4 BULLETIN 216, U. S. DEPARTMENT OF AGRICULTURE. 
From careful observation it appears that in North Carolina most 
of the loans on cotton are made by banks at a rate of from 6 to 8 per 
cent. The average would doubtless be 7 per cent or less. These 
same banks charge 8 per cent or more for ordinary loans on personal : 
security or real estate. In Georgia the rate on loans on cotton ranges 
from 7 to 10 per cent. The average is probably about 8 per cent. - 
This refers to comparatively small loans made by banks to individuals - 
and small companies. Doubtless many of the Georgia cotton com- 
panies obtain money at the rate of 6 per cent. The rate on personal 
notes in Georgia ranges from 8 to 12 per cent, with an average of not 
less than 9 per cent. In both States the interest charged on store 
accounts (which is usually included in the selling price) ranges from 
10 to 35 or 40 per cent. The average is not less than 20 per cent. 
All these facts show that in both States loans can be obtained when 
cotton is offered as collateral at a much lower rate than when per- 
sonal security is given. 
It can readily be seen that one of the greatest needs of the cotton 
farmer is to get away from the present credit system. Many, es- 
pecially those of the tenant class, pay the supply merchant an ad- 
vance of from 25 to 35 cents on a dollar’s worth of supplies, and these 
supplies are actual necessities. These accounts ordinarily run from 
six to eight months. Such exorbitant rates of interest would be 
disastrous to any class of people. When the crop is harvested the 
farmer disposes of his cotton and settles his accounts with the pro- 
ceeds, provided, of course, that he receives sufficient funds for this 
purpose. Then it is usually necessary for him to mortgage his next 
year’s crop to the supply merchant in order to obtain credit, which is 
necessary to enable him to live while the crop is beng made. While 
it is difficult to see how this situation can be remedied, owing to 
the fact that these tenants have no means of living while the crop 
is being made without trading with supply merchants, it does seem 
that the situation would be improved greatly by establishing a 
system of warehouses and encouraging the tenants to store such 
cotton as is not absolutely necessary to settle their accounts. If 
this plan should be pursued for two or three years, while economy 
in living was exercised, many could eventually free themselves from 
the present system. 
The merchant is almost as helpless as the farmer. -He advances 
supplies while expecting cotton to bring a fairly good price. In 
most cases he has bought his stock on time and can not. meet his 
own obligations until the farmers’ accounts are paid. Whenever. 
the price is so low that the farmer fails to meet his obligations, the 
merchant is likely to be seriously embarrassed. Late m 1914. for 
instance, many farmers refused positively to sell their cotton, and 
