The Watertown weekly leader. [volume] (Watertown, Jefferson County, Wis.) 1912-1917, 1915-03-23

During the spring OF 1913, the legis-
lature of Wisconsin passed an act au-
thorizing the Incorporation of credit as
soclations for loaning money to farmers
on longtime mortgage credit. Such
companies may be formed by not fewer
than fifteen adult free-holders of the
state. The capital stock shall not be
less than $4,000 divided into shares of
800 each.
These associations are given power to
lend money to farmers on first martgage
security. The amount loaned on Civ
en- tract of land may equal IS per cent
OF It's value If improved and not over 40
per cent where unimprOved. Using the
mortgages as security, the association
may issue and sell bonds, thus receiving
The capital first invested in mortgages.
BY using the proceeds of the bonds as a
revolving fund the association NAV 90
on with the process until the Outstand-
ing bonds are twenty times the capital
and surplus. Among other provisions,
all mortgages on agricultural lands shall
contain ID provisions for soil conserva-
tlon and (2) provisions for semi-annual
reduction of principal. The payments
are to be on the amortization plan and
shall not be less than one per cent of the
original amount per annum in addition
to the interest
The association is to conduct the busi-
ness out of an income not TO exceed one
per cent interest payment on loans.
However, the Importance of this restric-
tlon is greatly lessened by the fact that
no provision of the law prevents the
charging of interest rates higher than
that received on the bonds plus one per
cent for expenses.
The first purpose Of these associations
Is to give greater currency to funds
available for farm loans. There is
much money seeking investment in the
southern part of Wisconsin for example.
and much money wanted on land mort
gage security in the northern part of
The state. 1t is the expectation that the
bonds issued by these associations will
find sale in the more populOus and veal
thy centers and thus furnish money for
the places where it is needed
The bonds have several advantages
over mortgages as marketable securities.
The denomination Of the bonds is as
convenient as possible and the purchas-
er may buy any number of hundred dollar
bonds he. wants. Mortgages, of course,
are large or small but they are not on
hand in limitless quantities and it is
necessary to dispose of them about as
they come in. Hence the amount taken
by given purchaser must be made up
from the miscellaneous denominations
which are available at a given time. A
large company has less trouble with de-
tails of this kind than has a small COM
pany.
Another great advantage of the bonds
over the mortgages as salable securi-
ties is the fact that they run for longer
periods of time. The fact that they are
not payable at frequently recurring
times does not render them undesirable
even to the persons who may want the
money before the bonds mature, since,
assuming that they become desirable
they can be sold at any time. The
bonds will be more desirable as invest
ments because they are backed by COM
pany of stability, thus eliminating the
danger involved in purchasing a mort
gage where the mOrtgagOr may prove to
be slow in paying and unbusinesslike.
Presumably the bonds will have a very
much wider currency than mortgages
At present there are three bond mort
gage associations in operation in the
state, One Of these is at Eau Claire,
one at Marinette and the third Just or
gained here in WatertOwn. The bonds
of the companies have sold readily with
in the state. In each case the rate of
interest for the issue is per cent.