The Elk Mountain pilot., 1923-12-20
FARMERS PAYING
EXCESSIVE RATES
Spend Millions Needlessly for In
terest on Store Credit, Says
Department Of Agriculture.
BANK RATES THE LOWEST
Department Urges Thrift. Industry
and Reliability on Farmers to
Win Credit standlng-sank.
ers Asked to Help.

The cost to farmers OF credit from
stores is more than rs per cent when
calculated on the basis Of q yearly In
terest rate. while banks charge little
more than 6 per cent. says the ofncial
report Of the Department of Agricul-
ture on its recent survey Of farm
credit in North Carolina.
Farmers would profit greatly II
they could place themselves In posi-
ton to borrow from banks and pay
their bills with cash." the report con-
tinues. Merchants would be bene-
ited. since they could then give their
attention strictly to merchandising
and avoid the risk Of loss which they
now assume. Bankers would also prof.
1t, due to the resulting improvement
in farmers financial condition and the
increased business which these farm
ers would give the banks"
A Matter OF Habit
Discussing the question as to why
farmers rely on store instead OF bank
credit, the report says that many do
SO out of habit and do not realize how
high the cost OF the store credit IL.
There are others. however. who
cannot obtain credit from banks" It
goes on. "This is often due to the
fact that NO contact has been sstab-
nshed and the farmers credit rating
has not been determined. Banks pre-
fer character and general business
ability over any tangible security in
making loans. REPUTATION FOR
THRIFT. INDUSTRY AND RELIA-
BILITY is THE BEST POSSIBLE
ASSET FOR A MAN WANTING
CREDIT.
1.-The first step in giving farmers
better credit il to build up better con
facts. This will require, cooperation
Of county agents. farm organizations
and the bankers themselves. But the
banks cannot do 1t all. Effort toward
4 better acquaintance IL necessary on
the part of farmers. Frankness re-
garding their business Affairs 10 es.
sential."
The large part credit cost plays in
agricultural conditions is pointed out
BY the departments report, which says
North Carolina farmers contract debts
amounting to more than 5000. 900. 900
annually. and therefore a difference Of
only per cent in the average inter.
est rate would affect the net income
from agriculture there approximately
$4,000. 900 each year. More than half
the farmers in the areas Investigated
relied on merchandise advances. and
the total merchant credit was nearly
three times the short-term bank
credit.
High Interest Rates
"The average interest rate charged
for merchant credit was 22.3 per cent"
the survey reveals. Credit from To-
cal stores was the most expensive,
costing an average of 26.6 per cent.
Landlords came next in order, with a
rate Of 21.5 per cent Factories and
their agents are much lower. with
rates of 14.2 and ITO per cent respec-
lively.
Fertilizer and living expenses' are
the chief purposes for which merchant
credit 10 extended. Stores apparently
handle more Of such business than
all other agencies combined. while
banks carry less than one-sixth Of the
total. That the farmers fail to obtain
needed short-term credit direct from
banks constitutes 4 handicap to agri-
culture in North Carolina. since the
rate on such loans In materially low.
or than on short-term loans from all
other sources"
Ranchmen-You need one Of our