Abstract

The Federal Farm Loan Act of 1916 repudiated the creed of laissez-faire by declaring that government had a responsibility to assist ordinary citizens economically. Farmers had made affordable credit a political issue well before the Panic of 1907 thrust banking reform to the center of national policy discussions. Following this crisis, farmers called for the national government to make agricultural loans. Farmers’ advocacy—which was often channeled through their voluntary membership organizations—both compelled legislative action on agricultural credit and ensured a governmental role in the Federal Farm Loan System. Progressive Era farmers had succeeded in institutionalizing an idea that bankers opposed and the political elite otherwise never would have considered. The full consequences of this innovation in governance were unanticipated. The Federal Farm Loan System provided a precedent for subsequent New Deal programs that aided ordinary Americans.

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Notes

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24
.
68.
US Department of Agriculture
,
Annual Report of the Department of Agriculture, 1914
(
Washington, DC
:
Government Printing Office
,
1914
),
24
.
69.
Indiana Bankers Association
,
Sixteenth Annual Convention
(
Indianapolis
:
Press of Harrington & Folger
, [
1912
]),
66
.
70.
Agricultural Grange News
4
(Dec.
1915
):
4
.
71.
“A Great Issue,”
National Grange Monthly
12
(Aug.
1915
):
12
.
72.
“Farm Mortgage Bankers Organize,”
New York Tribune
, May 8,
1914
,
11
;
“Mortgage Bankers Perfect National Organization,”
Commercial West
25
(May 1914):
8
.
73. Sidney R. Stevens to Carter Glass, Nov. 5,
1913
, Box 17, Carter Glass Papers, Special Collections, University of Virginia, Charlottesville, VA. Secretary of the Treasury Franklin MacVeagh required national banks to pay 2 percent interest on public deposits; see
Committee on Expenditures in the Treasury Department, House of Representatives
,
Interest on Public Deposits, 62nd Congress, 3rd session
(
Washington, DC
:
Government Printing Office
,
1913
),
154
. On producerist thought, see Marvin Meyers,
The Jacksonian Persuasion: Politics and Belief
(
Stanford
:
Stanford University Press
,
1957
),
14
17
. On producerism’s place in the Populist movement, see Robert C. McMath, Jr.,
American Populism: A Social History, 1877–1898
(
New York
:
Hill & Wang
,
1992
),
50
53
.
74.
Twentieth Century Farmer
, no.
652
(June
1913
):
17
.
75.
“Farmers’ Wives Tell Troubles to Houston,”
Morning Oregonian
, Apr. 25,
1915
,
2
.
76.
Twentieth Century Farmer
, no.
665
(Sept.
1913
):
18
.
77. National Grange,
Journal of Proceedings of the National Grange of the Patrons of Husbandry, Forty-Seventh Annual Session
(
Concord, NH
:
The Rumford Press
,
1913
),
153
54
.
78.
Committee on Banking and Currency, House of Representatives
,
Rural Credits
, 63rd Cong., 2nd sess. (
Washington, DC
:
Government Printing Office
,
1914
),
195
. On farmers’ interest in improved roads, see Fuller,
RFD
,
194
95
.
79.
Committee on Banking and Currency, House of Representatives
,
Rural Credits
,
191
.
80.
Committees on Banking and Currency, Senate and House of Representatives
,
Rural Credits
,
264
.
81.
Ibid.
,
262
. For farmers’ participation in cooperative enterprise, see Hal S. Barron,
Mixed Harvest: The Second Great Transformation in the Rural North, 1870–1930
(
Chapel Hill
:
University of North Carolina Press
,
1997
); Steven J. Keillor,
Cooperative Commonwealth: Co-ops in Rural Minnesota, 1859–1939
(
St. Paul
:
Minnesota Historical Society Press
,
2000
).
82.
“Farmers Must Be Wide Awake,”
National Grange Monthly
11
(Feb.
1914
):
7
.
83.
Congressional Record
, 63rd Cong., 2nd sess.,
1914
,
51
,
1956
;
National Grange
,
Journal of Proceedings of the National Grange of the Patrons of Husbandry, Forty-Eighth Annual Session
(
Concord, NH
:
The Rumford Press
,
1914
),
114
;
Committee on Banking and Currency, House of Representatives
,
Rural Credits
,
228
31
,
191
;
Committees on Banking and Currency, Senate and House of Representatives
,
Rural Credits
,
266
;
Progressive Farmer
28
(Apr.
1913
):
558
;
Equity News
6
(Apr.
1914
):
360
;
American Federation of Labor
,
Report of Proceedings of the Thirty-Fourth Annual Convention of the American Federation of Labor
(
Washington, DC
:
The Law Reporter Printing Company
,
1914
),
102
3
.
84.
Washington State Grange
,
Proceedings of the 25th Annual Session of Washington State Grange
(
Olympia
:
Recorder Press
,
1913
),
37
.
85.
Twentieth Century Farmer
, no.
641
(Mar.
1913
):
26
. National banks could issue banknotes by securing them with 2 percent government bonds that they placed on deposit with the US Treasury. These banknotes were taxed at a rate of 0.5 percent per year;
Statutes at Large
31
(
1900
):
49
.
86.
Committee on Banking and Currency, House of Representatives
,
Rural Credits
,
197
. The land-grant railroads received a grand total of 179,187,040 acres from government—130,303,688 from the national government, and 48,883,372 through state grants;
Federal Coordinator of Transportation
,
Public Aids to Transportation
,
4
vols. (
Washington, DC
:
Government Printing Office
,
1938–1940
),
2
:
32
.
87. Senate,
S. 5542
, 63rd Cong., 2nd sess.,
1914
; Radford,
Rise of the Public Authority
,
57
60
.
88.
Congressional Record
, 63rd Cong., 2nd sess.,
1914
,
51
,
15615
.
89.
“Rural Credit Plan Shelved,”
New York Times
, May 13,
1914
,
1
.
90. Link,
Papers of Woodrow Wilson
, vol.
31
,
462
.
91.
Congressional Record
, 63rd Cong., 2nd sess.,
1914
,
51
,
16975
.
92.
“Favor Ship Purchase and Rural Credit Bills,”
Evening Star (Washington, DC)
, Feb. 3,
1915
,
2
.
93.
Congressional Record
, 63rd Cong., 3rd sess.,
1915
,
52
,
4592
93
,
5056
;
Statutes at Large
38
(
1915
):
1116
; Joe H. Eagle to William Borah, Mar. 16,
1915
, Box 23, Borah Papers; B. F. Harris,
“Better Farming, Not Federal Laws, Will Bring Better Credit,”
Banker-Farmer
3
(Dec.
1915
):
2
.
94.
“Rural Credits as a Matter for State or National Action,”
Journal of the American Bankers Association
8
(Dec.
1915
):
484
.
95.
National Farmers Union
,
Minutes of the National Farmers Educational and Co-operative Union of America, Eleventh Annual Session
(
Texarkana, TX
:
Four States Press
,
1915
),
29
30
;
National Grange
,
Journal of Proceedings of the National Grange of the Patrons of Husbandry, Forty-Ninth Annual Session
(
Concord, NH
:
The Rumford Press
,
1915
),
175
76
.
96. Washington State Grange, Proceedings of the 25th Annual Session, 37;
Massachusetts State Grange
,
Proceedings of the Forty-Third Annual Session of the State Grange, Patrons of Husbandry
(
Worcester
:
The Commonwealth Press
,
1915
),
159
;
“Significant Facts,”
National Grange Monthly
12
(Feb.
1915
):
12
;
Congressional Record
, 63rd Cong., 2nd sess.,
1914
,
51
,
5446
,
9931
,
12459
,
12977
, appx. 893.
97.
“Senator Fletcher Warns The Democratic Party,”
Miami Herald
, July 23,
1915
,
1
.
98.
Congressional Record
, 63rd Cong., 3rd sess.,
1915
,
52
,
5023
.
99. Link,
Papers of Woodrow Wilson
, vol.
35
,
96
97
.
100.
Ibid.
,
106
.
101.
Progressive Farmer
30
(Nov.
1915
):
18
.
102. Fred L. Trump,
The Grange in Michigan
(
Grand Rapids
:
Dean-Hicks Co.
,
1963
),
105
6
.
103.
Proceedings of the Fortieth Annual Convention of the American Bankers’ Association
(
New York
:
American Bankers’ Association
,
1914
),
102
; Carter Glass to Jefferson D. Stephens, Feb. 9,
1914
, Box 42, Glass Papers;
“Rural Credits on Shelf,”
Sun (Baltimore)
, May 14,
1914
,
9
.
104. House,
Rural Credits
, 64th Cong., 1st sess.,
1916
, H. Doc. 494; Radford,
Rise of the Public Authority
,
57
59
.
105. Link,
Wilson
, vol.
4
,
347
.
106.
Congressional Record
, 64th Congress, 1st Sess.,
1916
,
53
,
489
.
107. John Corrigan, Jr.,
“Barrett to Fight Rural Credits Bill,”
Atlanta Constitution
, Jan. 9,
1916
,
3
.
108. Link,
Papers of Woodrow Wilson
, vol.
35
,
530
.
109. George E. Putnam,
“Agricultural Credit Legislation and the Tenancy Problem,”
American Economic Review
5
(Dec.
1915
):
805
15
; Mitchell Mannering,
“A Leader in Rural Credits Reform,”
National Magazine
44
(June
1916
):
512
; Dick T. Morgan,
Land Credits: A Plea for the American Farmer
(
New York
:
Thomas Y. Crowell Company Publishers
,
1915
). The states that had enacted agricultural credit laws were Massachusetts, Missouri, Montana, New York, Oklahoma, Utah, and Wisconsin.
110.
“Rural Credit Law Wanted,”
Philadelphia Inquirer
, Aug. 2,
1915
,
3
.
111. Lovell,
Presidential Election of 1916
,
5
; Arthur S. Link and William M. Leary, Jr.,
“Election of 1916,”
In
History of American Presidential Elections, 1789–1968
, ed. Arthur M. Schlesinger, Jr., vol.
3
(
New York
:
Chelsea House Publishers
,
1971
),
2259
60
. Arthur S. Link’s unparalleled knowledge of Wilson leads him to conclude that political calculations underlay this unexpected reversal on agricultural lending, specifically a desire to curry favor with the midwestern and western farm vote. See
Wilson
, vol.
4
,
347
48
;
Woodrow Wilson and the Progressive Era
,
225
26
;
“South and the ‘New Freedom,’”
322
. See also Clements,
Presidency of Woodrow Wilson
,
64
; Lovell,
Presidential Election of 1916
,
160
; Abrams,
“Woodrow Wilson and the Southern Congressmen,”
433
.
112.
Congressional Record
, 64th Cong., 1st sess.,
1916
,
53
,
2562
; Senate,
Rural Credits
, 64th Cong., 1st sess.,
1916
, S. Rept. 144;
“Talk Over Rural Credits,”
Washington Post
, Feb. 20,
1916
,
6
; Link,
Wilson
, vol.
4
,
347
48
;
“Plans for Changing Rural Credits Bill,”
Nashville Tennessean
, Jan. 29,
1916
,
2B
. The Federal Farm Loan Act provided for a forty-year maximum loan period.
113.
Equity News
8
(Apr.
1916
):
367
.
114.
“Legislation is Recommended by the Equity Convention,”
Ward County Independent
, Feb. 24,
1916
,
1
.
115. W. W. Glasby to William Borah, May 1,
1916
, Box 35, Borah Papers.
116.
“A Big Fake,”
Agricultural Grange News
4
(May
1916
):
6
.
117. Myron T. Herrick,
“Myron T. Herrick Condemns the Hollis Rural Credits Measure,”
Journal of the American Bankers Association
8
(Apr.
1916
):
859
.
118.
“Rural Credits Bill,”
Cincinnati Enquirer
, Feb. 20,
1916
,
10
.
119.
“Rural Credits Plan Opposed,”
Pacific Banker
23
(Mar.
1916
):
3
.
120.
“Bills Before Congress,”
Coast Banker
16
(May 1916):
389
.
121.
“Sees Panic Danger in Rural Bank Bill,”
New York Times
, May 5,
1916
,
18
.
122.
“Rural Credits Bill,”
Cincinnati Enquirer
, Feb. 20,
1916
,
10
.
123. Sarasohn,
Party of Reform
,
187
.
124.
Congressional Record
, 64th Cong., 1st sess.,
1916
,
53
,
7708
10
,
7984
.
125. William Borah to C. V. Cottier, Aug. 4,
1916
, Box 35, Borah Papers.
126.
Congressional Record
, 64th Cong., 1st sess.,
1916
,
53
,
7412
,
7495
96
,
8017
.
127. Edmund Platt,
“It Might Have Been Worse,”
New York Times
, May 19,
1916
,
10
.
128.
Organized Farmer
2
(June
1916
):
4
.
129.
“President Signs Rural Credits Bill,”
Evening Star (Washington, DC)
, July 17,
1916
,
1
;
Statutes at Large
39
(
1916
):
360
. The conference committee modified the Senate bill by accepting House provisions that increased the potential government capitalization of the Federal Land Banks and permitted farmers to borrow up to 20 percent of the value of permanent insured improvements on their farms.
130.
National Grange
,
Journal of Proceedings of the National Grange of the Patrons of Husbandry, Fiftieth Annual Session
(
Concord, NH
:
The Rumford Press
,
1916
),
12
.
131.
“Emancipating the Farmer,”
New York World
, July 18,
1916
,
10
; Porter and Johnson,
National Party Platforms
,
198
.
132.
“Campaign Tocsin in Rural Credits,”
New York Times
, July 19,
1916
,
13
.
133. D. R. Hubbard to William Borah, Dec. 29,
1922
, Box 132, Borah Papers.
134.
Federal Farm Loan Board
,
Tenth Annual Report of the Federal Farm Loan Board
(
Washington, DC
:
Government Printing Office
,
1927
),
21
,
39
44
; Benjamin Horace Hibbard,
“Farm Tenancy in the United States,”
Annals of the American Academy of Political and Social Science
40
(Mar.
1912
):
30
; Lewis Cecil Gray,
Buying Farms with Land-Bank Loans
, Bulletin no. 968 (
US Department of Agriculture
, July
1921
).
135.
“What Your Land Bank is Doing,”
New England Homestead
94
(Mar.
1927
):
1
. On the operation of the FLS, see Radford,
Rise of the Public Authority
,
61
65
; W. Stull Holt,
The Federal Farm Loan Bureau: Its History, Activities and Organization
(
Baltimore
:
Johns Hopkins Press
,
1924
),
23
52
.
136.
“A Sign of the Times,”
New York Tribune
, July 19,
1916
,
8
.
137.
“Government Banks,”
Journal of the American Bankers Association
8
(June 1916):
1059
.
138. James S. Olson,
Saving Capitalism: The Reconstruction Finance Corporation and the New Deal, 1933–1940
(
Princeton
:
Princeton University Press
,
1988
).
139. D. C. Mullen to William Borah, Mar. 15,
1914
, Box 14, Borah Papers. On Morgan’s place in American financial history, see Susie J. Pak,
Gentlemen Bankers: The World of J. P. Morgan
(
Cambridge, MA
:
Harvard University Press
,
2013
); Ronald Chernow,
The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
(
New York
:
Simon & Schuster
,
1991
); Vincent P. Carosso with Rose C. Carosso,
The Morgans: Private International Bankers, 1854–1913
(
Cambridge, MA
:
Harvard University Press
,
1987
); Matthew Josephson,
The Robber Barons: The Great American Capitalists, 1861–1901
(
New York
:
Harcourt, Brace and Company
,
1934
); Lewis Corey,
The House of Morgan: A Social Biography of the Masters of Money
(
New York
:
Grosset & Dunlap Publishers
,
1930
).