Pine Bluff daily graphic., 1914-06-19
FIVE RULES FOR
 BORROWING MONEY
Government Points Out Diff ference Between Folly
 and Thrift.

Five rules to convince farmers that there is no magic about credit are set down in farmers bulletin 593 How to Use Farm Credit" which the department has just published. Un- less the farmer who is thinking of borrowing money fully understands these rules and is willing to be guided hs them, the governments advice to him Is: don't. As 1t is, there are probably almost as many farmers in this country who are suffering from
 Of these rules the three most i'm portant are:
 1. Make sure that the purpose for which the borrowed money is to be used will produce a return greater than the needed to pay the debt.
 2. The length of time the debt is tc run should have la close relation to, the productive life of the improve ment for which the money is borrow ed.
 5. Provisions should be made in longtime loans for the gradual re- ductior of the principal.
 The first rule is. of course, the key to the wise use of credit. Between borrowing money to buy equipment oi some sortwith which to make more money the is all the difference between folly and foresight, extravag- ance and thrift. If the money is bor. rOwed for wise purpose it will pro duce enough to pay back priacipa and interest and leave a fair margin of profit for the borrower into the bargain. If it is borrowed for fool ish purpose it will produce nothing and consequently there will be noth . ing with which to repay the loan From this point of view it matters comparatively little whether the in terest be high or low. It is the re payment of the principal. that is the chief difficulty.
 Rules and 3 deal with the mos satisfactory ways of repayment Underneath them both is the same principal: The loan must be repait with the money it earns itself. Fo example, if the money is used to bu, machine that will last ten years the machine must earn enough i, that time to pay for it's self or i never will. The loan. therefore should be entirely repaid before the ten yea are up or the farmer will lose money on the transaction, paying out inter est for no benefit in return. On tn other hand if too early date is SC for repayment. the machin will no have had sufficient opportunity t make the reQuisit money and tn borrower may have difficulty in rais ing 1t elsewhere. Rule 3 provides for some form of amortization. tn system by which the principal is re paid in instollments so that the a mount of the loan is continually di minishing and mi consequence tn interest charged also, Such a systen is quite feasible when the loan i really productive. when it returns t the borrower definite revenue eacl year. Tables showing the payment required to pay off principal and in terest in varying periods of time ar appended to the bulletin and are re recommended to the serious consider 'ation of everyone who contemplate. OOAAOWAA6 luOACy. 1uc Uuilctlu dlS advises the farmer to secure the low est possible interest. At first sigh this seems too obvious to be wortl mentioning. Of course the interes should be as small as possible. Every body knows that-except the lender But if the other. rules are observed if theborrower manages his financia affairs soundly he will be surprised to find how much easier it is to ob tain favorable terms. The right kint of lenders does not want to foreclos' mortgages; he wants his money bacl with fair profit, like any othe merchant. For money that is bor rowed wisely, for money that is sur to be repaid, he charges low interest
 This in fact. is why the government has published these rules for borrow CTS. It is not SO much a matter o driving shrewd bargain as it is o observing a few fundamental princi pies which alone can make credit 1; blessing and not Ia curse.
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