In corroboration of the above I wish to quote the opinion given by the eminent German economist, Prof. Brodnitz, of the Halle University. In reply to my inquiry (June 15, 1913) as to what guaranty there would be for the rigorous supervision of the Landschaft, he replied: The best possible, for the bonds at the high prices at which they sell and at the low interest which they bring, do not tempt regular money lenders to invest in them. They will be bought up mainly as investments for the funds of widows and orphans. This being the case there will be every reason to believe that these investments will be safeguarded by the Government with such caution and care as to preclude all danger of fraud or repudiation. And this great care and caution would give these bonds a value as high and perhaps render them steadier even than Government bonds, especially in times of war and panic, as for instance was the case in 1806 during the Napoleonic wars, when the Landschaft bonds were high and the Government bonds low. Now that the question of rural credits has been so fully placed before the American people, it might be presumed that the American farmer had been thoroughly awakened to its importance. This is, however, far from being the fact. It is true that the farmers of America are learning more and more what it all means as time goes on, but at the present writing there are quite a number of farmers who are under the impression that any system of rural credits would be an evil; they are under the impression that the best thing for a farmer is to keep out of debt of any kind. These farmers fail to realize the fact that for a business man or farmer to follow such a plan literally would require a surplus bank account subject to call, and therefore on deposit without interest. That is, quite a sum of money would have to be lying by idle, doing nothing, and such a mode of procedure is not a gain but a loss. Moreover, but very few farmers have such surplus money; so what must they do? They must buy all they need and pay for their labor and raw material on time— on long time and this means buying money of the storekeeper, which means paying the highest rate in the world for money instead of the lowest rate in the world. It further means that such a system is not "keeping out of debt" at all, but keeping in debt, and at the highest possible cost for the debt. In fact, the American farmer has yet to learn the simple lesson taught by the experience of the American merchant. Say 40 or 50 years ago the American merchant could not obtain money on open account from the bank, so he was compelled to get into debt with the jobber, and it was then that the jobber took from the American merchant "all that the traffic would bear"; that is, the jobber farmed the merchant, and at the present time the storekeeper farms the farmer, and if the farmer would only know how much in debt this supposed "not-in-debt " system places him it would open his eyes. He would begin to see that the Landschaft system, instead of being a proposal which would put the American farmer into debt, is just the very system which would put him on a cash basis. If there be any farmers at all that have any doubt as to the truth of this statement they can readily prove it. Let them go through the various stores in the cities nearest to their farms; let them ask each of the merchants to tell them whether they utilize the credit which their assets entitle them to on the open market, or whether they refuse to make such use of these assets; and the farmers would presently find that there is perhaps not a single merchant of good standing who does not avail himself of such credit. The only ones that are obliged to go without it are those who have a reputation for dishonesty or incompetency. It should be understood that the financial functions of a business can be compared to the human breathing apparatus. The business needs a winter stock which must be bought in summer, and a summer stock which must be bought in winter, all of which requires surplus money, more money than the mean average level. There is periodic expansion and contraction. If the merchant has money lying idle, ready for use whenever he needs a dollar, then he is doing business in a clumsy and costly way, and quite unnecessarily if he have a good standing. His assets, if backed by good character, will give him a dollar at 5 per cent a year. With this dollar in hand he can discount his bills at the rate of 5 per cent a day, in fact he can discount and rediscount with the same dollar many times over that day, and return the dollar to the bank and pay interest on it at the rate of one three-hundred-and-sixty-fifth of 5 per cent for the use of that dollar for that day. But the most profitable use of the money that the farmer can obtain on the security of his assets will be had in using it collectively, through cooperation, a corporation formed for that purpose. With the money that the security of their collective assets would give them the cooperative group of farmers, or, if you please, this corporation of farmers, could then perform all the functions now performed by the city commission man and by the trust. In fact, the farmers could be their own trust. "But," say some, "what need is there for the Landschaft when farmers can act cooperatively without it?" Yes, that is true; they can act cooperatively without the Landschaft, without capital. But what does such action amount to? It is almost as ineffectual for the farmers to act on such lines as it would be for the trusts, were they deprived of their capital or credit. Under such circumstances the trust would come to a sudden standstill; it would cease to be a trust. And in the final analysis the farmer without capital must remain subject to the trusts who have the capital. The fact is, the collective assets of the farmers could furnish a capital very much greater than the greatest of the trusts could command. It is only a question of placing their assets in an available liquid form. In 1885 the California fruit growers, for instance, seeing that they were in the hands of a couple of trusts, organized cooperatively to fight those trusts. The California trusts were each rated at a million dollars and over; the California fruit growers, for this conflict, only had a few hundred dollars to meet current expenses; and as a result of the fight they have been waging all these years, the couple of trusts are still there, doing business at the old stand, with almost the same power that they had in 1885. It was the trusts, each capitalized for a million dollars and over, that did the work, and do the work. It was several million dollars against a couple of hundred dollars, and the couple of million dollars won out and will continue to win out on this line until the end of time. But note how foolish and unnecessary this fight is. The trust has a couple of million dollars, but the California fruit growers could double and quadruple that couple of million dollars several times over if they were to place their assets in available liquid form-in a form of which the Landschaft system would permit. And so with the farmers everywhere, they could become the distributers of their own products through the medium of the Landschaft system. The Landschaft would be the mode for getting the money; that is all that the Landschaft could do. The farmers could then form another cooperative association, another corporation, their own cooperative bank, in which they could deposit the money obtained by the sale of the Landschaft bonds. This bank could in turn first give the farmers the open account, which would enable them to do business for cash; it could secondly furnish the money for the cooperative distribution of the products of the farm. All this would make it possible for the farmers to form the third and last cooperative group or corporation for the collective purchase of requirements and the collective distribution of their products. There would thus be three distinct cooperative groups, three corporations. First, the Landschaft; second, the cooperative bank; third, the cooperative purchasing and distributing association. The safeguarding proposal by the State and Nation would only refer to the Landschaft and not to the other two. Pertinent to this whole matter is the very valuable suggestion in your letter of June 7, wherein you say: Every city has its chamber of commerce; why not have chambers of agriculture established in the rural districts, and do this for the organization of the farmers in the cultivation, production, and marketing of their crops and in the financing of their affairs? I think that your suggestion hits the nail on the head. These chambers of agriculture should be federated into a national chamber of agriculture, holding periodic sessions presided over by the Secretary of Agriculture or the Secretary of Commerce. Relative to this matter I wish to say that on June 20 Dr. Owens and myself had a lengthy conference with Dr. Dade, the secretary general of the Deutsche Landwirtschaftsrat, who gave a full and clear exposition of this organization and its purposes. The discussion took the form of questions and answers, and I will send you a copy of the report of same as soon as it is mimeographed. I think you will read this statement with keen interest. It will be of material assistance to you in launching the chambers of agriculture for the United States. With the renewed assurance of my high esteem, I am, Yours, very sincerely, O DAVID LUBIN. RETIRED OFFICERS OF THE ARMY. LETTER FROM THE SECRETARY OF WAR, TRANSMITTING, IN RESPONSE TO A SENATE RESOLUTION OF MAY 1, 1913, A STATEMENT SHOWING THE AVOCATIONS IN CIVIL LIFE OF RETIRED OFFICERS OF THE ARMY AS REPORTED BY THEMSELVES. JULY 10, 1913.-Referred to the Committee on Military Affairs and ordered to be printed. The PRESIDENT OF THE SENATE. WAR DEPARTMENT, Washington, July 8, 1913. SIR: In further response to Senate resolution No. 35, of May 1, 1913, calling for certain information with respect to retired officers of the Army, a portion of which was transmitted to you in letter from this department dated May 9, 1913, I have the honor to now transmit a statement as called for in paragraph 4 of the resolution, showing the "avocations in civil life" of retired officers of the Army, who are engaged in such avocations, as reported by themselves upon call from the War Department. The retired officers who are not enumerated in this statement are those who are under detail to active duty by the War Department; those who report that they are not engaged in any avocation in civil life; several who are insane, and 25 from whom no reports have yet been received, presumably due to their failure to receive the communications sent to them owing to their absence from their homes or traveling abroad, or to other reasons. Very respectfully, LINDLEY M. GARRISON, |