252 TEE POPULAR SCIENCE MONTHLY 



HOW EUROPEAN AGRICULTURE IS FINANCED 



By Professor H. C. PRICE 



THE OHIO STATE UNIVERSITY 



THE American farmer is ahead of the European in many things, 

 particularly in the use of labor-saving machinery. But in the 

 application of business principles in their financial operations, the 

 European farmers have perfected systems that are in advance of any- 

 thing yet attempted in America. This has been largely brought about 

 by the force of circumstances necessitating an economic transformation. 

 During the last century the competition of new countries with immense 

 areas of virgin soil flooded the European markets with agricultural 

 products and forced the European farmers to reorganize their business 

 methods. 



As a result they have organized to make available abundant credit 

 at low rates of interest and on favorable terms of repayment. By credit, 

 it is not meant that the farmer gets everything he buys on time without 

 paying anything on it, and that he is in debt on every hand, but just 

 the reverse. It means he has money available at all times, so that he 

 may pay cash for everything he buys, thus getting the benefit of the 

 lowest cash prices and discounts. His credit is at the bank and not at 

 the store, and through the bank he gets the loans that he needs at rates 

 of interest just as low and in many cases lower than secured by other 

 industrial enterprises, no difference how large or how much business 

 they do. But to accomplish this the farmers have had to take a hand 

 in the banking business themselves. They have organized on a coop- 

 erative basis to secure the credit they need and to supervise its distribu- 

 tion rather than leaving it to private interests to supply the same. 

 By so doing they have reduced rates of interest, lengthened the time 

 for which loans are made, provided for the repayment of loans by 

 annual installments, and they keep the money in the rural districts and 

 prevent its accumulation in the large cities. 



Sources of Capital 



The sources from which the capital is drawn that is thus made 

 available to the use of the farmers may be classified under three heads : 

 (1) subvention from the government, (2) savings deposits of the 

 farmers and rural population, (3) from the sale of bonds secured by 

 mortgages on farm land. 



