Ellsworth American. [volume] (Ellsworth, Me.) 1855-current, 1912-10-09
INTEREST TOO HEAVY
COSTS FARMERS TOO MUCH TO
BORROW MONEY.
AMERICAN AeRIcULTURIsTs PAY $780,
000. 900 A YEAR FOR USE OF CAPT.
tai; GERMANS HALF as MUCH.

on the mortgage security OF city property
cost only per cent, but the American
farmer has to pay an average rate OF SIS
per cent. for the money he needs to oper-
ate his business.
Why this is so, ard how the European
and even the Egyptian farmer are able to
borrow more cheaply than their American
competitor, is told Interestingly by b. F.
Yoakum, president of the st. Louis q
San FRANCISCO railroad, in the Worlds
Work.
Writing in the September number OF
that magazine under the title, .'Tbe High
Cost OF Farming" Mr.. Yoakum places
this excessive burden Of interest borne by
! the agricultural producers of this country
first among the causes Of the high cost Of
living-a problem that is more serious
here than abroad, since, as he points out,
the American dollar shrank 80 per
cent. in purchasing power between 1897
and 1911, while the English dollar lost
only p per cent. OF its value in the same
period, and the German dollar still less.
"Cheaper money for the farmer" says
Mr.. Yoakum," is the first OF our agricul-
turRl problems. When I make that state
ment / am not thinking of the bonanza
farmer. or OF the owner of few thousand
acres of highly developed and carefully
cultivated land. He borrows on a BUSH
ness basis, Often the large planter Dor
rows to meet his current needs from
couple of nearby banks in which he owns
large interests. His business has nothing
to do with the agricultural prosperity, or
the reverse, of the..average American farm
er. His problems are as different from
the troubles of the average farmer as are
the troubles OF the United States steel
corporation from the trials of the local
foundry in a crossroads town.
'After all, when you come to talk of
agricultural borrowing, you have to come
down to talk in terms OF the sone- bale
farm. The farm Of eighty to 100 sores,
titled and worked to its limit, is the real
agricultural unit. The foundations OF a
permanent agriculture in any country
are laid only when the land is made to
support as many families, owning their
own land, as the land can properly sup
port. Therefore, the fundamental ques-
tion in farm money is the question
| whether the individual farmer, owning
and operating his own land, is supplied
with ample capital at reasonable rates, or
whether he is stinted in capital and
gouged in his interest account"
Citing government statistics to show
that the total Indebtedness OF American
farmers is IS, o46, ooo, 600, MIR. Yoakum con-
tinues:
1.-THE farmers debt In about half on &C.
count of fixed capital-mostly mortgage
loans-and half on account of current
loans. The total number Of farms in the
country is about 100000. Therefore, the
average farm has mortgage debt Of $500
and q current debt of about the same
amount outstanding against it.
.'The rate OF interest paid on this tre-
mendous volume Of borrowed capital is,
according to the best estimates can find,
between and per cent. per annum.
The actual rate OF interest itself is only q
part Of the burden OF borrowing. To it
must be added the constant drain OF re-
newals for mortgages on farms, of loans,
fees for recording mortgages and other
loans to farmers, most Of which are made
on short term, and commission fees and
compulsory insurance on renewals. From
all have been able to gather from the
best availab sources, 1 estimate that an
average rate paid by our farmers is 81 per
cent. per annum, which is . conservative
estimate Of the full cost paid on farm
money used in the financing and capitali-
cation OF the farms of the United States"
The annual interest bill, therefore, paid
by the farmers is about S510, 00O, 900. The
total value OF the wheat crop Of the United
States as OF December /, 1911, farm value,
was s5A3, 100000. Practically, the interest
account Of the farmers ate up the total
wheat crop of the entire country.
How much heavier this burden is than
that which the European farmer has to
carry, Mr.. Yoakum explains by pointing
out that the German farmer can borrow
on mortgage from the "Landschaften" or
"Ritterschaften" associations OF land
credit, at an average rate Of 4.4o per cent.
| "Under these systems the farmers, in a
certain territory, form into cooperative
! so~A~NASS1 9shuieatths tuolE iafui tdnub
under negotiable bonds which are offered
jointly as security for the credit they need.
The individual then borrows from this CO.
operative society. 1t is just as though all
the small farms in Texas county, no one
OF which is more than I60 acres, were
pooled into one great society which
borrowed on single bond against all this
property, and then lent to any individual
farmers forming this pool as they needed
money on mortgage. This system has
been in general use in Germany for more
than 14o years and cannot be regarded as
an experiment.
| The French farmer is equally fortunate,
for the aCredit Fopciern, with resources
derived from the sale of 8 per cent. bonds
to the public, has lent more than two
billion dollars at rate which is at preseut