INTEREST RATES ON SHORT- TIME FARM LOANS. 7 
erratic in his judgment, and irregular in his business habits will be 
considered a less desirable risk and, if he obtains a loan at all, usu- 
ally must pay a higher rate of interest. In any case, if credit is to be 
extended wisely it is just as important to discourage its use among 
those who can not be trusted as it is to grant credit to trustworthy 
borrowers who will use the borrowed money profitably and repay it 
promptly. 
BUSINESS ABILITY AND BUSINESS HABITS. 
Oftentimes the borrower may be honest and upright in his inten- 
tions, but may fail to appreciate the importance of being prompt in 
meeting his obligations. Possibly he thinks that a few days after 
the date of maturity is soon enough to make payment, and that a 
little delay is unimportant. He may not stop to consider that extra 
work and expense are involved when notice must be given of overdue 
paper, or that bank examiners do not take kindly to notes that are 
overdue. 
Again, the business ability and business habits of the farmer are 
tested when the banker asks for a statement of the borrower's busi- 
ness. This information is needed by the banker as a basis for intel- 
ligent rating. If the borrower is in the habit of keeping accounts 
and can explain the nature of his resources and liabilities and thus 
indicate accurately his financial standing, the wisdom of granting a 
desired loan as well as the proper terms thereon readily can be deter- 
mined. On the other hand, if this information is lacking and the 
banker is in doubt about the safety of a particular loan, he is likely 
to charge up his uncertainty to the borrower's account in the form 
of a higher rate of interest. 
The requirement that a borrower shall submit a statement of his 
business is being applied by bankers in their dealings with mer- 
chants and manufacturers. Accordingly, business men in general 
have become more or less familiar with this requirement, and are 
prepared to furnish such a statement whenever it is called for. Some 
bankers, in inaugurating a similar plan in connection with their farm 
loan business, are supplying farmers with especially prepared blanks, 
or rate sheets, on which the farmers furnish the desired information. 
METHOD AND CHARACTER OF FARMING. 
One important purpose of the rate sheet is to show how far the 
farmer devotes his energies to raising a single crop, or how far he di- 
versifies his farming and gives attention to the raising of foodstuffs 
for his family and feed for his animals. If, for example, farmer A 
has a garden and raises enough vegetables and fruit to supply the 
family needs, if he keeps enough poultry, pigs, and other live stock to 
meet the requirements of his household for eggs, meat, milk and 
butter, if he provides enough pasture, hay, and fodder to feed his 
