';■'.■' 6 OfjuU LAND SETTLEMENT AND RURAL CREDITS STATEMTT OF THE NEED FOR AN INVESTIGATION 3Y ELWOOD MEAD, •1 Professor of Rural Institutions, University of California. j4 &^o^i DAII. in;.;' ' e«RlC. WHaP w±5>y Investigations of Land Settlement and Rural Credits, The Act under which this Commission was appointed re- quires it to investigate and consider " The question of land colonization and the various forms of land banks, cooperative credit unions and other rural credit systems adopted or pro- posed in this country or elsewhere, with a special view to the needs of the rural communities of this state." It must make a report to the Governor on or "before October 1, 1916." The Commission "believes that the first step in this in- vestigation should be to ascertain what is needed to promote the development and prosperity of rural life in California. To this end it intends holding public hearings in different sections of the state, to which all interested in the subject are invited to attend and give evidence. These hearings will be begun in Sacramento on September 29th and will continue until the Commission feels that it is fully informed regarding the causes Which are now operating to retard the settlement and improvement of the Staters agricultural lands, and has given all who have suggestions to offer an opportunity to be heard. llo state has more to gain than California from improve- ment in methods of land settlement or from the ad-option of a system of rural credits. Qpngn 1 /' Notwithstanding its great natuial advantages of climate, soil and wide range of products, there has come a halt in rural development. Over 1,000,000 acres of land susceptible of irrigation is uncultivated and awaiting settlement. Another million acres could be irrigated if a demand for land and water was assured. The settlement and cultivation of these lands is needed to insure the continued growth and enduring prosperity of our » cities. We ought in this state to produce more meat, butter, cheese and wool. We need more farms devoted to raising horses, cattle, hogs and sheep. The alfalfa fields need to be extended, the live stock grown thereon multiplied. This cannot be hoped for until existing financial ob- stacles are removed. Interest rates must be lowered, the time for repayment of loans must be extended and more than all else there should be some organization that will give aid and direc- tion to beginners so that unimproved land may be converted into habitable and productive farms with the least possible effort and waste of money and time. We want to attract the young, virile and ambitious. We want to keep the red blood on the farm. We are not doing these things now. A recent investiga- tion of the University of California showed the average age of settlers in new developing districts to be about 45 years. Men ready to retire from active life buy farms — the boys and girls flock to the cities. A recent report issued by the United States Government shows an increase of 380,000 in the population of California, -2- during the last five years. Sev en ty- three per cent of this increase was in cities and towns of 3,000 and over. The in- crease in farm population was so small as to cause anxiety and lead to a "belief that changes in existing methods are desirable. Selling land to settlers has becone so difficult that coEEiissions to land salesmen have reached, the incredible figures of 25 to 30 per cent of the selling price. Reliable men engaged in the business say that even with these extraor- dinary commissions they are not prospering. \Tnen one considers the attractions of rural life in this state, there is no other conclusion except that this halt in development is due to vital defects in our policies. Two such defects are plainly apparent. Both are suscept- ible to removal if we set about it. The first is absence of aid and advice to settlers in the purchase and improvement of farms. The second, the high interest rates, the short time of repayment of loans, and in many cases the inability to borrow money on any terms. The farmers and settlers of California who have to borrow money pay more than double the average interest rate required of farmers in countries which have a rural credit system. Agri- culture cannot develop under this handicap. Below we give the interest rates paid by settlers in countries which have a rural credit system. They show the great disadvantages which California farmers labor under, and also m.ak< apparent what an impulse would be given to rural development if we had such a system here. -3- Country Rate of Interest Per Gent Time given for Repaying; Loan. Denmark Italy Holland Norway 3 2.5 4.7 3.5 65 years 50 years (To enable farmers to buy land, and 4% to those who own land) Hungary Austria Russia 50 years 54-g- years 55-g- years 4 to 4.5 4.5, (To cover both amortization payment and cost of administration) Germany : 3.5 to 4 : 56-g- years prance : 4 to 4.5 (To enable young farmers to buy farms: 2 Ireland Spain Belgium Switzerland 3 5 to 7 4.5 4.5 75 years 5 to 3 per cent) 30 to 50 years 30 years 57 years The following list includes countries with less development, less accumulated wealth, less population than the United States, and consequently less able to provide low interest rates. I }at e cf Interest : Time Given for Country : Per Cent Repaying Loan New Zealand : 4 36-g- years Victoria, Aus. ; 4.5 36 J years New South Wales j 3 to 5 30 to 40 yrs. Other Austral- j ian States 4 to 5 30 to 40 yrs. British and Ger- man South Africa 4 Chile 4 33 years Argentine 4 British Columbia . t_ pe r cent more than : the interest on state : 36^- years : b onds to The farmers of Californi a wi th no rural credit sys tei a pay froi a 6 12 ioer cent int crest on loans running; from 3 t o 10 v ears, and ften wi th excessive commissions for sccurin. » the 1 oan or its re- newal. The introduction of rural credit systems in other countries has in every case been a financial success and a benefit to all _4~ classes of people. It has extended the area of land cultivated; increased the acreage yield; and led to the building of better ■ houses, to rendering the social life of the farm more attractive, has tended to keep the boys and girls on the farm and check the drift to cities and to other countries. Nowhere has it been either an agricultural or financial failure and these great results have been accomplished in each case without any disturbance or loss to the existing commercial banking institutions. Australia has, perhaps, the most liberal and most highly organized rural credit system of any country, but the introduction of this system has not injured the commercial banks. They have been more prosperous since its introduction than before, not a single bank has failed and the dividend rate last year varied from 5-g- to 14 per cent with liberal increases in their reserves. It is hoped that out of this investigation there will come some plan that will give the farmers of this state the same credit advantages that are enjoyed by the fa.rmers of other coun- tries, either through the use of the state* s credit or through improvements in existing banking facilities. It is believed that what other countries have done this state should do, and that it only requires an understanding of the sub- ject and the cooperation of all classes to be benefited to bring about the desired results. -5- ■ MUlUIMUUIIl Pamphlet Binder Gaylord Bros., Inc. Makers Stockton, Calif. FAT. JAN. 21. 1908 920207 H 6-7**41 THE UNIVERSITY OF CALIFORNIA LIBRARY U. C.BERKELEY LIBRARIES CDMb77a?^7 ''■■'■'■■ -' ''■■'.': ■,'. - .' .. jK ... '.'