In Sakaltutan, in 1949-50, the villagers still drew their loans direct from the Agricultural Bank in Kayseri, though by 1955 they too were members of a Credit Co-operative. In 1950 I had the impression that most households which qualified had taken loans.
Normally, loans are collected by the Bank immediately after the harvest, and then within a short period fresh loans are made for the next season. The villagers in Sakaltutan told me that if any one villager defaulted the Bank would make no fresh loans to that village. In fact, it does seem that the debtors were grouped in mutually responsible groups, usually by villages.
The effect of the loans was not in any way to encourage capital improvements. Money from any source was used in any way the household needed to use it, and loans at low interest were naturally welcome. The first time a household received a loan it was thus a kind of shot in the arm for current expenses, but thereafter the year-to-year position was no different from what it had always been - the comparatively large sum from the harvest simply went into the bank and out again, and-was then used for the usual purposes
Nevertheless the system had advantages. The loan acted as a cushion. In good years, some households reduced their government loans, thus putting themselves in a position to borrow more than they had to pay back in a bad year or an expensive one.
The loans did not, however, help to meet the villagers' most serious problem: a year with no harvest. If the crops were below a certain percentage of average, the Bank declared a moratorium on all debts. The villager was then in the same position as he would have been without the Agricultural Bank. He had no crops to sell, no income to buy the annual necessities, and probably not even enough food to last until the next harvest. Because he owed the Bank one debt, he could not borrow again from this source. Some villagers have ways round this difficulty. The loans are personal, so that if a man's son or his wife can be declared a landowner, and if the headman will ratify the application, a fresh loan can be obtained. This kind of thing is more difficult once a Credit Co-operative has arrived in the