278 Cooperation in Agriculture 



that our financial system has not been developed to meet 

 the needs of American agriculture, and the farmer is handi- 

 capped by not being able to negotiate loans by offering 

 the land as security for his most necessary credit needs, 

 or to utilize his character as an asset for personal credit 

 to the extent that a member of a foreign cooperative 

 union may do. 



A better understanding of the subject may be had by a 

 brief discussion of the credit requirements of the farmer 

 and of his present means of obtaining the credit he needs. 



The American farmer needs credit to make permanent 

 improvements to his property, to increase its productive 

 power, and for short-term purposes to be used for current 

 expenses while his crops or products are maturing and 

 especially to provide for the harvesting and movement 

 of the crops. He now has three general ways of obtain- 

 ing credit: by borrowing from an individual or other 

 private agency on such terms as the two agree upon; 

 by obtaining credit from a local store or other mercantile 

 institution, giving as security, if necessary, a mortgage 

 or lien upon his crop ; and by borrowing money from a 

 bank, an insurance company, loan and trust company, 

 or other institution, giving such security as these agencies 

 require. He sometimes obtains credit by using a ware- 

 house receipt for grain, cotton, tobacco, fruit, or other 

 crop as security for a loan. 



The Individual Credit System 



Under the individual credit system a farmer usually 

 secures money from a local farmer or neighbor or a 

 resident or distant agent who has money to loan. For 



