THE CRY FOR MORE CREDIT.

Shannon News, 28 December 1923, Page 3

THE CRY FOR MORE CREDIT.

PRODUCTION UNBALANCED,

EUROPE'S LOW CONSUMPTION

Owing to the .troubles of the farmers in the United' States, mere has been a movement, for increased agricultural credit facilities and for cooperative societies, which would enable the farmers to hold their product for better prices. , In an address before the Montana; Bankers' Association, Dr. Benjamin Anderson, the economist of the Chase National Bank,

dealt with the fallacies involved in these two assumed palliatives. He pointed out that changed marketing methods and changed credit methods,

however, excellent in the long run for agriculture, are feeble and irrelevant remedies for the present acute agricultural distress.

The farmers' troubles grow out of a breach in the. world's economic equilibrium. With Europe disorganised, and with production "as usual" in the rest of the world, therfc is a relative scarcity of manfacturing activity, and a relative excess of farm production, There is not a general'over-produc-tion, but the proportions are wrong, and this means over-production in certain lines, of which wheat and hogs are striking examples. For agriculture to accept vast new credits at the present time would mean putting much new capital into an already over-expanded industry. There can be no help for the farmer in a course which would spell increased agricultural production and still lower prices for farm products. ,' More grain and live-stock are be-ing"-produced than the world can consume at remimrrative prices. The difficulties of American grain and live stock growers arc matched by similar di.culties in Argentina, Uruguay, and other parts of the world.. Grain growand high costs, and of the high prices Uiey have to pay for manufactured goods. It is a world.wide phenomenon. Producers of many raw materials, notably hides and rubber, face similar difficulties. Zinc mines have recently shut down on a great scale because of the weakness in the market for their product. Tims the farmer is not alone in suffering from a relative over-production. INDUSTRY AND AGRICULTURE. But-there is no general over-pro-duction. The world as a whole is producing less manufactured goods x than r did before the war. J'hc the maladjustment and disproportion -between manufacturing activity on the one hand and the production of foodstuffs and raw materials on the other hand. If the balance were restored, says Dr. Anderson, we should sec lower prices for manufactured goods, higher prices for agricultural products and increased activity, with better rates in shipping. Farmers and producers of raw materials could consume more manufactured goods and at the same time reduce their indebtedness, while manufacturing centres would consume a larger quantity of farm products. The chaotic condition of Central and Western Europe''mainly accounts for this lack of balance. "Public finances are disorganised, currency systems have been wrecked, political and military movements have demoralised economic life, current production is low. ; Having little to they arc able to buy little, as they have already largely used up those credit resources with the outside world which enablerl them, for six or seven years, to consume without producing and to buy without selling." Unsound finance and fluctuating currency are more demoralising to European industry and trade than they arc to agriculture. In wheat especially, production in Europe, except for Russia, has risen markedly since-IiUO. On the oilier hand,-Euro-pean consumption of food had diminished in quantity, hence it is a fanconclusion that the d-faculties of the American fanners arise largely from the European situation, though in the case of wheat it be overlooked that the production in Canada, the United States, and other places has-more than cpmpensated for-the decreased production in Russia and the Danubian countries. If, however, it is admitted that supply is in excess of the demand, the proposed provision of fresh capital on a large scale seems an extraordinary remedy. THE FUNDAMENTAL SOLUTION. Some sort of new credit machinery may be useful to-cnable farmers to replace old mortgage loans at high rates with new ones at lower rates. The deyhability of funding short-term debt into long-time obligations is obvious, both from the borrowers' and the lender's point of view. But, Dr. Anderson says, the farmer's present difficulty is partly due to the fact that he has had too easy credit in the past, and greater difficulty in securing- credit Avould have lessened the evils of land speculation, and would have compelled farmers to save more of their boom-time profits. As to cooperative marketing, "it is to be commended where it accomplishes technical improvements in the marketing process, but is to be condemned where

its purpose is control of prices through speculation and holding." Moreover, in Avorld-wide markets like those for wheat and cotton, less cooperative organisation by sellers is required than in cases where a few

} great buyers dominate the market. I In Dr. Anderson's opinion, the fund- } amental solution lies in the Govern - j ment of the United States taking a | broa d view and seeking to restore the international equilibrium by helping

J Europe to get on her feet again. This, | lie thinks, can be done in co-opera-

linn willi llie British Government, 'but I not merely "by pious- advice to Eur- ; ope." America, must take an active

part in ,the adjustments in Europe and make concessions of a substantial kind. "Wc should be willing to modify or even cancel the debts of our Conraw material capacity, and shipping. tinental Allies to our Government, to re-adjust our foreign trade policy, to consider seriously whether wc cannot assume some responsibility for guaranteeing security to France, and the American investment markets should be prepared to take additional European securities." All these things being subject, of course, to the necessary reforms, which involve an early settlement of the reparations problem on an economic basis, the re-adjust-ment of public finance in the former belligerent countries, and the-rectifica-tion of Europe's currency situation.