Baxter Springs news. [volume] (Baxter Springs, Kan.) 1882-1919, 1916-09-21
RURAL CREDIT
Law DEFINED
The Mortgage That Never
Comes Due.

farm loan Law which l do not
believe IL clearly understood BY
the rank and file Of farmers.
This IL In regard to the manner
In which the loan IL paid back.
Farmers who borrow from the
federal land banks will never
have to repay the loan on a GER
tain day; they will repay II
gradually, on each iuterest-pay'
ing date. Let me explain, a.
best / can, says James M. Pierce
In the Farmer and Stockman:
The average farm mortgage
of today IL made for five years,
but l am advised BY = life insur-
lnce official who has charge of
the investments of his company
Git Is 4 well-known fact that
most of our farm loans heretofore
have been secured from life in
surance- companies) that the life
of the average farm mortgage
here In the grain belt 10 only
three years. In that length Of
time il is either paid of, or the
borrower cancels II and makes 4
new one, for either 4 larger or 4
smaller sum, dependent on
whether he wishes to add more
land to his holdings, increase his
herds or otherwise widen or lessen
his farm operations.
Under the new rural credit law,
however, all this will be changed
for the farmer who borrows from
the federal land banks instead Of
from the present sources OF
capital. The law states that no
loans shall be made BY the new
banks for less than FIVE years
nor more than forty years. And
the principal Is paid back on
what is called the Amortization"
plan. Now, this is quite 4 form
liable sounding term, but in re-
atty it is not nearly SO formidable
as it might appear at first. It
simply means the progressive
repayment of the loans principal.
When the federal land board was
in the grain belt last week the
chairman, Mr.. George W. Norris,
informed those of as who attended
the public hearing that 1 per
cent, added to the interest every
year, would pay the loan of, In
full, in thirty-three years. For
ance-suppose I borrowed
ST., 900 and the rate of interest
was S per cent, making my an
uual interest charge $50. If,
instead of paying $50 4 year,
paid $50 4 year, in thirty-threc
years I would have the loan en-
tirely paid of. Let me give yOV
another instance. The figures
are not original with me, moi
have I had an opportunity Il
check them over, but I believt
they are accurate. If I were Il
borrow $1,000 at 5 per cen
interest aud If, instead of merel!
paying the regular iuteres
charge of $50 a year, paid $sO.2
a year, the loan would pay itsel
off in twenty years.
Now, let me show you the I'D
vantage of this new plan: Th
borrower Is never confronted b.
any one certain uncertain, nigh
be a better term. so far az tn
inability to pay is concerned
date when the principal come
due and the mortgage must b
paid off, or it will be foreclOsed
The borrower Is constantly pay
ing off the principal a. he pay
the interest, and in such smal
installments as never to work
hardship upon him. The farme
who borrows $1,000 for thirty
three years and pays $50 a yea
instead of $50, or the farmer VIII
borrows 1000 for twenty year
and pays 5000 a year instead {
|. $50, is never confronted Wit
such an excessive payment th'
he cannot make it, nor has b
the weight of 4 mortgage-fOrI
closure fear constantly hangiu
oyer him. Merely BY paying 81
a year or $30.2t 4 year Gas Il
case may be, In the two instance
/ have eited) he wipes out th