FCS Financial: One Hundred Years July 2016 | Page 25

few people had funds of their own to capitalize the new associations.
The Great Depression was still in full force and many did not have the
$5 cash (approximately $90 in today’s money) required to purchase
an initial share of “B” stock. Those who did were frequently brought
to the front of the meeting room and tapped to serve as a director.
The next challenge was hiring qualified managers from a
population that had little business experience or education. Of the
more than six hundred managers selected for offices across the
country during 1933–34, 43 percent were employed at less than
$100 per month. Only sixty managers in the entire system were paid
more than $175 per month. Training schools were established for
managers, directors, inspectors, loan committees, bookkeepers, and
other employees to teach them the ins and outs of the Production
Credit System, how to meet the members’ credit needs, efficiency
in operations, and how to build and maintain good relationships
with members. Many were unfamiliar with the cooperative concept
and had to become accustomed to referring to their customers as
“members” instead of “borrowers.”
Up to this point, most short-term lenders based the amount
of loan they would make to a farmer on the amount of money they
could recover from the sale of personal property the farmer offered
as collateral. The Production Credit Association changed all that and
collateral was no longer the end-all, be-all for the decision-making
process. Instead, they arrived at their decision by evaluating the man
himself, examining his financial position and progress as a farmer,
the farm’s repayment capacity, and the purpose of the loan. Only then
was collateral examined as part of the equation.
The purpose of the loan included an evaluation of the amount
a farmer should borrow for a particular purpose and whether or not
his use of the funds would contribute to repayment of the loan. In
other words, the purpose was evaluated depending on whether it
was an absolute necessity to keep the farm operating, a justifiable
need, or just a desire. They realized however enticing a new piece
of equipment might be, they would not be doing the farmer a favor
if its purchase meant he might lose his crops, his liv estock, or his

Getting Underway

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