The Mt. Sterling advocate. (Mt. Sterling, Ky.) 1890-current, 1912-07-31
The big objection to farm mort


cages as investments is that the
buyer cannot check the value of
the security in any satisfactory
way. He knows that the bond
merchant with whom he deals often
Rspends thousands investigating an
industrial organization which wants
to borrow a large sum of money
on an issue of bonds-and then
decides not to take the bonds. Ex-
pert accountants, engineers, and
Iawyers-the best men in the
country in their lines-are sent to
audit the concerns books, appraise
its property, and examine into
questions of title, leases, franchises
and other legal matters. OBJ
viously, scattered farm-mortgage
loans, seldom running as high as
$40, 900, cannot stand the cost of
any such investigation. But, taken
generally, farm mortgages are
good, and they pay rate of in
terest about 2 per cent. higher
than good bonds. On his side the
farmer is overcharged for credit.
One measure of relief suggested is
an adoption of the Landschaften
Association of Germany, which
make loans to their farmer men,
bers at rates which vary from 3 to
Al per cent, plus an annual charge
for ultimate repayment of one
eighth of l per cent. and one
tenth of l per cent. to meet adj
ministration cost. In the United
States similar associations of far
mers can be organized which will
guarantee the repayment of loans
made to members. If 200 farmers,
needing to borrow money and liv-
ing fairly close together, should
meet and work out some plain
rules as to the amount and char
acter of loans made, then the
banker could safely recommend
this form of security to investors.
1t would be discovered that A
owns 100 acres of land in fair
state of cultivation, with a clear
title. That farm has a market
value of $1,000. Let A borrow
on it not more than $4,000. Let
him understand that the cost of
the loan is just what the resident
of prosperous city Through the
.city's elected officials) has to pay
for money to fix the streets, put
in waterworks, or get better
lights. Give him a long time in
which to repay the loan, requiring
small payment on the principal
at each interest date. Impress
upon him that money ought not
to be borrowed unless it can be
used to increase the value and
productive capacity of the farm
permanently. These details would
be looked after by the association.
Every six months the association
would find out how much money
was needed to meet all legitimate
demands for loans to member.
Then bonds to that amount would
be issued and sent to the banker
Promptly the banker would buy
the issue and begin to sell them
to investors. No form of security
is intrinsically sounder than farm
lands. AS farming methods are
.bettered in this country this secur-
lily will become sounder. There is
no logical yeason why a Pennsy!-
yania farmer should pay 81 per
cent. for money when the citizens
of Lancaster or Pittsburgh or Phil
adelphia can borrow money for
3.95 per cent. Nor for the farmer
OF Kansas to pay s per cent. when
Topeka school district bonds are
selling on a A per cent. basis. All
that is needed is the organization
of farm borrowers into some re-
sponsible body.-Collier's Weekly.
$500 Panama Hats cut to 50. rs.
Punch q Graves.