The Hattiesburg news. (Hattiesburg, Miss.) 1908-1917, 1914-06-18
AS MANY FARMERS SUFFER FROM
TOO MUCH CREDIT AS FROM
TOO LITTLE.
SHOULD PROVIDE FOR GRADUAL
REDUCTION OF ALL LOANS
Department of Agriculture Experts
Advise That the Borrower be Sure
His Return Will be Much Greater
Than Needed to Pay the Debt.

Washington, June 1S.-F:ve rules
designed to convince farmers that
there is no magic about credit are set
down in Farmers Bulletin 593, "How
to Use Farm Credit" which the depart
farmer who is thinking of borrowing
money fully understands 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 ooun-
try who are suffering from too much
as from too little credit.
Of these rules the three most impor-
tant are:
1. Make sure that the purpose for
which the borrowed money is to be
used will produce O. return greater
than needed to pay the debt
2. The length of time the debt is
to run should have a close relations q
the productive life of the improve
ment for which the money is borrowed
8. Provision should be made In
long thine loans for the gradual reduc
tion of the principal.
The first rule is, Of course, the key
to the wise use of credit. Between
borrowing money to spend on ones
self and borrowing money to buy
equipment of some sort with which tt
make more money there is all the diff
ference between folly and foresight
extravaganza and thrift If the mon
ey is borrowed for a wise purpose i
will produce enough to pay b. / prin
cipal and interest and leave a fail
margin of profit for the borrower into
the bargain. If it is borrowed for ;
foolish purpose it will produce nothing
/ and consequently there will be moth
ing with which to repay the loan
From this point of view it matters
comparatively little whether the in
terest be high or low. 1t is the repay
ment of the principal that is the chic
difficulty.
Rules 2 and deal with the mos
satisfactory ways of repayment I'm
derneath them both is the same prin
ciple: The loan must be repaid with
the money 1t earns itself. For exam
pie, II the money is used to buy 9
machine that will last 10 years, the
machine must earn enough in thai
time to pay for itself or 1t never will
The loan, therefore, should be entirely
repaid before the 10 years are up Oh
the farmer will lose money on tn,
transaction, paying out interest for nj
benefit In return. On the other hand
II too early date is set for repay
ment, the machine will not have hat
sufficient opportunity to make tn,
requisite money and the borrower ma.
have difficulty In raising 1t elsewhere
Rule 8 provides for some form o
amortization, the system by which thu
principal is repaid in installments 81
that the amount of the loan is contin
ually diminishing and in consequence
the interest charges. also. Such \;
system is quite feasible when the LOAF
is really productive, when 1t return
to the borrower a definite revenu
each year. Tables showing the pay
ments are required to pay off principa
and interest in varying periods of tim
are appended to the bulletin and ar
recommended to the serious considers
ton of everyone who contemplate
borrowing money. The bulletin ais
advises the farmer to secure the low
est possible interest. At first sigh
this seems too obvious to be wort
mentioning. OF course, the interes
should be as small as possible Ever!
} body knows that-except the lende
, But If the other rules are observed
: IL the borrower manages his financis
| affairs soundly, he will be surprised
find how much easier it is to obtai
favorable terms. The right kind {
y Continued on Page Ten.)
81 \.