that they apply the same method to their other industries. Given that protection has become a fiscal policy, agriculture is drawn within its scope, since agriculturists are affected by the incidence of protection on prices. As between agriculturists as a whole, and industrialists as a whole, there have been compromises for example in France and the United States-of a give and take nature, so that it is not possible to regard agricultural protection as always implying a special regard for that industry. Even where, as in Germany, an agrarian policy " has urged the claims of agriculture for special consideration, the agricultural tariff must still be regarded as to a great extent merely equitable or compensatory, in view of the general fiscal system of the country. 66 14. In other ways, it is necessary to avoid a tendency of argument which is due to the separate consideration of a particular industry. If any industry is taken by itself, it is obvious that methods can be indicated of support for that industry by some charge on the community. If the industry separately considered is one whose products are largely imported, the short cut to a solution of its problem is easily presented as protection. It is plain that such an argument must be controlled by a wider view of the whole complex of national industries; and that a charge in favour of any one importing industry, the cost of which will be felt by other industries which are in that respect in the same position, requires more to justify it than the mere fact of importation. Against such a charge there must be shown an advantage in national welfare or development, in which the whole community will share, and which cannot be so well obtained in any other way. It is another form of the same tendency of argument to urge as a reason for protection, the special characteristics of a particular occupation. Industries have their own traditions, esprit de corps, and manner of life. Most of the large ones could make out on some ground a claim to be regarded as fundamental or key industries. There are such facts as that they are large, and employ much labour; that their products are of use to other industries; that they create certain forms of skill, and so forth. Since every great industry can be written up in this way, it is necessary in any particular case to do more than expound these characteristics in urging a case for protection. 15. In respect of agriculture, the national interest which has been urged for its maintenance up to some minimum standard is the defence of the nation. While there are many supplies which become vital in time of war, a deficiency in food supply has a greater moral effect than a deficiency in anything else. It is in this respect that our Reference can be interpreted as implying a special concern or urgency, as distinct from the desire to insure that agriculture is provided with the facilities and organisation which it ought in any case to have. But the problem of defence depends on political conditions which differ so much as between this and other European countries, that the policy of maintenance of home agriculture on this ground requires critical as well as sympathetic treatment. 16. In considering the chief items which are included under "methods employed" in foreign countries, it is necessary to take a broader view than is implied in State policy. Some of the important developments of agriculture in foreign countries have been the result of voluntary movements which have not been initiated, or even favoured in their early stages, by the State. In the next section, therefore, attention is given to both public and voluntary methods. PART II. METHODS OF POLICY. A.-Credit Facilities. 17. As already pointed out the relation of credit to agriculture is a special one. because of (1) the constitution of the industry, as a system of production organised in one-man units, and (2) the comparative slowness of its turnover. 18. The organisation of a special agricultural credit system has been a feature of continental agriculture for a long time. Its methods are different. In France, there has been a subvention of funds, both capital and annual, obtained by the State free of interest, and administered through a district system. of special banks, which centralise the work of local banks organised in relation to them. In Denmark, Credit Unions of the Landschaft type have been established by statute for both large and small holders; and the Savings Banks play a large part in short credit. In Germany credit has been the chief form of agricultural cooperation, and its higher organisation has been assisted in Prussia; the Landschaften, and the Raiffeisen banks are supplemented by other credit institutions, and the system is very complete. In Belgium and Holland short credit is very highly organised on the Raiffeisen plan. These methods are described later. 19. In some countries, especially in Denmark, the degree of mortgage on farms is very high. But figures of mortgage may only indicate the extent to which credit facilities are made use of; it is repeatedly urged, in relation to these developments, that the farmer or peasant should not regard borrowing as a last resource, or a mark of distress, but as the proper means of carrying on an industry which is not capitalised on the joint-stock plan. 20. It is specially important to note that the development of science in relation to agriculture requires to be assisted by an efficient system of credit. Otherwise the results of science and education are limited in their application, and the land is under farmed. This was, for example, an important motive in the foundation of the Crédit Agricole in France. 21. Agricultural Credit, whether worked through ordinary or special banks, creates funds that are specially available for the industry. Foreign agriculture, because of its larger proportion of peasant cultivators, and colonial farming, because it is a pioneer business, have had a greater need for these facilities. In this country, the problem of availability arises from the preponderance of manufacture, and the preference of ordinary banks for quick assets. And it is desirable that the farmer, if he binds himself by the system of mercantile credit, should do so by option, and not because credits are otherwise restricted. 22. A brief summary may be given of some of the typica methods of agricultural credit, mainly in European countries. 23. As to long-term credit. The principle of the Landschaft or Credit Union, has wide application. This form of agricultural credit was instituted in Germany in 1770, and has played since then a great part in rural credit. The Landschaften concentrate almost exclusively on agricultural land. Their influence now extends beyond Germany, the system having been at various dates introduced into the Baltic States, Poland, Norway, Denmark, Hungary, and Russia. 24. The fundamental idea is the issue by the Landschaft of land bonds based on the estates mortgaged in its favour. But the bonds are not issued on the security of specific properties; the guarantee behind them is the collective guarantee of the members. The borrower is paid at par value in bonds, which he may realise in the market or through the agency of banks attached to the societies. The loan is usually up to two-thirds of the value of the property. He has the right to repay by an annuity, or by special instalments at any time. He can cancel his loan by purchasing and tendering bonds. On the other hand, the holder of the bonds cannot at any time demand repayment, but can realise in the market. Bonds are called in according to the progress of repayment and the accumulation of funds from the annuities. 25. In the first instance, the German Landschaft was a means for meeting the credit requirements of the nobility. The restrictions have gradually been removed, first in favour of properties of intermediate size, and finally there were admitted to membership all rural properties of not less than 500 thalers in value, the yield of which was such as to ensure the economic independence of the owner. In Germany, it is to estates of larger size than peasant holdings that the system mainly applies. But in Denmark special Credit Unions have been established for small holders. 26. There are now in Germany 27 institutions of this type, eight of which are federated in the central Landschaft of Prussia. The purpose of the Central was to create a greater uniformity between the values of land bonds, and about one-sixth of the total bonds in circulation are those of the Central. The total value of the bonds which had been issued, including those of the Central, was before the war 150 millions sterling. 27. During the period 1910 to 1914, the bonds of the Landschaften and the loan bonds of the Empire were quoted on nearly equal terms. In Denmark there is invested in these securities by far the greater part of the public and private wealth of the kingdom. 28. It will be seen that the Landschaft, or Credit Union, is a method of increasing landed security by the method of collective guarantee. In Germany, the fact that the societies are able to proceed against the borrowers whose property has deteriorated by bad farming, and to take over its administration, enhances the standing of their securities. 29. Other long-term credit institutions exist in Germany, but the Landschaft is the main rural type. According to figures given in the Special Report of the International Institute of Agriculture, on the subject about three-fourths of the total amount of rural credit granted by mortgage banks and institutions in 1912 came through the Landschaften. 30. The ruling factor of the (German) Landschaften," says the Report of the International Institute," is exclusively the interest of agriculture; thus they hold an important position not only as mortgage banks but also as agricultural institutions." "The employees of the Landschaft have the standing of State employees. They are sworn in, and are subject to State discipline. The higher officials are nominated by the Landschaft and are confirmed in office by the State." 31. But, as showing how diversity of method goes with national custom, there is not a precise parallel to this method in France. The Crédit Foncier is not, like the Landschaften, limited in its operations to agricultural land; and its basis is not the collective guarantee. Long-term credit to agriculture has now become a branch of the Crédit Agricole, based on the subvention described below. In Belgium the Comptoirs Agricoles are small societies which give their own guarantee to the National Savings Bank for sums lent on mortgage, especially to the larger farmers, and are paid by a share (before the war one-fifth) of the interest. Added to this is the fact that, since 1904, the Central Bank of the Peasants' League has found itself strong enough to engage in long-term loans, either with the peasants directly, or through its local banks, bonds being issued on the security of the Caisse Central. 32. The Federal Farm Loan Act of the United States, passed in 1916, is a variant of the principle of the Landschaft. Loans are made to farmers by twelve Federal Land Banks, each operating in a separate district, with a capital of not less than 100,000l. The Government will, if necessary, make up the subscription to this amount, but it is expected that its contribution will in time be returned. The borrower must join a Farm Loan Association, subscribing 5 per cent. of the loan he requires, and having a liability up to that amount. This amount is subscribed by the Association to the stock of the Loan Bank, from which therefore the profits circulate down to the associations, and through them to the subscribing farmers. Each association guarantees its own mortgages, and each Federal Land Bank guarantees the bonds and coupons of the others. There is thus a very broad basis of insurance. The most notable feature of the American administration is that the bonds of the Federal Loan Banks are sold to the public free of all taxation. It is therefore not surprising that on these terms capital was readily obtained; but some controversy has arisen over the effects of this subsidy on the Federal revenues. In 1923 the method was extended to intermediate credit, by the organisation of 12 Federal Intermediate Credit Banks, authorised to discount agricultural paper from six months to three years, for banks, live stock and other loan companies, and also to make direct loans to co-operative marketing associations. Their bonds are also tax free, and the Government advances 60 million dollars of initial capital. On the basis of cultivated area, American figures should be divided by 16 for comparison with Britain. 33. These methods of obtaining, by mutual association and guarantee, long-term agricultural credits for the development of land, are of course specially applicable to countries where a large part of the land is owned by the farmers. It may, therefore, seem that they are of no interest to British agriculture, where a much smaller proportion of the land is cultivated by its owners. But in view of the importance to agriculture of the principle of association, one form of which leads to and supports another, it is worth while to indicate how the nature of tenure affects it. The British farmer resorts to his landlord, where the Danish, German, and now the American farmer resort to a form of co-operation. And the amount of credit obtained for long-term improvements depends in Britain on the willingness of the landlord to create mortgages on his individual liability, to meet the charges on which he must rely on the energies of his tenants. The nature of tenure abroad brings the liability into more direct relation to energy and enterprise. The foreign farmer is to a greater extent working for a return on capital, being keyed up to that position by the nature of long-term credit organisation. In this country, a smaller proportion of farmers are in that position, and a larger proportion work for a balance rather than a rate of return. 34. The Improvement of Land Acts are the special channel. through which in this country long-term credit is obtainable. The guarantee for the application of a loan is the inspection by the Ministry of Agriculture, on which the certificate is based. I agree |