INTEBEST BATES ON SHORT-TIME FAEM LOANS. 7 



erratic in liis judgment, and irregular in his business habits will be 

 considered a less deshable risk and, if he obtains a loan at all, usu- 

 ally must pay a higher rate of interest. In any case, if credit is to be 

 extended wisely it is just as important to discourage its use among 

 those who can not be trusted as it is to grant credit to trustworthy 

 borrowers who will use the borrowed money profitably and repay it 

 promptly. 



BUSINESS ABILITY AND BUSINESS HABITS. 



Oftentimes the borrower may be honest and upright in his inten- 

 tions, but may fail to appreciate the importance of being prompt in 

 meeting his obUgations. Possibly he thinks that a few days after 

 the date of matm^ity is soon enough to make payment, and that a 

 little delay is unimportant. He may not stop to consider that extra 

 work and expense are involved when notice must be given of overdue 

 paper, or that bank examiners do not take kindly to notes that are 

 overdue. 



Again, the business ability and business habits of the farmer are 

 tested when the banker asks for a statement of the borrower's busi- 

 ness. This information is needed by the banker as a basis for intel- 

 ligent rating. If the borrower is in the habit of keeping accounts 

 and can explaiu the nature of his resources and liabilities and thus 

 indicate accurately his financial standing, the wisdom of granting a 

 desired loan as weU as the proper terms thereon readily can be deter- 

 mined. On the other hand, if this information is lacking and the 

 banker is in doubt about the safety of a particular loan, he is likely 

 to charge up his uncertainty to the borrower's account in the form 

 of a higher rate of interest. 



The requirement that a borrower shall submit a statement of his 

 business is being applied by bankers in their dealings with mer- 

 chants and manufacturers. Accordingly, business men in general 

 have become more or less familiar with this requirement, and are 

 prepared to furnish such a statement whenever it is called for. Some 

 bankers, in inaugurating a similar plan in connection with their farm 

 loan business, are supplying farmers with especially prepared blanks, 

 or rate sheets, on which the farmers furnish the desired information. 



METHOD AND CHARACTER OF FARMING. 



One important purpose of the rate sheet is to show how far the 

 famjer devotes his energies to raising a single crop, or how far he di- 

 versifies his farming and gives attention to the raising of foodstuffs 

 for his family and feed for his animals. If, for example, farmer A 

 has a garden and raises enough vegetables and fruit to supply the 

 family needs, if he keeps enough poultry, pigs, and other live stock to 

 meet the requirements of his household for eggs, meat, milk and 

 butter, if he provides enough pasture, hay, and fodder to feed his 



