Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1913-07-18


banks re-invest their funds with
larger reserve banks and the reserve
| banks in turn place their money in
the central reserve banks of New
York or Chicago does not appear, IN
practice, to give the banks very
satisfactory method of calling in
their money in times of panic. But
if the money had been placed in
mortgages not due for several years,
the banks would have been in an in
f.nitely worse position. The funds
Of savings bank or some of the
funds of a trust company or stare
! bank can be invested in this way, bn(
whatever could be secured from this
source, without risking the safety Of
these Institutions wouldn't amount
to drop in the b1cket. The banks
might as we'll be eoupted out Of this
question.
BESIDES the banks there are the
tiA sums entrusted with the life in
suralce institutions which are placed
" iJh the Companies for long periods,
and for which the demand can be
foletcld with great accuracy. Life
insurance companies carry on a big
business in mortgages. Investments
Of insurance funds in the mortgage
field are greatly increasing. How
ever, this source of capital is not ade-
quate.
Next we have the individual lend
er. His resources are, of course,
without limit if they be considered
collectively. But the private CAPT
talist lending on a mortgage must
know the character of the land and
probably of the landowner back Of
that mortgage. So every Individual
farmer can only consider as pos
sible source of supply to his mort
gage loan those individual lenders
who live near enough to him to
Judge of the value of the security he
offers. Also the individual lender
must live near in order to collect
payments on the mortgage, to fore
| close in case of default, or to see that
tax payments are kept up.
We find then that the farmers of
any community have three sources of
supply for their mortgage loans
the banks, whose investments in such
SppuritjpG muct paooccoriIy ha limit
ed the insurance companies who
can probably engage in this business
hut whose funds alone are made
qrate; and the individual lenders re-
stricted, however, usually to those
who are residents of the vicinity.
Now, as to the terms which the
farm ers require on such loans, from
which of these sources of supply can
he secure such terms? 1t has been
said that money invested in the de-
Tclopment of a farm does not return
a profit to the farmer for a number
OF years. The same thing is true in
money spent in building the plant of
the manufacturer, only the manufac-
turer may have control of a patent
and by clever advertising create de-
mand for his products that will bring
| him riches within a few years. The
least from the produce of his farm.
E.e may become rich through a rise
in land values, but that is not farm=
/ ing, On the other hand his risk is
much less. He is sure of a fair re-
turn if he intelligently conducts his
farm. If he owns land that yields
! 12 bushels of wheat to the acre and
50 improves the land that the yield
/ IS increased to 1 5 bushels his profits
each year are so much increased. But
in comparison to the money which he
must invest in developing the land
/ the increase of profits per year is
not large. However, the increase
will not be realized for many years
I therefore,, when the farmer borrows
I ]: oney for permanent development
work he should get it on terms that
will permit him to repay a small por-
ton of it each year. Only in that
way can his obligations be made to
conform with his receipts. That is
, TIE first and most important requi-
site to farm mortgage it can
be repaid in small installm ents spread
over a number of years.
Can the banks grant loans for such
long periods? Obvi ously not, for
they do not get their deposits for
such periods and the money they
loan the farmer might be called for
by the depositor at any time. Can
the insurance companies lend their
money under such conditions? There
does not seem to be any reason why
they could not 1t might, however
increase their work greatly to care
for annual fpcto1IYnantc