Morris tribune. [volume] (Morris, Minn.) 1880-2000, 1914-06-12
RULES FOR BORROWING MONEY

RULES FOR BORROWING MONEY
The Department of Agriculture has issued bulletin
EARN Credit" which contains much sound advice The
bulletin should be equally useful to the farmer the town
borrower and perhaps the latter advice
more than the farmer Nothing difficulty
than the misuse of credit the rules for its
can hardly be often mentioned. Here is what Wash
ington dispatch says of the bulletin
''Five rules designed to convince farmers that there
magic about credit down in Farmers Bulletin
500 Glow Use Farm Credit which the United States
Department of Agriculture has just published. Unless
the farmer who is thinking of borrowing money fully
derstands these rules and willing guided by them
the Governments advice to him is don't AS it is there
are probably almost many farmers in this country who
are suffering from too much from little credit
''Of these rules the three most important are
i. Make sure that the purpose for which the bor-
rowed 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 close relation the productive life of the i'm
provement for which the money is borrowed.
8. Provision should be made in longtime loans for
the gradual reduction of the principal.
''The first rule is of the key to the wise
of credit Between borrowing money to spend ones
self and borrowing money to buy equipment of sort
with which to make money there is all the difference
between folly and foresight extravaganza and thrift
If the money borrowed for wise purpose it will pro-
duce enough pay back principal and interest and leave
margin of profit for the borrower into the bargain
If it is borrowed for foolish it will produce
nothing and consequently there will be nothing with which
to repay From this point of view it matters
comparatively little whether the interest be high low
;e& Lo - eS
Guilty.
''Rules and deal with the most satisfactory ways
of repayment Underneath them both the princi
ple The loan must be repaid with the money it
itself For example, if the money is used to buy a
machine that will last ten years. the machine
enough in that time to pay itself or it never will
The loan therefore, should be entirely repaid before
the ten years are up the farmer will lose money on
the transaction paying out interest for benefit in
return. On the other hand if too early date is
set for repayment the machine will not have had su-
cient opportunity make the requisite money and the
borrower may have difficulty in raising it elsewhere.
Rule provides for sorle form of amortization, the
system by which the principal is repaid in instaments
so that the of the loan continually diminishing
and in consequence the interest charges also. Such
system quite feasible when the loan really productive
when it returns to the definite revenue each
year. Tables showing the payments required pay off
principal and interest in varying periods of time ap-
pended to the bulletin to the serious
consideration of everyone who contemplate borrowing
money The bulletin avces the farmer to secure the
lowest possible interest at first sight this seems too OBJ
yious to be worth mentioning. Of the interest
should be as small possible. Everybody knows thai
except the lender But if the other rules observed
if the borrower manages his financial affairs soundy. be
will be surprised find how much easier it lis to obtsir
favorable terms. The right kind of lender does
to forecose mortgages he wants his MONEY back with
fair profit like any other merchant. For money that il
borrowed wisely, for money that is to be repaid he
charges low interest.
''This in fact is why the government has published
these rules for borrowers It is not much matte
of driving shrswd bargain it is of observing few
fundamental principles which alone make credit bles
sing and not curse"
The militant sufragettes again behaving in Eng