Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1913-09-07
Bismarck, Sunday, September 7, 1913
Better Farming and Rural Credit

In this months issue of the American Economlr
Review is an interesting article Oh Far" Credits IN
North Dakota by DR.. Meyer Jacobstein, formerly
instructor of economics at the University at North
Dakota.
The average rate of interest OH farm mortgages
In this state, according to Dr.. Jacobstein, is approx
mately 8 per cent accurately 1888 per cent?. The
average rate on short time loans is 1925 per cent,
though the Doctor does not say whether he has com.
puted the bonus. These are the highest average
rates in the Union.
The simple statement that these are the highest
average rates in the Union very naturally gives rise
to the question, Why should North Dakota's rates be
the highest?'-and further the suggestion that there
might be a story in the true answer. The apparent
reason is, Of course, the demand for money. The
price Of money, to use an economic term, like the
price of any other commodity, is determined by sup.
ply and demand. But it isn't primarily the scarcity
Of money which makes interest rates high in this
state. The principal reason is the speculative nature
of our present methods of farming. The banker who
loans money to the farmer depends upon crops tor
the payment of interest. Crops, under the present
methods of farming, are uncertain, hence the payment
of interest is uncertain.
This can be remedied in only one way, and that
is by changing the methods OF farming. Diversified
ton will largely do away with the speculative nature
- iNih ~ ieA'i'o iN oNSh
always have something to fall back upon to meet his
obligations in case of crop failure. Of course, the
banker is handicapped in making loans on account OF
our archaic banking laws, and a system of rural cred
it's is desirable, but SO long as the farmer is depend
ent upon crops alone to pay his debts, interest rates
will continue to be high and a system of rural credits
cannot be successfully operated, because the success
of such a system is absolutely dependent upon the
ability of borrowers to meet payments when they
become due.
Furthermore, the present methods of farming in
crease the cost of living in a manner not usually
considered. Not only are bankers and lenders OF
money dependent on crops for the interest on money
loaned, but merchants and implement dealers are
dependent in the same way for the payment for goods
sold. The majority Of farmers are compelled to buy
goods on credit. DR.. .%Jacobstein estimates that only
time. Often the retail dealer Eiust wait two or three
years before he can get his money. In 1910 and 191i
very few retail dealers we're able to collect money
among them because of the crop failures. In some
sections of the state that will be true this year. Con
sequently, in most instances, the retailer is forced to
borrow money in order to continue III business. The
debtor pays for it all, for the retailer, i'll order to
counts to the price of his goods and, therefore,
increase the cost of living. Therefore, it is of equally
vital interest to farmer and business man that the
very best methods be adopted on the farm, and that
every farmer exert his energies to bring about that
very necessary business condition-rural credit to
every community. s.