RURAL CREDITS 79 



the form of a higher rate of interest." Is it also possible that he may 

 refuse a loan that really is worthy ? What lesson does this carry for 

 the farmer who is angry at being asked for a statement and to the 

 one who has no records or accounts ? Is it easier for the big bank or 

 the little one to get borrowers' statements ? Why ? 



3. "The investigations made show the need for personal credit to 

 be more acute than for land credit. It is easy to get land credit equal 

 to 50 per cent of the land value, but the temptation is great for the 

 farmer to tie nearly his entire wealth in land, leaving himself little or 

 nothing for operating capital. Being heavily in debt on his land 

 cripples his personal credit, but he is usually worthy of personal 

 credit." If the farmer has an equity in his land of 50 per cent or some 

 considerable fraction of its value, would he be more or less eligible 

 for personal credit than the man who has no property ? Is commer- 



' cial or short-time credit supposed to be secured in the enterprise for 

 which the loan is made or to lean upon some outside security ? Is it 

 possible to have this situation in agriculture or is the nature of the 

 risk too great ? greater than in the case of merchants and manufac- 

 turers ? 



4. "The farmer can get credit for very short periods of time, but 

 what he needs is credit extending over a period corresponding to the 

 length of time required to bring to fruition the project for which the 

 loan is made. In the case of dairy cows it is perhaps two or three 

 years. For many farm operations it is nine months or a year, and 

 the usual 90 or 120 days at the bank is too short." Do the transac- 

 tions which in other lines of business are financed with 90-day loans 

 actually liquidate themselves within that period ? How, then, is it 

 managed? Would the same plan be equally applicable for the 

 farmer ? 



5. "One of the basic defects of the Farm Loan act is the fixing 

 of the maximum interest rate by statute. The law of supply and 

 demand will control the rate in any event, and a fixed maximum may 

 conceivably render the act inoperative in the communities most in 

 need of increased facilities." Do you agree with this writer ? Might 

 one logically agree with part of the statement and take exception to 

 part ? 



6. "Another defect is to be found in the system of joint guaranties, 

 putting good, bad, and indifferent securities in the same category, 

 penalizing the good for the advantage of the inferior." Is it true that 

 securities are pooled ? What bad ones get in ? Are the good penal- 

 ized? 



7. "While it is undoubtedly true that the adoption of a land- 

 credit system providing for a low rate of interest and a longer term 

 of loans repayable by amortization would enable a man of small means 



