The weekly times-record. (Valley City, N.D.) 1912-1922, 1915-04-15
IMPROVING THE
.. FARMERS CREDIT

FARMERS CREDIT
Washington, D. c., April 7.-Three
plans by which farmers in actual prac-
ftice have succeeded in improving their
personal credit and securing loans at
less than the prevailing rate of inter-
est are outlined in a new publication
|of the United States department of
agriculture, Farmers Bulletin No. 654,
How Farmers May Improve Their
Personal Credit"
The first of these plans has worked
out in certain localities in North Da-
kota so well that the farmer has been
able to borrow money on his personal
note at 8 per cent at a time when the
usual rate in this vicinity varied from
10 to II per cent. To secure this re-
duction in interest, the farmer agreed
that the bankers should buy the dairy
stock for which he wishes the loan
purchase in a number of cases was
conducted with the advice of state or
federal dairy specialists. The men
who furnish the money were thus in a
position to make certain that it was
used for productive improvements
which would enable the borrower to re-.
pay the loan. Under this plan, in fact,
the farmer may be said to have Dor.
rowed the Improvement itself instead
of the money to buy it with, for the
disposition of the money was taken
out of his hands.
A plan for the same general charac.
ter was carried out year or two ago
ago in southern Idaho, but in this case
three or four banks united in the pur.
chase of a carload of dairy stock. In
another case in Nevada local cream
cry supplied the money and held back
a part of the returns from milk and
cream delivered by the borrowers
Altogether 491 COWS and heifers were
distributed among 81 farmers, the az
gregate amount of money represented
by the loans being $39,4S3. This is the
simplest of the three methods. 1t con
sists essentially in permitting the
lender to say how the money that
he loans shall be spent. Under such
circumstances he naturally feels more
secure, and the rate of interest lessons
with the risk.
In regions where for various reasons
this plan has not proved possible, an
other method is to have the farmers
collectively assume a certain guaran'
teen for the notes given by individuals
In southern Montana for example, 19
farmers organized an association and
appointed trustees to represent it in
negotiations with a local bank. The
trustees were authorized to guarantee
a limited amount to the bank on the
joint and several liability of the asso.
citation members. With this additional
security the bank agreed to advance
$4,000 to the association at per cent
when the general bank rate was 10
and IL per cent. Two delegates from
the association purchased with the
money two carloads of heifers which
were distributed among the members,
each animal being charged with pro
portionate share for all the incidental
expenses connected with the transac
ton. Each purchaser pledged himself
to care for and breed the cattle by
methods approved by the trustees.
In the third plan the guarantee is
furnished not by the farmers them.
selves but by an outside interest. Al
The plan was developed in Wisconsin
and Minnesota, this outside interest
consisted Of local business men who
were in their way as much concerned
40 IAC AoA AAOAo Will ZIG 6c1AoA al ALL
provement Of agricultural conditions
in their regions. Under this plan the
business men subscribed certain per
centage of the funds loaned with the
understanding that this was to con
stitute guarantee fund to protect the
bankers. Otherwise the plan was in
its essential principles like that adopt
ed in Montana. "
None of these methods require more
than temporary organization. A
permanent cooperative credit associa
tion is, of course, a different matter
which has, however, many advantages
Such associations encourage habits
of saving, afford training in business
methods and may establish collective
fund for common agricultural purpos
es as we'll as providing loans to thei1
members on more reasonable terms
than they could obtain individually
The fundamental principle Of thei1
management is that no loan must BIZ
granted unless the committee il
charge believes that the member ant
the association will both be benefited