Pioneer press. [volume] (Martinsburg, W. Va.) 1882-19??, 1914-06-13
FIVE RULES FOR
BORROWING MONEY
Recent Bulletin Fully Explains How
This Can be Accom-
plished.

iS'i lileiS tllat tnere Is no magic about
credit are set down in Farmers Bull.
letin 593 How to Use Farm Credit. "
which the United States Department
OF Agriculture has just published. I'm
less the farmer who IS thinking of
borrowing money fully understands
these rules and is willing to be guild
ed by them,th governments advice
to him is: don't. AS it is, there are
probably Utmost 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 the borrowed money is to be
used will produce return greater
than needed to pay the debt
2. The length Of time the debt is
20 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 the wise use of credit Between
borrowing money 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 fore
sight, extravaganza and thrift. If
the money is borrowed for wise pur-
pose 1t will produce enough 10 pav
back principal and interest and leave
a fair margin of profit for the borrow
er into the bargain. If it is borrow
ed for a foolish purpose it will pro-
duce nothing and consequently there
will be nothing with which to repay
the loan. From this point of view
it matters paratively little wheth-
CT the interest be high or lew 1t is
he repayment Of the principal that
is the chief difficulty
Rules and 3 deal with the most
satisfactory ways Of repayment I'm
ierneath them both is the same prin-
ciple: The loan must be repaid with
he money it earns itself. For ex-
ample, if the money is used to buy
machine that will last ten years, the
machine must earn enough in that
time to pay for itself or it never
will. The loan, therefore, should be
entirely repaid before the ten years
are up or the farmer will lose money
on the transaction, paying out inter
est for no benefit in return. On the
other hand, if too early a date is set
repayment, the machine will not have
had sufficient opportunity to make
the requisite money and the borrow
er may have difficulty in raising it
form of amortization, the system by
which the principal is repaid in in
stallments so that the amount Of the
loan Is continually diminishing and
in consequence the interest charges
also. Such system is quite feast
BILE when the loan is really productive,
when it returns to the borrower a
definite revenue each year Tables
showing the payments required to
pay off principal and interest in vary
ing periods of time are appended TO
the bulletin and are recommended to
the serious consideration Of every
one who eontemplates 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. Put if the
other rules are observed, if the Dor
rover manages his financial affairs
cound1v no will he surprised to find