The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1896-02-20
INDIANA FARM MORTGAGES.
As Investments They Are FavOrably
Considered.

In considering the subject OF Indiana farm
mortgages, l shall endeavor briefly to pre-
sent a few suggestions in refer
ence to the elements of strength of these
securities. As preliminary. it may be peril
nent to call attention 20 the magnitude of
the farm mortgage business. 1t is not pos
sible to readily obtain exact statistics upon
this point. BY reference to census bulle-
tins of 1890, which form a partial state
ment only, we find the farm mortgage in
debtedness of the United States was nearly
two billion dollars. The greater portion of
this Indebtedness, in proportion to popula-
ton, was in States west of the Mississippi
river. In Indiana the farm mortgage in
debtedness was over $7i,000,GO; the average
proportion of the value loaned, a fraction
over so per cent, and the ratio OF mortgage
indebtedness to the estimated true value
of all the lands was nearly 10 per cent.
The foregoing clearly proves the element
of strength Of Indiana farm mortgages, a
matter which has been overlooked. by the
Eastern capitalists and investors.
Until some few years ago the Western
farm mortgages on lands west of the Mis-
sissippi river, where money commanded
high rates of interest, were in high rank
among capitalists. Millions of dollars were
invested in debenture bonds by the most
conservative investors. the amount invested
became enormous, nor did the investments
cease until loan companies began failing.
During the panic of 1878 but few foreclosures
were made in Indiana, and a less amount
nave been made since the present stringen-
cy than during 1873.
This is accounted for by the fact of steady
de yclopment of farming lands. Indiana,
while IL may not be the lin est, Is without
exception one Of the finest fields for opera
ton as regards these loans. Its SOIL is not
ably rich, a fine alluvial and black loan
predominating, and producing all KINDS OF
cereals, fruits, etc. Its inhabitants are a
thrifty, hard-working class of men, OF sober
and prudent habits, who have made for
themselves in this State permanent homes
The country is fully settled and improved,
and diversified crops are raised so tnat
in the event of failure of one crop the
farmer has other sources from which 10
raise his interest on his loan and create a
sinking fund for paying of the mortgage
when due. Ii has excellent railroad systems.
enabling the farmer to reach all the markets
with his products. Its railroads could tie
up one day and strangle traffic in the Ma
ton. Its resources are great. and me en-
ergy. push and good judgment or Its IN
habitants are equal to that or any state
OF the Union.
These are elements TO De considereu py the
investor looking for a good safe investment
that paws a better rate of interest than gov
ernment bonds. Real estate represents act
ual value. and it holds in itself the elements
of life. and as a food producer alone is the
foundation of all wealth. The farms OF IN
diana are paying full interest on all proper
investments. The man who has carefully
invested in Indiana farm lands and lost Is a
party who cannot be found.
Financial depressions will come, let the
government be ever so we'll managed, and
when they come let all avaiiaoie means DE
put in mortgages on improved farms in an
old or fully developed farming country, ana
then see who feels the stringency the least.
The history of 1913 and following years
shows il was the owner of mortgages on
farms in a well-developed farming country,
where there is no depreciation or vane
brought about by failure OF crops.
The value of Indiana lands or lands or any
other old State will fuctuate, but nothing In
extent to that of paper. Real estate being the
basis OF all value, ii follows that first mort
and best security. Take the theory of con,
sentative investors without doubt a logical
one). and we find that first mortgages on i'm
proved farms are preferred in many in
stances. for the reason that the value which
is made the basis of the loan II not so read
lily overestimated as is sometimes the case
on city real estate; a farm worth so per
acre is a giit-edged security for a loan OF
SO or $12 per acre (the moral risk. or course,
being considered. as much depends on tnis).
as the land can actually. produce THIS
amount i'm a short time by the crops raised
on it. The investor cannot go il blind as
the old saying goes.
No man can successfully handle his
money without careful attention to little
greater proportions. He cannot open the
purse and let his money go out in exchange
&c: unexamined securities without sooner
c. ia.cr coming to The worst KIND OF grlei.
If he thinks of investing in stock in an in
drstria! concern. the question that should
Erst arise is not the probable DIVIDENDS,
bur what is tire property basis OF the en-
terprse So with a farm mortgage the IN
weston mus know the value OF basis OF Sc
curity, then he can readily determine the
amount of money ne can loan on the land.
One farm may have a market value OF So
per acre. and another of $40 per acre, and the
lower priced land be a safer security f0r
a loan of $40 per acre than the higher priced
land, on account of its prOductiveness, as
the borrower must meet his interest pay
ments and create a sinking fund for pay
ments of principal from sale or products
of the land. The agent making the loan
must be a man who has knowledge OF
values of lands and OF their ~productiveness
as we'll.
consideration. Very little money has been
loaned on Indiana farms by nonresidents.
and practically all the money loaned is
by insurance companies which have been
In the field for years, none OF which have
lost a dollar on Indiana loans. The fore
closures have been very few, and with
few exceptions all properties have been
redeemed, and those not redeemed have
been sold at quite an advance on the actual
cost. On good loans the interest is s per
cent. to z per cent, according to amount
loaned. but excellent security can be had
at 8 per cent. interest. The mortgage is
executed to the mortgagee. as is also the
note with coupon interest, notes made pay
able at any bank the mortgagee may direct,
with exchange. A mortgage SO executed is
really backed by better security than a
dehenture bond issued by a mortgage COM
pany on lands in the newer and practically
urdeyelOped States.