Trade Acceptance.-The greatest reform in short time rural credit in recent years is that promised by the use of the trade acceptance. It is the cheapest and best form of credit known and is, it is hoped, destined to take the place of "open account" or book credit-the most expensive form of credit known. It should take the place of the promissory note where the term is not over six months. The farmers' coöperative store or the individual farmer, when buying fertilizer, feeds, seeds, agricultural machinery, livestock, or other agricultural supplies, may sign a trade acceptance, running as long as six months if necessary. This acceptance he will pay when due, at his bank, like a promissory note. It is, however, far superior to the promissory note, when the holder of it seeks to rediscount it or realize on it in paying his own accounts, since on the face of it it shows that an actual transaction has taken place in productive material. A promissory note fails to do this. In other words, here is a form of standard, liquid security which can be turned into money at the Reserve bank in the large city with the maximum of safety and the minimum of expense. Already the large farmers are using the trade acceptance rather than ask their local dealer to carry them. And when trade acceptances are once used their success and popularity are assured. Country bankers are urging their patrons to use this credit instrument. For some psychological reason the trade acceptance is paid promptly at maturity, whereas a promissory note is, in many sections, not so paid. QUESTIONS ON THE TEXT 1. Quote the "northwestern farm woman" as to the economic conditions of farmers. 2. Show the attitude of mind towards credit now, and formerly, in this country. 3. Show the relation of capitalistic agriculture to credit: Size of the Iowa farmer's investment. 4. What is the business corporation's attitude towards credit? 5. Cite Hunt's statement on the social significance of credit. 6. When did rural credit become a public question here? 7. Quote at length from President Taft. Summarize. 8. Distinguish clearly between land credit and coöperative credit. 9. Discuss our credit situation prior to 1916. 10. Explain the beginning of cooperative credit in America: Quebec; United States (nine States with detailed account of the North Carolina experiment): Herrick's criticism. 11. Explain at length the Federal Farm Loan Act. 12. Discuss the Joint Stock Land Bank. 13. What is the social significance of cheap credit? From the social standpoint, point out the probabilities and possibilities of this act. 14. State four additional sources of mortgage loans, and discuss in detail Life Insurance Companies. 15. Explain briefly the Federal Reserve System, and in detail the Trade acceptance. 16. On a map locate the 12 Federal Land Banks. 17. What is the average size of a loan? 18. Locate the Joint Stock Land Banks. QUESTIONS SUGGESTED BY THE TEXT 1. Show how land laws in New Zealand, designed to help the poor, helped the rich. Show whether it is probable or improbable that our Federal Farm Loan Act will make the rich farmer richer and the poor farmer poorer. 2. Examine the records of your local Farm Loan Association, and determine the classes of borrowers, and the purposes for which they borrowed. Show the individual benefits received. Show the social benefits (or injury, if any). 3. Show the possibilities and the limitations of the North Carolina Credit Union plan. Explain failure of credit union idea in 5 states. 4. Secure from your local banker samples of trade acceptances. REFERENCES 1. "Agricultural Coöperation and Rural Credit in Europe, secured by the American and United States Commissions, 1913," 63 Cong. 1 Sess. Sen. Doc. 214, same part 2. 2. CAHILL, J. R.: "Report to the Board of Agriculture and Fisheries of an Enquiry into Agricultural Credit and Agricultural Coöperation in Germany, with some notes on German Live-stock Insurance," London, 1913. 3. "Evolution of Credit and Banks in France." Report of National Monetary Commission. 61 Cong. 2 Sess. Sen. Doc. 522. 4. "Federal Farm Loan Board, Washington. First Annual Report, 1918. Annually thereafter." See also circulars issued irregularly by same Board. 5. "German Bank Inquiry, National Monetary Commission Report," 61 Cong. 2 Sess. Sen. Doc. 407. 6. HERRICK, MYRON T.: "How to Finance the Farmer-Private Enterprise-not State aid," 64 Cong. 1 Sess. Sen. Doc. 396. 7. Banker and Farmer: Dealers in Pork and Beans. Outlook, New York, May 2, 1917, p. 21. 8. AND INGALLS, R.: “Rural Credits-Land and Coöperative," New York, 1914. 9. "Miscellaneous Articles on German Banking. Report of National Monetary Commission." 61 Cong. 2 Sess. Sen. Doc. 508. 10. Morman, JAMES B.: "The Principles of Rural Credit,” New York, 1915. 11. WEIR, E. A.: "Rural Credit in Western Canada." Grain Growers Guide, Winnipeg, March 26, 1919, p. 25. 12. WOLFF, HENRY W.: "Coöperative Credit for the United States." New York, 1917. 13. 14. "People's Bank," London, 1910. "Coöperation in Agriculture," London, 1914. 15. International Institute of Agriculture, Rome; International Review of Agricultural Economics: Italy National Conference of Rural Banks Work of the Italian Federation," May, 1919, 241-250; Roumania-"Agricultural credit," May, 1917, 49-63; Germany "Landschaft of Piosen, 1914 to 1916," Dec. 1917, 1-9. "Raiffeisen Federation of Heuwed in 1914-1915," Feb., 1917, 1-14; March, 1917, 1-11. Austria-Hungary “Agricultural Credit in Bosnia and Herzegovina," Feb., 1917, 55-67; Denmark-April, 1911, Jan., 1913; Feb., 1914; Jan., 1916; Jan., 1917. Russia-“Popular Coöperative credit," May, 1916, 31-46; June, 1916, 24-40; July, 1916, 14-24; "Popular Bank of Moscow," Nov.-Dec., 1918, 861-873. Uruguay "Mortgages," July, 1918, 565-585; Jan., 1917; 65-70. United States "Organization of Credit Unions" (in 9 States, namely: Mass., N. Y., R. I., Tex., S. C., N. C., Wisc., Utah, Ore.). June-July, 1919, 356–358. 16. Annual Reports, on Savings and Loan Associations, Land Bank of the State of New York, and Credit Unions," Superintendent of Banks, Albany. 17. "Annual Reports, Inspector of Ohio Building and Loan Associations," Columbus. 18. ROSENTHAL, HENRY S.: "Building, Loan and Savings Associations: How to Organize and Successfully Conduct Them," Chicago, 1911, 3d edition. 19. "Annual Reports, Rural Credit Societies of Manitoba, Parliament House," Winnipeg. 20. "Loans under Rural Credit Law of South Dakota, State Banking Department, Pierre." 21. "Loans under Rural Credit Law of North Dakota, Monthly Report, Bank of North Dakota, Bismarck." APPENDIX The Twelve Federal Land Banks.-Numbered by Districts.-1. Springfield, Mass. States served-Maine, Massachusetts, Vermont, New Hampshire, Rhode Island, Connecticut, New Jersey, New York. 2. Baltimore, Md. States served-Pennsylvania, West Virginia, Maryland, Delaware, Virginia, District of Columbia. 3. Columbia, S. C. States served-North Carolina, South Carolina, Georgia, Florida. 4. Louisville, Ky. States served-Indiana, Ohio, Kentucky, Tennessee. 5. New Orleans, La. States served-Louisiana, Mississippi, Alabama. States served-Illinois, Missouri, Arkansas. 6. St. Louis, Mo. 7. St. Paul, Minn. Michigan. States served-North Dakota, Minnesota, Wisconsin 8. Omaha, Neb. States served-Wyoming, Nebraska, South Dakota, Iowa. 9. Wichita, Kansas. Oklahoma. States served-New Mexico, Kansas, Colorado, 10. Ho iston, Tex. State served-Texas. 11. Berkeley, Calif. States served-California, Nevada, Utah, Arizona. 12. Spokane, Wash. States served-Idaho, Washington, Montana, Oregon. Spokane.. Houston. Federal Land Banks. Loans Made up to February 1, 1919 Wichita. New Orleans. Total loans, $168,213,931; number of borrowers, 71,204; average per loan $2,362. Bahama. Valdese. Shotwell. Springfield.. July 11, 1919 Carmel.. Jan. 26, 1916 115 *Juniper Level. July 25, 1919 *Sharon.. Feb. 10, 1916 Wendell. Aug. 12, 1919 Lowes Grove. Jan. 20, 1916 *Mount Ulla. Jan. 29, 1918 Piedmont. *Riley Hill. Dry well. *Sadler.. *Laurel. Eureka. April 19, 1918 Dec., 1919 Aug. 9, 1919 Rock Ridge. *Angier. Oakdale. Feb. 16, 1916 Drowning Creek. Mar. 16, 1916 *White Oak. Dec. 2, 1919 Mar. 17, 1916 Dec., 1919 Dec. 20, 1918 Monthly Financial Statement of North Carolina Credit Unions as of February 29, 1920 110 2,500.00 15,162.50 20,813.83 27 2,800.00 185.60 21,689.19 789.25 799.41 4,338.81 19 3,500.00 474.61 5,174.38 326.50 322.50 935.50 7 4,000.00 3,532.72 4,652.19 39 2,360.75 1,314.06 3,175.00 12 826.18 4,042.58 653.50 2,294.00 1,000.00 3,867.70 62 916.85 1,467.00 3,425.00 16 800.00 17.32 3,455.75 36 446.75 1,133.14 192.50 1,700.00 2,999.00 3,297.89 1,260.00 1,528.17 1,197.74 8 1,707.50 2,919.14 13 595.00 528.90 1,930.22 9 1,138.72 399.12 2,429.41 3 941.78 305.15 800.96 14 561.23 1,370.52 4 115.00 1,024.25 1,142.50 791.50 800.50 800.50 730.96 520.75 23.50 75.00 150.00 87.42 714.69 468.75 204.82 388.68 3 309.59 703.09 411.00 40.00 417.25 457.50 454.00 100.00 500.00 1 65.50 565.50 237.50 115.85 200.00 2 176.41 382.15 292.14 45.95 353.22 1 12.86 366.08 229.25 101.89 337.39 337.39 294.37 326.62 326.62 4 118.00 100.00 170.00 3 54.44 224.44 209.87 1.00 45.25 3 170.19 215.44 210.00 210.25 210.25 145.00 80.00 70.00 150.00 110.00 110.00 110.00 88.00 86.30 93.05 85.50 82.60 85.50 July, 1919 67.57 71.50 71.50 CHAPTER XII TRANSPORTATION TRANSPORTATION, like credit, is now one of the vital forces in agriculture. It is part of the very life of the agricultural industry. The two, transportation and agriculture, must develop together, with equal steps, prospering together, suffering together. The State itself would not develop in a healthy and well-balanced manner without a concomitant development of a well-rounded transportation system. One speaker has called the road the foundation of the State. We have a six-fold transportation system at the present time, not counting the airship and the submarine. Our system, in brief, includes transportation by ocean, rail, lake, river, canal, and wagon road. And of these six, the one showing the highest degree of development and progress in the United States is the railroad. Railroads. In the United States, as in England-the two countries where the railroad was first and is now best developedthe railroad began as a private institution, and so remained up to the time of the World War. In some foreign lands, however, the railroad is owned and operated by the government. In the United States, when railroads were first built, the accepted economic theory was to the effect that competition would be adequate to govern both service and rates. It was discovered, however, that the railroad is a natural monopoly and is therefore not governed by competition. This left to the government the alternative of regulation or ownership. Hence, in the course of fifty or sixty years, the government adopted the policy of regulation both of rates and services. Evils. Like any other great institution, the railroads change their business standards and practices with the changes in society about them. In the past the most crying evils of the roads were their rebates to favored shippers, their discriminations in freight rates (between persons, between localities, and between commodities), and their corrupt participation in party politics. These evils were finally eliminated or scotched, due to legislation, to the administration of the Interstate Commerce Commission, and to the changing sense of business honor among the railway magnates themselves. At the present time, however, there seems to be a |