52 BULLETIN 547, U. S. DEPARTMENT OF AGRICULTURE. 



elevator and equipment, 5 used company notes indorsed by indi- 

 viduals, 12 used warehouse receipts of grain in storage, and 85 were 

 required to give personal security of responsible individuals who 

 were usually officers of the company or well-to-do members. 



These reports show that as organizations at least one-third of the 

 elevators reporting have no credit that is acceptable to bankers 

 other than that which is given by responsible individuals who 

 assume a personal responsibility. No cooperative business organiza- 

 tion should be so conducted that it is necessary for a few members 

 to assume large personal risks to carry on the enterprise which is of 

 benefit to all members. Members should assume a liability propor- 

 tionate to the benefits received or the amount of business which 

 they do through the organization. 



Interest. — Two hundred and ninety-eight elevators report interest 

 rates as follows: 



Number reporting 6 71 1 110 61 14 5 10 8 2 4 5 1 



Rate,percent 5 6 6J 7 8 10 8-10 6-7 7-8 6-8 5-6 5-7 5J-7 



From these figures it is shown that over one-third of the elevators 

 reporting pay 7 per cent for funds with which to carry on their 

 business. Seventy-one secure funds for 6 per cent; and 14 are re- 

 quired to pay 10 per cent, which high rate in most cases is due to 

 the lack of approved collateral security, such as will be accepted by 

 bankers generally. Several elevators have overdraft arrangements 

 with the banks, paying from three-fourths of 1 per cent to 1 per 

 cent per month on these overdrafts. If funds can be secured in any 

 other way this practice should be discouraged. It is clearly brought 

 out from these reports that rates of interests vary in the same ter- 

 ritory, as, for example, Minnesota elevators are paying rates rang- 

 ing from 6 to 10 per cent. Two companies within 10 miles of each 

 other borrow from local banks, one paying 7 per cent and the other 

 10 per cent. 



In the majority of cases where funds are obtained from commis- 

 sion firms the rate charged the elevator is 6 per cent, while in some 

 cases as much as 8 per cent is charged. In an investigation conducted 

 by the Office of Markets and Rural Organization, in collaboration 

 with the University of Minnesota, it was found that of 158 elevators 

 in the State borrowing funds, 51 per cent are financed wholly or in 

 part by commission men, the average rate of interest charged being 

 6.74 per cent; 71.5 per cent are financed partially by local banks, 

 the average rate being 7.39 per cent; and 13 per cent also borrowed 

 from individuals, usually farmers, at the average rate of 6.25 per 

 cent. 



