 
creased substantially during that time, we can only 
conclude that this enormous advance in the value of the 
produce of the farms makes the individual farmer today 
not only a more efficient producer, but a holder of 
enormous profits. In 1880 the total value of all farm 
property was 12 billions. In 1910 it was 41 billions, 
and when the census is taken next year the farming 
population will probably enumerate its wealth as close 
to 75 billions. In the 40 years under consideration the. 
increase in the acreage under cultivation has been from 
284 million acres in 1880 to about 500 million acres in 
1919. The per capita area cultivated in 1880 was nine 
acres, in 1910 11 y> acres, and iu 1919 probably about 
13 acres. 
Nor does the general high price level at which the 
farmer must buy his supplies modify his abounding 
prosperity. He keeps pretty well ahead of the game. 
For example, in 1909 flour sold for $0.30 per barrel. 
With the proceeds of the average acre of produce, the 
farmer could buy 2.0 barrels of flour. In 1918 a barrel 
of flour brought $12.30, but with the proceeds of the 
average acre the same farmer could buy 3.1 barrels of 
flour at the increased price. Flannel shirts from 1909 
to 1918 increased in price from $1.34 to $3.25 each, and 
from 1909 to 1918 the same farmer, from the same acre, 
could buy one dozen shirts in 191S as lie did in 1909. 
In 1909 sugar was .058 per pound. In 1918 it was 11 
cents per pound, and yet in 1918 at .11 per pound au 
acre of farm produce would buy 549 pounds of sugar 
and only 287 pounds iu 1909. Out of the list of 85 
articles bought by the farmer, 70 of them iu 1918 were 
costing him less than they did in 1909, when valued in 
terms of his own production. And most of the 15 that 
were costing him more were products made from cotton 
and wool, and the increased cost went to benefit some 
farmer. 
If things went on as they are now going, iu 40 years 
the farmers would own the country, and your bank and 
others like it would get down on your knees and beg ins 
to take your money and with it build homes for indus¬ 
trial and business people to live in so that they might 
stay in the city and give you in the country a market for 
eggs_at 50c per dozen, chickens at $0 per dozen, wheat at 
$2.25 per bu. If you know what is good for you as a 
business man you won’t try to force the homeless people 
of New York 'City to move to the country by refusing 
to build them homes to live in here. You will let them 
stay here. If you think the country as a whole would 
be better off with fewer people in New York City and 
other big cities, all you have to do is to let the people of 
the cities know something about the financial prosperity 
of the farmer. 
The people of New York City have paid for their Lib¬ 
erty bonds, and country people have left theirs with the 
banks. Hence city people have no money for mortgages, 
and country people are not willing to loan money saved 
from Liberty bonds for city mortgages. They prefer to 
keep it for local pleasures and home developments. 
The Government in establishing land banks to help 
the farmers has created a tax free bond, secured by 
farm property which pays 4 V. to 5 per cent, while many 
a mortgage investment in New York City, because of 
the present taxing system, nets the investors as low as 
2 per cent. This means that the most prosperous class 
of the nation today have pulled a subsidy from the gen¬ 
eral Government which they did not need. This is one 
cause of the waning interest iu city mortgages. 
But of equal importance is that we offer you a work¬ 
able plan under which you as a banker can help to edu¬ 
cate your own community into habits of investing safely, 
which is of as much importance to you as a rural banker 
as it is to anybody else. The Federal Trade Commis¬ 
sion estimates that the people of this country lose an¬ 
nually about $500,000,000 dollars in “wildcat” invest¬ 
ments. Much of this is lost by the small depositors in 
banks or by people who keep their money unprotected 
or hidden at home. Wouldn’t it be better to broaden 
your function in your community by helping to educate 
your people into knowledge of good investments? Not 
only must money for mortgage investments come in 
greater quantities from the farmer and the working 
man, but new capital for commercial ■ -"ust 
come from the same source. Jt , ,j,. 
SUMMING IT UP.—Mr.Burden finished: 
If three persons in commerce and manufacturing to 
two persons on the farm is a desirable proportion, how 
are you going to maintain such relations? Although 
the Secretary of Agriculture annually makes public an 
imposing array of values of farm crops, he has little to 
say about profits. Perhaps an average farm labor in¬ 
come of 25c per hour is not an unreasonable estimate 
of earnings. Granted that the products of the farm are 
now measuring the value of the gold dollar to the det¬ 
riment of the latter, please bear in mind that cost of 
production has also kept pace. It is the margin between 
tlie cost and selling price that constitutes profit. Farm¬ 
ers arc too busy hustling to keep up with the demands 
placed on them by the 3 to 2 ratio to worry much about 
owning the country. They have been led to believe that 
food was wanted and they find their ability to supply it 
somewhat in doubt. They would welcome help from 
those that were really willing to work without too much 
attention to the position of the hands on the clock. The 
cost of tin* war can be met only from income. If New 
Y r ork has paid for all its bonds, it means either a very 
large income, an under-subscription, or a large sub¬ 
scription paid for by the savings of a salaried popula¬ 
tion. Farmers pledged the income of their land and as 
such can only be gathered annually, payments must be 
correspondingly slow. Present distributive systems are 
being found somewhat unsatisfactory. Perhaps they 
may have to go. Your Government is just what you 
make it. As to greatness, there is a limit. 
Possibly city mortgages are sound securities, but you 
must not feel badly if a projected increase in the city 
budget of $(>8,400,000, with prospect of a like advance 
in the year following, causes would-be investors to have 
doubts on this subject. I cannot see that a 5 per cent 
interest rate on tux-free Federal Land Bank Bonds can 
be regarded as a subsidy to the farmer. If you think 
the fanner lias no need of credit for conducting an oper¬ 
ation having only one turnover annually, I think you are 
mistaken. 
Money that the farmer is earning today is going back 
into houses, barns, stock, equipment and automobiles. 
These are sound forms of investment for farmers, al¬ 
though motors might be classified as doubtful for sal¬ 
aried workers. Manufacturers will find their best mar¬ 
ket among our farm pop datum for some time to come if 
the conclusions reached after a recent survey are cor¬ 
rect. There will be few surplus funds in this vicinity 
for some time to come, if our present knowledge does not 
deceive us. 
PENALIZING THE COUNTRY.—This New York 
banker would have two farmers feed three city peo¬ 
ple, and out of the returns of 55 cents on the dollar, 
build houses to shelter the population of the city 
which is increasing at the expense of the country. 
The explanation of it all is probably found in the 
fact that while the proposition is urged as an altru¬ 
istic and patriotic measure, its real purpose is a 
banker's profit in the manipulation of securities. We 
are unwilling to believe that Mr. Kahler represents 
the general sentiment of New York financiers. We 
hope Mr. Burden better represents the sentiments 
of country bankers. 
Public Comment on Agriculture 
I am sending you two editorials, one from the New 
^‘*rk World, which seems to me to he the greatest col¬ 
lection of falsehoods I ever saw collected in so small a 
space: the other from the Rochester (X. Y.) Democrat 
ami Chronicle, which is the fairest editorial fin farm 
matters I have seen recently. edward mason. 
Livingston Co., N. Y. 
Our people are sending us clippings from the news- 
hick discuss one side or the other of the 
farmer’s problems. We are very glad to get them. 
In this way we may know what the newspapers are 
printing, and, from their comments, a clear idea of 
what farmers think. The editorial from the World 
sneers at farmers and concludes: 
Suffering from these and other grievances, as the 
farmer does, his mortgage paid and a new motor or two 
on the way, it is easy to understand his suspicion of 
the workingman who damns the producer every time he 
pays his grocery billI; but what reason is there to think 
that the capitalist is about to commit depredations in 
the rural districts, and why should the husbandman, 
denying that he is either a capitalist or laborer, refuse 
to associate himself with the public? Let us hope that 
it is not because, in his misery and desperation, pos¬ 
sessing returns unexampled in the history of agricul¬ 
ture, he has grown exclusive and arrogant. 
This is the old foolish falsehood that farmers are 
all growing rich at the expense of the rest of the 
people. 
The note from the Democrat and Chronicle dis¬ 
cusses the recent “industrial conference” at Wash¬ 
ington and points ait the connection between the 
labor unions and farmers: 
The demands of tli ■ unions are in danger of crippling 
agriculture to such an extent that labor will not be 
available for tilling the >oiI. Young men in increasing 
numbers in agricultural districts are being drawn to the 
cities by the lure of high wages. This loss of labor, of 
course, will bring about a reduced output from the 
farms. And a reduced output from the farms means an 
abnormal increase in the cost of living, followed by all 
the evils of distress, suffering and unrest. 
One thing that leaders of labor unions have yet to 
learn is that they cannot repeal the underlying basic 
laws of economics. They may ignore and defy those 
laws, but the result will be disastrous—just as disas¬ 
trous for their own followers as for any other class in 
society. Wages in some unions already have been forced 
up to a point where they are out of line with all rules 
of sound economics. Suc'u a condition brings about 
only a fleeting and elusive prosperity, gone almost before 
it is achieved; demoralizing the workers, and subversive 
to national prosperity. 
A Grange On Welfare Bills 
At a regular meeting of Rose Hill Grange, held at 
their rooms October 25, the following resolutions wore 
unanimously adopted: 
Whereas, at the last session of the Legislature, a bill 
commonly known as the Compulsory Health Insurance 
Bill, and otherwise as the Daveuport-Donohue Bill, was 
introduced and defeated and 
Whereas, this Hill was a measure to create class dis¬ 
tinction and would exclude front any benefits agricul¬ 
tural laborers, domestic servants, casual employes and 
all self-employed persons, and 
Whereas, such legislation is being again projected. 
Be it resolved that uo legal or moral liability rests 
upon any employer to justify such a law, which would 
add to the burden of present heavy taxation and en¬ 
courage shiftlessness ami 
Whereas, an expensive and partisan political machine 
would be built up ns the inevitable result of such a law. 
Be it further resolved, that the members of Rose Hill 
Grange, numbering over 000, oppose at the polls such 
candidates as favor, or stand committed through parti 
affiliatious, to this or similar “welfare laws. ' 
.TOTIN' Ci. PEARSON. 
