FCS Financial: One Hundred Years July 2016 | Page 16
By 1910, farm credit was a steadily growing issue in rural
America as demands on their production increased. Of the nation’s
nearly 92,000,000 people, 32,000,000 lived on the country’s 6,366,000
farms. Farmers themselves made up 31 percent of the labor force.
By 1912, the commission’s recommendation of a cooperative credit
system which would provide agricultural credit “on fair terms”
became a popular platform for politicians from all three parties—
Republican, Democrat, and Progressive—and all three advocated
strong rural credit legislation.
However, the farms would have to wait awhile as commerce
and industry, along with the Wall Street banks and investors that
financed them, garnered more attention. The Federal Reserve
Act, signed into law by President Woodrow Wilson on December
23, 1913, was part of the banking and currency reform plan he
advocated. It created the Federal Reserve System, a group of between
eight and twelve banks, along with the Federal Reserve Board to
function as its governing body. The agrarian interests that threatened
to stall the legislation gained a few concessions from the Federal
Reserve Act. For one thing, national banks were now authorized to
make mortgage loans, including loans for farm real estate. Further,
Federal Reserve Banks were authorized to discount agricultural
loans. In return for their reluctant support, agrarian advocates hoped
President Wilson would now be obligated to support their calls for a
rural credit act.
Congress responded to pressure from various groups, among
them the Grange, America’s oldest nationwide agricultural advocacy
group organized in 1867 which also lobbied for rural free postal
delivery. Once again, a commission was formed to study the rural
credit situation, traveling through Europe to explore possible
solutions. They recommended Congress create a system of privately
owned and operated banks dedicated to providing long-term loans
to farmers. Throughout 1914 and 1915, congressional hearings
continued, but nothing of substance was accomplished.
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Selected References