AGRICULTURAL FINANCE IN MASSACHUSETTS 



By Sargent Russell, Research Assistant, and A. H. Lindsey, Professor of 

 Agricultural Economics 



INTRODUCTION 



Existing in almost all farming areas are farmers who are heavily in debt. 

 Rather regularly some of them reach the point where the farm is foreclosed to 

 satisfy the creditors. The difficulties of those seriously in debt become widely 

 known and talked about. The result is an impression of widespread debt diffi- 

 culty. 



Another debt or credit condition receiving wide attention is high interest rate. 

 This may take the form of higher prices for goods to be paid for in the future or 

 actual high interest payments charged by finance companies. When a number 

 of such cases are known, they soon appear as the general rule. 



A third condition of farming is the small amount of money earned by many 

 farmers. One reason given for this is the high cost of money borrowed by farm- 

 ers. Low income is not often, however, interpreted as the reason why large debts 

 occur on many farms. More often the credit institutions are thought to be 

 working incorrectly. 



Because of these impressions a credit problem was thought to exist in Essex 

 County, and those in charge of farm extension work there asked for a study of 

 rural credit. It seemed wise to extend the study to include other parts of Massa- 

 chusetts also. 



Objectives of the Study 



This study is largely one of fact finding. The facts to be determined or the 

 objectives are: 



1. The farmer's financial standing. 



2. The amount, source, purpose, and cost of credit used by farmers. 



3. The adequacy of present agencies in supplying credit. 



4. The factors affecting a farmer's ability to repay loans. 



Another objective which is not necessarily fact finding is to suggest improve- 

 ments for using credit. 



Methods Used irt MaWng the Study 



A questionnaire! was used which; the enumerator filled in from the farmer's 

 answers. The questions on the schedule fell into three main groups. 



1. Receipts and expe'^ises for fhe- drcTp year of 1-940. Receipts included all cash 

 taken in from sale of farm "products; -worlc oflf the farm-; and' sale of machinery, 

 stock, land, etc. Expenses covered current and fixed cash costs for farm opera- 

 tion; purchases of new machinery, stock, land, buildings; and interest paid on 

 debts. 



2. Inventory of assets and liabilities, March 1, 1941. All farm assets were 

 included; but cash on hand, stocks and bonds, and value of life insurance were 

 not obtained. Liabilities and credit use covered farm business debts outstanding 

 on March 1, 1941. 



^Appendix, 



