The Holly chieftain., 1923-12-27
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 70
Win Credit standlne-sank.
ers Asked to Help.

The cost to farmers OF credit from
stores 10 more than rs per cent when
calculated on the basis Of yearly in
terest rate. while banks charge little
more than per cent. says the ofnciai
report OF the Department Of Asrtcul'
ture on Its recent survey OF farm
credit in North Carolina.
Farmers would profit greatly Il
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.
ated. since they could then sive their
attention strictly to merchandising
and avoid the risk OF loss which they
now assume. Bankers would also prof,
It, 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
30 out OF habit and do not realize how
high the cost of the store credit is.
"There, are others. however. who
cannot obtain credit from banks" II
goes on. This Is often due to the
fact that no contact has been estah
ushed and the farmers credit rating
has not been determined. Banks pre-
Ter character and general business
ability over any tangible security in
making loans. A REPUTATION FOR
THRIFT. INDUSTRY AND RELIA,
BILITY Is THE BEST POSSIBLE
ASSET FOR A MAN WANTING
CREDIT.
"The first step in giving farmers
better credit Is to build up better con
tacts This will require cooperation
of county agents. farm organizations
and the bankers themselves. But the
banks cannot do 1. all. Effort toward
better acquaintance is necessary on
the part of farmers Frankness re.
sarding their business affairs is 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 0O0. 900
annually. and therefore difference Of
only per cent In the average inter.
est rate would affect the net income
from agriculture there approximately
100000 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
1.-THE average interest rate charged
for merchant credit was 223 per cent"
the survey Tevsala. Credit from 10
cal stores was the most expensive,
costing an average Of ass per cent.
Landlords came next In order with a
rate OF 2l.6 per cent Factories and
their agents are much lower. with
rates OF la.2 and ITO per cent respec
lively.
Fertilizer and living expenses are
the chief purposes for which merchant
credit Is extended. Stores apparently
handle more OF such business than
all other agencies combined. Will.
banks carry less than one-sixth Of the
total That the farmers fail to obtain
needed short.term credit direct from
banks constitutes handicap to agri.
culture in North Carolina, since the
rate on such loans is materially low.
OF tnan on short term loans from all
sthss seurcsa"