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Show EDISON-FORD FLAN UNFAIR TO FARMER Third Article Shows How Credit i Test Would Fail Him in i' His Need. i,' ! The unfairness to the farmer of the Edlsou-Ford "commodity money" scheme, although ostensibly aimed to improve his economic position, Is discussed dis-cussed in the present article, which is the third in a series prepared by the American Bankers Association, reviewing re-viewing the exposure of tho weaknesses weak-nesses of the plan as presented by William T. Foster, Director of tho Pollack Foundation for Economic Research. Re-search. Briefly, the plan, sponsored by Thomas Thom-as Edison and Henry Ford, would provide pro-vide for Government warehousing of basic commodities, against which currency cur-rency would be loaned, during storage, to the producer without interest, up to half the average value of the products prod-ucts for the previous twenty-five years. On the other half of the value the producer would receive certificates certifi-cates which he could sell or use for bank loans. Restricted Credit lt Chat provision allowing for Government Gov-ernment loans only up to half the average value for twenty-five years Mr. Foster finds particular weakness in the scheme. He points out that prices have risen so high since ISS'6 that the farmer could borrow on most products much less than half the present pres-ent value of the products much less, in fact, than he could borrow directly from the banks. Loans on the other half the value, which would be on virtually a second mortgage basis, he says, would not be desirable for the banks. "The plan is not fair even to farmers; farm-ers; It involves unjust discrimination," discrimina-tion," Mr. Foster says. "The Edison plan fixes the loan values of all products prod-ucts absolutely, uniformly and arbitrarily. arbi-trarily. It ignores the relative prospects pros-pects of different commodity markets. Only by the merest chance would such a method give a fair loan valuation. Fifty per cent of the average price for the previous twenty-five years would be too high for some commodities commodi-ties and too low for most of them With such details the Edison plan is not concerned. Banks Fairer to Farmers "The general practice of the banks Is not only fairer to farmers, but it is sounder business. There Is no justi- j fication for basing the loan value of anything upon average prices in past years. Sound banking practice looks to the future. A bank for the protection pro-tection of its depositors, if for no other reason must consider above everything the prospects of getting its money back. And a farmer's prospects pros-pects of repaying a loan from the sale of his product depend entirely on future fu-ture prices, not at all on past prices. Last year's runs do not count in this year's game." As to the claim that the Edison plan would curb speculation in farm products, Mr. Foster says: "There is nothing in the Edison plan that would tend to abolish speculation. spec-ulation. Even after the farmer had stored his products and obtained a loan from the Government, he would still be free to sell his products outright out-right to speculators. The farmer would have all the inducements to sell that he has today, and speculators would have all the inducements to buy. "Clearly, then, the Edison plan would not provide a money that is sounder than gold money; it would not provide a money less subject to fluctuation In value; it would not enable en-able farmers to obtain larger loans than they can' now obtain; it would not divorce agriculture from the banking system; and it would not eliminate speculation in farm products." |