The RURAL NEW-YORKER 
A Primer of Economics 
By John J. Dillon 
Part X 
One hundred and fifty years ago Adam 
Smith, the great English economist, said 
that since the downfall of the Roman 
Empire the great governments of Europe 
had favored manufacturing or city indus¬ 
try at the expense of the country. N-> 
student of the present day can fail to 
note the same tendency in this country 
since the close of .our Civil War. At 
that time we were essentially an agri¬ 
cultural people. Since then the policy of 
government has been to build up and de¬ 
velop our city population and manufac¬ 
turing and commercial industries. 
We impose tariff laws to protect our 
manufacturing industries. We made rich 
grants of public lands to encourage the 
building of railroads. We enacted cor¬ 
porate laws to make legal and easy com¬ 
binations of capital and btisiuess. We 
encouraged the development of our pres¬ 
ent middleman system. We created a na¬ 
tional banking system, and gave it a 
monopoly of banking note circulation. We 
left the farmers to take care of them¬ 
selves. We are not concerned here with 
the wisdom or the folly, whichever it may 
be. of these policies from the national 
view as ti whole. The men who made 
the laws knew what they were about and 
what they wanted. They produced the 
desired results. Factory goods have been 
multiplied, city population has increased. 
The railroads have become a network of 
iron rails all over the country. Middle¬ 
men hold a monopoly of food distribu¬ 
tion. and the national banking system 
mobilizes credits for all these industries, 
and finances their undertakings. It is 
adapted to their needs because it was cre¬ 
ated and developed to suit them. It was 
created without any thought of serving 
farm population, and has helped them but 
little. In some respects it has beeu detri¬ 
mental to them. Up to 1018 the national 
banks were prohibited by law from loan¬ 
ing money on farms as security. Since 
then they may loan limited amounts, but 
rarely do so. The banks are reluctant to 
loan to farmers of average means in any 
event, even on time notes, and to a 
larger extent, farmers are equally reluct¬ 
ant to borrow of them. For one reason, 
the loan will be made only' for three 
months, and the farmer’s income is gen¬ 
erally seasonal, and he needs longer cred¬ 
its. and does not want to feel uncer¬ 
tainty about a renewal. What is report¬ 
ed as farm credits now is largely made up 
of loans to speculators in farm products. 
The farmer pays his fire insurance, .some¬ 
times a life insurance, his interest, and 
probably carries a small balance in the 
bank. All this money goes to the bank, 
and it is at the disposal of the feed dealer, 
the machine agent and other dealers who 
sell farm supplies. These merchants bor¬ 
row the money sit 0 per cent from the 
bank, and give the farmer credit for his 
requirement* at rates added to the price 
of the goods, ranging anywhere from 10 to 
50 per cent. Still worse than this, tin 1 
surplus in the bank above the amount 
required by the local merchants is sent to 
New York and other large cities, where 
it is loaned as call money to stock specu¬ 
lators or gamblers at a high rate. The 
National Controller of Currency is re¬ 
sponsible for the recent, statement that 
call money has been loaned by the New 
York bank* during the past year. 1020, 
at 80 per cent rate. At any rate, 10 to 
20 per cent 1ms been the iisunl quotation. 
The point of it all is that our national 
banking system draws money away from 
country districts out of farm reach, and is 
not adapted to the needs of farmers gen¬ 
erally, though the stronger class of farm¬ 
ers do use it to advantage, and those of 
average means could cultivate the load 
banks more than they do with advantage 
to themselves. 
The authority to use a co-operative 
banking system as part of the functions 
of the co-operative corporation would 
strengthen the whole banking system of 
the country, and result in more patronage 
from farmers for the local banks than 
they now enjoy. The national farm in¬ 
come now probably exceeds $20,000,000.- 
000. The national farm wealth is esti¬ 
mated at $00,000,000,000. Here is a 
great mine of bank credit that has scarce¬ 
ly ever been considered, much less ex¬ 
plored or utilized. Let these resources be 
once mobilized through a national co-op¬ 
erative banking system, and the national 
bankers will reap profits from a new and 
stable line of credits. If they could now 
realize the possibilities in it. they would, 
from self-interest, be the first to help 
organize the system. 
The great benefit of the co-operative 
banks, however, would be to farmer* them¬ 
selves. It would make large lines of 
credit, available for capital in their busi¬ 
ness of production on the farms, and at 
the same time finance their co-operative 
distributing enterprises. To a large ex¬ 
tent. farm products now finance the farm 
market operations for the dealers and 
speculators, and they will need to con¬ 
tribute little if any more to finance the 
operations for themselves. Their credits 
are based on substantial wealth, and a 
fundamental industry. It is a source of 
advantage and profit that ought not to be 
longer neglected. 
CO-OPERATIVE IDEALS 
The best thing about real co-operation 
is frequently overlooked. It develops 
men. It also develops communities, and 
improves the material condition of the 
people, but. the bringing out of the best 
that is in the members, commercially, in¬ 
tellectually, socially and morally, i* a 
gain not to be measured in dollars and 
cents. Co-operation develops character by 
the simple art of providing a way by 
which men, young and old. learn to do 
things by doing them. If makes a com¬ 
munity of farmers the unit of organi¬ 
zation. and places responsibility and au¬ 
thority on the local members to attend to 
their local affairs in their own way. un¬ 
der general principles laid down by the 
organization, and it clothes their local 
association with authority through them¬ 
selves to delegate general power*, such as 
buying and selling at wholesale, to a gen¬ 
eral or federated body created by them¬ 
selves. With proper organization the sov¬ 
ereign authority is always in the mem¬ 
bership ; and the exercise of this author¬ 
ity develops the best that is in the indi¬ 
vidual members. In this way the system, 
when properly organized, develops it* own 
leaders ; and the finest material for civic 
leadership as well. If this leadership 
were imposed upon it from the outside 
and everything done for it from a central¬ 
ized source, the members would in time 
lose the power to do things for them¬ 
selves. and would become mere laborers in 
the productive fields. The centralized au¬ 
thority may or may not be efficient, but 
whether so or not, it would not ‘be co¬ 
operative. 
The co-operative system improves the 
local community. The capitalist through 
the stock corporation brings work and 
enterprise and business to a community, 
but the greatest benefits are absorbed by 
a limited number of people who control 
the capital and through it the implements 
of production. In the capitalistic system 
men must work largely on its terms, and 
for such rewards as it. gives, or not at all. 
No matter whether the profits of the busi¬ 
ness are large or small, the operators feel 
themselves under the restraint of a master. 
They lack the inspiration of entire free¬ 
dom and liberty. The co-operative sys¬ 
tem brings capital and labor and enter¬ 
prise together, but every member brings 
capital and works himself, and the profits 
of the enterprise are distributed over the 
entire community. It will not be seri¬ 
ously disputed by anyone that an annual 
profit of say a half million dollars dis¬ 
tributed over a whole community will re¬ 
sult in greater prosperity to the neigh¬ 
borhood than when the same profit is di¬ 
vided among a very few individuals. Un¬ 
der the co-operative .system the work and 
enterprise is the same, but the production 
should be greater, because of the per¬ 
sonal interest of the workers inspired by 
their share in the results of the enter¬ 
prise. 
Co-operation builds up the individual 
fortune as well as the capital fund of the 
community. It stimulates prudence and 
223 
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