Evening Republican, Volume 20, Number 286, Rensselaer, Jasper County, 29 November 1916 — Collective Action Among Farmers [ARTICLE]

Collective Action Among Farmers

j ..... - 9 .. To Improve Their Borrowing Capacity

Washington, D. C.—What cooperation among farmers can do to improve l heir borrowing capacity at banks Is thus described in Bulletin No. 409, “Factors Affecting Interest Rates and Other Charges on Short-Time Farm , Loans.” recently published by the U. S. Department of Agriculture. "In some parts of the country where farmers, If they obtained loans at ail as individuals, were compelled to pay very high rates 6. ,iith °st, Btoi h«Vu been tried out under which groups of farmers have been able collectively to establish relations with banks. In several localities of the Central Western and Rocky Mountain regions, farmers have formed temporary agreements under which they act collectively as guarantee associations for apt„oved loans of members. The added security from thrso associations has enabled members to obtain loans at reduced rates of interest. Another plan, Illustrated by what has been done in a Texas community, Involves a temporary agreement between a group df fanners and a bank, but differs from the plan previously mentioned in that the added security consists of a reserve fund left with the banker. Each borrower allows the bank to retain 5 per cent of loan for a reserve fund, which is held as a guarantee for all the loans made under the agreement and is returned to the farmers at the termination of the agreement. "Under another plan, which has been employed in several communities of the Northwest, a group of business men agree to deposit a sum of money with a bank and guarantee the loans given to farmers for some specific and approved purpose. In all such chses farmers have been enabled to obtain credit on than usual. "In a number of localities in this country, groups of farmers have organized cooperative credit associations or credit unions. "Usually each credit union makes definite arrangements with some bank which the lat- r i acts as a depositary and furnishes loans on specified terms. Thus one of the unions in North Carolina receives 3 per cent interest from its bank on deposits subject to check an.. 4 per cent on savings accounts left on deposit months of longer, anu pays 5 per cent interest on its loans from the bank.'' The credit union in turn pays its own members 4 per cent on their savings accounts and furnishes them loans at 6 per cent. Such a credit union not only accustoms its members to the use of check and .savings accounts but also enables the members to obtain loans for approved productive purposes on better terms than they could obtain elsewhere.” —”