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Show PAYING EXCESSIVE RATES Spend Millions Needlessly for Interest In-terest on Store Credit, Says Department of Agriculture. BANK RATES THE LOWEST . Department Urges Thrift, Industry i and Reliability on Farmers to 4 Win Credit Standing Bank-JH Bank-JH ; era Asked to Help. . P The cost to farmers of credit from tores Is more than 25 per cent when calculated on the basis of a yearly Interest In-terest rate, while banks charge little more than 6 per cent, says the official report of the Department of Agriculture Agricul-ture on its recent survey of farm v credit In North Carolina. "Farmers would profit greatly If they could place themselves In position posi-tion to borrow from banks and pay their bills with cash," the report con-1 con-1 tlnues. "Merchants would be bene- flted, since they could then give their attention strictly to merchandising and avoid the risk of loss which they ' bow assume. Bankers would also prof- I 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 I farmers rely on store instead of bank '" credit, the report says that many do ao out of habit and do not realize bow ' high the cost of the store credit la. "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 established estab-lished and the farmer's credit rating has not been determined. Banks prefer pre-fer character and general business ability over any tangible security In snaking loans. A REPUTATION FOR THRIFT, INDUSTRY AND RELIABILITY RELIA-BILITY IS THE BEST POSSIBLE ASSET FOR A MAN WANTING CREDIT. "The first aten In rlrlnar firmnri tetter credit is to build up better con-' con-' .tacts: Thjs will require co-operation of county agenta, farm organisations and the bankers themselves. But the tanks cannot do It all Effort toward a better acquaintance is necessary on the part of farmers. Frankness regarding re-garding their business affairs Is essential" es-sential" I The large part credit cost plays la agricultural conditions is pointed out by the department's report, which says North Carolina fanners contract debts amounting to more than $200,000,000 annually, and therefore a difference of only 1 per cent la the average Interest Inter-est rate would affect the net Income from agriculture there approximately $2,000,000 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 tor merchant credit was 22.3 per cent," , the survey reveals. "Credit from local lo-cal stores was the most expensive, costing an average of 2(1 per cent Landlords came next In order, with a rate of 21.8 per cent Factories and their agents are much lower, with rates of 14.2 and 17.0 per cent respectively. respec-tively. "Fertilizer and living expenses' are the chief purposes for which merchant . credit la extended. Stores apparently . handle more of such business than all other agencies combined, while i. banks carry less than one-sixth of the V ; tout That the farmers fall to obtain t needed short-term credit direct from banks constitutes a handicap to agriculture agri-culture In North Carolina, since the rate on such loans Is materially lower low-er than on short-term loans from all Other sources." |