RURAL CREDITS 741 



because it is claimed that 25,000,000 acres of land in the Mississippi 

 Valley alone await improvement by drainage. I, therefore, commend 

 the drainage bond to your careful consideration. 



238. CREDIT EXTENSION BY THE IMPLEMENT DEALER' 



An important feature of the harvesting-machine industry was the 

 development at an early date of an elaborate system of distribution 

 by the manufacturer. The principal explanation for this early devel- 

 opment is to be found in the fact that the most important agricultural 

 sections of the country were to a large extent recently settled, and the 

 farmers were comparatively poor. Moreover, the credit facilities of 

 the chief farming sections of the country were not adequate, appar- 

 ently, to the need of agricultural development; the farmer, especially 

 the new settler, was often unable to pay cash for the machines that 

 were absolutely essential to the successful working of his farm, but, 

 if furnished with such machines, was in a position to pay for them in 

 instalments from the proceeds of his crops. Manufacturers who pro- 

 duced and sold for cash would have, therefore, a limited market, while 

 those who could give credit would greatly enlarge their sales. From 

 these circumstances developed the practice, particularly among more 

 successful manufacturers, such as McCormick, of selling their machines 

 to the farmers on credit, the trade being conducted through retail 

 dealers, who became local agents for the manufacturer for their 

 respective localities. The usual form of payment made by the farmer 

 for such machines was a part payment in cash at the end of the har- 

 vesting season and a promissory note or notes for payment of the 

 balance in one or two annual instalments. Such notes were generally 

 guaranteed by the retail dealer who acted as the local agent for the 

 manufacturer. 



The system of giving long credits to the farmer for purchasing 

 reaping machines was established by Cyrus H. McCormick at the 

 beginning of his business early in the fifties, or about 1855.* It has 

 been continued up to the present time, and it is a fact that the 

 harvesting-machine business gives longer credit to the farmers than 

 they receive from the manufacturers of any other goods they buy. 



1 Adapted from the Report of the United States Commissioner of Corporations 

 on the International Harvester Co. (1913), pp. 55, 281-85, 340. 



2 This whole paragraph is taken from the statement submitted by the McCor- 

 mick Harvesting Machine Co. to the bankers whose aid they were trying to secure 

 in connection with the formation of the International Harvester Co. EDITOR. 



