FARM FINANCE 127 



a more or less permanent investment, or in the shape of loans 

 extending over such a long period of time that they can be 

 gradually reduced and paid off out of the increased earnings 

 derived from the improvements made or the equipment added 

 by the farmer with the proceeds of such loans. ,This is gen- 

 erally referred to as long-term or land-mortgage credit. 



Second. The farmer's temporary or annually recurring re- 

 quirements, by which is meant the money needed by him to 

 finance his operations during the time that the crops are being 

 produced. These temporary requirements recur every year and 

 embrace the financial needs of the farmer for the purpose of 

 preparing the land, sowing and cultivating the crops, and 

 harvesting the same. This is generally referred to as personal 

 or short-term credit. But the short-term credit of the farmer 

 should be distinguished from the short-term credit of the mer- 

 chant or manufacturer. The merchant requires banking ac- 

 commodation for 30, 60 or 90 days, during which period he 

 can dispose of the stock acquired and repay the loan ; in con- 

 trast, the farmer may require short-term credit extending from 

 the time the crops are planted until they are harvested, and this 

 may be fixed approximately at from 90 days to 1 year. After 

 the crops are harvested and stored in a barn, elevator, or ware- 

 house, the need of agricultural banking is largely removed, as 

 the financial handling of the crops so stored then comes under 

 the province of commercial banking. 



The questions, therefore, to be considered resolve themselves 

 into the methods of furnishing for the farmer long-term, or 

 land-mortgage, credit and short-term, or personal, credit. For 

 convenience in discussing these two systems of credit, long-term, 

 or land-mortgage, credit will be hereafter referred to as mort- 

 gage credit, because such credit must necessarily be based on 

 the security of the land owned by the farmer and because such 

 mortgage credit must for convenience be again subdivided into 

 long term mortgage credit and short-term mortgage credit, as 

 will be hereinafter shown. Short-term credit, or personal 

 credit, as above defined, will be hereinafter referred to as per- 

 sonal credit. 



In the opinion of this commission these two general classes 

 of credit must be largely segregated, although the two systems 

 will naturally touch at many points. Further, in the judgment 

 of this commission, the development of a system of farm land 



