CHAPTER XVI 

 FARM CREDIT AND THE RATE OF INTEREST 



IN the discussion of the organization of production in the 

 previous chapters, it has been assumed that the farmer is in a 

 position to command the instruments of production in quanti- 

 ties suited to his ability and to the type of farming he is under- 

 taking. It is a well-recognized fact that many farmers do not 

 possess wealth enough to own the land and equipments needed. 



Farm credit is essential to good agriculture. If each farmer 

 were limited to the equipment and the land he could buy and 

 pay for, some farmers would be wasting their energies working 

 with too little land or inadequate equipments, while others 

 would be trying to operate more than they could use to advantage 

 and be " land poor." A good credit system is one which will 

 facilitate the adjustments between those who have more than 

 they can operate to advantage and those who can profit by 

 operating more with a view to maximum economy. Such a 

 credit system increases the incomes of both parties and increases 

 the productivity of the country as a whole, hence a good farm 

 credit system is a matter of importance to all consumers as 

 well as to many producers of farm products. 



The banks of this country are organized primarily to take 

 care of the merchants and manufacturers. These classes of 

 business men have a rapid turnover in their business and re- 

 quire large sums of money for short periods The farmer's 

 turnover is not so rapid. He invests in live stock, machinery, 

 buildings, and land, all of which are essential to the success of 

 his business, but he does not sell them in ninety days and put 

 the proceeds back in the bank for a few days and then borrow it 

 again for another transaction. The farmer continues to use 

 the same land and equipments for a series of years, and if 



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