The Gleaner State Savings Bank

Association and the investment insurance plan. During the war the demand for farm produce increased and prices kept pace. When the war ended in 1918, Europe was in a desperate economic condition, and much of the market for farm goods disappeared. The situation was made worse when the United States increased tariff s. A depression began in 1920 and continued until a modest recovery began in 1922. The fi rst indication of what was to come occurred in news articles about consumer boycotts of potatoes and meat. A general buyers strike followed, reducing imports and exports even more. Farmers were producing twice as much wheat as the country could consume, and commodity prices were in decline by 1920. It was the worst possible time for Gleaner leaders to expand.

The Board of Directors of the Clearing House met in Lansing in June of 1921. Although a “splendid record” was reported for 1920, it was clear that trouble was coming. Potatoes fell from $1.40 to 30 cents and wheat from $2.90 to $1.05. “The farmer is selling potatoes at fi fty percent less than it cost to produce them,” Slocum wrote in May 1921. In addition, there were losses from merchandise purchased for resale by the Clearing House. Because the stock sale had not gone well, capital was scarce, and bank loans cost the Association $17,000 in interest in 1921. The directors closed those elevators operating at a loss and put the money behind stronger ones. Slocum and others worked without salary or expenses. There was considerable anguish in April 1922 when Slocum quoted another editor saying, “If we let the farmer’s elevators go now, never again in this or the next generation will we get anything of the kind again. Competition will pass out with the passing of the farmers’ elevators and the old order will again be rooted and in control of the situation.” To that, Slocum added: “Someone must pick up the torch of co-operation and carry it on. Whom shall it be?”

Everything was done that could be done, but the Gleaner Clearing House Association failed to survive. It fi led for bankruptcy on May 10, 1922. Some of the locally owned elevators continued as cooperatives.

Despite the recession, and perhaps because of it, the Ancient Order of Gleaners and the fraternal insurance program continued to prosper. People are not inclined to give up a form of security during hard times.

A long list of creative ideas came from the early Gleaner organization. Not all of them led anywhere, or even gained widespread support, but all of them were interesting. Some, including the Gleaner State Savings Bank, might have had a major impact on the Society.

Farmers have always had to deal with the problem of cash fl ow. Expenses continue year-round, but income usually comes in only when crops or produce are sold. Farmers were, and still are, rural bankers’ major customers.

The banking business operated in a diff erent climate early in the 20th century. Nearly every small town had a privately owned bank. States generally thought of banks as just another business, not needing special regulation by government. People who patronized the banks had no deposit security except for the integrity and resources of the banker. An example is found in an article published in The Gleaner about the 1904 bankruptcy of the Montague Exchange Bank of Caro. The bank was considered to be safe because the owner, Charles Montague, was a large landowner. After the bankruptcy it was discovered his property was heavily mortgaged through speculation. Depositors received between 25% and 60% of their money.

In addition to the private banks, Michigan had a system of state-chartered savings banks. They were closely regulated, did not engage in commercial loans, and held the stockholders responsible for losses.

Slocum was familiar with the “people’s banks” started in Germany in the 1850s. Their success, he said, proved that Gleaner members should think about starting a bank to avoid the high cost of short-term loans. Always the populist, Slocum objected editorially to farmers paying 10% to 25% interest on loans while receiving only 3% on deposits. Merchants, he pointed out, were usually charged only 7%.

In April of 1906, an eff ort was made to organize the Gleaner Bank. It was to be legally separate from the Ancient Order of Gleaners but would be owned and operated by Gleaner members. The bank would be chartered by the state and owned by shareholders. Loans would be made only after approval by a local arbor fi nance committee. Commercial loans and deposits would be forbidden. The object of the bank was not to