Rural Credit 277 



and to supervise the acts of the Credit Committee. Ap- 

 peals from the Credit Committee, as well as from the 

 Supervisory Committee, can be taken to the General 

 Assembly. The members of the Board of Directors are 

 not eligible to borrow except by a two-thirds vote of the 

 General Assembly in each instance. The loans are 

 granted only for productive purposes or urgent needs. 

 They are not granted for a period exceeding six months 

 nor for an amount exceeding $100. Interest is charged 

 at the rate of six per cent, and is payable in advance. 

 The security is determined by the Credit Committee, 

 and is generally the promissory note of the borrower 

 with one or more responsible indorsements. Initiation 

 fees and other charges, also so much of the net profits as 

 have not been distributed as dividends, constitute the 

 Reserve Fund of the Credit Unions." 



THE COST OF CREDIT TO THE AMERICAN FARMER 



The indebtedness of the American farmer is approxi- 

 mately six billion dollars, on which an annual interest 

 charge of 510 million dollars is paid. 1 There are twelve 

 million farmers in the United States and they add 

 each year to the National wealth $8,400,000,000. They 

 pay an average interest rate of 8| per cent. The rate of 

 interest paid by the farmer, as the President points out, is 

 considerably higher than that paid by industrial corpora- 

 tions, railroads, and municipalities, yet the security offered 

 by the farmer in the land on which his crops are grown 

 is as stable as the securities offered by the corporations 

 mentioned. This condition of affairs is due to the fact 



1 Letter of President Taft to the governors of States, October, 1912. 



