The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1915-03-24
RATES TOO HIGH
Kansas Farmers Pay Too Much
Interest ON Mortgages.
Conditions i'm Western Part of
State the Worst.

Lawrence, Kan, March 24.-DiS-
satisfaction among the farmers of
Kansas, especially in the western part
of the state, with the present rates
of interest on farm loans has resulted
in an investigation of the problem by
the University of Kansas, under the
supervision of Prof. George E. Put
nam of the department of economics.
Professor Putnam consulted bank
ers, merchants, and farmers in every
county of the state, and among other
things has found that interest rates
increase from u to 1 per cent in
crossing the state from north TO south,
and about 4 per cent in going from
the eastern end of the state to the
western.
Rates on mortgage loans run from 6
per cent to 10 per cent, but in the
western part of the state these rates
are really usurious, because of the ex
pense attached to negotiating the loan
and to the practice of collecting in
terest in advance. For instance, if
interest is collected in advance on a
run six months, the rate really paid
is 101e per cent. Commissions, fees,
etc, also help to raise the actual cost
of borrowing money, and the bor-
rover also has to bear the cost of es-
the title to his land, which
often is excessive. In general, when
all expenses have been paid the &C
tual cost of borrowing is from l to
2 u per cent higher than the rate re-
corded in the mortgage contract.
Rates Are Too High.
Four-fifths of the farmers in the
western part of the state declared
that under such conditions the rates
paid are too high, but it was also
said that the chief trouble is not the
rate so much as the difficulty of Sc
curing the loans. The difficulty may
arise in the case of short-time loans
from the frequent inability of the bor-
70 Iyn I0 Wy Ics
due. One merchant reported that he
had carried more than rs per cent of
his debtors over from one fall until
the next harvest.
But it was discovered that con-
trary to the general impression the
farmer is not Disseminated against
in borrowing money, for merchants
pay the same rate as the farmer uSu-
ally, and the rate on city property in
most Kansas communities is higher
than on farm lands.
One result is that high-priced land
is passing out of the hands of the ac-
tual cultiVatOrS and into the possess
sion of men who can afford to hold
it for an increase in price instead of
hoping to make the land pay interest
on the investment. There is 500 land
acre. In the light of such facts some
thing besides profits from the land
must be supporting high rates of in
tereSt.
Causes of High Rates.
Some of these forces, as seen by
Professor Putnam, are bad farming,
wasteful methods, borrowing for I'M
productive purposes, and neglect in
prompt payment of obligations. 1eav-
ing machinery out in the rain, or bOr-
rowing money to pay for an automo-
bile helps keep up the interest rate,
but the chief factor is the wasteful
and uneconomic farming method fol-
lowed in Kansas, from which many
other evils, such as soil depletion and
returns, have resulted.
In western Kansas, land values are
uncertain because they depend too
directly on the price of wheat. In
some localities 80 per cent of the Gull
.ivated land is planted to wheat; when
the crop fails land values fall-in
lines of bumper crops they rise. This
dependence on the crop has resulted
N some places in the land being al
ernately occupied and cultivated,
hen deserted, for three successive
periods.