INTEREST ON FARM LOANS 695 



not be questioned. When the money must be had for development, 

 and there are no other means of securing it except through local 

 agencies, which usually control the field and demand the pound of 

 flesh, what is the farmer to do ? Not to accept the condition imposed 

 means not to go ahead, that is, not to increase his farm facilities, or 

 acreage, while to accept means to do this at a smaller profit than 

 would otherwise be made. Where the farmer is wise and objects to 

 the commission charge, the result often is that the lender, if a non- 

 resident, is advised that the rate must be lowered, while the agent 

 still continues to collect the customary large commission. It is not 

 the purpose of these remarks, however, to bring the loan agent into 

 disrepute. His position is natural so long as he can corner the 

 market, or when there is difficulty in securing foreign capital. 



The security behind a well selected farm mortgage is just as valu- 

 able and dependable as the values upon the faith of which railroad, 

 industrial, or other like securities are issued. Why then should the 

 farmers' interest rate be, in good localities, 50 per cent, 75 per cent, 

 or 100 per cent more than the rate paid by the railroad, the merchant, 

 the manufacturer, or the farmer in another state ? The primary rea- 

 son is the absence of a highly organized market for the sale of farm 

 secured obligations, or an organization so developed as to bring the 

 farmer and lender together without unnecessary and wasteful effort. 

 The financial genius of our country has been devoted to educating 

 the public to the value of railroad, government and industrial bonds, 

 and other forms of corporate securities, and to making them "liquid 

 assets" by developing a market in which they may be bought and 

 sold at will. Legislative acts have been passed to render attractive 

 the obligations of governments. There is competition among the 

 purchasers of these securities, hence a favorable rate of interest. No 

 concerted, widespread effort under such able financial leadership has 

 been devoted to the rural credit problem. The supply of credit 

 available to the farmer is largely confined to home sources, and a 

 limited number of outside investors. His situation is the reverse of 

 other sellers of credit. The competition is among the borrowers for 

 money rather than among the lenders for investments, therefore the 

 borrowers pay the high rate. 



We buy railroad, government, or industrial bonds, without per- 

 sonal knowledge concerning the value of the property securing them, 

 because we have faith in the stock market quotations as expressing 

 their values, or in the opinion of experts, or the statements of officials 



