The Blackfoot optimist. [volume] (Blackfoot, Idaho) 1907-1918, 1914-06-11

used will produce a return greater
than needed to pay the debt
2. The length of time the debt is to
run should have a close relation to
the productive life of the improvement
for which the money is borrowed.
3. Provision should be made in long
time leans for the gradual reduction
CT the principal.
The first rule is of course the
key to the wise use Of credit. Be-
tween 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
foresight, extravaganza and thrift. II
the money is borrowed for wise pur.
pose it will produce enough to pay
back principal and interest and leave
a fair margin Of profit for the Dor.
rover into the bargain. If it is bor-
rowed for a 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 interest be high 'or low.
1t is the repayment of the principal
that is the chief difficulty.
Rules and 8 deal with the most
satisfactory ways of repayment. I'm.
derneath them both is the same prin.
ciple: The loan must be repaid with
the 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 yearo
are up or the farmer will lose money
on the transaction, paying out inter.
est for no benefit in return On tha
I'other hand, if too early a date is set
for repayment, the machine will not
have had sufficient opportunity to
make the requisite money and the
borrower may have difficulty in rails.
ing it elsewhere. Rule 3 provides for
some form Of amortization, the sys.
TEN by which the principal is repaid
in installments SO that the amount of
the loan is continually diminishing
and II consequence the interest char.
ges also. Such a system is quite
feasible when the lean is really pro.
ductive, when it returns to the Dor
rover deflnlte revenue each year
rabies showing the payments require;
TO pay off principal and interest in
varying periods of time are appended
10 the bulletin and are recommended
to the serious consideration of every
one who contemplated borrowing n.t
ney The bulletin also advises til
farmer to secure the lowest possible
interest. At first sight this seems
too obvious to be worth mentioning.
Ot course the interest should be as
small as possible, Everybody knows
that-except the lender. But if the
other rules are observed, if the Dor.
rover manages his financial affairs
soundly. he will be surprised to find
how much easier it is to obtain ia.
Vorable terms. The right kind Ct
lender does net want to forecloso
mortgages; he wants his money back
with fair profit like any other
merchant Fer money that is Dor.
rowed wisely, fer money that is
sure to be repaid, he charges low
interest
This in fact is why tie govern.
ment has published these rules fol
borrowers. 1t is not so much a mat.
ter OF driving shrewd bargain as
it is of observing a few fundamental
principles which alone can make ere
dit a blessing and not a curse.