On the other hand there is nothing disgraceful in borrowing for productive purposes.  The feeling that it is not quite respectable to go into debt has grown out of the old habit of borrowing to pay living expenses.  That was regarded, perhaps rightly, as a sign of incompetency. ...  But to borrow for a genuinely productive purpose, for a purpose that will bring you in more than enough to pay off your debt, principal and interest, is a profitable enterprise.  It shows business sagacity and courage, and is not a thing to be ashamed of.  But it cannot be too much emphasized that the would-be borrower must calculate very carefully and be sure that it is a productive enterprise before he goes into debt. [Footnote:  T. N. Carver, “How to Use Farm Credit,” p. 2.]

COOPERATION FOR CREDIT

Even though a farmer be thrifty, industrious, and honest, the conditions of farm business are such that it has not always been easy for him to borrow capital.  Here again cooperation helps.  In some of our states the law permits the organization of credit unions.  The members are farmers of a neighborhood or district and, therefore, are acquainted with one another.  Each member must buy shares of stock, which provides a certain amount of funds.  The union may also receive deposits of money, paying interest on them as a savings bank would do.  This increases the funds and also encourages thrift on the part of the farmer.  Idle money, or money that might otherwise be spent unwisely, is thus made productive.  In some unions, as in Massachusetts, children are encouraged to deposit their small savings, and in some cases half the capital of the union is made up of such small savings deposits.  From these funds loans are made to members of the union on reasonable terms, provided they are to be used for productive purposes.  The union may also borrow money from the bank in town on the collective credit of its members for the improvement of agricultural conditions in the neighborhood.

NATIONAL AID TO THE FARMERS’ CREDIT

Similar aid to the farmers’ credit has been given by the national government through the Federal Farm Loan Act of 1916.  This Act created a Federal Farm Loan Board in the Treasury Department, and twelve Federal Land Banks, one in each of twelve districts into which the United States was divided for that purpose.  Through the organization provided by the board and the banks, a farmer may now borrow money on more favorable terms, but only on condition that he agrees to use the money for the purchase and improvement of land or for equipment, and to engage in the actual cultivation of the farm for the development of which he desired the money.