The Birmingham age-herald., 1914-12-27

in the United States. The estimated total
 of farm mortgages held by these banks as loans exceeds S930. 900 GOO. This fund is very unevenly supplied. Iowa banks alone furnish nearly $100000,0O0. Illinois and New York approximate sS5 900, 000 each, California $67000.000 and Missouri
 S5S 000,000. In Indiana, Vermont and Min nesota the sum in each exceeds 5000,- 00o The total of farm mortgages held by these banks in the 10 states of the cot
 ton belt is approximately the same as that held by Iowa banks.
 Bankers in many states, especially in the middle west, furnish almost as much mony for farm loans, through their ac-
 tivity as middlemen, as they do through loans from their own bank funds. Tn such cases the banker acts as an agent us- ually for some insurance company, mort gage company or other bank. It Is esti- mated that approximately $565 COG, GOO is | thus handled through members of state, private and savings banks and trust com | panies.
 Insurance Funds in Farms
 l Information secured from Insurance 1 companies shows that more than $6.1- l 000, GOO of their funds are invested in farm | mortgage loans. While mainly confined at , present to the corn belt, these invest | ments are being extended into the south | and west. The companies have trained l field inspectors or rely upon the state
 ments or guaranties of local agents as to 1 land values. Insurance companies usually limit their loans to 40 per cent of the value of the security and to a fixed max mum per acre. The prevailing period l of such loans is five years, with the priv ! ilege of prepayment on interest dates. 1 sThe business of existing mortgage companies in the United States is often l that of agents or brokers who bring bor-
 rower and lender together and render l nt hat. Ia, loans without assuming liability. Such 1 business can be built up with very little ] capital. The mortgage is made out d- l rectly to the lender, who assumes all 1 responsibility. It is evident that the mar 1 ket for such loans is restricted to in- | vestors who know the nature of the se- | cIrity. who are willing to lend the par ticular amount desired, and who will as- l sume all risks,
 | "A limited number of companies deal
 in mortgages as jobbing or merchandise
 business. The mortgages generally are sold after suitable investors have been 1 found. few of these companies retain ownership in a portion of the mortgages l deposit them with a trust company and 1 issue debentures secured by the mort | gages as well as by the capital of the 1 company. The debentures are issued in
 even amounts of $10O and upward and for varying periods, affording the investor | some of the usual conveniences of bonds l However, inasmuch as the purchaser of
 a debenture does not know the particular mortgages used as security he must rely on the integrity and solvency of the com. pany to protest his investment.
 "The students of rural credit recognize the desirability of another piece of leg. islation which may probably be had al the hands of the several states or oi the federal government namely, legisla- | finn aIlthnrszipy off, personal cooperative credit associations Such states have already taken steps in this direction and others are contem. plating taking them. The department oi agriculture has made earnest investiga | tions in this field and is in position tC offer suggestions as to legislation ant as to the form and operations of rura credit cooperative associations. Suct
 associations as these will perhaps render their largest service in the sections o the country where there are many smal | farmers whose individual resources ma,
 not be sufficient to enable them to secur, the requisite credit Their largest fielt
 for operation would probably be tn
 south. Characteristics of such associa
 tions of small farmers are: Unlimited
 liability of members, the pedging of tn,
 faith of each to. the other and of tn,
 whole to the lender; the use of fund
 for clearly defined productive purposes
 and the supervision by the association
 of the use made of the funds. It hal
 been objected that the feature of un
 limited liability will prevent the organ
 ization of such associations in this coun
 try but in certain sections of the ma
 ton the liability of small farmers is al
 ready unlimited, and this could not b.
 said to be an insurmountable obstacle.
 "In reference to such proposed associa tions, as well as to land mortgage banks 1t is of the utmost importance that atten tion be centered on the use which ma. be made of borrowed money. It is o 1 high importance that there should b , guaranties of the use of funds secures for productive purposes on the farms GOV
 cred by mortgages or other obliga ations otherwise the field for speculation will b ! opened and more harm may result thai ,ood The investigations of the depart
 ment indicate that relatively smal number of the banks of the country pa. , nv attention whatever to the purpose . for which loans are made, and in replie II g nq4AIies many of the banks reportin did not even attempt to give data bearin
 on this important point. . 'The office of markets and rural organ I izaton has continued it's investigatio nl into the field of personal credits Fror I | data gathered it appears that the state private, and savings banks and trust com 5 panies supply approximately $1,000, ,000, ,00