52 
BULLETIN 547, IT. 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 . 
Rate, per cent 
110 
7 
8-10 
10 
6-7 
8 
7-S 
2 
6-8 
4 
5-6 
5 1 
5-7 5§-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 paving 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. 
