The Fargo forum and daily republican., 1916-11-15
THE "MoNEY MARKET" AND THE
GARNER

According to government report,
the farmers of the United States nave
a farm mortgage debt of $S,59S ,9S5,oOO.
This money is loaned to farmers by
banks, by life insurance companies, by
mortgage companis,e and by private
investors The life insurance companies
have loans Of five billion dollars only
one seventh Of which is loaned to
farmers. The estimated farm mort
gage debt of North Dakota is $780,
364, 900. About twenty million dollars
of this amount comesi from life in
surance companies. The agents of
these companies charge a commission
on the loan, ranging usually from one
to two per cent, and averaging 1.S per
cent The interest rate paid by the
farmer averages - per cent for the
whole state. North Dakota banks loan
about $5,000,O00 of their funds on
North Dakota farm mortgages. These
banks handle about $42, 100000 Of out
side money, on which they receive a
commission. A person or corporation
borrowing money goes to the money
market for the loan, thus there are
many money markets. The state of
North Dakota has a debt OF $5I8,lOO
bearing interest at four per cent. This
money was borrowed from state school
funds, These funds will eventually
amount to about $50,000,O00. Many
counties have a bonded debt. One
county recently built a new court
house, borrowing for that purpose
5000, 900 from the state school fund,
at four per cent for twenty years, to
be paid back on the installment plan.
Most North Dakota cities have
bonded debt, bearing interest at
rates ranging from four to six per
cent. Hundreds Of school districts are
likewise borrowers on their bonds. the
rate of interest ranging from four to
seven per cent. Thus the farmer is
seen to pay more than his school,
county, municipal OF state govern
ment, although they occupy the same
territory. The great industries of the
country, such as transportation or
manufacturing, have access to the
central money markets, such as New
York, Boston, and Chicago. Thus the
railroads have mortgage debt OF ten
billion dollars. the interest on which
ranges from four to seven per cent.
They have two advantages over the
farmer: They have direct access to
the great money markets of the east,
| consisting chiefly Of banks, savings
banks, trust companies, and insurance
companies); they have standardized
| liquid securities; standardized, in that
the railroad bond is well known on
investors throughout the length and
breadth of the land. is usually in
convenient denominations, such as
800, $500, $1,000. etc.. and has defin-
lite earning power; liquid, in that II
can be turned into cash. through the
banks or stock exchanges, any bust
ness day of the year. without loss anc
without delay.
The Farm Loan act aims to furnish
the farmer cheap money. This result
will come, it is hoped, through giving
the farmer access to the money mar
tkets of the country. The act provide:
for a form Of security known as farm
loan bonds, issued in denominations
Of SIS, $50, $100, $500 or $1,000. These
bonds will bear a rate of interest no
to exceed five per cent. The farmer
mortgage will always pay just on'
lper cent more than these bonds. This
security will be both standard ant
liquid. These bonds will be free from
all taxes. federal state. municipal, o.
local. They will be a lawful invest
ment for all fiduciary of trust funds
and may be accepted as security 70
! all public deposits. III short, they ar
expected to be equal or superior to tn
, securities used by the great corpora
, tions. therefore, it is believed that tn
( money market will absorb quantitie
! of these securities. They can not bea
! more than five per cent interest. bu
!, this is high rate for an absolutel
: gilt edge security. OF course, IL the
d can be sold at four per cent 1t wi
r mean money at five per cent to tn
Q farmer. The amount of the farm loa
: bonds to be issued is unlimited, de
: pending entirely upon the number {
= first mortgages for sale by the farme
4 and the number of farm loan bond
n the investors will buy at five per Ger
t or less. 1t is believed that the pres
Q ent money market will absorb man
9 hundreds of millions Of these securi
g ties. and also that small investor
= and money savers all over the countr
: will form a new money market by &C
lquiring the habit Of putting their say