My contention is that the Federal reserve act is a bill for the establishment of a banking system for this country. It is true that under its title it is designated as a bill for the establishment of Federal reserve banks and for the supervision of existing national banks. It is equally true that it is a bill for the establishment and reform of commercial banking as well as a bill for furnishing elastic currency. But I respectfully submit that the farmers have a right to be considered when a question of establishing a banking system is being passed upon by Congress and that the bill is faulty in that it does not provide for the kind of banks that the farmers need to meet their banking requirements, though it provides for the commercial banks needed by merchants and manufacturers.

It is true that the bill legalizes loans on real estate which have heretofore been illegal, but it is also true that such action on the part of the National Government should not be considered as the granting of a privilege, but should be considered purely as the rectifying of an injustice. The incalculable harm that has been done to the farmer by shutting out his land as a security from the great accumulations of loanable funds contained in the national banks would be hard to estimate; and the removal of this unmerited and unjust stigma on this asset is nothing more than an act of simple justice, which should have been put into effect many, many years ago. Let us now consider what legislation should be passed by the Fedcral Government in order to meet the farmer's needs.

In a question of this magnitude I confess my inability to specifically outline just what legislation should be enacted by the National Government. I am personally convinced that the plan which I have outlined for State rural banks, with the national rural bank as the capstone of the system, is practical and workable. I am not prepared to say that some better system may not be devised; but if the plan I have outlined should be adopted, then I would suggest the following:

Under this plan the incorporation of a national rural bank is provided for. This bank is to be incorporated under a Federal charter. I think it should have not only the power to act as a clearing house and reserve agent for the State central rural banks, but it should also unquestionably have the power to use its credit to aid the farmer in selling his long-term bonds so as to meet his capital requirements. I, moreover, think that this national rural bank should receive some portion of the Government deposits.

Under the Federal reserve act the Federal reserve banks are made Government depositories, and it is provided that the Government's funds are to be placed with them. Senator Owen has figured out that these Government deposits will probably amount to from $150,000,000 to $200,000,000. All of these deposits are, under the bill, placed with banks which obviously can not serve to meet the requirements of the farmer. It seems to me only fair and right that a national rural bank, organized as a capstone of the rural bank system in this country, should receive some of the Government funds, so that the use of the Government money should not be withheld from the greatest class of producers in our country, and so that the farmers might be benefited by the use of a part of these funds instead of making them all available for use in commercial banks. I particularly suggest that the

deposit of a portion of the postal-savings funds should unquestionably be made with the national rural bank; and I believe that other portions of the available current money of the Government should be so placed that the farmers can get the benefit of its use.

It further seems to me that the national banks organized under the Federal reserve act, as proposed, should, under proper regulations and restrictions, be authorized to rediscount for the national rural bank under more elastic provisions than are now set forth in section 27. In other words, instead of simply permitting national banks to lend money upon the security of real estate, as above outlined, permit them to rediscount for the national rural bank, under proper restrictions, thereby giving them the added security of the indorsement of the national rural bank, but permitting the national rural bank itself, through the State central and local rural banks, to make the loans to farmers in such shape that they will be of value to them in meeting their requirements.

Moreover, I think that the national rural bank should be permitted to rediscount farm loans taken by the national banks, and the national rural bank should be permitted to keep a portion of its required reserve with the national banks themselves.

I have refrained from any comment on the provisions of the Federal reserve act, except as bearing upon this rural banking problem. Personally, there are many of its provisions which I think are subject to criticism. I am, myself, a believer in a central bank, controlled by directors appointed by the President, with the advice and consent of the Senate, and who shall serve for life or during good behavior. Personally, I do not believe in the retirement of the existing 2 per cent bonds now held by the banks as a basis for circulation, by delivering to these banks new 3 per cent bonds. I think such action will needlessly impair the Government's credit, and will result in the banks continuing to hold, to a large extent, the Gov. ernment bonds. These bonds, in my judgment, should be distributed among the people; and I believe that there is a method by which the people will take these bonds bearing 2 per cent interest, in small and varying amounts, to an almost unlimited extent, and thereby retire the $700,000,000 of outstanding twos held by the banks, and place the Government debt with the great public, who rightly and properly

should hold it.

But all of these suggestions are outside of the particular scope of the point which I have endeavored to make, namely, that in passing a bill for the reform of banking, Congress should adequately pro vide for the banking requirements of the farmers.

I respectfully submit that our agricultural population has a right to expect and demand this from our national representatives. I submit that the farmer's needs are as important to the farmer as are the merchant's needs to the merchant. I submit that the farmer has heretofore had but little consideration in the upbuilding of our banking system. I contend that he is entitled to consideration. I submit that rural banking is just as important to the progress and development of our country as is commercial banking. And I urge upon you, and each of you, to impress upon your Senators and your Representatives in Congress that the misnamed currency bill is in reality a bill for general banking reform; that it is principally de

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fective in that it neglects to adequately provide for the banking needs of the most important class of our citizenship; that the question of rural banking is pertinent in considering this bill; and that the people of our country insist upon the provision in that bill of an adequate banking system for our rural population, so designed and with such extraordinary powers that it may be able to meet their reasonable requirements.

Mr. President, I am not and never have been a farmer. My farming operations have been confined to the attempt to keep presentable the lawn in a city yard and to endeavoring to prevent my wife's small flower garden from going to ruin. I can not appeal to you with the moving tale of the country boy raised on the farm, whose earliest recollections are saddened by the memory of the farm mortgage, of the futile efforts to pay it off, of the shadow which its approaching maturity cast on an otherwise happy and contented family. I have no sentimental appeal to make, and I need no sentimental appeal to sustain my contention.

My appeal is to the reason, to the business common sense, to the sense of justice, and to the selfish interest of each and all of us. The farmer is the backbone of any country. As a class he is the great conservative force in every nation. Upon him depends the stability, the wealth, and the greatness of every people. With a bumper crop for the farmer, prosperity reigns everywhere. A crop failure means closed factories and bankrupt merchants. It is the farmer who produces new wealth every year. By his labor he affords the opportunity for the combined action of the soil, the rain, and the sun to bring into existence the essentials of human life-the food we eat and the clothes we wear.

The United States was a great country before a railroad was ever built. The United States might be a great country without its factories. But without its farmers the United States would lose its place among the nations. Its railroads would rust from idleness, its factories would fall to pieces, and our cities and homesteads would disappear, until this beautiful land would again be covered with trackless forests. Your annual automobile crop may fail with only a local disturbance, but a failure of your corn or cotton crop would be a national calamity.

It is not only a patriotic duty to consider and care for our farming population, on whose prosperity the continued greatness of our Nation must depend; it is not only just that in a republican form of government the rights and necessities of a class constituting practically one-third of our population should be considered and provided for, but it is a pure question of common sense and self-preservation as well. You and I and all the other classes in this country can not succeed unless the farmer succeeds. If his crops are doubled, our success can be greater; if his crop is halved, our success must be less. When he fails, our business must disappear.

To your business judgment, your common sense, your selfish interest, I therefore make my appeal, feeling at the same time that every consideration of patriotism, of fair play, and of sentiment will emphasize the justice of that appeal. Help the farmer to secure the establishment of financial institutions peculiarly adapted to his needs! Don't expect him to make bricks without straw! Don't require him to conduct business without capital. Money has been

called the lifeblood of commerce. I believe that our rural problem is a case calling for the transfusion of lifeblood. I call on you as the custodians of the greater portion of that lifeblood in your respective communities to aid in placing on our statute books such legislation as may give to the farmer his fair and proportionate use of the capital of our country as is needed for his business requirements, and to see that the circulation of the lifeblood of business is not cut off from a large portion of our body politic by reason of inadequate legislation.

From its earliest history, sir, your State and your people have been conspicuous for their independence of thought and action and for their tenacity in fighting for an idea when once they had decided in its favor, regardless of the consequences. It is a pleasure to me to bring this matter to your attention, to have the opportunity to suggest to you the injustice that is being done-I believe inadvertentlyto the agricultural community in failing to provide for their needs in the pending banking bill. For if the temper of your people has not changed, if the South Carolina boys whom I knew and loved in my college days at the University of Virginia represented the real manhood and sentiment of your State, I know that no appeal for justice will pass you by unheeded, and that no South Carolinian will fail in an effort to see done "equal justice to all and special privilege to none."