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Show HOGS ON ICE. "INDEPENDENT" FARMERS WILL GET FARTHER WHEN THEY CO-OPERATE. Letter Xo. 2 from Cousin Ben to Farmer Ned. Washington, D. C, Sept. 30, 1916. Dear Cousin Ned: Hurrah for your Co-operative Fruit Selling Society! Your co-operative canning factory and creamery, too, are doing great work. Those reports re-ports sent me about your success in marketing your berries by the carload and forcing the buyers to bid against each other and so bid tip the price made me laugh out loud. It bears out just what you and I argued six years ago when we were coaxing the neighbors to join the co-operative society. I tell you, Ned, the more I know of the foolishness fool-ishness of individuals, the more I sympathize with hogs on an icy pond. They do work hard and are I independent, but Dan Patch could have beaten their speed. You farmers have already demonstrated dem-onstrated the power of co-operation in your fruit selling co-operative organizations; or-ganizations; also in your creameries, . cheese factories and live-stock co-operative organizations. Just extend that principle now to collective credits cred-its organizations. Of course, you will have to recognize the necessity of forgetting prejudices against your ! neighbors, and when you consider i credit, leave out all other qualities of the borrower and think only of -' the probability of payment. Since character enters into personal cred-,' cred-,' its, you must have a reliable commit- j tee to pass on the character of every man you admit into your local credit union. The committee must be broad-minded, broad-minded, impartial, but it must also be firm in ruling out farmers whose word cannot be trusted or who are visionary in their plans. Assuming that this is done with fair conservatism and caution, then you can go ahead and organize into - a local credit union all the farmers in your neighborhood who want to i borrow. Suppose you have twenty- -. five farmers as the minimum. You decide that your locality is well ! adapted to raising hogs, for example, and you twenty-five or more farm-7 farm-7 " ers agree amongst yourselves all to raise the same kind of hogs and to I follow the directions which your sec- retary will get through the county agent or the professor from the Ag- ' ricultural College. Now, suppose ! each of you wants to borrow J 100 with which to buy hogs. Some of you could go to the bank and get it without mortgaging your farms, but many of you could not. If, however, you say to the bankers, you will mutually mu-tually endorse the entire loan of $2,-i $2,-i 500, the banker will at once recog- j nize that, while perhaps one or two 1 farmers might be risky, the whole twenty-five will not fall down in the J payment of the note, and so the collective credit of the union enables I you all to obtain your money. The bank gladly lends its money to the union, not to the individual, and the union lends in turn to the individual individ-ual members. But now, how will the union pro-! pro-! tect itself against loss by the in- dividual member? Some, perhaps, might become sick or die, or they might not live up to their reputation for honesty. That problem is fully solved in fifty of the cities of the United States, through a comparatively compara-tively new system of banks for lending lend-ing on personal credit exclusively, to city wage earners and small merchants mer-chants whose credit is not strong enough to interest a national bank. This new system of banks never takes tangible security. It requires that the individual note be signed not only by the borrower, but by two of his friends as endorsers. Then the borrowers bor-rowers must make fifty weekly installment in-stallment payments so that the entire en-tire debt is paid off by the end of the year. Each installment is very small, but if anv installment is delayed the bank at once notifies the endorsers and they are called upon to pay the installment. Now, can you imagine what a mean, small character a man must be, who, without good cause, would shirk his installment and force his friends who have endorsed his note to carry his installment amounting amount-ing to, say $2 a week on a hundred dollar loan? I think I hear you say that the scheme wouldn't work at all on the farm, because farmers don't get their money in weekly installments, but the answer is that the same principle can -easily be adapted to farm conditions con-ditions to make the installments monthly instead of weekly, and the farmer can meet these monthly installments in-stallments if he is enterprising enough to diversify his interests by having cows or poultry, or truk. If ; he isn't that much alive yotThad better bet-ter keep him out of your organization, organiza-tion, because this proposed sytsem is not intended to finance grain raising rais-ing or cotton raising or any of the great staple products. It is to help the individual diversify his interests and get on his feet. Now, just to illustrate the strength of this plan: In a city that I know of, one such bank, which, in the last four years has loaned more than $2,-000,000 $2,-000,000 without any security except the personal character back of its notes, has lost less than $200 of the $2,000,000. I know of other institutions institu-tions somewhat similar in character, one located in Boston, which, in six or seven years, has lost only $20, and that loss was due to its cashier's having hav-ing his pocket picked. The banker tells me that he finds that the very fact that the borrower had to ask two of his friends to go on his note is a moral influence upon that bor-power bor-power almost irresistible. He will pay that note even if he goes hungry, if he has any manhood in him. Now, if that is true in the city with wage earners, just apply the same idea to the farm community. Suppose a farmer farm-er borrowed money from the local credit union. The credit union would require that farmer have two of his friends endorse his note. Then suppose that farmer shirks the payment pay-ment of his note. How long would he dare live in that neighborhood? Wouldn't every farmer in the neighborhood neigh-borhood despise him as a dead beat? Farmers are no more honest than city people, but they are just as honest, hon-est, and just as reliable. You and I having been raised on farms probably feel that I am putting it too mildly in saying that, but I am trying to be charitable to the city folks. The main point is that the Democratic Dem-ocratic talk about the impossiblity of solving the problem of how to help the tenant farmer is insincere and is mere political project to glorify its "bank of bankers"' the Reserve Bank and to pretend that it solves all problems of the farmers when it doesn't touch any phase of that question ques-tion at long distance. Now, that is only the first step in the proposed personal credits organ ization. I have shown that the notes thus created are reliable and bankable, bank-able, but that doesn't go far enough. It still leaves the mass of members of the credit union subject to the local banker, and you must make the farmers more independent than that. I have talked of only one credit union because you only want one in a neighborhood, neigh-borhood, but there would be a thousand thou-sand such credit unions in one State. Every borrower would borrow enough in excess of his own actual needs to enable him to invest ten per cent of his loan in stock in his credit union. That gives a cash capital to the union. Now, let these several thousand thou-sand credit unions use half of their capital by federating and establishing establish-ing a bank owned by the unions themselves and to handle the redis-counting redis-counting of the notes for all the unions of that State. Don't you see that that puts the whole management manage-ment of the problem into the hands of the farmers themselves? The monthly installment payments go to the credit union, not to the bank, and can be reloaned by the union, and so earn double interest, giving a profit to the union treasury. Eventually that will build up a fund, so the union can depend on its own capital for loans and not have to borrow from the bank. I want to go still farther. I want the co-operative banks of all the States, then, to federate on a national nation-al basis and establish one central bank to be entirely independent of the Reserve Bank System, which will receive from the forty-eight banks in the several States, not merely the individual farmer's notes, but the direct obligations of these foaty-eight banks, on the basis of which the central bank can issue bonds. These bonds will have back of them and under them the collective credit of the unimpeachable character of the ambitious, intelligent and honest tenant ten-ant farmers and small farmers of America. While Investors might not know enough about any one individ ual to want to lend him money di rectly, the debenture bonds of thi central bank of the personal credit: system will be as safe and soum and desirable as Government bonds Do not get the impression that, under un-der this plan, only $100 loans car be made, nor that monthly installments install-ments are vital to the system. Those are merely illustrations. The one vital feature is that personal character, char-acter, expressed in endorsements of personal notes, and collective or cooperative co-operative credit, are sound security fully as reliable as farm mortgages when properly administered. There is no mystery about the problem of financing character in America since that mystery has all been solved in other civilized countries coun-tries and in the cities of America dealing with wage earners. Through the federation of credit unions, centering cen-tering in the national debenture bank as above outlined, access will be had to almost unlimited funds. Cheer up, Ned, for long before you can possibly get real money out of this cumbersome Democratic law there'll be long heads, instead of long ears, in the Government stalls. The Elephant and the Moose will not eat such fodder as the Hollis Law, with all its roughage, and I doubt their even using it for bedding. They will demand a balanced ration not shavings shav-ings and green goggles. Yours truly, COUSIN BEN. |
