464 AGRICULTURAL CREDIT. DAVIDSON. 



a problem, but it is not of any interest to the community. The 

 problem of agricultural credit is how to supply money at low 

 rates of interest to those who are competent to manage it, so as 

 to make it yield enough to repay the loan with a profit to the 

 borrower. For it must always be remembered in this connection 

 that" what the lender wants is interest, not farms ; and when, 

 owing to incompetence on the part of the borrower, the lender 

 runs a risk of getting a farm instead of his principai and interest, 

 he will insist on being paid for the risk he runs. The farm may 

 be just as good, but the lender does not want it, and does not 

 care for the risk of having it left on his hands. Lending monev 



O ^ 



is a matter of business, and a bank exists chiefly for this purpose ; 

 but the borrower must show that he has a legitimate use for the 

 loan, and that he is competent to use it so as to provide for 

 repayment at maturity. As business is, the farmer cannot satisfy 

 these commercial requirements ; and the problem for which a 

 solution is sought is how the farmer can obtain the credit his 

 business requires. 



Is is desirable, in order to promote an understanding of the 

 situation, that we should distinguish carefully between the 

 general and the special advantages which arise from an efficient 

 banking system. Our banking system is designed primarily as 

 an agent of commerce and of industry, but it confers great and 

 undoubted benefits upon the whole community. It provides 

 a sound and elastic money ; it gives facilities to the investor and 

 the depositor, and by affording real services to the merchant and 

 the manufacturer, it promotes the interests of every member of 

 the community. Fortunnately it is not true that one man's gain 

 is another man's loss, and we all reap some advantage, directly 

 or indirectly, from the prosperity of our neighbours. Whatever 

 general benefit a good banking system confers on the community 

 at large, that the farmer shares with all his fellow citizens, and 

 in our own case these benefits are large. 



The farmer also has his share in the personal credit which 

 the banks give, and this for him and for others under stress of 

 competition may be of considerable amount. But this is not 



