PERSONAL AND BUSINESS LOANS

business. These loans are obtained usually but once ayear at a specified time. The ultimate cause is the cycli-cal change in the position of the earth in reference to thesun. This gives rise to the cycle of the seasons, the effectsof which are felt not only in agriculture, but in manu-facturing, transportation, trade, and banking. The alter-nate congestion and thinning of the freight business, thealternate stocking and depletion of raw material in fac-tories, the seasonal fluctuations of trade activity, bothwholesale and retail, the transfer of bank deposits be-tween New York and the West for moving crops, orfor other uses, all testify to the seasonal rhythm whichis constantly felt in the great network of business opera-tions. Without some compensating apparatus, such asthat for borrowing and lending, these seasonal fluctua-tions in production, trade, and finance would transmitthemselves to the final enjoyable income streams of indi-viduals, and those incomes instead of constituting aneven flow would accrue by fits and starts, a summer oflavish enjoyment, for instance, being followed by a win-ter on short rations.

To show how borrowing and lending compensate forthese fluctuations, we may consider first what is perhapsthe most primitive type of the short term loan, namely,that contracted by poor farmers in anticipation of crops.In the South among the negroes this takes the form ofwhat is called a crop lien, the cultivator borrowingmoney enough to enable him to live until crop time andpledging repayment from the crop. Here, evidently, thepurpose of the loan is to eke out the meager income ofactual enjoyments. The loan, in other words, is for sub-sistence. This case, therefore, clearly involves the im-patience principles.

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