UNITED STATES DEPARTMENT OF AGRICULTURE 
OWW4, 
BULLETIN No. 409 
Contribution from Office of Markets and Rural Organization, 
CHARLES J. BRAND, Chief 
Washington, D. C. 
August 26, 1916 
FACTORS AFFECTING INTEREST RATES AND OTHER 
CHARGES ON SHORT-TIME FARM LOANS. 
By C. W. Thompson, 
Specialist in Rural Organization. 
CONTENTS. 
Page. 
Introduction 1 
Importance of natural conditions 2 
Distance from financial centers 6 
Characteristics of the borrower 6 
Personal character 6 
Business ability and business habits 7 
Method and character of farming 7 
Responsibility for the one-crop system . . 8 
Characteristics of the loan 8 
Purpose of the loan 9 
Size of the loan 9 
Relation of the farmer to the loan agency 10 
How collective action among farmers 
may improve their relations to loan 
agencies 10 
How the cooperative credit association 
helps members to obtain loans on bet- 
ter terms 11 
Attitude of the loan agency toward the 
farm-loan business 11 
INTRODUCTION. 
There are wide variations in the interest rates and other charges 
paid on short-time loans by farmers in different sections of the 
United States. The extent of the variations between States is indi- 
cated by the diagram, Plate I, which shows for each State the aver- 
age interest rate and the average total cost for loans to farmers on 
personal security, as obtained from reports received by the Office of 
Markets and Rural Organization. Variations inside the State boun- 
daries are shown by the table on page 3, which gives the same aver- 
ages for districts or subdivisions within the States. The districts 
referred to in this table are shown on the map, Plate II. 
The extent to which extra charges of one kind or another affect the 
cost of short-time loans to farmers is indicated by the diagram and 
the table. It will be seen that these charges are especially high in 
the Southern and the Rocky Mountain States. The relatively large 
Note.— This bulletin discusses the reasons for variations in interest rates on short-time farm loans, 
giving special attention to those causes of variation which can be modified by individual or collective 
action. 
54010°— Bull. 409—16 
