As already seen, the relationship between the government and the banking system, as well as the banking relationship of the government to the public, includes a fourth type which deserves careful study. In a good many countries there has been, especially in recent years, a strong growth of the idea that certain classes of producers, weak industries, or businesses that were supposedly vested with a public interest, deserve special attention and support. Perhaps the best illustration of the kind is seen in the case of agriculture. Farmers in many countries have been able to put pressure upon governments in order to secure the extension of credit to them upon terms or conditions that might not be granted to others. The consequence of this demand has been, in some cases, to bring about the establishment of institutions whose function it was to furnish special banking or credit facilities for agriculture. Thus the United States provided for the incorporation of farm-loan banks in 1915, and purchased the entire stock of these banks out of public funds, while it later became a very large bondholder by purchasing the bonds issued by these banks. Still later, during the war, when it was alleged that given classes of industry could not obtain the credit support that they needed, the government organized the War Finance Corporation with the function of discounting slow and long-term paper. In 1921 it remodeled the War Finance Corporation by an amendatory act (other amendments having been adopted in preceding years), so that the institution could exert itself in promoting the exportation of agricultural products to foreign countries in those cases which offered special reasons for government aid of this kind. In other countries, somewhat similar measures have from time to time been taken. Great Britain, for example, after the close of the war, organized an export credit plan whose object it was to relieve bankers of the liability growing out of unduly hazardous elements in the export trade. Various instances might be cited of action on the part of other nations intended to afford special credit accommodations either to facilitate particular movements of goods or to help out special classes in the community. It is not necessary to go into the detail of these different organizations, but their general characteristics should be noted. This is found in the fact that they constitute a diversion of capital from the channels in which it would naturally flow to others into which it has been diverted by government intervention and guaranties. The result is to transfer a part of the normal credit risks of the country out of the hands of the banks, and so saddle them upon the shoulders of the community as a whole represented in the governmental mechanism.

It is probable that the relationship between the government and the banking mechanism in modern countries will grow closer and more intimate in future years. This makes it the more important to recognize the consequences of such interference and especially to note the influence exerted by government banking schemes upon the general credit structure.