The Dawson news. (Dawson, Ga.) 1889-current, 1914-06-16


there is no magic about credit are
set down in Farmers Bulletin 593,
How to Use Farm Credit" which
the United States department of ag-
riculture has just published. Unless
the farmer who is thinking of bor-
rowing money fully understands
these rules and is willing to be guild
ed by them, the governments advice
to him is: Don't. AS it is there are
probably almost as many farmers in
this country who are suffering
from too much as from too little
credit. Of these rules the three most
important are:
/. Make sure that the purpose
for which the borrowed money is to
be used will produce a return greater
than needed to pay the debt.
2. The length of time the debt is
to run should have a close relation
to the productive life of the i'm
provement for which the money is
borrowed.
8. Provision should be made in
longtime loans for the gradual re-
duction of the principal.
The first rule is, of course, the
key to the wise use of credit. Be-
tween borrowing money on ones self
and borrowing money to buy equip
ment of some sort with which to
make more money there is all the
difference between folly and fore
sight, extravaganza and thrift. II
the money is borrowed for wise
purpose it will produce enough to
pay back principal and interest and
leave a fair margin of profit for the
borrower into the bargain. If it is
borrowed for a foolish purpose, II
will produce nothing and conse-
ouently there will be nothing with
which to repay the loan. From this
point of view it matters compare
lively little whether the interest be
high or low. 1t is the repayment OF
the principal that is the chief diff
Guilty.
Rules 2 and 8 deal with the most
satisfactory ways of repayment. I'm
derneath them both is the same
principle. The loan must be repaid
with the money it earns itself For
example, if the money is used to
buy a machine that will last te'
years. the machine must earn enough
in that time to pay for itself or it
never will. The loan, therefore,
should be entirely repaid before the
ten wears are up or the farmer will
lose money on the transaction, pay
ing out interest for no benefit in
return, On the other hand, If too
early a date is set for repayment
tbe machine will not have had suf-
ficient opportunity to make the re-
ouisite money and the borrower may
have difficulty in raising it else
where. Rule provides for some
form of amortization, the system by
which the principal is repaid IN in
stallments so that the amount of the
loan is continually diminishing and
in consequence the interest charges
also. Such a system is quite FEAST
BILE when the loan is really produc-
tive, when it returns to the Dor
rover a definite revenue each year.
Tables showing the payments re-
quired to pay off principal and in
terest in varying periods of time are
appended to the bulletin and are rec
commended to the serious considera-
ton of everyone who contemplates
borrowing money. The bulletin also
advises the farmer to secure the
lowest possible interest. At first
sight this seems too obvious to be
worth mentioning. OF course the in
terest should be as small as possible.
Everybody knows that-except the
lender. But if the other rules are