Gary L. Benjamin

English

Research Papers in Economics

    	    	    	  6 	  6 	    
   r  nd d      b r   
   	    
f r   r d t    t  
l f   n  r n      p n   
80
60
40
20
0
 r bl    f   n    r   lt r l b n  
G r   .   nj   n
Gr  th  n f r  d bt p    d  p  h rpl   n th 
   0 .   r n  th  p  t t n    r , f r  d bt h  
r   n  t  n  nn  l r t   f   .  p r  nt,     
p r d   th  .  p r  nt  n th     0   nd   60 .
O t t nd n  f r  d bt n   t t l  $ 60 b l 
l  n, thr   t     th  t t l  f t n    r     .
Gr  th h   b  n   p    ll  r p d f r th 
l  t f  r    r .   t  r  th  t b n   h   n t
  pt p   , r   lt n   n     b t nt  l l     f
  r  t  h r .   r  d bt    d t  b n   h  
r   n  t  n  nn  l r t   f  0.  p r  nt   n  
    ,    p r d   th    p r  nt f r  ll  th r
 n t t t  n l l nd r .          f th   l   r
 r  th, th  pr p rt  n  f  n t t t  n ll  h ld
f r  d bt    d t  b n   h   d  l n d t   
th rd.    n fr   40 p r  nt  n     , th t   
th     ll  t   r  t  h r  f r b n    n th 
p  t W rld W r II  r .
C  p t t v    b l n    th t f v r  th r
l nd r       nt f r p rt  f th  l     n   r  t
 h r . C  p t t  n fr   th  f r   r d t
   t    nd   v rn  nt    n       n b 
t   h f r b n    nd,  n      r  p  t ,  n 
    t bl .  h  f r   r d t    t  — h  h  n 
 l d   f d r l l nd b n    nd pr d  t  n
 r d t        t  n —h        p t t v   d    n
 t   x  pt  n fr      r     l n  ,  nd  t  t x
 dv nt   . G v rn  nt    n     th t l nd t 
f r  r  (C    d t  Cr d t C rp r t  n,
  r  r       Ad  n  tr t  n,  nd th  S  ll
    n    Ad  n  tr t  n   l   h v  th     d 
v nt    , pl   r   nt   nd t   fr   C n 
 r     nd th  Ad  n  tr t  n t  pr v d 
f r  r   p    l l  n . G v rn  nt    n    
h v  b  n th  f  t  t  r   n   n t t t  n l
l nd r   rv n  f r  r   n r   nt    r . M  h
 f th    r  th r fl  t  n    nd   r  l b r ll 
  b  d z d pr  r    f r f r  r   ff  t d b 
n t r l d    t r   nd    n     d  tr   . M r 
b rr   n   nd r th       d t  pr      p 
p rt pr  r   (p rtl  t  r b  ld  r  n r   rv   
 nd   l b r l z d pr  r   t   xp nd  n f r 
 t r    f   l t    h    l     ntr b t d t  th 
r     n   v rn  nt l nd n  t  f r  r .
Sh r   f f r  d bt    d t  b n  
h   d  l n d  h rpl 
p r  nt  f f r  d bt    d t   n t t t  n 
 00
Al        nt n  f r th  l     n   r  t
 h r      th  r    r  n    f pr bl   
p   l  r t  b n  ,   p    ll  r r l b n  . M  t
 f th  pr bl    t   t  l    d t  pr    r   th t
b   n b  ld n   t r r l b n    n th  l t     0 .
  t       f th   t   t  th   n r    d b rr   
 n  n  d   f   r   lt r —n  d  th t pr   
    n t th  l   t   n  r d t b n     n  xt nd
t    n l  b rr   r .
 h  l    d t  pr bl    nt  l        
r   rd n     r     f f nd .  h  pr bl    f
l nd n  l   t   nt  l         r   rd n  th   d  
       f   p t l  t r r l b n   r l t v  t  th 
 r d t n  d   f f r  l  n    t   r .
     d t  pr bl   
     d t         n r l      r   f th 
b l n   b t   n f nd  fl   n   nt    b n 
 nd th    fl   n    t. It  l   b  r   n th 
b n    fl x b l t   n   nv rt n  f  rl  f x d
    t   nt  l    d     t . Ev d n    f l    d t 
  d r l     rv    n   f Ch     	   pr    r    t r r l b n       ll   pp  r      
r     n l  n t  d p   t r t   .   t     t
  r   lt r l b n   h v  r   n  h rpl   n r   nt
   r     b n   tr  d t     t  tr n  l  n d  
  nd  h l  d p   t  r  th  l   d.    n t  
d p   t r t     t   r   lt r l b n    n th 
S v nth   d r l     rv     tr  t  v r   d 6 
p r  nt l  t    r.  h t    p r d   th
 v r      f  4 t     p r  nt  n th  f r t h lf  f
th     0 .
  rth r  v d n    f r   nt l    d t 
pr    r    h     n b n  r           nt   f
th   v  l b l t   f f nd  f r l nd n . A  tr    
 d b     rt rl    rv     f   r   lt r l b n  
 n th  S v nth    tr  t, th   v  l b l t   f
f nd  h   b  n v r  l     n   l t      .
S  n    n th  l    d t   f   r   lt r l
b n   r fl  t th  d p nd n    f r r l b n  
 n l   l d p   t          r    f f nd . S  n  
  n b  tr    r d b    dd n  h n     n l   l
   n       nd t  n ,    h      dr p  n f r 
  rn n  . Or th     n      fr   d   
 nt r  d  t  n. A    r  t r t    f  nt r  t
r   ,   th th  r t   b n     n p    n    t
d p   t  f x d b     l n  , f nd  th t    ld
 rd n r l    pp rt d p   t  r  th  r   t 
tr  t d t   th r  nv  t  nt .     nt r  d   
t  n th n t nd  t   l   d p   t  r  th.   r
     b n  ,  t  r  t     n t   tfl    f
d p   t .
  r l b n   d  n t h v  th    z , r p t  
t  n,   r  t  r  ,  nd  th r  ttr b t   th t
 ll    rb n b n   t      n nl   l    r     f
f nd  t   ff  t    n    n l   l d p   t .   r l
b n    r  n  rl   l     pr  l d d fr    f 
f    ntl  b dd n  f r    h n t  n l   n  
  r  t f nd     f r   n d p   t , l r  
n   t  bl    rt f   t    f d p   t, r p r h   
  r    nt , f d f nd  tr n   t  n ,  nd     
  r   l p p r   l  .
    nt r  d  t  n pr bl     t r r l
b n   h v      d      h t   th th   ntr  
d  t  n  f d p   t  n tr   nt    th fl  t n 
 nt r  t r t     l n   t  d t     ld   n n  
 r    r        . W ll n l   r b  r d  n l ,
r r l b n   h v       nt d f r   l r   p rt  f
th    x   nth $ 0,000   n     b l n  
  n     r  t   rt f   t    f d p   t      d
  n   th     r  f r t   th r z d  n   n     8.
M  h  f th  , h   v r, h   r pr   nt d   r 
  r  tr  t r n   f l   l d p   t  th n   n t  n 
fl    f n   d p   t .
C  l   ll  r   n    r  t r t    f  nt r  t
  n  l    ff  t th  l    d t   f r r l b n   b 
l   t n  th  r fl x b l t   n  dj  t n      r t 
p rtf l    t     t l  n d   nd. A r r l
b n    l nd n    p   t     l r  l    v rn d  n
th  l n  r n b   t   b l t  t   ttr  t d p   t .
  t  t   n f nd f  t r l  n  r  th  n th   h rt
r n b  l    d t n      r t   .  h        l  rl 
th    t  t  n  n th  l t     0   h n l  n t  
d p   t r t     t r r l b n   r     h rpl .
Ev n   , r   n  r t    f  nt r  t     
pl   t  th  pr   d r  t       . On th   n 
h nd,   r  t r t   t nd t  r    f  t r th n
r t    n f r  l  n ,   th th  r   lt th t  h rt 
r n pr f t  n  nt v   f r b n    h ft fr   l  n 
t     h  th r  nv  t  nt      r    r     
  r t   ,   n   p l ,  nd f d f nd    l  .  On
th   th r h nd, r   n    r  t r t        
pr      f th  f x d r t   n tr   nt   n   b n   
 nv  t  nt p rtf l   t  d  l n . Und r th   
  nd t  n , th  b n     l   l  t  l     n th 
    r t  tr n   t  n  f  t l    d t    n  nv  t 
  nt     t   n f nd l  n r     t .
     d t  pr    r    l  rl   nd r  t th 
 b l t   f b n  r  t     t th   tr n  f r  l  n
d   nd  f th  p  t f      r .    p t  r p dl 
r   n  l  n t  d p   t r t   , f r  d bt    d
t  b n   r     nl   2 p r  nt  ft r    6.  h 
d bt    d t   nd v d  l   nd  th r  r     nl 
 8 p r  nt, b t th   n r          6 p r  nt
f r th  f r   r d t    t  , 66 p r  nt f r l f 
 n  r n      p n   ,  nd 240 p r  nt f r
  v rn  nt    n    .
    l l nd n  l   t pr bl   
           t  f th  r l t v   l   n   n
b n  l nd n  t  f r  r  tr     t  l    d t 
pr bl   ,       f th    r  t  h r  l  t t 
 th r l nd r      b  r    n d  h n   r  t
r t   t rn d  n     n. Ev n   , d v l p  nt 
 f th  p  t d   d    pp rt th  v    th t  n 
d v d  l l   l l nd n  l   t  h v   n r    n l 
   h   r   lt  p rtl  fr   th  f r   r d t    t    
pr  t     f pr   n  l  n   n th  b      f  n  v r       t  f
f nd . Ch n     n r t    n f r  l  n   ft n l    h n     n
  n     r  t r t  .  h  r t   d  n t     ll  r   h th 
   l   l p      nd tr   h   f  th r r t  .
20	 E  n       r p  t v  St t   h rt r d b n  
Ill n   
Ind  n 
I   
M  h   n
W    n  n
(th  h  h r  f 
  	 C    n  t   , pr f rr d  t   ,   rpl  
  	 C    n  t   , pr f rr d  t   ,   rpl  ,
  b rd n t  n t    nd d b nt r   
20	 C    n  t   , pr f rr d  t   ,   rpl  
20,	     n  t   , pr f rr d  t   ,   rpl  
  b rd n t d n t    nd d b nt r   
  	 C    n  t   , pr f rr d  t   ,   rpl  ,
  b rd n t d n t    nd d b nt r   
Or
C    n  t   ,   rpl  
  h  l   l l nd n  l   t        l t  th   ppl   bl  p r  nt    t     th       f th  d ll r
v l    f th   l   bl    p t l      nt .
 S b rd n t d  n r  ht  f p    nt t  th   l      f d p   t r .
 W th th   ppr v l  f t   th rd   f th  b n    b  rd  f d r  t r . Oth r      0 p r  nt.
  r  t  n   n b     l   l l nd n  l   t  f r b n    n th  S v nth    tr  t
  t  n ll   h rt r d
b n  
    l l nd n  l   t 
  t th    x      r d t  
b n    n  xt nd t      n l 
b rr   r.  h  l   t   r 
d    n d pr   r l  t 
pr t  t d p   t r  b 
 pr  d n  l  n     n   
l r   n  b r  f
b rr   r   n d ff r nt
l n    f b   n   .
  t  n l b n    r 
  bj  t t  l   t    p   d
b  th  C  ptr ll r  f th 
C rr n  . St t  b n    r 
  bj  t t  l   t    t bl  h 
 d b   t t     n    .  h 
l   t   r    l  l t d     
p r  nt     f   b n   
  p t l b   .  h 
 ppl   bl  p r  nt     nd
th       nt  th t   n
   l f     p rt  f th 
  p t l b    v r    th th 
r   l t r     n  .   r  t  n   n b    
l nd n  l   t  b t   n b n    n S v nth
   tr  t  t t    r       r z d b l  .
 h r   r  n   r     dd t  n   nd
 x  pt  n  t  th  b     l nd n  l   t .
At n t  n l b n  , f r  n t n  , l  n 
   r nt  d b    v rn  nt    n    
(   h      r  r       Ad  n  tr t  n
 r   d r l      n  Ad  n  tr t  n   r 
n t   bj  t t  l nd n  l   t . W th th 
pr l f r t  n  f    r nt  d l nd n 
pr  r     f th    r  r       Ad  n 
  r  t  n   n b     l   l l nd n  l   t 
f r b n    n d  tr  t  t t   ,
Appl   bl 
p r  nt    El   bl    p t l      nt 
 0	 C    n  t   , pr f rr d  t   ,   rpl  ,
  b rd n t d n t    nd d b nt r  , 
 nd v d d pr f t , n  h lf  f r   rv 
f r l  n l     , r   rv  f r   nt n  n    
  tr t  n  n r   nt    r , th    x  pt  n
h   b  n  f  n r    n    p rt n   t 
r r l b n  .   t  n l b n     n l nd th 
    v l nt  f  p t    f  rth  f th  r
 l   bl    p t l b    t      n l 
b rr   r, pr v d d th  f nd   r     d
t  b   f  d r l v  t     nd th  l v  t   
    r n  th  l  n      rth  t l   t    p r 
  nt   r  th n th  l  n. S   l r
pr v    n   r   v  l bl  f r l  n   n
     d t   ,    h     r  n,     r d b 
  r h     r    pt .
h nd   pp d r r l b n    n th  r  ff rt  t 
f n n   f r  r .
In   r   nt   rv  , f r  n t n  ,   r 
th n h lf th    r   lt r l b n    n th  d  tr  t
r p rt d th   h d   r  f r  l  n    t   r 
  th  r d t n  d   x   d n  th  b n    l nd 
 n  l   t th n f v     r     . Onl  4 p r  nt
r p rt d th   h d f   r    t   r    th
 r d t n  d   n  x      f th  b n    l nd n 
l   t.
 h    nt n  n  d  l n   n f r  n  b r 
 n th     0 ,  l n    th th  r p d  r  th  n
f r  d bt, h   l d t       h  r  t r   n  n 
tr t  n  f d bt.  r l   n r   nd   t  n   r 
th t p r f r  d bt    n   n t    th  nn  l
  l    f $40,000  r   r      b   l    t 
  d r l     rv    n   f Ch     
	
2    tr b t  n  f   r   lt r l b n    n th  S v nth    tr  t,
b  l   l l nd n  l   t ,      b r    2  nd      b r     
    l l nd n  l   t (th    nd d ll r  
2   r 26 t     t   6 t   0  t      t  20  t   0  t 
l     0     00   0 200  00   r 
 .6 42.  2 .   0.0  .   .8 2.  0. 
 .4   .  22.   0.0 28.2  .  6.  4.6
4.6 2 .8 28.   .    .6 4.6  .6  . 
0 6.   0.2   .  2 .6   .0   .    . 
 .2 40.  2 .0  6.   .  2.   .0 0. 
 .    .0 2 .4 2 .0   .   2.0 6.8 2. 
0 8.   6.    .0 2 .8  0.   0.   .6
0 0 2.    .  24.  20.    .0 20. 
4.6 2 .2 2 .  2 .2  6.6  .   .  0
 .   2.6  2.6   .  2 .8   .2   .  4.6
 .   4.6 24.4  4.8  2.   .  2.   .2
 .   2.4   .   6.4 24.   2.   .8  . 
$200,000.2     hl  h lf
th t    pr b bl  n nr  l
  t t  f r  d bt.
 h    f   r   h v  t 
b   nt rpr t d    t    l 
 h n r l t d t  l   l l nd 
 n  l   t.   bt p r f r ,
f r  x  pl ,     t    
 nv lv   t    r   r 
b rr   n   n t ,   p    l     2
l   h r  th r       t n nt
    
 nd	  	 l ndl rd.	  h 
I   
   2
f   r  ,	 n v rth l   ,     
pr v d      n r l   pr   
   n  f th    n  ntr t  n
 f d bt.
An   rl  r  n l      f
 r  th  n l nd n  l   t   t
  r   lt r l b n    n th 
S v nth    tr  t f rth r
  pp rt  th  v    th t
l   l l nd n  l   t   n 
 r    n l  h nd   p b n  r   n f n n  n 
f r  r .  h t  n l      h    th t, d  p t    n 
  d r bl   r  th fr      2 thr   h     ,
n  rl   4 p r  nt  f th    r   lt r l b n    n
th  d  tr  t  n    8   r    nfr nt d   th b    
l nd n  l   t   f $ 0,000  r l   . A th rd
 p r t d  t l   t  fr   $  ,000 t  $ 00,000. A
f  rth h d l   t  fr   $ 0 ,000 t  $  0,000.
  r  l  b        f d ff r n     n b n  n 
 tr  t r ,   r   lt r l b n    n Ill n     nd
I    t nd t  h v  th  l    t l nd n  l   t .
M r  th n h lf th    r   lt r l b n    n Il 
l n     nd  v r thr   f fth   n I    h d l nd 
 n  l   t   f $ 00,000  r l     t th   nd  f     .
 h t l   t  ppl  d, b    ntr  t, t   nl   0 p r 
  nt  f th    r   lt r l b n    n Ind  n ,  6
p r  nt  n M  h   n,  nd 40 p r  nt  n
W    n  n.
A l   l l nd n  l   t  f $ 00,000    ld b 
r  tr  t v     p r d   th th  b rr   n  r  
2  r    f th     z  r pr   nt  nl  22 p r  nt  f  ll
f r   b t      nt f r  6 p r  nt  f th  f r      t ,   
p r  nt  f th  f r  d bt,  nd 8  p r  nt  f th     h
r    pt  fr   f r    r  t n . S  h f r    r   n r    n  
l    n  d r d "     r   l f ll t   " f r  . G v n r  
  nt  v r      f p r   r     ld   nd pr    , f r     th  
  n      f 200   r      ld l   l  h v   nn  l   l    f
$40,000  r   r .  h   v r    f r   n th  d  tr  t  t t     
 l  htl   v r 200   r  .
   r   nt   f   n  f r  r . US A b d  t 
f r    8  h   d, f r  x  pl , th t  r  n
f r  r   n th  M d   t h d v r  bl  p r   r 
   t  ( x l d n  l b r  nd  nt r  t   f r   hl 
$ 6 f r    b  n   nd $82 f r   rn.   r    00
  r  f r  r    n      l     nt   f   rn  nd
   b  n , th t    ld     nt t  r   hl 
$ 0,000  n  p r t n     t  th t h d t  b 
f n n  d   th r b      t   r d bt. If h lf th 
f r         h r nt d  t $ 00  n   r ,  n th r
$2 ,000    ld b   dd d t    rr nt  p r t n 
   t .
  r h     f     j r  t    f    h n r 
   h      tr  t r  r    b n ,    ld  dd
$ 0,000  r   r   n b rr   n  n  d .
  r h     f  n th r 40   r    f l nd    ld
r   lt  n $ 0,000 t  $8 ,000  n b rr   n 
n  d .     r     th r  xp nd t r  ,    h   
f   l  l v n   r r  l   t t    pr v   nt ,
   ld f rth r b   t th  n  d f r  r d t   ll
b   nd th  l   l l nd n  l   t   f   n 
  r   lt r l b n  .
I pl   t  n  f r th  f t r 
 h  p rf r  n    f b n   r l t v  t 
 th r f r  l nd r   n r   nt    r      n t
p  nt   l l  t  th  pr bl     t b n  . S   
Ill n   
   2
    
Ind  n 
M  h   n
   2
    
W    n  n
   2
    
   tr  t
   2
    
22
	
E  n       r p  t v   l   nt   f th   n r      n   v rn  nt l nd 
 n  h v       d  b  rv r  t  th n  pr  r   
  r  t   l b r l  nd    ht b    bj  t t 
 b   .
Alth   h    h l     f  n      ,  r  th  f
th  f r   r d t    t      n t   th  t     
    t  n   f  ppr pr  t n   . Wh th r  t   
 ppr pr  t  f r th     t   t  r     f nd   t
v r  f v r bl  r t    n n t  n l   n  
  r  t   nd d  tr b t  th    l   t  x l   v  
l   n l  n  t  f r  r — h l  r    v n  t x
  n      n   nd  x  pt  n  fr      r 
   l n  —    b  d b t d   r   n th     r 
 h  d.  h      t  n      r  r l v nt n  
th t th  f r   r d t    t        nt  f r 40
p r  nt  f th   n t t t  n ll  h ld f r  d bt
th n   d   d       h n  t h ld    p r  nt,
t   d   d        h n  t h ld 2  p r  nt,
 nd thr   d   d        h n  t h ld  nl   8
p r  nt.
A  d  fr   th          , th r   r 
  n  n    n  rn   b  t th  f t r  r ll  f
r r l b n    n   r   lt r l l nd n . W th th 
p bl  ,  n l d n  th  r r l p bl  ,   r     r 
n t  nl   f d ff r n     n  nt r  t r t   b t
 l         f th  n    nv  t  nt  th t     
p t    th d p   t , r r l b n       n  d t 
b        r   nn v t v   n h ld n   nd  x 
p nd n  th  r l   l d p   t b   .  r p   l  t 
ph      t    l n    n  nt r  t r t   p  d  n
d p   t ,  f   pl   nt d,     h lp r r l
b n      nt  n th  r d p   t b   .
  d  n  th  f t r  d p   t b     t r r l
b n   r    r                nt  f th 
   n     h  lth  f r r l      n t   . M  t
 n l  t   r   pt    t    b  t th    tl     f
  r   lt r ,  h  h b d     ll f r r r l     
  n t     nd r r l b n  .  h   n  rt  n   t 
l    f r  n r  , h   v r, thr     nt       
t  n   nt n  t  n  f th   rb n t  r r l  h ft
 n p p l t  n.   rth r  n r       n  n r  
pr        ld  l  ,  r  v n r v r  , th   tr nd.
Q   t  n   b  t th   d        f l   l
l nd n  l   t   t r r l b n    r       h t
     r t  h ndl .  h r        n  r    n t 
 xp  t th  d  l n   n f r  n  b r  t   nd,
 lth   h  t    ht  b t . Op r t n  f r  d bt,
 nd    b  t t l f r  d bt,   ll v r  l   l 
  nt n   t  b  h ld b   v r f   r f r  r .   
 ff  t th  r   lt n  pr    r   n l nd n  l   t ,
r r l b n     ll h v  t   n r     th  r   p t l
b   .
 h  d  l   n  rn   f l    d t   nd l   l
l nd n  l   t    nn t b  d v r  d fr   th 
 v r ll     t  n  f b n   tr  t r . St d     f
th    p  t  n   r   lt r l l nd n  fr  
br n h b n  n   nd   lt b n  h ld n 
   p n     h     x d r   lt . It    n t  n 
  n   v bl , h   v r, th t   th th   r  t r
       t     r     f f nd  th t    h b n  n 
 tr  t r   pr v d ,      ll    th   xp nd d
  p t l b     nh r nt  n th     r  n z t  n ,
r r l b n        v nt  ll  l      th   r 
f v r  n    h  rr n    nt .
  d r l     rv    n   f Ch     	 2 

Problems facing agricultural banks

http://www.chicagofed.org/digital_assets/publications/economic_perspectives/1980/ep_mar_apr1980_part3_benjamin.pdf

Problems facing agricultural banks

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