Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1914-04-01

AOoA CSIoLS kQOItSd6S6. WuSu d 1dTmcE
borrows to buy a farm and gives a
mortgage for the loan there is no rea-
son why it should not be a long time
amortization mortgage permitting re-
payment in annual or semi-annual
payments extending over ten, twelve
or twenty years. s. Il. &
5 Gilt Edge Security.
p A good first mortgage on real estate
running for considerable period Of
time is recognized the world over as
q gilt edged loan. Financiers, are &C
customed to advise 1t as the safest in7
vestment for trustees, widows and
others who are not able to pass upon
the character of miscellaneous invest
ments. %S$s
The president of one OF the great
life insurance companies makes the
statement that his company In its his
tory OF forty-six years has loaned
$133,s38,549.44 to 75,102 farmers, Sc
cured by mortgage on II, 462, 1868 acres.
the average loan being $1.782. yrhe
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
amount equal to IS per cent. of the
total farm mortgages shown by the
census.
If farm loan for three years is q
good loan, ono 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, TT isn't good
banking to make such 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 a 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 a loan. Is
there any reason why the American
banker should not put himself in .
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
1t IS not surprising that the farmer
sometimes suggests that bankers
might we'll study their own activities
rather than to be butting in upon the
farmers business.
No City Market for Them.
But suppose a 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-.
mand 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
but the city banks have no system
for handling these rural mortgages.
The country banker finds that it is
easy! to send the farmers money from
the farm into the city. but mighty diff
flcult to get any city money out into
the country for the farmer. City Sc
curities, be they based on blue sky
or financial cats and dogs, have in
the city value, much or little as the
case may be, but still definite known
value. But gond gilt-edged farm mort
cages are financial outcasts. They are
practically outlaws.
After all we repeat the thing most
needed is an adjustment of banking
methods to rural business needs.
Bankers could solve the farm credit
problem II they would. But so long
as they prefer to leave the study Of
their own work (which the farmer
thinks they do not understand) and
insist on telling the farmer his bust
ness (which the farmer knows they
do not understand, there is little hope
for them. They are driving the
farmer to his own solution Of his own
difficulties. One state legislature
made up largely of farmers has at,
tackled the problem and over the pro
test OF the bank members has made
some progress. More will be said
about this later.
Over here in Germany the bankers
were formerly as slow as those of
America are now to meet this demand