The herald and news. [volume] (Newberry S.C.) 1903-1937, 1914-06-16
FARM CREDIT
Rive RuieS For Borrowing Money aS
Set 0ut BY Department Of Agri-
culture.

Washington D. c., June 13.-Five
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
United States department OF agricul-
ture has just published. Unless the
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 al
most 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:
l. Make sure that the purpose for
which tle 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 improve
ment for which the money is borrow
ed.
3. Provision should be made in
longtime loans for the gradual reduc-
ton of the principal.
The first rule is Of course the key
to tie wise use of credit. Between
borrowing mo@ey to spend on ones
self and Borrowing money to buy
equipment of some sort with which
to make more money there is all the
difference between folly and foresight,
ext" avagance and thrift. If the money
is borrowed FOR wise purpose it will
produce enough to pay back principal
and interest and leave fair margin
# 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 noting
with which to repay the loan. From
t1is point of view it matters compar-
atively little whether the interest be
high cr low. 1t is the repayment OF
the principal that is the chief diff
Guilty
Rules and deal with the most
satisfactory ways of repayment. Tn
derneath taem botl is the same prin-
c.p!e The loan must be repaid with
the money it ears itself. For eX-
ample. if pse money is used to buy
a machine that viii last 10 years, the
machine must earn enough in that
time to pay for itself or it never will
[ahe loan, therefore. shu!d be entirely
repaid before the 10 years are up or
the fa1mer Will lose money on the
transaction, paying out interest for
no benefit in return. On the other
tand, il too early date IS set for re-
payment, the machine will not have
had sufficient opportunity to make tie
requisite money and the borrower may
have difficulty in raising it elsewhere.
Ruie provides for some form Of
amortization. the system by which the
oa...c.pal j. repaid il insta.Iments 50
that the amount OF the joa is con
,;naa..y diminishing AID in conse-
Gueace the interest charges also. Such
. system : quite feasible Ven the
loaa = really productive, wnen it re-
turns t. tie borrower definite rev
en"a eacl year. Tables showing the
payments required TO pay of principal
ard -terest in varying periods OF time
are appended 10 the 5a..etin and are
recommended 10 the serious consid-
Grafton CT eyeryo&e vho coatemDlates
borrowing money The bHlle,ia also
ADVISES the farmer to secure the low
est possible interest. At first sight
! this seems too obvious to be worth
mentioning. OF course the interest
! should be as small as possible. Every
tody knows taat-except the lender.
i?:.t if the Ter rules are observed, if