AGRICULTURAL CREDIT.—DAVIDSON. 461 
Jatter require, or should require, loans for short periods only ; 
the former needs advances for long periods which, however, and 
unfortunately, are too long for lending and too short for invest- 
ment, if such investment were permitted by our banking laws, 
Generally speaking, capital is not turned over in agriculture in 
a period much short of a twelvemonth, and should the season 
prove unfavourable, and the crop fail, credit may be required 
for still longer periods than a twelvemonth. It is a maxim of 
good banking and good business that loans should be repaid, 
after earning a profit for the borrower, out of the property 
in which the loan has been invested. 
When a bank lends to a merchant, it lends on the security 
of a stock of finished and marketable commodities, which both 
merchant and manufacturer have, using their knowledge of 
market conditions, considered to be marketable, the manufae- 
turer because he produced these commodities to sell them, and 
the merchant because he bought to sell. The bank has, therefore, 
every reason to be confident that the goods on which it lends 
will, in this case, find a market, provide a profit for the merchant, 
and a fund from which the loan can be repaid. The manufac- 
turer has not, other things being equal, quite such a good 
standing with the banks. The bank has one judgment only 
guaranteeing that the goods being produced will find a market. 
So far as the raw material is concerned, the bank may contilently 
advance, because what has founl a market once will find it 
again; but with regard to the commodities into which this raw 
material is to be converted, the bank has at the best the security 
only of the manufacturer’s judgment that the goods will sell. 
It is true that the manufacturer has often a better standing 
than the merchant; but this advantage arises from the larger 
amount of capital invested. The small manufacturer has not, 
as arule, as good a standing as the merchant using the same 
amount of capital. The farmer, again, has not as good a standing 
as the manufacturer, for the simple reason that the normal basis 
of agricultural credit is raw material vet to be produced; and 
the bank has the farmer’s judgment only that the goods when 
