74 OUTLINES OF AGRICULTURAL ECONOMICS 



businesses would enable them to pay higher rates on loans running for 

 shorter periods. Likewise, the farmers usually repay their loans at a 

 time of the year when bankers must handle low-rate commercial paper, 

 if anything at all, to occupy their funds until the new demand arises 

 from the farmers/ ' Can you illustrate these statements from the 

 experience of your own community ? What effect do they have on 

 the willingness of bankers to supply capital to the farmer and upon 

 the rate of interest charged ? 



8. "Rural credits and capital are scarce only when borrowers are 

 wasteful, shiftless, or untrustworthy, or when soil or climatic condi- 

 tions are such as to render the loaning of money unsafe. Within my 

 own recollection, mortgages bearing 10 and 12 per cent have been in 

 force on Michigan farm lands upon farms which now command a 

 mortgage rate of 5 per cent. What has brought about this result ? 

 Nothing more than the increased productivity of the soil due to more 

 efficient farming methods. And when the farms of our western 

 states, where rates are now exessive, are brought to this advanced 

 state of cultivation and productivity, a similar decrease in rates will 

 naturally follow. In states where high rates now prevail the high 

 rate merely compensates for the risk." Is this reasoning sound? 

 Analyze carefully. 



ADDITIONAL REFERENCES 



Besides general economic texts, such as those of Marshall, Taussig, Selig- 

 man, Ely, and others, the student might consult any of the special 

 works on distribution, notably: Carver, The Distribution of Wealth; 

 Clark, The Distribution of Wealth. 



One particular point of view is expounded in great detail in: Fisher, The 

 Rate of Interest. 



An excellent eclectic discussion may be found in: Cassell, The Nature and 

 Necessity of Interest. 



For interest rates of American farmers, consult: " Costs and Sources of 

 Farm-Mortgage Loans in the United States," Bulletin J84, U.S. De- 

 partment of Agriculture; "Factors Affecting Interest Rates and Other 

 Charges on Short-Time Farm Loans," Bulletin 409, U.S. Department 

 of Agriculture. (See also references at end of next chapter.) 



TOPICS FOR SPECIAL PAPERS 



Mobility of Capital as a Factor in Interest Rates. 



The Farmer's Access to Non-agricultural Capital. 



The Demand for Capital as Affected by Changing Farm Technique. 



Middleman's Charges as an Element in the Cost of Loans. 



High Interest Rates as a Sign of Progress. 



Low Cost of Capital-Use v. Low Rates of Interest. 



