The Harvester World: Volume 8, number 1, January 1917

              More Cash—Good Towns—Better Farms

Address at the 17th Annual Convention of the Illinois Implement and Vehicle

Peoria, Illinois, Dec. 6, 1916, By George A. g^NNE

I APPRECIATE the opportunity  of saying a
few words to the Illinois Implement and Vehicle Dealers' Association, though reaUzing that it is difficult for a representative of any implement manufacturer, or a member of the National Implement and Vehicle Association, to tell your organi¬ zation anything that you do not already know. What I will talk about is not new to you, but I hope to put it in possibly a new light and to set you thinking about the matter along a line that may be somewhat novel. There has been a great deal said to the implement dealer about bookkeeping and cost accounting—by the latter I mean the cost of doing business. You have been urged by organizations and individuals to keep a proper set of books and have an intelligent cost system. All of this is excellent advice, for none of us can run our business without proper accounting methods. How¬ ever, I am going to urge you to discontinue some of this bookkeeping, limiting my recommendation, how¬ ever, to the open book accounts with your farmer customers. I hope to show how money may be put into your pockets if you will do so.
The plan I lay before you is not mine, but your Uncle Sam's; and we must say in all sincerity that he has done a good job. I picture him lookingthrough the dictionary for a word with which the implement
dealers are not very familiar. He has the book open at the letter "C" aud his finger runs down the page until it stops at the magic word "cash." I can see from your faces that you do not know what it means. Webster's dictionary says that cash means "A Chinese Coin." If we read on we find that it also has another meaning, namely: "Ready money; sometimes any paper easily converted into money." Your Uncle Sam thought it would be a good idea to let the people in the agricultural business know about this magic word, the result being that the " people's servants," alias Congress, enacted a law called "The Federal Reserve Act."

You ask: " How does that law affect me, and what has it to do with my bookkeeping, and that mysterious and elusive thing called ' cash' ?"    Let me answer:
A farmer comes into your place, of business to buy some tools. He may buy a plow, some repair parts for his mower, a couple of hundred pounds of binder twine, and maybe a cultivator or some other useful article. Does he dig into his pocket and get out some " long green." It is a safe bet that he does «o/. He probably says, as he climbs on to his wagon:    "Well, goodbye.

I PICTURE HIM
LOOKING
FOR
A Word

John. Put it on your books. I'll send the money around when I sell my corn this fall." You scratch your head, look pleasant until he turns the corner, and—. have to stand for it. You cannot pay your account with the implement house from whom you buy your goods unless you have real money. The company will not take your "open book account" on the discount date and allow you its cash discount. Therefore this book transaction results in your losing the cash discount and the implement house losing its cash, and you both are feeling a little sore.
What is the answer? Here it is. The next time your farmer friend, after buying, is about to cUmb on to his wagon and starts to talk about paying next fall, you say to him: " Nothing doing, Sam. I want the cash. If you haven't got it with you, hop off and put your name
on this little note. You tell me you will pay the money on October first. I am satisfied if you say so in writing." Sam says he does not like to sign notes. You say that you do not like to keep book accounts any more; that you are running your business only for cash or for bankable notes. Friend Sam demurs, but eventually signs. You have the note, he has the goods—and here is where the Federal Reserve Law comes in. This explains Webster's definition of the word "cash" when he says "sometimes any paper easily converted into money."
The prime object of a bank is to take deposits from its customers and turn around and lend part of the money to other customers, charging them interest for its use. Another form of loan is the purchase of good commer¬ cial paper. For example, let us take a bank that has $50,000 to lend. When this sum is all loaned, it has no further credit to extend. A customer of the bank who wants to borrow money comes in after the $50,000 has been loaned. The president of the bank says to him: " I never saw such a demand for money as we have had this summer, I am sorry, Mr. Joues, but we are all loaned up and cannot accommodate you right now." Mr. Jones is not only disappointed, but he is mad, for he had an opportunity to do some profitable business if he could borrow money on or discount notes of his cus¬ tomers, knowing full well that the notes in his possession are as good as gold.
It was partly to provide more money and make the credit of the country more elastic that prompted Congress to enact the Federal Reserve Act. A very brief out¬ line of a part of the law may interest you.     Under