Fulton County tribune. (Wauseon, Ohio) 1883-1925, 1914-04-03

AMERICAN BANKER HAS SOMETHING TO LEARN
, sy MATTHEW $. OuDeEoN.

that he could arrange for long time
real estate mortgages. When farmer
borroWs to buy farm and gives a
mortgage for the loan there is no rea-
son why it should not be long time
amortization mortgage permitting re-
payment in annual or semi-annual
payments extending over ten, twelve
or twenty years.
Gilt Edge Security.
A good first mortgage on real estate
running for a considerable period of
time is recognized the world over as
a gilt edged loan. Financiers are ac-
customed to advise it as the safest in
vestment for trustees, widows and
others who are not able to pass upon
the character of miscellaneous invest
ments.
The president of one of the great
life insurance companies makes the
statement that his company in it's his
tory of forty-six years has loaned
$133,S33, ,549.44 to 1902 farmers, Sc
cured by mortgage on 11,462,36S acres,
the average loan being $1,782. The
net loss after paying. all costs, fees,
assessments and penalty interest
rates was fourteen-hundredths of one
per cent. This is substantially the
history of all properly organized farm
land mortgage business. Some $780,
100000 in farm mortgages are carried
by our life insurance companies an
amount equal to 35 per cent of the
total farm mortgages shown by the
census.
If farm loan for three years is a
good loan, one for ten or fifteen or
twenty years is good. too, but no
American bank makes these long
loans Why? We have never been
able to get any adequate answer to
this question; The general response
is an unsatisfactory one. lit isn't good
banking to make fsuch long farm
loans" which is another way Of say
ing what we have said before, that
the city banker will not meet the
needs of the farmer borrower.
There seems to be therefore no rea-
son why this fact that long time
farm loan is a gilt edged loan should
not be taken into account in fixing the
interest. 1t is not possible that the
interest on these loans should be near
the rate which is received upon bonds.
either municipal or industrial. The
city banker will investigate fully the
integrity and earning capacity OF
every factory that wants loan. Is
there any reason why the American
banker should not put himself in a
position to investigate the honesty and
earning capacity of the farmer who
needs money. thus permitting him to
capitalize his character as do bankers
abroad? On the whole after looking
over the situation at home and abroad
| it is not surprising that the farmer
sometimes suggests that bankers
might well study their own activities
rather than to be butting in upon the
| farmers business.
No City Market for Them.
But suppose country banker in
Rusk county, Wisconsin, does loan
$4,000 to fifty farmers on fifty of the
finest farms, taking back fifty mort
cages which are gilt edged in every
! sense. He wishes to make more loans
and there is in his community a de
n1and for more money Can he sell
or otherwise raise money on these
fifty mortgages from the city banks
In Madison, Milwaukee or Chicago.
Not at all. The city banker will con
cede that. they have probable value
1 but the city banks have no system
for handling these rural mortgages
The country banker finds that it il
easy to send the farmers money from
the farm into the city, but mighty diff
ficult to get any city money out int
the country for the farmer. City Sc
curities, be they based on blue SIX!
or financial cats and dogs, have il
the city value, much or little as tn,
case may be, but still definite know
value. But good gilt-edged farm mort
cages are financial outcasts. They ar
practically outlaws.
After all we repeat the thing mos
needed is an adjustment of banking
methods to rural business needs
Bankers could solve the farm credi
problem if they would. But so Ion
as they prefer to leave the study Q
their own work (Which the farme
thinks they do not understandD an
insist on telling the farmer his bus
ness (Which the farmer knows the
do not understand), there is little hop
for them. They are driving tn
| farmer to his own solution of his ow
, difficulties. One state legislator
| made up largely of farmers has a
tackled the problem and over the pr,
} test of the bank members has mad
! some progress. More will be sal
about this later.
r Over here in Germany the banker
were formerly as slow as those {
I America are now to meet this deman