Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1914-06-23
(To be Continued.)
HOW TO USE FARM CREDIT
There is No Magic About Credit Says
Bulletin.


farmers that there is no magic about
credit are set down in Farmers Bulle-
tin 593, How to Use Farm Credit"
which the department has just pub
lished. Unless the farmer who is
thinking of borrowing money fully un-
derstands these rules and is willing to
be guided 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 i'm
portant are:
/. Make sure that the purpose for
which the borrowed money is to be
used will produce 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 improvement for
which the money is borrowed.
3. Provision should be made in
long time loans for the gradual reduc-
tlOn Ol the pTlHCipti'
The first rule is, Of course, the key
20 the wise use Of credit. Between
borrowing money to spend on ones
self and borrowing money to buy
equipment of some sort with which to
make more money there is all the diff
ference between folly and foresight,
extravaganza and thrift. II the money
is borrowed for a wise purpose it will
produce enough to pay back principal
and interest and leave a fair margin
Of profit for the borrower into the bar
gain. If it is borrowed for a foolish
purpose it will produce nothing and
consequently there will be nothing with
which to repay the loan. From this
point of view it matters comparatively
little whether the interest be high or
low. 1t is the repayment Of the prin-
cipal that is the chief difficulty.
Rules and deal with the most
satisfactory ways Of repayment. I'm
derneath them both is the same prin-
ciple: The loan must be paid with the
money it earns itself For example, II
the money is used to buy machine
that will last ten 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 years are up or the
farmer will lose money on the trans
action, paying out interest for no ben
eft in return. On the other hand, If
too early a date is set for repayment,
the machine will not have had suffi-
cient opportunity to make the requisite
difficulty in raising it elsewhere. Rule
3 provides for some form Of amortiza-
ton, the system by which the principal
is repaid in installments so that the
minishing and in consequence the in
terest charges also Such a system is
quite feasible when the loan is really
productive, when it returns to the bOr-
rover a definite revenue each year.
Tables showing the payments required
to pay off principal and interest in
varying periods of time are appended
to the bulletin and are recommended to
the serious consideration 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
interest should be as small as possible.
Everybody knows that-eXcept the
lender. But If the other rules are OBJ
served if the borrower manages his
financial affairs soundly, he will be
surprised to find how much easier ii is
to obtain favorable terms. The right
kind OF lender does not want to fore
close mortgages; he wants his money
back with fair profit, like any other
merchant For money that is borrow
ed wisely, for money that is sure to be
repaid, he charges low interest. &.
This, in fact, is why the government
has published these rules for borrow
ers. 1t is not so much a matter Of
driving a shrewd bargain as it is Of
observing a few fundamental princi-
Piles which alone can make credit "a
blessing and not a curse.