UNITED STATES DEPARTMENT OF AGRICULTURE 



BULLETIN No. 409 



Contribation from Office of Markets and Rural Organization, 

 CHARLES J. BRAND, Chief 



^-U^^o-t- 



Washington, D. C. 



V 



August 26, 1916 



FACTORS AFFECTING INTEREST RATES AND OTHER 

 CHARGES ON SHORT-TIME FARM LOANS. 



By C. W. Thompson, 

 Specialist in Rural Organization. 



CONTENTS. 



Page. 



Introduction 1 



Import-ance o f natural conditions 2 



Distance from financial centers 6 



Characteristics of the borrower 



Personal character 6 



Business ability and business habits 7 



Metho d and character o f farming 7 



Responsibility for the one-crop system . . S 



Characteristics of the loan 8 



Piu-pose of the loan 9 



Size of the loan 9 



Relation of the farmer to the loan agency 10 



How collective action among farmers 

 may improve their relations to loan 



agencies 10 



How the cooperative credit association 

 helps members to obtain loans on bet- 

 ter terms 11 



Attitude of the loan agency toward the 

 farm-loan business 11 



INTRODUCTION. 



There are wide variations in the interest rates and other charges 

 paid on short-time loans by fanners in different sections of the 

 United States. The extent of the variations between States is indi- 

 cated by the diagram, Plate I, which shows for each State the aver- 

 age interest rate and the average total cost for loans to farmers on 

 personal security, as obtained from reports received by the Office of 

 Markets and Rural Organization. Variations inside the State boun- 

 daries are shown by the table on page 3, which gives the same aver- 

 agers for districts or subdivisions within the States. The districts 

 referred to in this table are shown on the map, Plate II. 



The extent to which extra charges of one kind or another affect the 

 cosf of short-time loans to farmers is indicated ])y the diagram and 

 th(i table. It will be seen that these charges are especially high in 

 the Southern and the Rocky Mountain States. The relatively large 



Note. — ThJ.s bulletin discusses the reasons for viiriations in interest rates on short-lime f;irm loans, 

 giving speci-il atl«niion to those causes of variation which fian be modified by individual or collective 

 action. 



64010°— Bull. 'UKt—Ui 



