, 1924-08-06
FARMERS PAYING
EXCESSIVE RATES
Spend Millions NeedIessIy 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 standine-eank-
ers Asked to Help.

The cost to farmers Of credit from
stores Is more than rs per cent when
calculated on the basis Of a yearly In
terest rate. while banks charge little
more than s per cent. says the oficiai
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-
flied, since they could then give 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 he 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 is.
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 estab-
lished and the farmers credit rating
has not been determined. Banks pre-
fer 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
facts. This will require cooperation
Of county agents. farm organizations
and the bankers themselves But the
banks cannot do it all. Effort toward
a better acquaintance Is necessary OIL
the part. of farmers. Frankness re-
garding 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. 900. 900
annually. and therefore a difference of
only 1 per tent In the average inter
est rate would affect the net income
from agriculture there approximately
$4,000. 900 each rear. More thar 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 10
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 40 per cent espec
lively.
Fertilizer inc living expenses are
the chief purposes for which merchant
credit is 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 fall 10 obtain
needed short-term credit direct from
banks constitutes a handicap to agri.
culture in North Carolina, since the
rate on such loans Is materially low.
or than on short.term loans from all
other sourcaa"