Special Message to Congress on Relief of the Agricultural Situation in the Northwest
To the Congress of the United States:
The economic situation in certain wheat-growing sections of the Northwest is reaching an acute stage that requires organized cooperation on the part of the federal Government and the local institutions of that territory for its solution. In my message of December 6, 1923, I stated:
The distress is most acute among those wholly dependent upon one crop. Wheat acreage was greatly expanded and has not yet been sufficiently reduced. A large amount is raised for export, which has to meet the competition in the world market of large amounts raised on land much cheaper and much more productive.
Diversification is necessary. Those farmers who raise their living on their land are not greatly in distress. Such loans as are wisely needed to assist buying stock and other materials to start in this direction should be financed through a Government agency as a temporary and emergency expedient.
Great numbers of individual farmers are so involved in debt, both on mortgages and to merchants and banks, they are unable to preserve the equity of their properties. They are unable to undertake the diversification of farming that is fundamentally necessary for sound agricultural reconstruction of the area. They are unable to meet their obligations and thereby has been involved the entire mercantile and banking fabric of these regions.
Not only have there been large numbers of foreclosures on actual farms, but there are great numbers of farmers who are continuing in possession on sufferance from their creditors. There have been large and increasing bank failures. Bills have been introduced providing for the lending by the federal Government of moneys directly to the farmers for purpose of assisting them in conversion of their farms on the basis of diversified farming. I am heartily in favor of these bills, but they do not and will not compass the entire problem.
Many of the farmers are, however, in such jeopardy from their creditors that even with this assistance there is no assurance that they would have a sufficient period in which to work out the necessary conversion of their methods, and it would be useless to give to this group such governmental assistance if it is to be only for purpose of immediate seizure by the creditors.
Such legislation, therefore, will be of little avail unless arrangements have been effected between the farmer and his creditors, by the funding of past-due indebtedness and interest or by similar means, so that the loans will inure to the benefit of the farmer himself instead of merely to the benefit of his creditors. If such arrangements can be made the farmer can be given the opportunity to work his way out of his present difficulties. If they are not made, it is difficult to see how he can benefit from the plan.
In addition to legislation of this character, coupled with the agreements which I have mentioned looking to the refunding of past-due indebtedness, it is necessary to consider whether any steps can be taken to bring financial help to certain limited areas of the Northwest in which embarrassments and failures among country banks have added to the hardships of the farmers. The War Finance Corporation is still functioning, but its authority to make new loans expires March 31 of this year. I recommend that the Congress extend until December 31, 1924, the time during which loans can be made by the corporation, and grant some extension of the period for which loans heretofore made can be removed.
It appears to me that it is essential that the large business concerns such as transportation, the more stable banks, not only in this territory but in adjoining states, who necessarily benefit from the prosperity of these areas, should in their own interest extend a very large measure of aid in remedy of this situation, and that creditors even further afield, such as our insurance companies and others, should cooperate fully.
In those agricultural sections in which numerous bank failures have contributed to the distressful conditions, it must be recognized, however, that there is a distinct limit to the scope of the assistance which the federal Government can render. Government agencies can not properly make loans upon insecure collateral, or to banking institutions whose capital is impaired. In certain sections a more drastic remedy may be necessary. It may be necessary, on a well-organized and extensive scale, to provide systematically for the restoration or strengthening of the capital resources of the country banks and financing institutions necessary to the proper service of the farmer. It may be found to be advisable to create new financing institutions, such as have been organized with great success in the livestock territories, to cooperate with the War Finance Corporation. The Government can not supply banking capital nor can it organize loan companies, but it can properly call upon those large business concerns, the railroads, the mercantile establishments, the agricultural supply houses, and all those large business establishments whose welfare is immediately connected with the welfare of the farmer. It can ask them, in their own interest as well as in the interest of the country, to cooperate with federal agencies in attacking the problem in a large way. I have therefore directed the Secretaries of Commerce and Agriculture and the Managing Director of the War Finance Corporation to confer with representatives of the interested groups, to devise a practical plan of action.
The refunding the pressing past-due indebtedness of the farmer in the territories most seriously affected; financial assistance through a federal agency to enable wheat farmers to make the change from a single-crop system to diversified farming; the restoration, wherever it would be helpful, of the impaired capital of banking institutions in the distressed sections and the creation by private capital of a substantial financing corporation to assist in the plan of reorganization; the extension of the time during which the War Finance Corporation can make loans; these are the measures which I propose. They are measures by which, without undue alarm or agitation; but nevertheless promptly and effectively, we can bring to bear on a serious though happily a localized emergency every resource of the federal Government and all the assistance which the business and firming community can render.
THE WHITE HOUSE, January 23, 1924.
Calvin Coolidge, Special Message to Congress on Relief of the Agricultural Situation in the Northwest Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/329315