FA EM MANAGEMENT 



sold for cash that in some regions there are no cash prices. 

 If machinery bought in the spring is paid for by Octo- 

 ber 1, the price is counted as cash. 



Most of the chemical fertilizers are purchased on time. 

 It is hard to realize what a tremendous credit business 

 these agencies conduct. In order to sell the product, they 

 must not only produce machinery and fertilizers, but 

 must furnish the farmer credit. What really happens is 

 that while banks do not furnish the necessary capital 

 to farmers, they furnish it to the machinery and fertilizer 

 companies, whose credit comes from the large number of 

 farmers who owe them. It would be much better if 

 farmers conducted their own credit associations, as is 

 done in Europe. 



The companies from which the farmer buys on time, 

 charge enough to make a good profit on the credit business, 

 as well as on their regular business. If there is no cash 

 price on a piece of machinery, it does not mean that the 

 firm has generously donated the use of money to the 

 farmer. He pays a good high rate of interest in the in- 

 creased price. 



Some cases in which ca'sh prices are offered give some 

 idea as to what rates of interest are really charged. The 

 writer obtained prices from one dealer as follows : a 

 plow that regularly sold for $13 on a year's time at 6 per 

 cent interest, could be purchased for $12 cash. If this 

 plow is boiTght on time, the real interest charge is $1.78, 

 or 15 per cent on the cash price. He sells a grain binder 

 for $125 on a year's time at 6 per cent, or for $118 cash. 

 The real interest charge in this case is $14.50. The rate 

 of interest is 12 per cent, not 6. This dealer estimates 

 that, on an average, the prices are enough more to make 

 the real interest charge 12 per cent. This is in a region 



