The Caldwell tribune. [volume] (Caldwell, Idaho Territory [Idaho]) 1883-1928, 1914-09-25

FARMERS cheaper money than anybody
else is able to get on equally good
security. The eagerness with which
some are accepting the bait is one in
dlcation of the need there is for a
sound system of rural credit. 1t is
not wholly the fault of the farmer
who is taken in. A great deal of men
tai energy, combined with marvellous
skill, is expended in preparing soul
compelling circulars which seem to
promise the farmer everything, but
really promise him nothing. If as
much thought and skill were exercised
in trying to convert sinners, we should
be very near the millennium.
Stripped of verbiage and wonds
which darken rather than enlighteu,
the scheme is essentially as follows:
Such a company offers to lend you
money on good security at, say, per
cent interest, and to allow you to re-
pay the loan in easy monthly INSTALL
ments on the amortization plan. This
sounds alluring, and, if you are not
too persistent in asking what you are
to get and when you are to get it, you
sign an application for a loan on
these favorable terms. In few DAYS
you receive from such a company
contract for the loan for which YOU
applied. The contract which you re-
ceive is duly signed by the officers of
the company. Then you realize that
the application signed by you and the
contract signed by the officers Of the
company together constitute a valid
contract, and that you are now in for
it.
Under the terms of the contract
you are to begin at once paying off
the debt of, say, $1,000 at the rate of
| $40 a month, but you have not got
your $1,000 yet. Moreover, you do
not know just when you will get it.
The only thing you know is that you
have got to go right on paying $40 a
month. You have, however, the pro-
mise that whenever the company has
the money to spare, you will get your
loan. Another way of saying the
same things is that when your turn
comes, you will get it. This means
that such company has not got the
money now, and that there are several
other gentlemen whose turns come
before yours. AS fast as the com
pany gets money it lends it out to
these men each in his turn. When
your turn comes, if the company lasts
that long, you will get your money.
Now, where does this kind of COM
pany get the money which it is go
ing to lend to you and the other gen
tlemen who have signed these con-
tracts? Why, it gets it from you and
those same gentlemen, and from no
one else. Speaking to all of you col
lectively, it says, in effect, Gentle
men, this company has no money of
its own, but if you will pay your
money into its treasury, we will then
be glad to lend it back to you, if you
will give good security, on very favor
able terms, indeed"
If such a company ceased getting
new contracts, it could not lend you
your thousand dollars until you had
paid in a thousand. 1t has no other
source of income, and it can not
create something out of nothing. If
it continues to get new contracts after
yours, then it can take the money paid
in by those who precede you. In this
way your turn may come before you
have paid in quite the full amount of
which you expect to borrow. But
those who follow will have to wait
longer on that account. If new appli-
cants should sign up rapidly and in
large numbers, and began paying their
good money into the company, the
company may then be able to give
you your loan tolerably early. But
that only postpones the evil day.
Those who follow you in such num-
bers, will have to wait longer and
longer, unless the applicants should
continue increasing in geometrical
ratio. But the longer this sort OF
thing goes on the greater will be the
smash when it comes.
Unless you have been initiated into
| the mysteries of geometrical progress
sion you may imagine that this sort
of thing can go on indefinitely; but il
YOU will take your lead pencil and
figure awhile you will find that in or
der that you may get your loan within
a year there must be about 10 times as
many applicants next year as there
were this. In order that they may gel
their loans within year, there mus
be 10 times as many applicants the
following year as next year, and SC
on indefinitely. Now, if there are l,00t
applicants waiting for loans this year
in 10 years there would have to be
at this rate, 100000, 000,000,000 new
contracts in the tenth year, This il
nearly seven thousand times the pres
ent population of the earth,
But if you and all the applicants ar,
willing to wait five years for YOU
loans it would only take 100000 new
contracts in the tenth year to keel
the company going. By the thirteenth
year there would have to be 8,
10000 new applications. There ar
about 100000 farms in the Unite,
States. If there were several com
panies like this operating on our farm
ers, you can see that the competition
among them would, by that time, be
come what might be called severe.
But why mince matters? Everyon
who has ever studied the question
knows perfectly we'll that this sort O
Il 1 E,st