184 CREDIT 



Trade Acceptance. The greatest reform in short time rural 

 credit in recent years is that promised by the use of the trade 

 acceptance. It is the cheapest and best form of credit known and 

 is, it is hoped, destined to take the place of "open account" or 

 book credit the most expensive form of credit known. It should 

 take the place of the promissory note where the term is not over 

 six months. The farmers' cooperative store or the individual 

 farmer, when buying fertilizer, feeds, seeds, agricultural machin- 

 ery, livestock, or other agricultural supplies, may sign a trade 

 acceptance, running as long as six months if necessary. This 

 acceptance he will pay when due, at his bank, like a promissory 

 note. It is, however, far superior to the promissory note, when 

 the holder of it seeks to rediscount it or realize on it in paying his 

 own accounts, since on the face of it it shows that an actual trans- 

 action has taken place in productive material. A promissory note 

 fails to do this. In other words, here is a form of standard, liquid 

 security which can be turned into money at the Reserve bank in 

 the large city with the maximum of safety and the minimum of 

 expense. Already the large farmers are using the trade accept- 

 ance rather than ask their local dealer to carry them. And when 

 trade acceptances are once used their success and popularity are 

 assured. Country bankers are urging their patrons to use this 

 credit instrument. For some psychological reason the trade accept- 

 ance is paid promptly at maturity, whereas a promissory note is, 

 in many sections, not so paid. 



QUESTIONS ON THE TEXT 



1. Quote the "northwestern farm woman" as to the economic conditions 



of farmers. 



2. Show the attitude of mind towards credit now, and formerly, in this 



country. 



3. Show the relation of capitalistic agriculture to credit: Size of the Iowa 



farmer's investment. 



4. What is the business corporation's attitude towards credit? 



5. Cite Hunt's statement on the social significance of credit. 



6. When did rural credit become a public question here? 



7. Quote at length from President Taft. Summarize. 



8. Distinguish clearly between land credit and cooperative credit. 



9. Discuss our credit situation prior to 1916. 



10. Explain the beginning of cooperative credit in America: Quebec; United 



States (nine States with detailed account of the North Carolina experi- 

 ment): Herri ck's criticism. 



11. Explain at length the Federal Farm Loan Act. 



12. Discuss the Joint Stock Land Bank. 



13. What is the social significance of cheap credit? From the social stand- 



point, point out the probabilities and possibilities of this act. 



14. State four additional sources of mortgage loans, and discuss in detail 



Life Insurance Companies. 



