The morning news. [volume] (Savannah, Ga.) 1887-1900, 1889-11-04
COMMERCE AND FINANCE.
CONDITION OF THE FARM MORT
GAGE LOANING BUSINESS.


in Southern Lsnds?-The Iron In
dustry Six Big Brokers Unite in
Recommending an Investment.
CCopgriohtA
NEW YORK, Nov. Public attention has
been directed to the farm mortgage loaning
business very sharply.
And very properly so.
For more than dozen years funds have
been flowing to the west for investment in
farm mortgages, and to-day hundreds of
millions of dollars, the surplus accumula-
ton of individuals and institutions. are tied
I'D in mortgages upon farms in Michigan,
Illinois, Nebraska, Missouri, Kansas and
other states, notably in the south. At first
the loans were placed by local bankers or
real estate agents, but out of the growth of
the business developed the numerous farm
mortgage loaning companies. The relative
lv high rates of interest offered and average
prosperity of our western and to a less ex-
tent southern population, together in most
instances with careful placing of the loans,
rendered this form of investment quite
popular, and its growth has been enor-
nous.
Twenty companies alone, with a total
capital of about IS, 250, 900, have placed
more than SIS, 000, 900, and these form but a
portion of the regularly organized channels
of investment of this class.
The recent publication of the inability OF
one of the these companies to pay "a back
interest indebtedness of sos, 900, on
guaranteed loans, created good deal of I'M
easiness and caused sharp comment This
was followed by an announcement that
some loan company or companies had placed
money on Kansas farms in the days of pre-
emption, dating the mortgage prior to final
proof and that under late decisions were
likely to lose millions of dollars"
Then came the virtual attack of the New
York state superintendent of banking upon
western farm mortgages as investments for
state banks.
To thinking, conservative people the ques-
ton arises is there anything unsound in this
business, as conducted generally?
They recall two or three unfavorabe sea-
sons for Kansas farmers OF late, and are in
tested further.
Within two weeks the editor of a promi-
nent newspaper which circulateS widely in
New England and in the south and west
wrote to me for summary of the reasons
for believing that farm mortgages are a
good general investment His letter
evinced that many of his readers were anx-
ious.
There is no doubt that some of the larger
and stronger companies guarantees are safe
ones, but from personal investigation there
is reason to believe that by some concerns,
in their anxiety to put out funds, to get
business, that the work has by them been
Overdone.
But it is immensely important that no
violent collapse take place even among the
smaller OF weaker concerns, for the effect on
the public mind would react upon the bust
ness as a whole.
Among well-known men Mr.. Edward
Atkinson has given as much attention to this
subject as anyone not directly engaged in it,
So asked him what he thought of the
probability of weak spots
He replied that "the success Of the mort
gage companies loanIng money on west
ern farms down to the date when l made an
analysis of the condition of several leading
companies was such as to make it certain
that wildcat companies of the some kind
would be organized"
sand how do you regard the existing
situation?'
The natural course has been followed.
The wildcat company forcing money upon
farmers which has not been sought by them
has led to the disaster which might natu-
rally have been expected These disasters
are like all crises in any line Of business; a
wedding out of the unfit, a test of the
strength of those which are fit to survive,
and when that test has been applied the
sound, sagacious and prudently managed
farm mortgage companies will go on after
their customary manner"
Here Mr.. Atkinson evidently believed it
we'll to make plain the utilitarian side of
that to which the existence Of the wildcat
companies points. for he added:
IF | have rightly observed the course of
commercial crises they have been what l
believe Bagebot defined them, Processes of
cure clearing she way FOR sounder methods
of management. 10, 80
GAS to the outlookF
1.-THE wild speculation IN eastern lands led
long ago to one great panic; wild speculation
in western lands led to another We shall be
fortunate If wild speculation in southern
lands does not lead up to another. The
wildcat mortgage companies which are now
IN difficulty have led 10 wildcat undertake
ings on the part of those whom they have
misled. Their bankruptcy or receivership
will be but suitable conclusion TO their bad
methods, clearing away rubbish"
The National Pig Iron Storage Associa-
ton has finally had its warrants listed on
the exchange at New York, and ''specula-
ton" in pig iron, as in wheat, corn, oats,
pork, lard, cotton, tin. lead, petroleum aud
coffee is now rendered possible.
There is a sentiment among large num-
Der OF the so-called conservative iron deal
ers opposed to this move, and great interest
is excited throughout the trade as to the out
come. Not little fun has been poked at
the association because, as alleged, it has
only about 10000 tons of iron IN store at
Two or three points throughout the country,
such an insignificant quantity, it being ut
terly inadequate.
had had the impression in talk some
months ago with William Libbey, promi-
nent in the association, former partner of
the late A. T. Stewart and one of New
York's Oldest and most respected mer-
chants, that it was not the purpose of the
association to have its warrants listed. But
on asking him again find that such impress
sion was erroneous. The question then fol-
lowed naturally:
What are your reasons for believing a
speculative business may be built up in ex-
lSGlng stocks in yards, said to be small?'
MT. Libbey replied that ''the original in
tentlon was to defer putting warrants on
exchange boards until quite large number
VI warrants were In existence, but it be-
came apparent that the inquiring for war
rants would assist in getting them. There
lore, the machinery has been put in shape
ana the result has been to increase sales of
IRON for future delivery by warrants. In
TACT, the demand for these warrants is very
largely in excess of the supply, so much so
mat they are and have been readily salea-
ple at 1ully 90 cents per ton above the mar
Aet price for iron on cars at the same
point y