The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1893-11-22
Western Investments.

Editor Of WdtchmdB;-Since the financial
crash of the present year, which has in
volved some of the strongest loan and invest
ment companies in the world, | am receiv-
ing very frequent inquiries regarding the
value of securities held principally by
assignees of said companies, and mostly
living in the Eastern and Middle states.
As many of your readers may be directly or
Indirectly interested in western securities,
| will give you some of the details of the
loan business. The formation Of loan COM
panies commenced some twenty years ago,
and the business of placing eastern and
foreign capital has grown since, year by
year, until it has become enormous. The
money thus secured has been obtained by
the companies of the capitalist at from five
TO seven or eight per cent. The borrower,
living and owning the security here, has
paid from seven to ten per cent interest,
The difference of the rate paid here aud
that received by the lender represents the
commission or profits to the loan companies,
less their brokers' commission, office eX-
penses, collecting expenses, examiners eX.
penseS, etc. Where inves ment companies
that guarantee the payment of principal
and interest have operated largely in the new
states like Kansas, Nebraska and Dakota,
the results have generally been disastrous
TO the company, and have incurred great
losses to the lender. The hard times and
great depreciation of prices of farm land in
the new states from the former inflated
values or boom prices to their actual value
is what has caused the failure of ZONE COOL
companies. Real estate dropped there;
crops failed to some extent. The farmer
was unable to pay his interest, their farms
were foreclosed, the money loaners became
the owners, and were, in many instances,
unable to realize one-half of the amount of
the money advanced by an actual sale of
the land. But where the loan companies
have confined their operations to states like
Iowa, Missouri or Illinois, there have been
comparatively few losses. During a bust
ness experience in the loan business of
some nine years, | have placed in this
and adjoining counties (nostly in DeKalb
county, more than a million dollars. OF my
loans there has never been one dollar loss
to my clients. l have made it a rule never
to recommend more than forty per cent of
the actual value of farms, and having care
fully examined and prepared all abstracts
of title, where | have negotiated loans, and
as there has been but little or no deprecia-
ton of farm land in northwestern Missouri,
the result is no ~delinquencies, no foreclos-
ures, and no losses to the borrower or the
lender. l should be glad il | could say that
the same rule would apply throughout the
West, but am compelled to say hat in parts
of some new states there are great losses.
In conclusions: To those who have money
to invest in the future, my advice would be,
il you invest in western securities of any
kind, first ascertain that the farms that
stand as security are Just what they are
represented to be and located in localities
where they will never become of less value,
or else keep your capital east and assist in
home enterprises, which you can safely do,
amidst the thrifty villages of Vermont or
New Hampshire. DANIEL PERRY.
Maysville, Mo-, Nov. IA, 1893.