742 AGRICULTURAL ECONOMICS 



Plows and spring tools are sold on short time or for cash. Twine is 

 sold principally for cash in the fall of the year it is sold. The usual 

 terms for harvesting machines are one- third in the fall of the year the 

 machine is purchased (this is called cash)) one- third the fall of the 

 following season and one-third the fall of the second season, so that 

 a farmer would have used the machine in three harvests before it was 

 finally paid for. Excessive competition has extended this time until 

 it frequently happens that a farmer has three years in which to pay 

 for the machine after the season in which he purchased it. Competi- 

 tion has also brought about the undesirable feature of giving a farmer 

 a year's time without interest when the crop conditions are unfavor- 

 able and he is not able to get full use out of his machine. It is also 

 a custom to sell machines at the close of harvest on what are called 

 "next year's time" without interest. That is to say, that if a farmer 

 purchased a harvester or reaper in September of 1902, he gives his 

 note without interest until the fall of 1903, and at that time he pays 

 one- third cash, and one- third each in the fall of 1904, 1905. The 

 policy of extending this long credit has worked to the advantage of 

 the McCormick Company in some ways by increasing sales, but if 

 the collection departments of all the various companies were managed 

 together, many improvements upon this system could be effected by 

 shortening the length of credit and by making the examination of the 

 paper taken hi payment more rigid. 



The rates of interest which the International Harvester Co. 

 charges on the notes it receives depend apparently to some extent, 

 at least, on the laws of the respective states in which the business is 

 done. The International Harvester Co. submitted the table shown 

 on p. 743 to the Bureau, which shows in a comprehensive way the 

 variations in this respect. 



The International Harvester Co. not only perpetuated the system 

 of selling harvesting machines on long terms of credit but also after 

 it entered into the production and sale of various new lines, it applied 

 the same system to them also. It is especially able to do this on 

 account of its financial resources. Most of these new lines were 

 formerly sold for cash or on short terms of credit. Representatives 

 of the International Harvester Co. claim that its leading competitors 

 grant equally long credits, and declare that its policy is to develop 

 as far and as rapidly as possible the system of cash sales that is, 

 cash payment in the same season as the goods are purchased and 

 that discounts for cash are allowed for this reason. 



