Correspondence

2 pages

Loucks articulates to R.F. Pettigrew that an urgent call went out for a conference in Sioux Falls for their organization through the encouragement of Alli Reed. The call for a conference is not only to take place in Sioux Falls but also Chicago. Loucks also mentions that he believes the time is right for action for the Farmers Nonpartisan Political League.

TRANSCRIPT

Watertown S. Dak. July 28
Hon. R. F. Pettigrew,
Sioux Falls, S. Dak.,
Dear Friend,

On a hurry up call from Reed, who seemed to have had considerable encouragement, I issued a call for a conference for Sioux Falls for next Wednesday afternoon at 2 P. M.

There was no time to correspond with any one in Soo Falls, so I just took chances.

I thot that as the call was intended for those of one mind only, that we could easily get thru in one session, and be ready to start for Chicago Wednesday evening.

I will come down on S. D Central, and go direct to the Kiserhoff where I have suggested any mail for me might be sent.

As I had wanted to get advertising rates from the State Press I concluded to enclose copies of the call, and Alli Reed also published a shorter call in A-Call-To-Action.

While it was too late to get a notice in this weeks weeklies it will serve to attract their attention as to what transpires at Chicago and they may get a better notice of it.

I have written a good many letters also, and asked them to phone etc. but of course it is a very busy time, and so hot.

If the Kaiserhoff has not a room big enuf for us, perhaps you can find an inexpensive one somewhere close in.

I hope that if you have returned, that you can go with us to Chicago. I somehow feel that the time is ripe for action.

They way this Farmers Nonpartisan Political League is booming, means something.

Sincerely yours,

H. L. Loucks

SOUTH DAKOTA RURAL CREDIT LEAGUE

J. E. Holter, Canton, President
O. D. Anderson, Plankinton, Vice President
WM. Thompson, Huron, Sec’y-Treas.

Executive Committee

H. L. Loucks, Watertown
WM A. Thompson, Huron
H. W. Smith, Sioux Falls

State Rural Credits or Investments

H. L. Loucks, Watertown, S. D.

That it will require several years to arouse the people and move congress to enact a scientific Federal Investment Banking system as I have outlined may as well be conceded.

Accepting the theory that whatever the community as a unit can do for the individual members thereof more efficiently and economically than the individual members of the community can do for themselves, the community should do when a majority of said unit approves; we should while waiting for Federal action be working and demonstrating that the plan suggested is practical in so far as the state, county and individual units are concerned.

I believe that each state in the union is rich enough in natural resources and intelligent, industrious citizenship, that if freed from unjust discriminations and exactions by private monopoplies, could and would produce enough wealth, which if properly conserved and administered would develop the state from within more satisfactorily than is being done under our present system.

Our forefathers did it; other nations are doing it; we can do it.

Using the state as the unit, each state in the union can provide the credit for the individual members for production and development for a much longer time and at a lower rate of interest than is being charged at present. Then why wait for Federal action?

The pos toffice savings bank has failed in its mission to encourage thrift and saving, as its advocates intended, and has become primarily a medium to gather deposits for the national banks at a saving to them of from two and one-half to three and one-half per cent.

Begin With the State Unit.

Begin with the state unit. Thanks to the good influence of the old Farmers alliance, we in south Dakota have an advantage over most states in having inaugurated with statehood a system of loaning our school funds through the department of the Commissioner of School and Public Lands at 5 per cent which had the effect of reducing the rate of interest on farm loans very materially. It would seem therefore that our next step should be to enlarge the usefulness of this department. In other states it would be necessary to organize state banks for purely investment purposes, paying interest on deposits at the rate of 3 or 4 per cent and loaning through the county commissioners, or board, at an advance of one-half of one per cent, one-half of which should go to each the state bank and the county board.

State Bonds.

Instead of keeping accounts in local offices as with the postal savings banks I would suggest the issue of state bonds, registered or unregistered at the option of the depositor, in denominations of five dollars and multiples of five, unlimited in amount and payable on demand.

These bonds in small denominations would prove very popular, and could be handled by county, city and town officials for a nominal sum.

The Canadian provinces of Saskatchewan and Alberta on our north borrow money on bonds at 4 per cent and loan to co-operative farmers elevator companies at 5 per cent to the extent of 85 per cent of stock subscribed, and it is proving very satisfactory indeed.

New Zealand.

The system of state banks accepting of deposits at 3 or 4 per cent and loaning at an advance of one per cent for investment purposes has proven highly satisfactory in New Zealand for many years. New Zealand with less than 1,000,000 population has over $30,000,000 thus loaned out.

They pay 4 per cent and loan for 5 per cent. Prompt payment 4 ½ per cent. If the interest is paid fourteen days before due one-half of one per cent is remitted.

They report no losses, and a net revenue for the last year for which I have a report of $256,000.

West Australia.

West Australia with less than half a million population, is not an agricultural province. In 1900 the total acreage in crop was only 186,000, and applications for land only 309,000. In 1911 there was over 1,000,000 in crop and applications for 1,956,000 acres, an increase of six fold in ten years. But we will quote from the Premier, Hon. John Scadden, in an interview in Winnipeg a couple of years ago: “We realize that the farmer must, of necessity, compete with the world in the sale of his produce, and we therefore endeavor to do what we can to enable him to carry on his business under the most favorable conditions. We have, for instance, a system of state loans, by which our farmers may borrow money at a low rate of interest.

Based on Improvements.

‘Our policy is not to lend a lump sum on the value of the land, but rather on the improvements which the farmer makes. When a farmer breaks or clears a piece of land, erects buildings, and makes other improvements, we lend him the full value of those improvements. We also lend money to farmers for the purchase of stock and machinery and for the purpose of paying off other indebtedness. These loans are made at 5 per cent interest. For the first five years the borrower pays the interest only and after that, by paying 8 per cent he not only pays the interest but gradually repays the capital and retires the loan in about 20 years.

Where Money Comes From.

“The money comes from the state savings banks. The depositors receive 3 per cent on their savings, and the money is turned over by the savings bank to the agricultural bank at 4 per cent. The agricultural bank in turn lends to settlers and also to home builders in the town at 5 per cent. The 1 per cent margin taken by each institution pays all the expenses of administration and last year the savings bank made $40,000 profit and the agricultural bank $30,000.

Profits Go to Reserve Fund.

“The profits go into a reserve fund and the agricultural bank has a surplus of accumulated profits amounting to $175,000. The agricultural bank has power to issue debentures for the purpose of securing money to loan to settlers but so far this has not been necessary. We have lost $50 in the last five years.

Valuable Service Last Year.

“The agricultural bank also performed a very valuable service last year when it came to the rescue of the farmers at a time of crop failure caused by lack of rainfall. Many of our farmers at the time were indebted to the chartered banks who had sent out canvassers and induced them to take out loans and when hard times came the banks attempted to collect their money. The farmers were unable to pay and many of them were faced by ruin. The government agricultural bank was able to come to their rescue, however, and provide the farmers with the money to pay off the chartered banks and so enable them to stay on the land and produce another crop.”

Life Insurance a Source of Deposits.

New Zealand organized a life insurance company in 1870 and has accumulated a fund of $22,500,000 with an annual income of $2,750,000. This gives them a large sum for investment. They also have several other state utilities. I have not the statistics at hand, but know that the amount of life insurance money that goes to a few eastern states is enormous. Comparatively, very little of that money comes west or south for development purposes.

Second Source for Investment.

I would recommend that for a second source of money for investment, we follow the example of New Zealand and organize a state life insurance company. In addition outside insurance companies should be required to keep on deposit with the several state banks a certain part of their reserve funds as security for insured citizens.

The state bank should of course be the fiscal agent of the state, and all state funds deposited with it.

I believe that from sources suggested sufficient funds could be secured to very materially reduce the prevailing rate of interest, and if one state in the union can duplicate Canada, West Australia or New Zealand, we will soon be able to include the Federal unit, and perfect an American system for the encouragement of production and development; THE VERY BEST IN THE WORLD.