The Outlook, Volume 126The Tomahawk. (White Earth, Becker County, Minn.) 1903-192?, September 25, 1919, Image 7
Image provided by Minnesota Historical Society; Saint Paul, MN
BROKERS WANT BUSINESS
Story of Overvaluation of Iowa Land
Proved by Omaha Bank Chief to
Be Deliberate FraudBrok
ers Offered Same Loan.
Omaha, Neb.In an interview
given out to the press, D. P.
Hogan, president of the Federal
Land bank of Omaha, exposes the
propaganda of the mortgage brok
ers to discredit the loans at cost
plan for the farmers.
“For the past two years,” says
Mr. Hogan, “the American Farm
Mortgage Bankers’ association
has been carrying on a campaign
of falsehood and misrepresenta
tion agsinst the federal land bank
“Their predictions that the
bonds would not sell have proven
false their attempts to scare the
farmers by stating that every one
guaranteed every other loan in the
system, have not succeeded and
the good dividends we have
earned and paid have discredited
their statements that the borrow
ers’ investment in stock was a
“In the Congressional Record of
July 1, Congressman McFadden of
Pennsylvania published the speeches
that E. D. Chassell, secretary of the
American Farm Mortgage Bankers’
association has been making during
the past year at bankers’ group meet
i ings and elsewhere. “We have at dif
ferent times corrected the misrepre
sentations of Mr. Chassell, but a new
one appears in this speech on page
2374 in the Congressional Record of
July 1, substantially as follows:
”That Messrs. Hoyer, Schulze
and others borrowed $41,300
through the Federal Land bank
of Ohama on 791 acres in Hamil
ton county, Iowa, a large part of
which is covered with peat and
moss and does not raise either
pasture or meadow grass that
the lands in Question are a specu
lative proposition and the loans
iar in excess of what would have
been made by reliable private
loan men. That particulars re
garding the loans were furnished
by Varick C. Crosley, an ab
stracter of Webster City, Iowa,
and tbat he also had a very inter
esting set of photographs show
ing the correctness of the report
of its being a swamp.”
“Now the facts proven by abstracts,
affidavits and letters in our posses
sion, are as follows:
“First, This land sold in an unde
veloped state In 1914 for $45,000 and
again in 1916 for slightly less than
$70,000. Two large drainage ditches
were constructed at a cost of $9,834.80.
Fifty-eight cars of main and lateral
tile were purchased and laid at a cost,
of approximately $15,000. Fences and
buildings have been erected, making
beautiful homes and profitable farms
of land which was formerly a swamp.
The land has been crperated by these
borrowers by their own labor and by
hired labor. These men deserve credit
for reclaiming this land. Loans can
be made for no better purpose than
for repaying these men for the ex
pense incurred in reclaiming this
“Second, We have bona fide offers
in writing by responsible men of
means, agreeing to purchase the
whole ef this tract at mors than
THE TOMAHAWK. WHITE EARTH, MINN.
Benjamin C. Marsh, expert for
the farmers’ National Council
told a senate committee last week
how the people, in his Judgment,
were being robbed of about 6*4
billions a year.
The cost of our failure to tax
land values adequately he placed
at 2% billions.
The burden of private owner
ship of natural resources at least
The burden of privately owned
railroads, 1 billion.
The burden of private owner
ship of the merchant ships on a
pre-war basis, 400 millions.
The minimum cost of the pack
era system, 200 millions.
Monopoly of finance and credit,
Competitive advertising, 1.4 Ml
double the amount of our loan. Well
informed and responsible men who
live in that vicinity and know land
values there, tell us that it is easily
worth three times the amount of our
“Third, There is at present grow
ing on this tract about 200 acres of
corn ‘and about 250 acres of small
grain, witfc the balance largely in hay.
The county agricultural agent of
Webster county, Iowa, estimates the
yield of oats at 55 bushels per acre
and states that the corn is fully up to
the average of surrounding fields. He
also states that alkali and peat in
damaging quantities is present only
on a few acres and he states the land
is extaordinarily fertile.
“Fourth, We have the affidavit of
J. R. Zeigler, photographer, in which
he states that he was paid $25 by
Varick C. Crosley with instructions to
take pictures of the worst part of the
old Iowa lake. He has since learned
and now states under oath that the
pictures he took showing bad farm
ing conditions were not taken on land
covered by mortgages to the Federal
Land bank of Omaha.
“Fifth, We have an affidavit by one
of the owners of this land, stating
that Varick C. Crosley offered to
make them loans and discouraged
them from making loans with the
Federal Land bank by stating they
would be liable for losses on other
loans, if any should occur. The ab
stract discloses that insurance com
panies had made loans on parts of
this land several years ago.
“Sixth, W are informed that
Varick C. Crosley conducts a farm
loan business in Webster City, Iowa,
and is also a member of the American
Farm Mortgage Bankers’ association.
“The Federal Land bank is owned
by farmers and furnishes them funds
at actual cost, as all net earnings be
long to borrowers. The system was
established to furnish farmers with
funds to finance their long term farm
mortgage needs in the same manner
that the federal reserve system sup
plies the short-term commercial needs
of the people. The statement made to
Washington, June 30, shows not one
dollar’s worth of past due principal
or interest on the $34,000,000 of loans
held by the Federal Land hank of
WHEAT PRICE FACTS.
Jululs H. Barnes, director of the Gov
ernment Grain Corporation, gave con
gress the following figures to show
that the guaranteed wheat price was
more than warranted by world condi
Average farm price to American
farmer under guarantee, $2.05 a bu
Average farm price in the United
Kingdom during the last calendar
Average farm price for four big
producing countries: United States,
Canada, Argentina, sad Australia,
The Outlook, Volume 126
AN ALLIANCE FOR PROSPERITY
THE GOVERNMENT, THE CITY, AND THE COUNTRY
FARMERS FEAR AN INSIDIOUS PROPAGANDA — CITY FOLK
ARE THE LAST TO BE FED SPECULATORS THRIVE ON MANUFACTURER IS DEPENDENT UPON THE FARMER’S PROSPERITY —YOUNG AMERICANS DISCOVER NEW EARNING POWER —WHAT AN AGRICULTURAL AND INDUSTRIAL LEAGUE IS ACCOMPLISHING—A CHINESE PHILOSOPHER SUMS IT UP
AND THE FIRST TO STARVE—
AN UNINFORMED PUBLIC—THE
Traveling several hundred miles by train, by motor, and afoot, Mr. Gathany gathered, at the request of The Outlook, information from practical men in-reply to his main question: “What is the matter with the Eastern farmer ?” What he reports here, as in his three previous articles, is not his own opinions but the opinions of those whom he interviewed. He is serving as the Eastern farmer’s spokesman.
BY J. MADISON GATHANY
\HERE are certain financial interests and speculators in this country who are doing their darnedest to put agriculture on the bum,” said a farmer to me. “The enemies of American agriculture, and therefore the enemies of our entire population, are attempting to smash the Federal Farm Loan System, established in 1917. Ever since then it has been under the fire of the American Farm Mortgage Bankers’ Association. These men intend to destroy it if they can.” •
These remarks were lftade so vigorously and sincerely that I asked for further information.
“What is this Farm Loan System, and how does it operate?” I asked. “Why is this banking association against the Farm Loan System, and what would be the result if the American Farm Mortgage Bankers’ Association should win? You understand, do you not,” I said, ” that you have made a very serious charge against bankers, and that I am to report what you say
other, “and what I have to say will bear rigid inspection. I am not accusing all American bankers of being in a plot to down the Federal Farm Loan System. Many of them are loaning liberally to farmers, particularly where farmers are organized. But certainly the American Farm Mortgage Bankers’ Association is a deadly opponent of the Federal method of loaning money to farmers.
“The reason is simple enough. Since March, 1917, the Government has been loaning money to farmers at five per cent interest, with a one per cent amortization charge. This enables farmers to pay off loans in about thirty-five years. Back of this Federal plan lies the idea of building up the farm credit of the country with loaning organizations ultimately owned by the farmer* themselves, but operated always under such Government supervision as to guarantee the soundness of their operations and securities. It is not intended that it shall be Government money that is to be loaned to the farmers. despite the fact that the Central Government subscribed about $9,000,000 of capital stock to initiate the system. This subscription is being paid back to the Government already. The Federal Land Bank of Spokane as early as April, 1919, distributed dividends amounting to $60,000. The Federal Land Bank of Houston declared a dividend in October, 1918.
“Only one per cent spread is permitted between the bank loan rate and the bond rate. There is already ample proof that the Federal Farm Loan system is a financial success, and can be made self-supporting on less than a one per cent margin. The money loaned to the farmers comes from the sale of bonds, exempt from all kinds of taxation.
“Now, in order that private companies might not be put out of business by Federal competition, the Federal Farm Loan Act provided for a system of joint-stock land banks into which the old mortgage companies might enter. But if the private companies came into the Federal system, they were not allowed to charge the farmers more than the Federal rate of interest, and have to submit to the regulation of the Federal Farm Loan Board.
“Most of the private farm mortgage companies, I believe, have stayed out of the Federal System, and are conducting an insidious propaganda to ruin it. They are operating in many of our States, and charge farmers as high as eight and ten per cent interest. They consider that the Federal Government is a meddler in their lucrative business. You see, the Federal system operates upon a fixed basis of income, and rules that any excess of income over expenses and a fixed reserve must go back to the boiyowers in the form of dividends. Of course it is natural to consider the Government your financial enemy if you find it difficult to loan money at a high interest rate in competition with lowinterest long-time Federal loans to your patrons.
ATTACKS FAKM LOAN ACT
“The Federal Government is no longer considering the thousands of new applications from farmers for loans that are pouring into Washington. Why? The Farm Mortgage Bankers’ Association is responsible for a suit now pending in the Supreme Court to test the constitutionality of that provision of the Federal Farm Loan Act which exempts the Federal Farm Loan and the joint-stock land bank bonds from taxation. Until the Court has hauded do wn its decision no further loans will be made, although more than one hundred and thirty thousand farmers in the last three years have already been helped financially to the extent of more than $500,000,000 by the Federal land banks and the various joint-stock land banks.
“As a result of this suit interest rates have already been raised by private money-lenders and banks from one to four per cent on loans to farmers.
“If the Farm Mortgage Bankers’ Association should win this suit, consumers would be the worst sufferers. The farmer is the first to be fed and the last to starve; the consumer is the last to be fed and the first to starve. It would further discourage an already discouraged class of basic workers, and mean a serious setback to the ownership of farms by farmers, particularly young farmers. If this suit should go against the farmer, it would mean a serious decrease in food production, which would mean higher cost of food products to the consumer. Or it might mean that the higher rate of interest which the farmers would be compelled to pay would result in increased cost of raising farm products. In any case, a decision adverse to the farmer will come home hard to the consumer. The country and the city are inseparably linked together,” concluded my informant.
I asked a number of farmers if the Federal Farm Loan Act, with its taxexemption clause, was not a piece of class legislation. I do not know how sound the opinion of these farmers is, but this is what they think: “Class legislation! We know that some bankers and other money-lenders regard it as such. They are much wrought up about the $500,000,000 Farm Loan bonds representing class legislation. But how much are these same persons wrought up about the more than $4,000,000,000 of municipal bonds that are exempt from Federal taxation being class legislation? Or the more than $1,750,000,000 worth of mortgages held by mutual building and loan associations that are exempt from taxation? Or the more than $2,000,000,000 worth of mutual savings banks mortgages that are exempted? Or the stock in the Federal Reserve Banks and the income therefrom that are exempt from all taxation?
Where the money-grabbers have one chance to secure a farm bond free from taxation they have twenty or more chances to secure municipal and other bonds free from taxation. Then how about Government aid furnished in the form of a protective tariff for manufacturers and their employees since the days of Alexander Hamilton? Isn’t it about time agriculture was given as much consideration as other business?”
ATTEMPT TO SUPPRESS CROP REPORT
No less an authority than the Secretary of Agriculture has recently made public that certain food interests, particularly the large food speculators, have at times attempted the suppression of the crop reports. What difference would it make to the consuming public if these reports were suppressed? The Secretary holds, in substance, that speculation in food products depends and thrives upon lack of information, uncertainty, and confusion on the part of farmers and the public. Were it not for the crop reports, the public would l>e at the mercy of the speculators, who would be free to issue any sort of misleading reports designed to influence prices. Congress has played right into the hands of the foot! speculators by refusing to appropriate sufficient funds to make the Federal crop reporting service more useful.
The Secretary of Agriculture complains that the last Congress failed by about $6,000,000 to appropriate the money necessary to carry on fifty essential activities of the Department. This has proved harmful both to our domestic needs and to our export trade. Lack of funds has seriously handicapped the eradication of hog cholera and footand-mouth disease. It has interfered with co-operative cow testing. It has checked the prevention of cereal diseases and the enforcement of the Federal Pure Food and Drugs Act. The sweet-potato weevil gets a new lease on
life. Tropical and sub-tropical plant insects are again enabled to flourish in California, Florida, and other Gulf States. One wonders why there are not more farmers and fewer lawyers in Congress.
“America is over-industrialized,” complains one farmer. “Factories are turning out luxuries, frills, and nonessentials. Our wealth must be replenished—we need more capital rather than more credit. We need more bumper crops. The Government should make it easier for industrious people to own farms. The Federal Farm Loan System cannot because it is limited to loaning to those who already own land and can offer security amounting to at least forty per cent of the loan. Through Federal, State, and local co-operation a loaning system might be modeled after building and loan associations.”
One Maine farmer wants it made a crime punishable by imprisonment to speculate in farm products; he adds that marketing can never become satisfactory until we have a Government standard in grades. Another demands clarification and amendment of the anti-trust laws.
Here are six planks which the farmers of America asked the Republican and Democratic parties to put into their platforms:
1. We recognize agriculture as the
fundamental industry, and we pledge
ourselves to give it practical and adequate representation in the Cabinet and in the appointment of Governmental officials, and of commissions on a bi-partisan basis.
2. We pledge to all farmers the full, free, ami unquestioned right of cooperative maketing of their farm products and purchase of their supplies and protection against discrimination.
3. We pledge effective National control over the packet’s and all other great inter-State combinations of capital engaged for profit in the manufacturing, transportation, and distribution of food and other farm products and farm supplies.
4. We pledge legislation that will effectively check and reduce the growth and evils of farm tenancy. We pledge the perpetuation and strengthening of the Federal Farm Loan System, the improvement of facilities for loans on farm commodities, and the inauguration of a system for co-operative personal credit that will enable farmers to secure short-time credit on more favorable terms.
5. We pledge comprehensive studies of farm-production costs, at home and abroad, and the uncensored publication of facts found in such studies.
6. We pledge ourselves to accord agriculture the same consideration in tariff legislation as is accorded to other interests.
An agricultural economist from Pennsylvania declares that the hope of America lies in the harmonious devel
opment of her resources instead of special privileges for certain other industries at the expense of agriculture. In Springfield, Massachusetts, the agricultural center of the North Atlantic States, the policy advocated is being worked out by the Hampden County Improvement League and the Eastern States Agricultural and Industrial League. Their effort is to bring about a letter understanding between country and city, to rebuild the dying agricultural life, to promote general business prosperity. To the League belong leading manufacturers, merchants, bankers, and farmers. All are conscious of the interdependence of manufacturing, banking, and farming.
“More agricultural products are consumed here in the East than are produced here,” a large manufacturer of Springfield tells me. “The cost of food and of manufacturing is constantly increasing as the population increases. In finance and manufacturing the West is the competitor of the East. But the East imports the greater part of its foodstuffs as well as most of its raw materials for manufacturing, while the West, in addition to raising most of its own foodstuffs, exports great quantities of them. The West also has most of its raw manufacturing materials nearer at hand than the East.”
The Eastern manufacturer, as a result, has to pay his employees higher wages and has to pay more for his raw materials. When he goes into the market with his goods in competition with the Western manufacturer, this double differential is greatly to the Easterner’s disadvantage. Abundant crops raised in the East would help offset this disadvantage and would mean greater social contentment on the part of employees through reduction of their cost of living. New England manufacturers cannot continue much longer to increase wages more rapidly than their Western competitors. Driven by these conditions, some New England industries have moved West and some South, but either an extensive exodus of industries from New England or a lowering of standards of living of New England wage-earners would be fatal to New England. Manufacturers and bankers have begun to comprehend that their prosperity is fundamentally dependent upon that of the farmer.
ONE LEAGUE THAT WORKS
Hampden County, Massachusetts, has not been the same since the League got under way. The League has shown farmers how they can increase their potato crops from twenty-five per cent to seventy-eight per cent. The county to-day produces about two hundred per cent more and better fruit than in 1913. Rotation of crops has been applied to idle lands. Therehas beenalarge increase in swine raising. Five years ago the county was rapidly abandoning dairy farming; to-day the League has imbued dairymen with new confidence. Production of eggs has increased. Carloads of sheep have been brought from the West. Balanced rations for animals, modern farm plants, drainage, and sanitation are now the rule. Co-operative buying and marketing have saved these farmers thousands of dollars, and have headed off the tendency toward too great an individualism among farmers. The Granville Apple By-Products Plant has recently been organized on co-operative lines, and will save the farmers thousands of bushels of apples heretofore almost given away or not even picked. The plant will manufacture apple juice, apple butter, vinegar, and jellies.
A farmers’ co-operative market has been organized at Springfield to sell direct to the consumers only. The League has established through two loan associations a credit system which is patronized liberally by the farmers. It is striking at the solution of one of the biggest farm problems, that of labor. Farms have a knack of demanding that they be operated by human beings. A perfectly amazing system of boys’ and girls’ clubs has been established with a membership of nine thousand for the single county of Hampden. All of these young Americans are actively engaged under expert supervision in the care of chickens, pigs, calves, sheep, bees, and gardens. I was amazed at the zest, the eagerness, and the spirit of play these young people put into their new-found earning power. They are catching the farm spirit, and many of them are already laying plans to become owners of farms.
The Home-Making Department of the League lays great stress upon the relation of foods to health. In four years fifty groups of women have taken up this subject. The importance of milk as a food is widely taught and advertised. The League is fighting malnutrition, lack of teeth care, the housefly, and poor clothing habits. ‘It introduces labor-saving devices, and teaches household accounting and budgetmaking. Each woman pledges herself to pass on to others what she herself learns. All these and other activities are carried on among the foreignspeaking populations as well.
This significant programme is for city people as well as for country/ folk. Teaching and practicing sound economics of production and distribution, making better and brighter homes, bringing city and country into better understanding and closer co-operation— such are the services of the Hampden County League.
The Eastern States Agricultural and Industrial League, Incorporated, now operating in the ten North Atlantic States, was organized about two years ago. It has thousands of members. They believe that farmers need pros
What should our future policy toward agricidture be? What programme of agricultural reconstruction do we need?
1. The vital relation of agriculture to National and personal “wellbeing should be taught to the 25,000,000 or more people attending our schools.
2. The number of our agricultural schools should be greatly increased at once, and a truly National system of agricultural education effected.
3. Our rural school system needs to be overhauled and reorganized, and city-bred boys and girls should have the chance to learn farming.
4. All newspapers and magazines in the United States should keep their l-eaders consistently informed as to the real problems of agriculture, and should make constructive criticisms.
5. The existing system of distributing food products from the country to the cities and towns, which has been organized without the slightest consideration of the farmers, should be reorganized in the interest of both producers and consumers. Our present system is costly, inefficient, wasteful, and unfair.
6. Some sound system of effecting ownership of farms by those who wish to own farms, but cannot on account of lack of capital, should, be devised. In this system the capitalizing of approved character must be an essential part.
7. Farming must be so reorganized that it can pay wages and grant working conditions that will compare favorably with other industries.
8. Both National and State legislation should recognize and encourage collective bargaining among fanners.
9. The farmer must have actual and practical voice in government by appointment and election to public positions, and should be called into council when questions affecting commerce, trade, and transportation, both National and international, are being discussed and decided.
10. The Government should keep men in all foreign countries studying the methods and the tendencies of agriculture, and widespread notice should be given of the results of such studies.
11. Farmers and consumers should organize throughout our country for direct dealing with each other.
perons industries and thriving customers, and that manufacturers, bankers, merchants, and urban consumers need prosperous farmers.
The League is accomplishing its purposes through six special means! The Eastern States Farmers’ Exchange purchased at wholesale for farmers #1,725,518 worth of farm supplies. The Eastern’ States Consumers’ Exchange buys at wholesale prices for scores of employees’ co-operative stores; new stores are constantly being established, especially in manufacturing centers. The Farm Finance Bureau has established the Eastern States Agricultural Trust and has arranged credit among bankers and business men sufficient to finance $10,000,000 of farm business annually. The credit can be expanded to almost any amount as the business of the Farmers’ Exchange increases ; and this phase of the work of the League alone is a great factor in getting city and country to understand each other. The Home Bureau of the League operates along lines similar to those pursued in Hampden County.
The League is organizing rural and urban boys and girls into Junior Achievement Clubs. Although this effort is only a few months old, over one hundred thousand boys and girls already belong to the clubs, and more than 1300,000 of the #500,000 asked for the work has been subscribed. In Springfield seventy leading business men have volunteered as leaders in this work. Its objects are to set a standard of achievement in work programmes; to make work popular through club projects under trained leadership; to develop, a sportsmanlike attitude toward productive work: to capitalize industry, commerce, and agriculture for the benefit of boys and girls; to assist young people to earn money and own property; to acquire habits of thrift and be businesslike. To attain independence at fifty is another aim.
Had I not seen with my own eyes, it would be rather difficult for me to believe what these clubs are achieving.
To the manufacturer it means more and better food supplies for his employees at lower cost efficiency. To the employee it means more purchasing power in his dollar, better living conditions, and greater efficiency. To the banker it means a steadily increasing field for his operations due to greater industrial and farming prosperity. To the merchant it means more sales and quicker payment of bills. To the farmer it means more economic production, more satisfactory marketing accommodations, greater prosperity, and better home and community life.
“The well-being of the people is like a tree—agriculture is its root; manufacture and commerce are its branches and life,” wrote a Chinese philosopher. “If the root is injured, the leaves fall, the branches break, and the tree dies.” A STORY
WHEN Simon Lee, the shoemaker, left Blue Hill Village on his strange quest, he seemed to steal away. It is a curious fact that you cannot get out of Blue Hill Village even in the daytime without seeming to steal away. When you walk down the only street, which twists exactly like the letter S, you are never visible from more than one house at a time. A branch which you have disturbed sweeps into place behind you, or an oak tree shadows you, or the corner of a log cabin conceals you. If you step out of the village in any direction, north or south or east or west, meaning to descend into the valley or to ascend the mountain, you are swallowed up, even in the narrow road, by a sea of verdure.
Tt^ Hen young John Mclntyre and \ y Ben n y Lucas marched away early one summer evening, there could be no formal procession, because there was no place in which to march. There was, however, an escort. Grandfather Mclntyre walked first, tooting on an old fife, and then came the boys, each with a little bundle, and then the fathers and mothers and the few young girls and the children. They kept close together, and the group was so small that they never occupied at one time more than one limb of the letter S.
Not only did elderberry bushes and early shadows and corners of house walls hide their bodies, but a loud sound drowned out their voices and made their little celebration seem ridiculous. The sound was that produced by whippoorwills whooping above their heads. The whippoorwills seemed to mock them and jeer at them. It is to be regretfully recorded that Will Lucas, who could not go to war because he was lame, turned and put out his tongue in the direction of a particularly scornful bird.
Simon Lee, sitting in his little house, tapped and tapped and did not bestir himself. But Blue Hill Village knew that Simon Lee had given each boy twenty-five dollars, a princely gift, and that it was he who would look after Gran’pa Mclntyre. What Blue Hill Village did not realize was that Simon, seeing a faint glow of amazement and disapproval in the breasts of Blue Hill Village in the summer of 1914, had watched it and sheltered it and put fuel delicately upon it, so that in this summer evening of 1917 it flamed to a consuming fire in the hearts of John and Benny and other Blue Hill Villagers. Simon had books and newspapers and knowledge of the outside world; he was Blue Hill Village’s only Mercury.
He was also Blue Hill Village’s only