The Black Hills union. [volume] (Rapid City, Pennington County, Dakota [S.D.]) 1889-1904, 1891-02-19

EASTERN CAPITAL,

their goods.
EASTERN CAPITAL.
Our exchanges are loaded with words
OF advice and warning to our legislature,
on the subject OF financial legislation.
Particularly are they advised not to
pass a more stringent usury law, nor a
law for the taxation OF mortgages. The
tendency OF such laws would be to keep
foreign capital out OF the state is the
burden OF their song. The following,
from the Argus-Leader is a sample:
The farmers OF South Dakota are
poor. They are deeply in debt. At pres
ent they are heavily dependent upon the
loan companies, not only for the money
to operate their farms but for the farms
| themselves. Should the companies con
clude to withdraw from the state wide
| spread misfortune would ensue. And
yet the placing Of a tax on mortgages
would result in just this, orin raising the
interest to the amount OF the tax, and
either would react disastrousIy on the
mortgagors. The companies place their
money here because they getlnterest SUI
| f~iciently high to overcome the risk.
Should the interest be reduced the in
ducement would disapper and the COM
panies would foreclose their mortgages
and withdraw from the state.
No one can deny that the farmers OF
| Dakota are poor and heavily in debt.
But if, as has been proven, the very best
| OF farmers cannot make over five per
cent on the money invested, how in the
name OF common sense will they be
helped by coaxlng loan companies to re-
main that they may pay them - per
cent. Had not the above widespread
misfortune better come at once than to
be dragged out for years to come in the
end?
Perhaps when our single tax friends
get to the front it will not be necessary
7 to tax all classes OF property, but under
/ our present system, as a matter OF JUS
tice, every specie OF property should be
taxed at it's cash value. In a measure it
may come back in the shape OF increased
interest, but it will only be in a measure,
and II it came back in full, the farmer
would be no worse Of than he is at pres
emit.
The theory that a reduction OF inter.
est would drive eastern capital from the
state is advanced on an entirely false
basis, viz. that it is eastern money thai
has commanded high rates in the west
To be sure, as compared to caster
rates, the rate OF interest that easter
lmoney brings in the VESTS high. Butth
a rate which the eastern capitalist get
S when compared with the rate a wester
! farmer Or merchant pays, is very low
e Why! way back in 'S5 and 'S6 whe,
money was higher than it has been sine
except during the recent furry, the ma
who made a loan executed a mortgaG
to eastern parties at only seven per cen
THU was sni eeetnrn money brough'
and yet to the western agent lo s.s,1ad
second mortgage which brought lis loa
y up to Is per cent. And today, through
y out South Dakota, eastern money doe
,e not net eastern holders to exceed seve
l. per cent, probably running from six t
eight, according to the security, and W
It it costs farmers or merchants from 12
"a per cent. Thus we find that it cost
from six to 16 per cent to place easter
money.
VI 1t is the class OF men who are gettir
this per cent, who are making the HOY
about driving out eastern capital. The
realize that the enactment and enforc
ment OF such laws means one OF tw
things: either they must cut their con
mission down to the basis on which IL
producer is living-three per cent-or +
tire from business.
l. Right here is where most honest me
l. are misled. They really believe the CT
that capital will be withdrawn, wherea
s it is the agent not the capital that wi
e disappear. This is the only class Of MIC
dlemen that the majority OF the alliane
: would be in favor OF dispensing with, an
we would not be hard on him. W
would welcome him to the ranks OF th
+ farmers. Most OF them own plenty {
S farms and they have always been free i
Z their advice as to how a man should S
: manage a farm as to pay the indebted
ness, consequently they are well equip
ped for this business.
The timidlty ofeastern capitalist, th
foreclosure Of mortgages and tn
: withdrawal OF loan companies, j
! brought about more directly iron
!, the management OF these agents
, than from any other one cause
The high commissions they have taken
!, instead Of satisfying them, has mad
them ayaricious for greater gain
! and even competition has only resulted
: in greater and more earelessly place,
: loans. Property that could not conse1
| va.tlvely command a loan OF over S25t
to $500, has been m%ortgaged for iron
!, $500 to $500. While this afforded
temporary relief to the farmer or specu
: lator, a reaction was sure to follow
which must prove disasterous to bot
loaner and borrower. We believe tina
legitimate banking institutions could, il
t addition to their regular business, handl
+ farm loans at one third the commits
: sions now obtained. Ii they would no
r then let farmers and merchants coinbin
and handle this eastern capital them
selves.
Plain sewing and patching done
Leave orders at fourth door from Mai
. street, over First National bank.
l
: Reports from the valleys OF losses il
! cattle are beginning to colne in, We lear