Evening journal., 1921-02-23
new Things in
AGRICULTURE
Farmer Should Weigh Well
His Needs in Using Bor-
rowed Capital
PROPER TIME
TO BORROW

Credit is always a good thing to
have, and under certain conditions a
very good thing to use. but just
now il seems in most cases to be
much more desirable to have Il than
actually 10 use it. The United States
Department of Agriculture warns
farmers that the present is a par
ncularly unfavorable time to bor-
row for any purpose that does not
promise naturally TO increase the
productiveness Of the farm enter
prise This applies particularly to
longtime loans. Interest rates are
az presen. considerably above nor
NAL, and the payment Of these rates
Is IN itself a heavy burden to assume
IL Is Furthermore pointed out that
while at the beginning or early in
the progress OF a period OF rising
prices il is generally highly profit
able to borrow for productive pur-
poses, the case is quite different in
time OF falling prices. When prices
go up the value Of money goes down
and debt contracted on a low mar
ket can be settled on a high market
with money representing CORES
pondingly less labor and smaller
Quantities OF products per dollar.
Thus with rising prices all loans
that would be safe on a steady mar
ket stand to yield handsome profits.
Tn period of peak prices. However.
or OF falling prices. such as farm
crs are facing now. the shoe is on
the other foot. At such time IL Is
advisable to use great caution in
borrowing since there is n proba-
bility OF having TO pay back the
loan in dearer dollars than those
obtained from the loan.
For those who find that they
must borrow at this time in order
10 avert disaster. or are so situated
that by a reasonable amountof ad-
oitional capital they can naturally
increase their earnings. the Office of
Farm Management and Farm Econ
omios offers certain simple rules to
be- kept in mind.
The first and most important
rule is that only as much money
be borrowed as can be put to de-
cidedly productive use. with the
rate of interest high and prices
falling. only an important use OF
borrowed capital is likely to make
loan prove profitable or even
safe venture for the borrower The
borrowing of money for the pur-
chase OF power machinery. for ex-
ample. can be justified under pres
ent conditions only where farming
is done on a considerable scale and
where such machinery can be used
q considerable number OF days dur
ing the year TO save time and labor
needed elsewhere on the farm.
The second rule to be considered
by the farmer concerns the time
when the loan shall be repaid. II
he borrows money to purchase fer
ulizer and agrees 90 repay Il before
a crop is harvested and sold. he may
have difficulty in discharging the
debt. II he arranges. however. to
pay after the borrowed fertilizer
has brought returns. he will be re-
leved OF the possible embarrass-
ment OF asking for a renewal of
The note and the resultant injury
10 his credit.
The third consideration is closely
related to the second, and has to do
with the duration OF the loan. Cen
orally speaking the length OF time
the debt is allowed 10 run should be
closely related 10 the productive life
of the farm implement or improve
nent for which the money is en-
ployed. II the money is to build q
silo that win last ten years. the loan
should not run more than ten years.
because. II a silo cannot pay for it.
SELF in its own lifetime It is plain
hat il would be folly 10 borrow to
build IT, on the other hand. such a
loan should run long enough to give
the farmer a good chance 10 meet
Il when due.
Provision should be made in a
longtime loan for the gradual re-
duction OF the principal. This can