704 AGRICULTURAL ECONOMICS 



SENATOR SMITH: But the character of th^ call for money is so 

 different that the loan rate on the money n.us. be higher? 



MR. THOMPSON: Yes; and the sources of supply for the two 

 kinds of capital are different. 



SENATOR SMITH: I- have in mind that a steady, all-the-year 

 demand brings a source of supply at a much lower rate than a tempo- 

 rary demand during only a portion of the year. It is the steady 

 demand for the money that gets the money utilized and makes the 

 use of the money pay. Sporadic demand necessarily does not meet 

 with supply as steady demand meets with it, and therefore sporadic 

 demand, unless we can do something to help overcome it, must neces- 

 sarily place heavier burdens upon the borrower or more difficulties will 

 surround him in obtaining it. 



CHAIRMAN Moss: The thought that occurs to my mind is this, 

 that merchants and manufacturers are almost constant customers of 

 a bank, and a farmer is only an occasional customer. 



MR. THOMPSON: The reaction from differences in natural condi- 

 tions is shown in comparing the figures by districts in Nebraska and 

 Kansas. In Nebraska the average for personal loans is 9 . 3 per cent. 

 For districts 3, 6, and 9, the eastern row, the rates are 8 .8, 8 .3, and 8.3. 



SENATOR HOLLIS: Those are on the edge of the state where the 

 soil is rich and business is heavy. 



MR. THOMPSON: And rainfall relatively abundant and climatic 

 conditions favorable. The western row of districts show rates of 

 10.2, 10.6, and 10.4, respectively. 



SENATOR HOLLIS: That is in a very dry part of the state ? 



MR. THOMPSON: Yes. The same peculiar changes apply if you 

 take Kansas or South Dakota or North Dakota; you will find exactly 

 the same variation. Also in the case of mortgage rates, you will find 

 that they vary in exactly the same way. Here is a table (Exhibit D) 

 showing the average mortgage interest rates and average commissions, 

 and also the totals, by states. 



You will notice that the commissions are especially high in North 

 Dakota, Oklahoma, Montana, and Georgia. You will notice that 

 commissions are relatively insignificant in the New England States. 

 The question of whether commissions are charges or not depends upon 

 the source of the capital. In those states where a relatively large 

 fraction of the farm mortgage capital is secured from a distance, from 

 the outside, and where, therefore, it is necessary to utilize middlemen 

 in order to get the capital to the farmer, there commission charges 



