Warren G. Harding photo

Address in Hutchinson, Kansas

June 23, 1923

Fellow Citizens of Kansas and Fellow Americans All:

A half score of years or more ago, I was making a number of addresses in your state, and had the good fortune to make a more or less intimate survey of several thriving Kansan communities. While driving in the outskirts of a county-seat town, not a hundred miles from here, we noted in the distance a structure rather more imposing than the average home, and I made inquiry as to its ownership. My host said: "Well, sir, I'll have to apologize. That's the county poor-house, but it is out of commission. We discontinued its public operation for we had no inmates." "Omit the apology," I replied, "and make it a boast. I never saw an unoccupied almshouse before. If this is a reflect of the life of Kansas, it is a glorious chapter in human progress." My host had spoken truly. More interesting still, before my speaking tour was finished, I saw two other county almshouses which had been abandoned as public institutions, and made into eloquent monuments to a community's good fortune. A civilization without a public charge is not the supreme attainment in human progress, but it is a lofty achievement, and I know there can not be very much wrong with the fundamentals of the Government under which it is recorded.

Probably the fortunes of agricultural Kansas are not to-day precisely what they were a dozen years ago, and agricultural fortunes are invariably reflected in the fortunes of all others, because they are so closely related and interdependent that there can be no good or ill fortune of one without influencing the other. The whole world has been in a social, industrial, financial, and political upheaval since then. The very fabric of civilization has been sorely tested, dynasties have fallen, monarchies have failed, revolution has reigned in various sections of the world, and disasters have exacted their toll nearly everywhere and in nearly every way.

The losses to American agriculture are universally admitted and deplored, "but it is not an experience peculiar to American agriculture alone. Nor was the readjustment following war's inflations a burden to agriculture alone. It came to the railroads, to bankers, to manufacturers, and to the mercantile world.. The miracle is that we all escaped with so relatively little of disaster. It is characteristic of human nature that we magnify our own ills and too little appraise the ills of others, but the eyes of the Government are attracted to them all. I hesitate to tell you how seriously vast interests, presumably unendangered by the changing tides of business, were affected, and at what sacrifices disasters were averted. Looking backward, I find my confidence in the social and industrial fabric of this Republic strengthened by our wonderful emergence from threatening disaster

Ever since the earlier processes of deflation which began after the World War we have been studying and talking about the rehabilitation and the better organization of our agricultural industries.

I confess a very frank pride in the Government's part in bettering a situation against which you justly complained and which all the people of the nation deplored. The cooperation of all the governmental agencies, and with them the cooperation of the fine forces of leadership which the great national farm organizations) have developed, made it possible to secure a measure of helpful results in this department of our endeavors, which has been especially gratifying. Moreover, it has found prompt reflection in the improved status of every agricultural concern. We, have been officially informed that owing to improved conditions the farm products of the country for 1922 were worth $2,000,000,000 more than they were in 1921. Clearly, we are through the worst of the depression and can reasonably expect gradual improvement.

The balance within the industry, as between livestock and grain production, has been restored. The disturbance of that equilibrium, so highly important to a properly adjusted agriculture, had been one of the unfortunate and unavoidable results of the war-time necessities. Called to feed a world, American farmers had willingly responded to the demand for special efforts in certain lines of production. Relation-ships between supplies and demand for some staples were badly disrupted and could not be instantly restored when peace came. That was in considerable part responsible for the violent fluctuations which imposed so much hardship on the farmer. Along with this distortion of the production ratios went an even more acute and difficult disturbance of the factors which determine foreign demand.

While the war lasted there was no possibility of overproduction of such staples as wheat and cotton, for example; and when peace suddenly burst upon the world, the farmer had plans for a long future which he could not readjust instantly. No human wisdom could possibly have foretold the course that would be taken by supplies and demand; and it is as futile as it is obvious to us now to say that wisdom would have dictated at least a less precipitate policy in removing the war-time restrictions and guidance in dealing with some aspects of production and distribution.

When the present Administration came into responsibility, agriculture was in the lowest ebb of depression. The immediate need was for measures to meet an emergency. There was urgent call to keep open and so far as possible enlarge our foreign markets, and this was accomplished by a prompt policy of placing necessary credits at the disposal of those engaged in finding foreign markets for our foodstuffs; by arresting and reversing the drastic deflation which had the seeming, under the former administration, of being aimed especially at the destruction, of agriculture's prosperity; by recalling the War finance Corporation from its state of suspended animation, giving it a credit of $1,000,000,000 [see APP note] in Government funds, and recommissioning it to afford relief to the American farmers. The wisdom of this action was demonstrated by results.

Four hundred million dollars have been loaned by this institution, three-fourths of it to the farming and live-stock interests. At the same time the emergency tariff measure was passed, by which to secure the farmer's home market against the flood of competing articles from distant corners of the earth. During the war vast quantities of farm products had been dammed up in countries so distant that shortage of shipping made transportation to Europe impossible. With the seas again free, these sought, at whatever price could be obtained, the one market where there was real buying capacity and cash to pay—the great market of the United States. We took prompt measures to stop this movement; and the combination of effective protection, easier credits, and the operations of the War Finance Corporation quickly arrested the downward trend and started agriculture upon the upgrade once more.

It is only fair to pause a moment and emphasize the value of these measures of agricultural relief so promptly put forward by the Congress. The new tariff schedules saved for the American farmer a vitally important and gravely menaced home market. The resumption of the War Finance operations, backed by the resources of the only Government on earth that was able to summon such a credit, enabled the American farmer to compete for sales abroad.

Along with these measures, prompt steps were taken to put the federal Farm Loan Board back into business. Like the War Finance Corporation, it had been in a state of suspended activity for want of money to loan. It was given a credit of $50,000,000 and resumed loaning on farm property.

A bill to facilitate cooperative marketing of farm products was passed. Legislation to prevent harmful gambling in agricultural futures was passed, held by the courts to be unconstitutional, and quickly repassed with the defects removed. The act for the control and regulation of the meat packers was enacted. Important reductions of freight rates on agricultural products were effected. Certain restrictions upon the operation of the joint-stock land banks, which had prevented them from doing their share in financing the farm, were removed. The loan limit of $10,000 which had formerly been imposed upon the federal Land Banks was increased to $25,000, a change which is certain greatly to increase the practicable usefulness and range of operations of this system.

A measure of the utmost importance to farmers in those parts of the country where irrigation is the very basis of agricultural life is the act authorizing formation of irrigation districts, whereby the water- using settlers are brought together in associations to conduct their relations with the federal Government. Formerly the settlers had to adjust all differences of this kind as individuals, at great expense and inconvenience to themselves. These water-users' organizations promise to become nuclei of highly useful cooperations in assembling, shipping, and selling the products of the irrigation districts. Further encouragement was extended to the irrigation farmers by amending the farm loan act to provide terms on which the land banks could make loans to farmers on the irrigation projects, whose conditions and necessities require special treatment.

Yet another prevision in behalf of this same community is made by the new law which authorizes extending the time on payments due from irrigation farmers to the Government. This measure has given a new chance to thousands of farmers in the irrigation areas who have fallen under the same misfortunes that have afflicted other farmers, and who had been unable temporarily to meet their commitments to the Government.

If the recital of this long list of accomplishments in the farmer's behalf shall have seemed to suggest that Washington has been devoting itself with a special and perhaps a partial assiduity to the agricultural interests, I shall reply that the farmer has received nothing more than was coming to him; nothing more than he needed; nothing more than was good for him; and nothing that was not also good for all of our national interests, bound up as they are in the nation-reaching mutuality of dependence and interdependence. I tell you frankly that I am proud to be able to come to you to-day and tell you of what has been done, because in doing it we have served not only the farmer but everybody else in this land.

But that is not all. I have reserved till the last what we may well appraise the crowning achievement of the entire list. I refer to the code of agricultural credit legislation known as the Agricultural Credit Act of 1923, which became law in the closing days of the last Congress. It has not been possible yet to perfect machinery for administering this act, but I do not hesitate to express confidence that this scheme 6f agricultural credits, taken in connection with the other enactments I have described, furnishes the basis for the most enlightened, modern, sound, and efficient scheme of agricultural finance that has been set up in any country, and will enable the farmer in no distant future to free himself from obstacles which have made it difficult heretofore to conduct farm operations upon a sound, business-like basis.

Before describing this program of advancement in agricultural finance, permit me a word by way of bringing before our minds the backgrounds of the agricultural problem. Farming is the oldest of all industries. It has supported the community in peace, and has been the most essential line of industrial defense in war; commonly, too, the first victim of war. In olden times the conqueror distributed the subjugated lands to his favorites, and his prisoners as slaves to till it. Thus land ownership became the mark of favor and aristocracy. Later, the feudal regime substituted the somewhat less severe conditions of serfdom and villenage for those of slavery on the soil. Then came the modern institution of an agricultural peasantry, politically more free, but economically still held in fetters of old tradition.

Merchants and manufacturers, in the Middle Ages, devised banks to help them finance their ventures. Banking methods developed which served their purposes, but were not adapted to the farmer. The farmer's way of life made him an individualist. He could not organize the great cooperations which we call corporations. The banks did not furnish credit of the kind and on the terms he needed. The manufacturer and merchant, doing a large gross business in proportion to capital, having a short turnover period, wanted to borrow working capital for short periods. The farmer, with a long turnover period, wanted working capital on very different terms.

Now, the bank of deposit and discount is easily the most completely cooperative institution that human society has devised. But it got started dealing primarily with industry and commerce, and the farmer never quite caught up with it. The railroad or industrial corporation raises plant capital by selling bonds; the farmer, by the essentially similar operation of selling a mortgage on his land. Both still require at times to supplement this capital, by making less permanent loans to pay operating costs.

These loans the banks make out of the funds intrusted to them by great communities of depositors. In order to keep their resources as liquid as possible, against the possibility of heavy demands from depositors, banks have preferred to loan for short periods, commonly one, two or three months. This precisely suited the commercial or industrial borrower; it did not fit the farmer's case, because he requires a full year to produce most crops; two or three years; even, in case of livestock.

So, as the ordinary banking practice did not meet the farmer's needs, the idea arose of establishing intermediate credit institutions, which should advance money for longer periods than the merchant or manufacturer desired, but yet not on the long-time basis of the farmer's mortgage or the corporation's bond. Various forms have been taken by these institutions in different countries and under different conditions. But I doubt if there has ever before been set up a system of intermediate farm credit so well adapted to serve the needs of the farmers in America.

This legislation, designed to furnish necessary intermediate credit for production purposes, taken in Connection with the federal Farm Loan system, which provides long time mortgage credit, and with the new law making easy the organization and conduct of cooperative associations, and with the amended federal Warehouse Act, provides what seems to be a complete, scientific and well-rounded, efficient and workable system of agricultural finance. Quite possibly experience may show the need of minor amendments here and there to the credit act, but the principle underlying it is sound and needed changes can readily be secured.

Under the Agricultural Credit Act, which became law last March, two classes of corporations are authorized. First come the federal Intermediate Credit Banks. They are twelve in number, just as there are twelve federal Reserve Banks and twelve federal Farm Loan Banks. Each Intermediate Credit Bank is to have $5,000,000 capital, subscribed by the Secretary of the Treasury in the name of the United States and paid for from the Treasury. There is to be one of these banks in connection with each federal Farm Loan Bank, and they may be under the same or separate managements.

The federal Intermediate Credit Banks are to make loans to banks, or to cooperative marketing associations of farmers, which associations are carefully provided for. The loans are to be made especially for agricultural purposes.

Whenever the loans made from the original capital reach an aggregate justifying it, the Farm Loan Board; which supervises the system, may issue debenture bonds against the securities which the Intermediate Credit Banks have taken. The sale of these debentures will put the banks in funds once more for a new loaning campaign; and so, in the revolving-fund fashion which has been made familiar through the operations of the Farm Loan Board in real estate mortgages, the endless chain goes on and on, drawing in with each sale of debentures a new supply of capital for loaning to the farmers.

The Intermediate Credit Banks are fundamentally different from the Farm Loan Banks in this: that while the Farm Loan Banks advance money only on real estate mortgage security, the Intermediate Credit institutions are to discount farmers' notes taken by local banks and to loan on personal and chattel security—live stock, farm equipment, growing crops, and the like. The debentures sold by the Intermediate Credit Banks are tax-exempt precisely as are the debentures of the Farm Loan Banks.

The debentures will be sold to the public at a rate sufficiently below that charged the original borrower to insure that all expenses will be met by the margin of difference. These banks are authorized to make loans on these debentures to the amount of ten times their capital; that is, each bank may carry $50,000,000 of business, which places the total for the system of twelve banks at $600,000,000.

Under the same law, another and entirely distinct set of corporations is provided for, called National Agricultural Credit Corporations. These are to be set up, their capital furnished, and their management controlled by private capital and enterprise, under the general supervision of the Comptroller of the Currency. A National Agricultural Credit Corporation may be formed with capital not less than $250,000, and national banks are authorized on proper conditions to subscribe for stock in such corporations, in the aggregate not exceeding 10 per cent of their capital and surplus.

The National Agricultural Credit Corporation is authorized to make loans for agricultural purposes on chattels, livestock, growing crops, and personal credit up to a period of nine months; except that in the case of breeding stock and dairy herds the period may be extended to three years. They may issue debentures against the securities they have received, and these may be marketed up to whatever amount may be determined by the regulations prescribed by the comptroller.

To facilitate the marketing of the debentures issued by these corporations, a class of rediscount banks is provided. A credit corporation may subscribe up to 20 per cent of its stock to the capital of the rediscount bank. A minimum of $1,000,000 paid-up capital must be provided for a rediscount bank. The rediscount bank, on the responsibility of its own capitalization, will enter the general money market, float the debentures that have been turned over to it by the credit corporations, and thus provide them with new funds for further investments. It is simply another application of the revolving fund or endless credit chain idea which we found illustrated in the case of the Intermediate Credit Banks.

The utmost care has been taken to surround these various institutions with every possible safeguard that can be afforded through skilled supervision, ample responsibility, and sound methods. It is the judgment of financial experts that their debentures will find just as ready an acceptance among investors as have those of the federal Farm Loan Board.

There is thus created at last a complete farm credit system which, drawing together the aggregate responsibility of the greatest single industry in the land, backed by the security of the land, and of live stock, warehoused and growing crops, all kinds of agricultural equipment, and, finally, by the character and high responsibility of the men and women who constitute the great agricultural community, will be capable of furnishing the American farmers, for the first time in the history of agriculture in any country, adequate investment and working capital on terms as favorable as those accorded to commerce and industry.

Many people have been inclined to be skeptical of benefits which might follow the enactment of legislation to give the farmer a better system of credit. They have said that the farmer needs better prices for his crops and livestock, rather than easier ways to borrow money. That is true, but these friends do not seem to understand that prices of crops and livestock are directly influenced by credit facilities.

In the past, farmers have been obliged to finance their productive enterprises by borrowing money for short terms. When times are good they have no difficulty in renewing these loans, but in periods of financial stress too many farmers have found themselves under the necessity of pushing their crops or their livestock on the market, not infrequently before the latter is fully fitted for market, in order to pay notes which they had expected to be able to renew, thus at times flooding the market and seriously depressing prices. Under a system of intermediate credit, administered with reference to the farmers' seasonal requirements, they should be able to market both their crops and livestock in a more orderly fashion, and this in itself will be a potent influence in keeping prices more stable and reasonable.

I thoroughly agree that what is needed is fair prices; and I very well know that the farmer wants to get out of debt rather than to get further into debt. But it is my opinion that both these ends will be much more quickly accomplished through this new system of agricultural credits.

The legislation enacted by Congress does not by any means measure the attention Congress has given during the past two years to the needs of agriculture. People who have not been familiar with what has been going on in Congress can little appreciate the exhaustive study which the appropriate committees of Congress have given to our agricultural problems.

Day after day, and week after week, and month after month these committees have held hearings. They have considered every conceivable measure suggested for relief. They have listened patiently to all who came to them. They enacted legislation which seemed to promise real help. They did not enact nearly all the measures which were suggested, because after the most exhaustive study they became convinced that such measures would not only be of no help but might aggravate an already bad situation.

Go back with me for just one glance, in conclusion, at the steps which have marked the rise of agriculture to this, its new estate. We need to go back but a very few generations to the time when the title to land represented no more than the whim of a despot or the shifting and uncertain fortunes of a military adventurer. The agricultural worker was a serf, a mere human chattel, bound to the soil on which he lived and to the service of the particular adventurer who at the moment, in the permutations of fortunes and of favor, chanced to hold the land.

In the view of his master, he had no rights which could command respect, his political status was nil, and he was permitted the least possible share in the fruits of his toil on which he could keep together his soul—if indeed it were conceded that he had a soul—and his body, so as to perform the grueling toil of tasks that were regarded as utterly menial. All agricultural operations were crude, inefficient, barbaric. The great light with which science and organization and efficient methods have illumined the art of agriculture had not yet cast its first feeble rays over the desolate and dehumanized landscape of the rural countryside. The old-time picture is one to make women weep and men despair of their kind.

But somehow the life of the open places, under a sky which inspired always the longing for a fair chance; somehow the daily touch with the mighty forces of mother nature in all her wondrous moods; somehow the dim realization that there was yet something beyond and above the squalor and misery of his immediate surroundings—somehow, through the centuries of his serfdom, these things kept the farmer mindful of possibilities for better times and friendlier fates; kept him longing for liberty; inspired him in the age-long struggle to lift himself up to a wider vision of life; moved him to eternal revolt against the fetters which bound; gave him courage for the seemingly hopeless conflict with destiny.

The centuries passed, and untold millions went to their graves despairing. But other millions followed, to seize the torch and bear it a little farther on the road. The slave became a villein, the villein a peasant; and yet the grim struggle went on, with political rights and economic emancipation as its twin goals. Painfully, doggedly, the men of the soil toiled under their dual burden of furnishing sustenance for humanity and keeping alight the flame of that consuming purpose to achieve freedom and human equality.

Down to times so near our own that they are but the yesterdays of history, the outcome of the struggle seemed in doubt. But mankind's darkest hour was followed by the dawn. The vast structure of artifice and selfishness which had been built and supported by the soil at length crumbled under its own weight of futility and corruption. The revolutionary movements of the eighteenth century, the reformations of the early nineteenth, the spread of knowledge, the rise of invention and growth of industrialism—all these combined to extort from tyranny the recognition of human rights. The man of the land had won his first battle: the battle for a place in the political system.

The economic struggle was longer and harder, because it had to be waged against preconceptions and prejudices which through the ages had driven their roots deep into the very fundamentals of human nature itself. It was not possible, all at once, to establish the conception that the tiller of the soil, ignored through centuries, must now he taken into full fellowship with the favored of the earth.

Sometimes I think it more interesting to recall the more modern processes of emancipation, because it will bring reminders to quell heedless insurgency and suggest at least that moderate contentment which will tend to bless.

I can well recall the making of Kansas, and the near-by states of the Mississippi and Missouri Valleys. That was when farming was more a struggle for subsistence than a contest in industry. That was back in covered-wagon days, when the men of Ohio, and bordering states, migrated westward, too poor to come with family and possessions by rail, where rail travel was possible, so they builded their wagons, loaded all their material possessions which the wagon would carry, crowned the cargo with the family, and drove westward under the glow of the Star of Empire. A few returned, but the great majority dug in, battled with nature and her elements, and conquered.

In those grim days there were no motor cars, no electric lights. The cracky wagon, now forgotten in our lexicons, or the spring wagon, double seated, was the luxury of travel, and the kerosene lamp had recently put the tallow dip to shame. Ten dollars in cash in the family purse was an inordinate excess, and a hundred dollars cash balance for the year's trade was success extraordinary. Nowadays we expend more money for gasoline going to and from town in one week than was spent for kerosene to illumine the home for a whole year a generation or two ago. The farm emancipation in this country has been apace with other advancements, though there are inevitably periods of unbalanced price relationships, the reflexes of supply and .demand, which have vexed and discouraged.

There is no escaping the relativity of outlay to income. The sane practice is to make sure that the outlay is less than income, but it is somehow inherent in our lives that we pay more or less as we receive. I can recall when my annual offering to the church was one dollar, and it was considered ample. But it cost me more, and I gladly paid, when my annual earnings expanded. We live very much according to our income. It is proper that we should. The citizen who skimps and denies while the tide of good fortune is flooding is often acclaimed a miser and an undesirable citizen.

My point is that agricultural emancipation has brought its problems as well as liberation. The blue-sky stock salesman can dissipate a farm surplus with ready facility, and extravagance on the farm is no less costly than in palatial city homes. I am sorry that simple rural life is too often giving away to modern extravagances. In the rise and fall of nations, in the peaceful conquest for human advancement, the simple-living peoples will make the long survival and record the notable triumphs.

It is good to contemplate the political, social, economic, and financial equality of the American farmer, good to confirm his title to all the instrumentalities and facilities which make for success in other activities, because he is the supreme contributor to human welfare. And he brings another invaluable asset to our republic. He has been and must continue to be the anchorage of dependable public opinion when ephemeral whims are appealing and storms of passion play. The farmer, better than all other toilers in our community life, has learned that only the rewards of endeavor spur humanity on to large achievement. He fully appraises property rights and the necessity of their preservation. In spite of his adversities, the farmer has never failed as the stalwart defender of the American heritage. In his fuller participation, the American farmer must continue to be the stabilizer of sentiment and the defender of our fundamentals upon which is builded the republic which wrought his emancipation.

APP Note:  The text as originally published in The Messages and Papers of the Presidents Volume XVIII represented the number above as $1,000,0000,000.  We have corrected this typo here. 

Warren G. Harding, Address in Hutchinson, Kansas Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/329286

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