The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-05-01
TOPEKA STATE JOURNAL
Information Bureau
FREDERIC j. HAsKIN. Director.
Washington, d. G.
WHY MONEY IS TIGHT !.

Washington, D. c., April 26.-AI-
most every owner of real property in
the United States has a mortgage on
his house or on his farm that amounts
to about half and sometimes two
thirds of its value. The mortgage has
been riding along easily for five years
or twenty years with no other incon-
venience than the intermittent neces-
sity of paying the interest. The
budget has been adjusted to taking
care of the added expense.
But to the multitudes who have ac-
customed themselves to carrying this
load of debt there is likely soon to
come an unexpected shock. Their
mortgages will be coming due from
cages were made for terms of three
or five years. In the days before the
war they were renewed almost auto
matically when their time had run.
There was little to do other than take
mother around to the notary to sign
the papers. The mortgage like the
brook, ran on forever.
But when the mortgage falls due
next time a new situation Will be pre-
scented. The holder of it may merely
say that the interest rate must be in
creased from to per cent. Where
the mortgage was formerly assigned
$500 in the family budget, it must be
assigned $500. The home owner. when
thus informed, will probably run
around excitedly for a few days, look
ing for 6 per cent money. There are
thousands of them in the United
States registering excitement from this
cause today. Some of them may find
money at the old rate, but not many.
Most of them will absorb a bit of
financial atmosphere in their quest
and return hastily to sign up at the
advanced rate.
Or perhaps the man in business has
loan at his bank, secured by his
lars or for ten thousand. He is using
this money in his business. or is spec
ulating with it. or has borrowed it to
waste in eXtravagances.
Hard to Renew.
He is very much surprised, one
morning, when he gets a notice from
the bank asking him to come in and
has happened that his credit is no
longer good at the bank. He fran
tically and introspectively looks him
self over for sins of omission or COM
mission. He timidly goes down to the
bank and asks why he has to pay up.
The bank, six months ago, solicited his
business. Why the change of front?
He is told that the money market is
tight. Call money has been up to
fifteen. a-quarters are be-
low ninety. The country is suffering
from initiation.
He does not know what all this talk
means but is hurniliated by his very
ignorance, goes out and digs up the
money if he can, and pays the note.
But the fact is that the owners of
this money have found that they can
make it earn more than it has been
earning. They can put it out at a
higher rate of interest than money has
been drawing during the past few
decades. They have been hiring out
this chattel which they possess for six
dollars where they might be getting
eight.
Demand for Money Grows.
Their climbing interest rates are
due to the fact that the demand for
money is \greater than the supply.
More people are wanting to borrow
money than have money to loan. The
borrowers are bidding against each
other and running the price up.
The Treasury Department is much
agitated over this situation 1t ex-
plains it by saying that the world
formed the habit during the war, of
living beyond its income, The gospel
of pouring out without stint, destroy
ing, lending, spending. was preached
uncea singly for years. Lavish bor-
rowing became a national necessity,
national virtue. The whole world
came to spend much faster than it
produced.
In the lives of families there are
sometimes crises. Typhoid fever may
run thru a poor family and require I'M
usual expenditures for doctor bills,
medicines, nurses. The family will
spend at rate that is entirely be-