The gazette-times. [volume] (Heppner, Or.) 1912-1925, 1914-07-09
HOW AND WHEN TO BORROW.

about credit are set down in
farmers bulletin 593, GLOW to Use
Farm Credit" which the depart
ment has just published. Unless
the farmer who is thinking of bor-
rowing money fully understands
these rules and is willing to be
guided by them, the government 8
advice to him is-don It.
AS IT is, THERE ARE PROB
ABLY ALMOST AS MANY
FARMERS IN THIS COUNTRY
WHO ARE SUFFERING FROM
TOO MUCH AS FROM TOO LIT
TIE 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 a return great
or than needed to pay the debt.
?. The length of time the debt
is to run should have a close rela-
tion to the productive life of the
improvement for which the money
is borrowed.
3. Provision should be made in
longtime loans for the gradual re-
duction of the principal.
The first rule is, of course, the
key to the wise use of credit. Be-
tween borrowing money to buy
equipment of some sort with which
to make more money there is all the
difference between folly and fore
sight, extravaganza and thrift.
III THE MONEY rs BORROW
ED FOR A WISE PURPOSE 1T
WILL PRODUCE ENOUGH TO
PAY BACK PRINCIPAL AND IN
TEREST AND LEAVE A FAIR
MARGIN OF PROFIT FOR THE
BORROWER INTO THE BAR
GAIN.
Ii it is borrowed for 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 in
terest be high or low. 1t is the re-
payment of the principal that is the
chief difficulty.
Rules and 3 deal with the most
satisfactory ways of repayment.
Underneath them both is the same
principle: The loan must be re-
paid with the money it earns it.
self.
For example, if the money is used
to buy machine that will last 10
years, the machine must earn
enough in that time to pay for it.
self or it never will. The loan,
therefore, should be entirely repaid
before the 10 years are up or the
farmer will lose money on the trans.
action, paying out interest Tor no
benefit in return.
On the other hand, if too early a
date is set for repayment, the ma
chine will not have had sufficient
opportunity to make the requisite
money, and the borrower may have
difficulty in raising it elsewhere.
Rule 3 provides for some form Of
amortization, the system by which
the principal is repaid in install
ments so that the amount of the
loan is continually diminishing and
in consequence the interest charges
also Such system is quite feas-
ible when the loan is really produc-
tive, when it returns to the borrow
er definite revenue each year.
Tables showing the payments re-
qulred to pay off principal and in
terest in varying periods Of time
are appended to the bulletin and
are recommended to the serious con-
sideration of every one who contem-
plates 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 observed, if
the borrower manages his financial