396 



SCIENTIFIC AGRICULTURE 



August, 1922 



Credit may be of two kinds, productive 

 and unproductive. The man who borrows 

 money in order that he may secure a larger 

 amount of consumers' goods and services for 

 the gratification of his wants is on the way 

 of danger. If he borrows in order to get 

 an automobile so that he can do more tra- 

 velling for pleasure, or to get a high-priced 

 automobile merely to keep up with one or 

 two of his neighbors who have high-priced 

 cars, he is "spending for that which is not 

 bread." Capital used in that way is econ- 

 omically unproductive; it does not contrib- 

 ute to the creation of additional capital. It 

 is consumed in gratifications and pleasures. 

 The same thing may be said of any expend 

 itures which are made merely for display, 

 for vanity or for excessive or luxurious 

 living. But capital which is invested in 

 valuable machinery, improved live stock, 

 better buildings and in the means of educa- 

 tion which make the farmer's mind more 

 alert and give him the latest results of scien- 

 tific investigation along his line of work, is 

 productive capital. It enables the farmer 

 to apply his own labor and capital more ef- 

 fectively upon his farm. It will yield not 

 only enough return to pay interest on the 

 capital bori-owed and to repay the principal 

 of the loan, but also an additional or extra 

 profit to the competent farmer. It does not 

 require any more than ordinary judgment 

 K-day lo see ciiat many farmers havv^ far to<» 

 heavy obligations in the way of borrowed 

 capital. 



Three kinds of credit are needed by the 

 farmers who have the ability to use them 

 wisely. In the fir.st place, there is a need 

 for short-term credit extending over the pro- 

 ductive year. By having this means of pur- 

 chasing improved seed, of hiring additional 

 labor at critical times such as seeding, har- 

 vesting and threshing, of purchasing feeders 

 or stockers, of securing the best feeds for 

 dairy cows or fattening .stock, etc., the good 

 farmer is frequently able to obtain much 

 higher returns from his labor and farm 

 management than if he had to be satisfied 

 with his own capital. Not infrequently a 

 farmer could get a bargain in purchasing one 

 or several head of stock if lie could only se- 

 cure accommodation at the bank in the form 

 of credit wliile his own capital is tied up for 

 the time being in other productive forms. 

 Then, too, the farmer of ability could often 

 turn his winter months to better account if, 

 bv access to a source of suitable credit, he 



could purchase animals for ripening off into 

 a good quality of beef. This short-term credit 

 would also be valuable in enabling the 

 farmer to market his products in a more 

 orderly manner ; instead of throwing his 

 products on the market just when others are 

 doing the same thing and thus getting low 

 prices because of Mie glutting of tlie market, 

 the farmer with good credit could hold his 

 commodities and take advantage of the higher 

 prices at a later time when the market had 

 reacted. Agriculture is a risky business and 

 we do not wonder that the interest rates 

 charged to the farmer for loans during the 

 productive period are high, for even slight 

 ravages of insects, blight, drought, frost, ex- 

 cessive rain, etc., may cause the investment 

 of the borrowed capital to be completely or 

 largely wiped out. But when the crops have 

 passed this stage and have been safely har- 

 vested or when the returns of other kinds 

 from the year's work have been assured, it 

 would seem but fair that capital in larger 

 amounts and at lower interest rates should 

 then be available for the farmer in order to 

 enable him to hold his products until the 

 most favorable turn of the market. 



In the second place, the farmer needs 

 long-term or mortgage credit, that is credit 

 which he may have for periods of five to 

 thirtj'-five or forty years. This is required 

 to enable a farmer, and especially a young 

 man, to buy land and pay for it out of the 

 jjroceeds of the farm. Occasionally a five- 

 year term is long enough, but usually the 

 more acceptable term is thirty years, with 

 the privilege of paying off the whole amount 

 or any extra portion of it at any time after 

 five years. An appropriate system of 

 long-term credit would also permit many a 

 tenant of ability to become an owner rather 

 than a tenant farmer, with all the commu- 

 nity advantages wliieh would accrue from 

 ownership. 



In the third place, the farmer needs what 

 we may call intermediate credit, that is cre- 

 dit ranging in duration from two to five 

 years. This is necessary for such purposes 

 as draining land, putting in home convenien- 

 ces (as. for instance, a water or an electric 

 light system), putting up better dairy barns, 

 securing better equipment (such as better 

 machinery or silos), investing in pure-bred 

 stock, etc. Tliese things would not pay for 

 themselves within a year, and yet the farmer 

 would not want to put one or more small 

 mortgages on his place in order to provide 



