MANAGEMENT 



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local storekeeper, in such cases, consists in the management of 

 the credits which he gives rather than in the buying and sell- 

 ing of goods. Where this system prevails, nearly every farmer 

 arranges at the beginning of the season for a certain amount of 

 credit at the store, giving a mortgage or lien on his crop. This 

 puts the storekeeper in a position to dictate as to the kinds of 

 crops to be grown, and sometimes he even specifies the method 

 of cultivation. He is compelled to do this in order to protect 

 himself, that is, in order that his mortgage or his lien may be 

 worth something. In return for the credit, he only advances 

 ordinary household supplies, horse feed, seed, fertilizers, tools, 

 implements, etc. While not bad in itself, this system has worked 

 disastrously in many cases, particularly in the cotton states of 

 the South, sometimes because of the thriftlessness and incapac- 

 ity of the farmers with whom the storekeeper has had to deal, 

 and sometimes, also, by reason of the unscrupulousness of the 

 storekeeper himself, and sometimes by reason of both combined. 

 Bank credit. Generally speaking, the credit system works 

 better where it is not mixed up with something else like store- 

 keeping, that is, where the credit institution is purely one of 

 credit and nothing else. In other words, bank credit is gen- 

 erally a better system than store credit. In the first place, when 

 one borrows of a store he does not borrow money, does not 

 receive money, and has, moreover, no liberty to buy where he 

 chooses. He only borrows credit and must, furthermore, make 

 use of it in buying at the store where he borrows. But when he 

 borrows of a bank he either receives money or the right to draw 

 it when he needs it. He is thus at liberty to buy with that 

 money at whatever store or in whatever way he chooses. This 

 puts him in a position of greater independence than he enjoys 

 when he makes use of store credit. Where the banking system 

 is well developed and there is competition among banks to get 

 business, it is not likely that the rate of interest charged will 





