Rocky Ford enterprise., 1915-04-16
WILL R. MONKMAN. Publisher.
MEMBER COLORADO EDITORIAL ASSOCIATION
FRIDAY. APRIL 16, 1915
PLANS FOR
INCREASING CREDIT
Methods by Which Farmers Can
Make Productive Improvements
on Favorable Terms

| Washington, D. c., April a. =
Three plans by which farmers in ac-
;tual practice have succeeded in inn
proving their personal credit and Sc
curing loans at less than the pre-
aviing rate of interest are outlined
in new publication of the United
States department of agriculture,
farmers bulletin No. 654, How
Farmers May Improve Their Person
al Credit
I 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 person
al note at s per cent at a time when
the usual rate in his vicinity varied
from 10 to II per cent. To secure
Lthis reduction in interest, the farmer
agreed that the bankers should buy
the dairy stock for which he wished
the loan and sell it to him at actual
cost. The purchase in number OF
cases was conducted with the advice
of state or federal dairy specialists
The men who furnished the money
were thus in a position to make GER
tain that it was used for productive
improvements which would enable
the borrower to repay the loan. Uni
der this plan, in fact, the farmer may
be said to have borrowed the i'm
provement itself instead of the mon
ey to buy it with, for the disposition
of the money was taken out OF his
hands.
A plan of the same general charac-
ter was carried out year or two 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 a local cream
cry supplied the money and held
back a part of the returns from milk
and cream delivered by the borrow
crs, Altogether 491 cows and leifers
were distributed among 64 farmers
the aggregate amount OF money rep
resented by the loans being $50, ,4S3
This is the simplest OF the three
methods. 1t consists 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 rea-
sons this plan has not proved possible
another method is to have the farm
ers collectively assume certain
guarantee for the notes given by
individuals. In southern Montana
for example. 10 farmers organized
an association and appointed trus-
tees to represent il in negotiations
with local bank. The trustees were
authorized TO guarantee limited
amount to the bank on the joint and
several liability OF the association
members. With this additional Sc
curity the bank agreed to advance
4 $1,000 to the association at per cent
when the general bank rate was 10
4 i
from the association purchased with
the money two carloads of heifers
which were distributed among the
members. each animal being charged
with proportionatc share for all the
incidental expenses connected with
the transaction. Each purchases
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 As
the plan was developed in Wiscon-
sin and Minnesota, this outside in
terest consisted of local business
concerned as the farmers with the
general Improvement OF agricultural
conditions in their regions. Under
this plan the business men subscribed
a certain percentage of the funds
loaned with the understanding that
this was to constitute guarantee
fund 10 protest the bankers. Other
wise the plan was in its essential
principles like that adopted in Mon
tana.
None of these methods require
more than temporary organization
A permanent cooperative credit as.
/ e 81
matter, which has however, man,
advantages. Such associations en-.
courage habits OF saving, afford train.
ing in business methods and may es.
tablish a collective fund for common
agricultural purposes as well as pro.
viding loans to their members or
, more reasonable terms than they
! could obtain individually The fun.
damental principle OF their manage.
J ment is that no loan must be granted
unless the committee in charge be.
lieves that the member and the as.
J sociation will both be benefited. The
funds for the loans may be secured
through payment on shares, through
deposits, and by borrowing from
outside sources. Associations doing
business of this sort, however. are
subject TO statuary regulations and il
is, OF course, important that these
regulations be understood and OBJ
served by the management
II A cooperative credit association
must not be considered as in any
way substitute for other banking
institutions, but rather as an ally oi
them. The deposits in such asso-
Citations are frequently in such small
amounts that it is unlikely that they
would be placed in regular bank
On the other hand the total OF these
small sums is frequently consider
able and such part of it as is not
loaned to members of the association