8 BULLETIN 409, U. S. DEPARTMENT OF AGRICULTURE. 



live stock, he has this advantage, that when the cash crop, whether 

 cotton or grain, is ready for sale in the fall, it is not tied up with a 

 lien to meet a season's advance for food or feed. He is in a position, 

 therefore, to sell his cash crop whenever the marketing conditions 

 are favorable. The relatively favorable position of such a farmer 

 assists him in commanding the confidence of lenders. 



On the other hand, consider farmer B, who comes to the local 

 merchant and makes credit purchases of bacon, commeal, and canned 

 goods for table use, and who goes back to his farm with a bale of 

 hay or a sack of feed in his wagon box. In his cotton field there are 

 patches where the yield is poor because of low soil fertihty and indif- 

 ferent methods of cultivation. The only enterprise on the farm is 

 cotton growing and this crop is mortgaged in advance to supply the 

 food and feed purchased in town and consumed on the farm. Farmer 

 B has little if any credit at the bank. He gets a limited store credit 

 on an advancing basis from a local merchant. His is the most ex- 

 pensive kind of credit and probably he is the farmer who is the least 

 able to pay for it. 



RESPONSIBILITY FOR THE ONE-CROP SYSTEM. 



In some regions the lender even more than the farmer is responsible 

 for the continuance of a one-crop system of farming. This is es- 

 pecially true where bankers refuse to extend credit to farmers except 

 on the basis of a single crop, such as cotton in the South or a cereal 

 crop in the North. Such a mistaken policy can be corrected only to 

 the extent that the banker realizes the evil eflPects of one-crop farm- 

 ing and undertakes to cooperate actively with the farmer in the 

 extension of credit on a proper basis. 



It is scarcely possible to lay too much emphasis upon the practical 

 importance of the method and character of farming as a factor affect- 

 ing interest rates on farm loans. Every agricultural region has its 

 own peculiar problems of adapting farming methods and practices to 

 local conditions. There are progressive bankers in various parts of 

 the country who reahze the unportance of cooperating with the 

 farmei^s in promoting the kind of f armmg that wiU be permanently 

 beneficial to the community. This suggests a common interest 

 between bankers and farmers which should be made the basis for 

 further cooperative effort. 



CHARACTERISTICS OF THE LOAN. 



As the importance of promoting and encouraging improved systems 

 of farming becomes increasingly apparent, attention wiU be directed 

 more and more toward such questions as the purpose and size of farm 

 loans. How are the proceeds of a proposed loan to be employed? 

 Are they to be expended for a productive purpose, such as would lead 



