36 MASS. EXPERIMENT STATION BULLETIN 405 



firms have been testing the qualifications of their employees for particular posi- 

 tions. The success attained over former subjective judgment has been great. 

 It would seem reasonable that tests, psychological or otherwise, could be devised 

 which would improve the success of loaning agencies in picking qualified farmers. 



It has been found in this and other studies that farmers have difficulty in supply- 

 ing an enumerator with the costs of credit. The stated contract interest rate is 

 commonly known in case of mortgages and notes, but the net cost is usually 

 unknown. Installment credit, short-term loans, and commodity loans are en- 

 tirely without a concept of net cost. Education in the methods of figuring the 

 true costs of these high-cost loans is needed. Further education would be helpful 

 in informing borrowers of agencies which loan on short term at reasonable rates 

 and how to secure loans from these insititutions. 



Amortized farm mortgages are a common institution today. But amortization 

 is not the complete answer to successful payment of mortgage loans. Recently, 

 during periods of low farm prices, moratoriums on mortgage principal payments 

 have been granted. Such policies, if sound, must also be accompanied by a 

 provision for more rapid payment than the amortization plan calls for to operate 

 when farm prices are higher. At least one large credit institution in this area has 

 made provision for advanced future payments. The plan is working very satis- 

 factorily. The gearing of payments to farm income levels appears to be logical. 



One of the difticulties in the granting of credit to farmers has been the lack of 

 adequate records and statements. This condition may be changing. The neces- 

 sity for reporting income for income and victory tax purposes may force better 

 bookkeeping upon farmers. One of the indirect results will be a better basis for 

 credit extension. 



Certain government agencies and a few private lenders have followed their 

 loans with a considerable amount of farm management supervision. It should be 

 a principle that the higher the loan risk, the greater the right of supervision. 

 When effectively applied, it should be welcomed by the borrower as a means of 

 increasing income out of which to pay his debts. 



