276 PRINCIPLES OF RURAL ECONOMICS 



which he can reap a larger advantage from his own superior 

 managing ability than would otherwise be possible. 



A state of society where the sense of financial responsibility 

 is weak, where debtors are in the habit of dodging their obliga- 

 tions, where the general sentiment of the community sympathizes 

 with and encourages them in their dishonesty, where lenders and 

 so-called " moneyed men " are unpopular and cannot get justice, 

 there we have an invariably backward community. Such a com- 

 munity is an unfavorable location for an honest and capable 

 farmer, because money and credit are invariably scarce, interest 

 rates high, and prices low. Men with capital to invest, men of 

 enterprise and forethought, who make the prosperity of a com- 

 munity, will avoid such surroundings. When such men are 

 lacking, and there remain only those without any sense of finan- 

 cial responsibility, men who hate every one more prosperous and 

 progressive than themselves, such a community is doomed 

 to remain, for a period at least, unprosperous, unprogressive, a 

 reproach and a byword among more enlightened neighborhoods. 



There are four kinds of credit commonly made use of by 

 farmers, individual credit, store credit, bank credit, and co- 

 operative credit. Individual credit is where an individual farmer 

 borrows from an individual lender on such terms as the two can 

 agree upon. This is the simplest form of credit, and if both par- 

 ties to the transaction are honest and wise, it is the most satis- 

 factory of all. However, it is limited in its application. It is 

 similar to the case of a consumer buying directly from the pro- 

 ducer, which is an excellent system but not always possible. 



Store credit. Store credit is made use of more or less in every 

 rural community. In many cases it merely consists in buying from 

 the local storekeeper those goods necessary to keep the household 

 running, and paying for them after the crop is harvested. In 

 other cases this system has undergone such a development as to 

 dominate the whole rural life. A large part of the business of a 



