DRY-FARMING CONGRESS, WICHITA, 1914 



101 



ness, the cost of farm supplies must be kept down. If everything which 

 the farmer has to buy rises in price as much as what he has to sell, his 

 cost of production rises as much as his gross income, and he makes no 

 more profit than before. 



It is, therefore, of the utmost importance that the farmers be encour- 

 aged to buy at least the raw materials of their business at wholesale 

 rather than retail. By the raw material of farming is meant such things 

 as machinery and tools, fertilizer, seed, lumber and building materials, 

 and fuel. Any organization which attempts to exploit farmers in these 

 fields, and add to the cost of these materials, adds to the cost of pro- 

 ducing crops. This has the same effect in the depression of agriculture 

 as a fall in the prices of farm products. 



Since capital is coming to play such an important role in agriculture, 

 the cost of credit is coming to be an important factor in the cost of 

 growing crops. This again, affects agricultural expansion preciously as 

 does the price of farm products. That is to say, poor credit facilities and 

 a high interest rate will depress agricultural production as surely as a 

 fall in the price of farm products. On the other hand, good credit facili- 

 ties with a low interest rate will stimulate agricultural production as 

 surely as a rise in the prices of farm crops. The poor credit facilities 

 and high interest rates of the present time must be regarded as a third 

 obstacle to the proper expansion of our agricultural production, helping to 

 counteract the stimulating effect of high prices. 



How can a farmer possibly get credit on easy terms unless he has 

 a good basis for credit? This question is asked more frequently than 

 any other by skeptics on the subject of rural credit. Of course, there is 

 only one answer: He can not. But it is too often assumed by people 

 who pride themselves on their hard-headedness, and who fail to distinguish 

 between hardness and impenetrability, that the only good basis for credit 

 is property or collateral. Real financiers have always seen deeper than 

 this,* but many of the rank and file of those who deal in securities, credit, 

 and collateral are not financiers of any kind, either great or small, though 

 they imagine that they are. They are sometimes unable to see beyond 

 the things which clutter their desks and fill their pigeon-holes. To such 

 men, the suggestion that character may be satisfactory basis for credit 

 doubtless seem rather humorous. 



The suggestion loses its humorous quality when we consider its fun- 

 damental importance. Unless honesty is, or can be made, an advantage 

 in business, honest men can not generally win against rogues in business 

 competition. The result will be that rogues can never be eliminated from 

 business. It is difficult to see how honesty can have any greater advan- 

 tage over dishonesty anywhere than in the field of credit. Unless the 

 honest man can secure credit on easier terms than a dishonest man, where 

 does honesty pay? Of course, men ought to be honest whether it pays 

 or not, but this kind of a preachment is not going to eliminate dishonest 

 men from business. So far as collateral is concerned, a rogue may have 

 it as well as a saint. 



