San Francisco, Calif., 1102 Balfour Herbert J. Fleishhacker, chairman, San FranBuilding. cisco, Calif. James J. Fagan, vice chairman, San Francisco, Calif. Ralph Merritt, San Francisco, Calif. O. J. Woodward, Fresno, Calif. Fred W. Kiesel, Sacramento, Calif. Spokane, Wash., 427 Hutton Build- R. L. Rutter, chairman, Spokane, Wash. ing. Springfield, Mass.... J. K. McCornack, Spokane, Wash. J. W. Spangler, Seattle, Wash. S. M. Jackson, Tacoma, Wash. A. E. Clarke, Lewiston, Idaho. George A. MacDonald, chairman, Springfield Henry H. Bowman, Springfield, Mass. The agencies at Indianapolis, Ind., and Detroit, Mich., were discontinued on June 13, 1922, and their records and activities transferred to the Chicago agency. The agency at Richmond, Va., was discontinued on October 16, 1922, and its records and activities transferred to Washington, D. C. EXHIBIT H. HOW THE WAR FINANCE CORPORATION REACHED THE FARMER. EXTRACTS FROM LETTERS RECEIVED BY THE CORPORATION. We are located in one of the best agricultural spots of We believe that we are as well acquainted with the farmers' affairs as any one who is dealing with them, and from actual experience we can say that the aid we have received from you has been the brightest spot in the last two years' work; in fact, I am wondering what course we would have pursued had we not received this aid. Our farmers are as good as any in the State. They have worked hard and done the very best that they could, and we know that this aid has enabled them to carry their burdens much more easily, and eventually we are positive they will get back on their feet. Previous to making the application for this loan we increased our bills receivable nearly $50,000 to our farmer customers for money actually advanced for the purpose of buying cattle, and had we not been able to obtain this advance from the War Finance Corporation we certainly would have been obliged to call our loans which we had made to the farmers, at least to that extent, as it was loaned with the thought in mind that we would obtain the money from the War Finance Corporation. As far as this bank is concerned every cent of the two advances we have had from the War Finance Corporation has been used entirely in the interest of our farmer customers. Were it not for this financial assistance it would have been absolutely necessary for us to have compelled our farmer customers to pay their loans, and in many instances this would have been disastrous to them. With the assistance we are now able to give them, through the War Finance money, they will be able to continue their farming operations without being forced into bankruptcy. We sincerely appre ciate the assistance the War Finance act is giving us, for we in turn are able to help out customers who are sorely in need of help. This plan has saved us calling in about $40,000 of our loans that were made to the farmers. We think this is one of the best moves that the Government has made for a long time. We feel that in this instance the loan has been a direct loan to the farmers. They have the money, and through the aid of the War Finance Corporation may continue to use it. Without this aid we should have asked the farmers who have been assisted in this manner to have reduced this amount. It is our opinion that every dollar we have received from the War Finance Corporation has helped the farmer indirectly where it has not gone to him directly. Since receiving the advance from them we have renewed or extended probably several times the amount of what we received, with confidence that in case we need further help we can get it from the same place. Since the War Finance money came into local elevators have raised the price of corn bought over their scales from 22 cents per bushel to 34 cents at the present time. We believe the money received by the banks of from the War Finance Corporation is largely responsible for this increase. our We think the War Finance Corporation is doing a lot of good in and we appreciate the aid very much. When you carry the banks then the banks can carry the farmers, and that is giving the farmers time to liquidate in an orderly way. Otherwise we would have had to demand immediate payment. We believe that the War Finance has been a wonderful help to our farmer customers in that we have been able to extend their notes in full; otherwise we would have asked them to sell their grain and hay from 10 to 20 per cent of the principal of each note. It will tend to keep the price of corn at a higher level, as the market need not be flooded. It is making weak banks strong. A strong bank is an asset to the farmer. From the relief extended us by the War Finance Corporation we are placed in a position to grant our farmer borrowers renewals for longer time with assurance of additional renewals, so as to give them an opportunity to feed their grain to live stock and liquidate their indebtedness in this manner at a better price instead of being requested to reduce their obligations by selling their grain on a low market or selling their live stock before it is ready for market. We will also be able to extend some credit where it is essential and the security good and where they have not already had a liberal line of credit extended to them. A good portion of the farmers have had enough credit extended and can get along very nicely on what they are now borrowing, provided they are not requested to reduce their obligations at present. The War Finance loans are sure a relief, both to farmers and banks. Had it not been for the advance we got from the War Finance, we would have been compelled to take drastic action to call in money loaned to farmers, thereby putting some of them out of business and crippling others so that they could not successfully carry on agriculture. We were unable to get any more accommodations from our corresponding banks; not only that, but they were demanding that we reduce every time our obligations come due: it would either have been up to us to force the farmer or close our doors, as our reserve was all exhausted. * * * We think the War Finance Corporation is the most wonderful relief that we could have received from any source. We were borrowing quite heavily of our correspondents and were not able to maintain a reasonable reserve. We are loaning to farmers every day to care for their present needs, mostly small amounts, as most of our farmers are of the opinion that they have borrowed more than they ought to have done, and are satisfied to be able to renew their present obligations. We are using our advances mainly to renew loans now on our books which we would have had to call had we not received this assistance. The money we have had so far from the War Finance Corporation has been used almost exclusively for the benefit of the farmers, as our loans are nearly all to this class. If we had not had this money come in we would have had to collect it from the farmers to take care of our declining reserve. While we have not made new loans to farmers we have been renewing the old notes of six months where we were having to collect them or else make new notes for 90 days only in order that they would have time to haul and sell something. We are not having much call for new loans from the farmers, but they are wanting to get out of paying their present loans at this time, and the fact that we are able to get these funds enables us to extend their loans. The farmers, while they may not know it, are getting the benefit of this in many more ways than one. As soon as we get a sufficient amount of paper rediscounted so that it eases up on us a little bit, will be in position to make new loans to the farmers for reasonable farm operations. This will allow them to start buying again from their friends and neighbors, and when they and the general public start buying, things will gradually start to going along again. This would not make much difference in one locality, but being spread over the entire agricultural section, will soon be showing results. While we expect to see things start to going again soon, it will be naturally a little slow for some time yet. the sentimental or psychological effect of this measure has already borne fruit-an abundant crop, in fact. I am reminded of the story of the Irishman who thought his bank was shaky and called for his balance. When handed it in cash, he said, "Begorrah, if I can git it, I don't want it!" The very fact that banks know that they have this new emergency crutch to lean upon has rendered them less concerned about their bills payable and more disposed to extend reasonable credits to customers. The whole atmosphere has changed for the better. Economists may not write into history that the War Finance Corporation is in any way accountable for rise in prices of cotton and tobacco, but the fact remains that, had hard pressed banks forced their merchant, "middle-men" and farmer borrowers to pay up as crops matured, we would have undergone the misery of low priced (and short) crops and resultant failures from which it would take years to recover. In the cotton association is moving along with great smoothness. The bankers have given them a splendid credit for immediate purposes-enough to cover the period between the actual delivery of cotton and the storage of cotton, under the circumstances, that will permit the use of funds from the War Finance Corporation. Everybody in is extremely proud of the assistance given by you. They are fully convinced that the mere announcement of the credits was not merely the biggest factor in persuading the bankers to assist, but also the biggest factor in making the commercial buyers of cotton respond to the statistical position, thereby offering more in price at this time. Right now I do not hesitate to state that your assistance has been of more importance than everything else combined to prevent a terrible collapse, and to insure a distinct commercial success on the part of the -association, representing a very huge portion of the crop. * * All through the country, the thinking bankers and economists seem to be unanimous in the conviction that the work of the War Finance Corporation * has given agriculture and those dependent on agriculture, in finance, as well as production and marketing, a solid basis for active optimism. I feel that the War Finance loans and the Government's attitude of willingness to help finance agriculture, so that some little encouragement can be given to honest, hardworking, industrious farmers, who are producing the nation's food, is about the first ray of sunshine that has penetrated the gloom which hangs thick over this part of There are a lot of farmers who are honest and industrious and competent, who will just simply have to sell out their farming equipment to meet the demands of pressing bills, and heretofore banks have had no choice but to exert this pressure. Now, however, with the possibility of relief, through the War Finance loans, we can carry these fellows along and give them a chance for their lives, and as collections get better, if they do, we can, perhaps, take care of a few little things which sometimes arise, where a small loan would make a very big difference to our farmer customers. It is unanimously felt that the making of this loan by the War Finance Corporation was exceedingly timely, and that the effect of the loan has not only materially strengthened the market but has encouraged the industry. * * * The result has been that there is a confidence throughout the industry which did not exist prior to the making of this loan, and that the moral and financial effect has been extremely favorable in every part of the West which is affected by the movements of live stock. I think the creation of the War Finance Corporation was a wise piece of legislation, *** whereby banks can avail themselves of the assistance offered, thereby enabling said banks (and there are hundreds of them over the State) that have made agricultural advances to secure funds, thereby enabling them to further finance the farmer, where his financial condition warrants, to enlarge upon stock raising, feeding, and to enable him to market in a more orderly way the products of his labor. Otherwise the farmer in many instances would be compelled to liquidate his indebtedness, which would bring about a condition that would greatly impair his business. The farmer is the beneficiary and is to-day receiving funds that would have been impossible for him to have received were it not for the War Finance Corporation. To say that the situation in has improved since the operation of the War Finance Corporation in this State is putting the situation rather mildly. Three weeks ago the elevators in were paying from 19 cents to 22 cents per bushel for corn. Coincident with the granting of loans in the price of corn has increased within this period from 28 cents to 33 cents per bushel, an increase of approximately 50 per cent. It is my belief that the work of the War Finance Corporation is very largely responsible for this advance. The banks in need of funds have, by reason of advances made by the War Finance Corporation, found it unnecessary to force liquidation of farmers' paper. Further, the fact that assistance is not only at hand but readily available has given both the country banker and the farmer renewed courage. * Just what happened to the cotton market in the South is having the same psychological effect on the grain market in the Corn Belt, and I can say to you truthfully, I believe, were it not for the War Finance Corporation, * * corn would be selling today over the scales in quantities at 20 cents to 25 cents a bushel, whereas it is bringing now on an average of 35 cents, and very little being offered. The relief which is being afforded to bankers and cattle loan companies which are in an over extended condition gives these institutions an opportunity of affording the greatest amount of relief to their borrowers, which otherwise they would be deprived of. There is no question but that the money which the War Finance Corporation is furnishing this section has done an inestimable amount of good. Had it not been for this we would have had a very serious and disastrous situation to face, as the city banks had practically reached the limit which they could advance to their correspondents, and the correspondent banks were facing steadily declining deposits. Through the advancement of this money by the corporation confidence, to a large extent, has been restored, there is a tremendously better feeling in the country, and altogether, the prospects look considerably brighter than they did a few months ago. The board at Washington should certainly feel highly complimented and gratified with the wonderful success that is coming from their efforts, as general improvement is noted all over the country. Fat lambs sold at $14.25 in Denver the other day. Ewes that were $4 three months ago are now selling at eight to nine dollars. Stock cattle are from eight to ten dollars a head. Wheat is higher than it has been for a number of months, as also is corn. I am still convinced, even where advances have not been made, there has been without doubt, a very favorable influence as a result of the activities of the War Finance Corporation. It has stimulated a desire on the part of banks, generally, to discharge properly the obligations resting upon them. So far as conditions in this vicinity are concerned it has appeared to us for some time that the farmers were beginning to feel more reconciled to the existing conditions and also a little more hopeful. Since the rise of prices for farm products set in this feeling of hopefulness has increased. In our individual case after we began securing help from the War Finance Corporation we adopted a more liberal policy toward our customers, encouraging them to hold their surplus feed and in many cases advising them to buy live stock to feed out or if they were holding live stock in excess of their feed, to secure sufficient feed while the price was low. In other words, we have encouraged them to borrow money in order that they might not sacrifice on anything. We also think that other banks in the vicinity have seen the necessity of being a little more liberal with their customers, having faith in the ultimate outcome. I wish to state that the live-stock situation out here has improved wonderfully. There is a strong demand now for all kinds of live stock. Ewes-that could have been bought, when I met you in San Francisco, at $5-sold a couple of days ago at $10. Wool-that was selling at 18 cents-is now being contracted at 30 cents. Range cows that were valued at $30-are now selling at $45. And I feel that, after this season, live-stock men will not need assistance other than can be furnished by their local banks. However, the use of the funds from the War Finance Corporation will enable them to increase their herds for the coming two years instead of decreasing them to meet the payments to local banks. We are in position to know that there would have been a calamitous condition in the live-stock industry but for this timely aid and the same thing is true in less measure of the situation in the district. * * * You will be interested to know that advances made by War Finance Corporation in the West are largely responsible for the following facts: Ewe lambs which will be yearlings in the spring are now being contracted at $8 per head. Ewes coming 7 years old have changed hands at $8. Old Gummys have brought growers on mutton market here prices which net $5.50 per head at shipping points. Wethers in fair condition are bringing on Portland market $8.50 per head. Wool is being freely contracted by Boston dealers on the sheep back at from 25 to 30 cents per pound. Consignment houses are making cash advances to wool growers of $1.50 per head. Western packers at Seattle and Portland are contracting 2 and 3 year old steers at 7 cents per pound at country shipping points as far East as Montana for shipment to Pacific coast. This means cattle growers receive from $75 per head. It should be certainly gratifying to members of board that their faith evidenced by their advances has been entirely justified. Just the other day, I had an application in person from one of the best banks in Missouri, but after they discussed the matter with their correspondent here, they concluded to postpone their request for an advance from the War Finance Corporation. My understanding is that they were offered funds at a low rate by their correspondent, and with assurance of renewal if desired; and right there is where you can feel gratified with results obtained by the corporation indirectly. There is no doubt but that the banks in the principal centers, and the country banks also, have been stimulated to take prompt and proper care of every call upon themthat is, every call that is legitimate and justified by existing conditions. It all combines to help relieve the pressure upon the farmer-customer of the country bank and give him an opportunity to get on his feet again. |