Under certain conditions of farming, more especially in the West, credit for a farmer is more or less a necessity, and loans to responsible farmers is a desirable and legitimate business for a bank. In the East, where mixed farming prevails, the farmer is not only in easy circumstances, with perhaps a savings bank account or money loaned out on mortgage, but he has a more or less certain income thruout the year from the sale of farm produce to the neighboring towns. Loans when made to him are generally for some specific purpose - such as the purchase of cattle for fattening - in other words for the creation of an immediately liquid asset.

In the West, however, where only grain-growing prevails, a farmer has practically only one crop a year, and it is necessary for him to have credit while he is preparing for the crop, as he has to wait until the fall before receiving any return for his year's work. Seed must be bought, labor paid for and, while the crop is growing, the farmer must live. Few farmers can cultivate their farms without some credit either from a bank or store, and if no credit were extended they could neither purchase nor produce anything.

Credit to a farmer, no matter what his moral or financial standing, is relative and should not exceed a year's supplies at any time. The loan should be cleaned up regularly after harvest, unless arrangements were made by way of advances under Section 88 of the Bank Act. The size of the farm and the amount of land under crop should also be carefully considered, for some farmers are too ambitious and try to farm too much land. The tenure of the land, the amount of mortgage, and other indebtedness, especially for machinery, are all important features in considering advances to this class. As a rule, the farmer should not need to borrow from the bank until seed-time to pay for seed, labor and the like. If his crop is successful, he should be clear of his indebtedness before the end of the year, and have a good surplus to pay on his mortgage or to place in the bank.

A clause in Section 88 of the Bank Act of 1913 permits a bank to lend money to a farmer "on the security of his threshed grain grown upon the farm." The addition of this clause was due to the fact that the grain grown by a farmer in the West was expected to clean up his indebtedness at harvest time or shortly afterward. This condition worked a hard--ship on the farmer, who sometimes had to throw his crop on the market regardless of prices, instead of having an opportunity to await normal conditions. The volume of sales, moreover, at this time depresses prices and adds to the confusion and congestion on the railways. The farmer is now in a position to offer the security of a staple article, and can borrow enough on his crop to pay off his indebtedness. It is still early to give any opinion on the result of the new law but, speaking generally, it possibly will not make very much difference to the responsible farmer, as he was able to borrow money on his own note in any case. As to the farmer of less favorable standing, it is questionable whether a security entirely under his control will improve his chance of credit.