An economic analysis of the activities of agricultural representatives in Tennessee banks

Commercial banks are an important source of agricultural credit.Their importance varies from area to area. Some banks have made little effort to attract agricultural business and others have made definite efforts to meet the credit needs of the farmer. One way in which some banks have attempted to better serve agriculture has been through the practice of employing agricultural personnel to work with the farmers. It can be assumed that the banks having such a program feel that in addition to enabling them to better serve agricultural needs, it can and will either expand the agricultural banking business and/or decrease the losses sustained in agricultural lending more than enough to finance the program. Thus, the program to be successful for the bank would have to affect favorably any or any combination of the following insufficient degree to at least cover the costs of the program: (1) the volume of credit extended to agriculture, (2) the volume of deposits drawn from agricultural sources, and (3) the volume of loss from credit extended to agriculture. Relatively little has been known about the work done by agricultural personnel associated with Tennessee commercial banks and evenless has been known about the effectiveness of their use as it affects the banks and the farmers in their attempts to secure adequate credit. It is known that several banks in Tennessee now use such personnel and have a specialized agricultural credit program. By studying these programs it should be possible to arrive at conclusions as to the work done by these agricultural personnel and the effectiveness of this work. Specifically, the objectives of this study, the first of its kind in Tennessee, are: (1) to determine the types of work done by these personnel, (2) to attempt to measure the effectiveness of this program from the banks’ point of view, and (3) to explore the effectiveness of the program from the farmers’ point of view, and (4) to make recommendations and suggestions as to how such a program, if effective, can be represented by banks not now utilizing agricultural representatives. The plan of inquiry is to briefly examine the theory of capital formation and capital budgeting, showing the place adequate credit has in the formulation of economically sound farm plans. Next, there is presented a brief examination of some of the sources of credit. With this as a background, an attempt is made to deal with the problems suggested by the four objectives of this study, as stated above