Barbour County index. [volume] (Medicine Lodge, Kan.) 1880-current, 1891-07-22

i
tration Of the fact that those who pro-
fess to know the most about finance in
reality know the least, 1 submit the
following editorials clipped from the
| North Western Financier, of Denver.
Col:
Some people are prophesying that
the Farmers Alliance, as a power in
politics. has come to stay Many poll
ticians are trimming their sails accord
ingly. Already it is said that ex-Sen-
are the mighty fallenp Such time
servers will realize their mistake in
due time. This country is too intelli-
gent to be governed by such principles
of finance as the alliances have pro-
mulgated Such men as the sockless
statesman from southern Kansas will
not rule this country. The financial
reforms proposed have all been
tried and exploded They will not
stand before discussion and investiga-
ton. England tried these same cur
rency theories 800 years ago. France
did the same during the revolution
Did not the Argentine republic do al
most the Identical things contained in
the platform adopted by the farmers.
In every case national bankruptcy and
ruin were the result The same thing
would follow in this country. We can
not ignore history; neither can we de-
feat the laws of the Almighty. The
| farmers themselves would see the error
and abandon it This country is not
going to be ruled by any one class of
| people-neither by the farmer nor
instrumentation laborer nor capital
ist; and any political party built upon
one class or interest will go down, as it
ought to. No, sir; the Farmers Ali
ance as political power, will not stay.
1t will soon serve its day and may do
good, but it will CO."
''In the annual report of the Jarvis
Conklin Mortgage Trust Co. we find the
following:
The market value of "a railroad stocks
listed on the New York stock exchange
shrank In value the enormous sum of .l21,-
l2s, 1855 below the market value of said stock
six months ago; and 1t is estimated that
within that period the market value of all
stocks listed on the New York stock ex-
change deprecated In value $3.50, 600 600, or
20 per cent. of their value six months ago.
It 10 With reasonable degree of satisfaction
that the directors of this company call atten-
ton to the fact that the market value Of this
company's debentures did not become re.
ouoed in value one per cent Land, the basis
OF these securities, 10 ultimately also the
basis OF all values, and while there may be
periods when 1t depreciates, It oan never be
entirely wiped out, and must always finally
return to It's true and normal value.
Here are some important facts,
which too many investors fail to real
lie. A hue and cry has been raised
against western mortgages, on account
OF some losses that have occurred,
where investments have been unwisely
made; but these losses bear no COM
parison to losses that have occurred in
other classes of securities. For in
stance, take the stock of the Atchison,
Topeka & Santa Fe. Over $50, 900, 900
have been lost by shrinkage in that one
security, which is more than has been
lost on all the farm mortgages In the
west in the last twenty years The
stock of the Rock Island has fallen from
14O 1885, to about 20 in 1891, or a total
loss Of one half. We think the day is
near at hand when confidence in
western mortgages will be greatly i'm
proved. Prosperity is returning to
Kansas and the west. Values are adj
vancing. The bottom has been reached.
A reaction has begun. Liquidation is
going on among the farmers The
losses SO fondly predicted by enemies of
western securities will not occur"
The above naturally excites in the
mind curiosity to know just what are
these ''company's debentures" which in
the recent crash and wreck of specula-
tive values, Ibid not become reduced In
value one cent"
What, then, are "debenture bondsp"
I will tell you These loan and trust
companies and farm mortgage and in
vestment companies, etc., ETC., invest
their capital In farm mortgages That
Is to say, they have their capital out to
farmers at from 6 per cent, with a
commission, to IL per cent straight,
but as rule so as to average about
9 per cent. to the farmer, from whom
they receive mortgage and five or
seven-year coupon bond for the amount
loaned.
Now mark: These bonds, as rule,
are not allowed to show a greater rate
OF interest than Z per cent-indeed,
many companies limit their revealed
rate OF interest to per cent The
average rate of or 10 per cent. is OBJ
tanned in two ways; first, by taking a
sufficient amount of money out of the
principle advanced to make the rate for
the term Of the loan amount to 9 or 10
per cent the money thus taken out is
called commission. Second, by taking
second mortgage to secure 10 notes
for the semi-annual payments of Q, or
4 per cent, as the case may be- upon the
principle sum for which the first mort
gage is given This is called ''com-
mission" mortgage.
Having invested, say 800, 600, in this
manner, receiving that amount of first
mortgage bonds drawing an average of
8 or per cent, the next step is to de-
post these bonds and the mortgage Sc
curing them with trust company in
New York, Boston or some eastern
money center, which trust company,
for a small per centage, guarantees the
payment of what are called "debenture
bonds" such being nothing more or less
than the long time bonds of the company
to whom the farmers gave their mort
cages In the first place, but bearing l,
or per cent less than do the bonds
originally given to them by the farmer.
These ''debentures" they sell for cash,
thus receiving another 500, 900 in money
to loan out to the farmers.
1t will be seen at glance, that this
system enables loan company to du-
plicate their capital as many times
as they please. such duplication
being limited only by the de-
mand on the part of the farmers for
loans upon their farms. The profits
accruing to the loan company are
found, first, in the commission received
from the farmer above the rate of in
terest shown in the bond; second, in
the margin or difference between the
rate of interest received from the farm
er upon the bond, and the rate paid in
vestors upon ''company's dedentures. :"
There is no doubt but that Jarvis
Conhlin s. Co. have issued and outstand-
ing debenture bonds amounting to