INTEREST RATES ON SHORT-TIME FARM LOANS. 11 
farmers have formed temporary agreements under which they act 
collectively as guarantee associations for approved loans of members. 
The added security from these associations has enabled members to 
obtain loans at reduced rates of interest. Another plan, illustrated 
by what has been done in a Texas community, involves a temporary 
agreement between a group of farmers and a bank, but differs from 
the plan previously mentioned in that the added security consists of 
a reserve fund left with the banker. Each borrower allows the bank 
to retain 5 per cent of his loan for a reserve fund, which is held as a 
guarantee for all the loans made under the agreement and is returned 
to the farmers at the termination of the agreement. 
Under another plan, which has been employed in several communi- 
ties of the Northwest, a group of business men agree to deposit a sum 
of money with a bank and guarantee the loans given to farmers for 
some specific and approved purpose. In all such cases farmers have 
been enabled to obtain credit on more favorable terms than usual. 
HOW THE COOPERATIVE CREDIT ASSOCIATION HELPS MEMBERS TO OBTAIN LOANS 
ON BETTER TERMS. 
In a number of localities in this country, groups of farmers have 
organized cooperative credit associations or credit unions. Usually 
each credit union makes definite arrangements with some bank by 
which the latter acts as a depositary and furnishes loans on specified 
terms. Thus one of the unions in North Carolina receives 3 per cent 
interest from its bank on deposits subject to check and 4 per cent on 
savings accounts left on deposit three months or longer, and pays 5 
per cent interest on its loans from the bank. The credit union in 
turn pays its own members 4 per cent on their savings accounts and 
furnishes them loans at 6 per cent. Such a credit union not only 
accustoms its members to the use of check and savings accounts but 
also enables the members to obtain loans for approved productive 
purposes on better terms than they could obtain elsewhere. 
ATTITUDE OF THE LOAN AGENCY TOWARD THE FARM-LOAN BUSINESS. 
In many regions the banks are not accustomed to dealing with 
farmers to any extent, especially with tenants and croppers, and the 
latter, therefore, must obtain their loans from other sources. This is 
especially true in the cotton States, where the system of advances 
from merchants to farmers still prevails. A few banks are breaking 
away from this traditional attitude, however. In one community 
of South Carolina the banks are actively soliciting business with 
croppers and renters as well as with farm owners. One of these banks 
began this policy 15 years ago on the assumption that many small 
accounts of this character properly scattered would be safer for the 
bank than a few large accounts. The experience of these banks has 
led them to become more active than ever in the extension of their 
