2 BULLETIN 409, U. S. DEPARTMENT OF AGRICULTURE. 
figure shown for extra cost in North Carolina is due, in part, to the fact 
that with a legal interest rate of 6 per cent the lenders of that State 
have made up in extra charges what the State law does not permit 
them to charge as interest. In some cases the difference between the 
interest rates shown in the table and the estimated total cost may be 
explained by the fact that interest is reckoned for a full year on a loan 
which actually runs for only 9 or 10 months, though more often the 
extra charge takes the tangible form of a bonus demanded by the loan 
agent in payment for his services in "getting the money" or of a fee 
for making out the papers. Especially in connection with loans on 
chattel security is there likely to be considerable expense for making 
out papers, recording the chattel mortgage, etc. In general, how- 
ever, the extra charges are small where the interest rates are low, and 
vice versa, so that the variations between different sections of the 
country may be considered either on the basis of the nominal interest 
rate alone or on the basis of the total cost. 
No simple explanation will account adequately for these variations 
between one State or district and another. While some of the 
factors involved are essentially natural conditions and are not readily 
subject to change, others have been brought about primarily by 
human agencies and may be modified considerably through voluntary 
action. It is realized that any improvement in the farm-loan situa- 
tion must be secured mainly through the. modification of conditions 
controlled by human agencies. Therefore, while some attention 
should be given to natural conditions in order to show their impor- 
tance as factors affecting interest rates and other charges on short- 
time loans, the purpose of this discussion is primarily to show some 
of the ways in which conditions actually are being modified so as 
to enable the farmer to obtain better terms. 
IMPORTANCE OF NATURAL CONDITIONS. 
Climate, contour of the land, and soil are, for the most part, natural 
conditions and, in the order mentioned, exert a relatively permanent 
influence upon the interest rates and other charges on short-time 
loans. Soil and to a less degree contour are subject to modification 
as the result of human activity. Much of our soil has been impov- 
erished through a continuous one-crop system. Sandy hillsides, 
through open cultivation, often have been washed into gullies. 
Because of the relative permanency of climate, contour, and soil 
it is necessaiy to adapt farming methods and systems to these 
factors rather than to attempt any material modification in the 
natural conditions in the interest of any particular farming need. 
Through the influence which they exert on farming and the results of 
farm business, however, they become important factors indirectly 
affecting interest rates on short-time farm loans. The influence of 
