The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1913-01-17

STAKE LIain aSSeGlall0n, IN
January, 1912, made the following re-
port:
Your committee, consisting OF Carl
e. Rakow Of Wheatland, Anthony
~Stonehouse of Larimore, j. O.. Mills of
Hannaford, III. J.. Hughes of Mime
apolis, and Frank L. McVey of Grand
Forks, beg to present the following
report:
IT is well known to careful obssrv-
ers OF agricultural conditions that q
revolution Is going on in the methods
and processes Of farming, that, In fact,
tha business OF farming Is rapidly
4 changing in its character from a min
ing to q manufacturing process. This
change has necessitated an immense
amount of new capital, for the purpose
of furnishing better machinery, per-
manent buildings. fences, live stock.
home improvements and drainage:
and with this demand for more capital
has come a considerable interest in
methods Of securing it. 1t has been
pointed out In various places that
countries in Europe nave met this
problem in various ways and through
their utilization have been able to
make great advance in the direction
of better and more profitable agricul-
ture. In general money money for
the use OF farmers In Europe has been
furnished on OF two plans, either
through the short time loan, such as
is ommon In Germany, Austria, Hol-
land, Ireland, Italy and other countries
where the amount loaned is small
and the business done by what lis
known as the credit banks, or the
long term loan, such as had oriein in
France and is substantially a long
time mortgage on the property, the
amount of tie indebtedness being paid
4 - 20 -. - L~rE.uz--- - al
sufficient to cover the interest and
part Of the principal. This is what
is known as the Credit Foncier sys-
tenn. while the short time loans go
under the name of the Raiffeisen sys-
tenn. These systems are very general
Iy taken advantage of by the Europe
an farmers and they are recognized
as successful under European condi-
lions.
In comparison with this progress,
the United States appears to be back
ward along these lines. This back
wardness is due to the fact that (1)
lands have been open to all COMETS,
and that the method of cultivation has
been extensive rather than intensive;
(2) poverty has never been a part of
the problem here as it has been in
Europe, and II should not be forgot
ten that both of the systems named
were designated to meet, and have
met, the problem of providing money
for the man without means n in the
direct need financially, consequently
one who is willing to make any terms
and concessions in order to secure
accommodation; (3) that the agricul-
tural population I'm America has been
more transient and shifting in char
acter: "a that there has been great
isolation on large farms, tending away
from the development of that co-op-
erative spirit which is essential to the
creation of such systems as are pro-
posed: and (5) that the development
Of manufacturing has been in the
hands of the people who own the
banks. But now that the free land
has been taken up, and that agricul-
ture is no longer an exploiting process.
but one of maintaining the fertility uf
the soil, the need of business methods
becomes more prominent.
Problem in America.
The problem in America, so far as
the securing of capital is concerned,
is really a double one; the first having
to do with short time loans, and the
second with long time mortgage cred
its. These two problems are distinct
ly different. Your committee, in order
to ascertain the rea facts concerning
these matters, some time ago under
took an investigation Of the farming
, territory between the Great Lakes
and the Rocky mountains, and the
central portion of Iowa and the nor
thern boundary of the United States.
1t asked the farmers these six ques-
tons:
First-what is the current rate Of
interest paid for long time loans or
good real estate security?
Second-What is the rate of inter-
est paid for short loans on collateral
security?
Third-what is the ate OF interest
paid on notes without security, but
considered good by the holder and the
community in general?
Fourth-How much discount is TAX
en- by the banks on notes Of the third
class?
Fifth-What is the average value of
improved land in your neighborhood2
Sixth-If the reader could borrow
money at a reasonable rate of interest,
what would he do with it,
The first Eve have to do with the
question OF interest rates as they are:
1.-The sixth has to do with a question
of whether short time or long time
loans are desired. The facts, as
brought out by replies to our inquiries
Towering practically every county
between the wisconsin river on the
L G26teh AA LAO GhOGhy SAa W
west, between central lowe and Neb-
raska on the south and Canada on the
north-show al that the combined
average interest rate on first mortgage
loans in the territory covered Is TIA
per cent, that the interest paid on
chattie mortgage notes is 90 per cent,
or practically 2 per cent higher
than first mortgage security requires.
Land that the unsecured notes draw an
average of 9.48 per cent, or slightly
ia excess OF the secured rate. At first
thought this would indicate that the
interest rate in the northwest was
excessive. but committee finds that
this breaks up into three natural
/ groups OF interest including and be-
low s per cent. which takes in Wis
cOnsin, Iowa. southern and central
Minnesota, about a third of South Da-
kofa and q narrow strip up the east
ern edee OF North Dakota, and the
western edge Of Minnesota to the Ca
Enadian line. In other words, this is
the area OF well developed farming, OF
dairy herds and beef cattle, Of pork
land poultry. of creaznerfes and cheese
l~factoriss OF corn, clover, and the feed
ing grains. Ii ca likewise the area
where the farmers during two or more
Generations have established a strong
line of moral credit as lis shown BY
the fact that for this area the average
OF long unsecured notes is az follows
interest Rates.
The interest rate on first mortgage
loans in Wisconsin averages SIS per
cent and the unsecured lean rate il
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