Tensas gazette. [volume] (St. Joseph, La.) 1886-current, 1915-10-08
RULES IN BORROWING MONEY
Three Fundamental Principles Enun-
Grated Which Alone Make Credit
Blessing and Not . Curse.


prepared ny the United States Depart
ment Of Agriculture.)
Three rules designed to convince
farmers that there is no magic about
credit are set down in Farmers bulle-
tin 500, How to Use Farm Credit"
Unless the farmer who 10 thinking OF
borrowing money fully understands
these rules and is willing to be guild
ed by them. the governments advice
to him IL: don't. AS it is, there are
probably almost 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:
1. Make sure that the purpose for
which the money is borrowed will pro-
duce a return greater than needed to
pay the debt.
2. The length of time the debt Is
to run should have close relation
to the productive life Of the improve
ment for which the money is Dor
rowed.
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. II the
money is borrowed for a wise purpose
1t will produce enough to pay back
principal and interest and leave q
fair margin of profit for the borrower
into the bargain. II It is borrowed for
a foolish purpose 1t will produce moth
ing and consequently there will be
nothing with which to repay the loan.
From this point of view 1t 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 2 and deal with the most
satisfactory ways of repayment. Un-
derneath them both is the same prin-
ciple: The loan must be repaid with
the money 1t earns itself. For exam
pie. II 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 1t never
will. The loan, therefore. should be
entirely repaid between 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, II too early q 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 1t elsewhere. Rule provides for
some form of amortization, the sys-
tenn by which the principal Is repaid
in installments 50 that the amount Of
the loan is continually diminishing
and in consequence the interest
charges also. Such q system is quite
feasible when the loan is really pro-
ductive. when it returns to the Dor
rover q definite revenue each year.
Tables showing the payments required
to pay on principal and interest in
varying periods of time are append
ed to the bulletin and are recon-
mended to the serious consideration
OF everyone who contemplates Dor
rowing money. The bulletin also ad.
vises the farmer to secure the lowest
possible interest. At first sight this
seems too obvious to be worth men,
tioning. Everybody knows that-ex-
cept the lender. But II the other
rules are observed. II the borrower
manages his financial affairs soundly,
he will be surprised to find how much
easier 1t is to obtain favorable terms.
The right kind of lender does not
want to foreclose mortgages: he
wants his money back with q fair
profit. like any other merchant. For
money that is borrowed wisely, for
money that Is sure to be repaid. he
charges low interest.
This in fact is why the government
has published these rules for borrow.
ers. It is not SO much q matter of
driving shrewd bargain as 1t is of
observing a few fundamental princi-
pies which alone can make credit q
blessing and not q curse.
COTTON NOW PLACED SECOND