The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1939-03-02
Debt Picture Clarified
(COntinued frOm page One)

period. At the end of that time,
he had paid 81 $50 in interest and
the principal of $1,000 remained
unpaid.
The federal land bank received
1914 million dollars in income in
1888, he said. Ten million dollars
represents interest paid by farm
ers and 434 millions came from
the United State treasury as a
subsidy. This amount represents
the difference between the FIVE
per cent interest many farmers
agreed to pay and the interest
rate of 31 per cent which came
into effect in 1888.
Paying four per cent on its
bonds, the bank allocates IL mil
lion dollars annually for interest.
One million, 600 thousand dollars
is used in the operation of the
bank; one and one-half million is
lost in the operation and sale of
farms foreclosed and about two
million is set aside to meet future
losses, he said.
Loan 10 InlrQ Lien
The st. Paul federal land bank
district, Minnesota, Michigan,
Wisconsin and North Dakota, has
loans to 100000 farmers in effect,
he stated. OF these $4,000 have
paid up all interest and taxes and
are paying off principal.
"a farm mortgage loan is a
third lien on a farm" D. S. Gray,
vice president of the st. Paul fed
erar land bank told his listeners.
''The first lien," he said "is liv-
ing expenses. The second is tax
es, operation, replacement and re-
pair expenses. The third, interest
and principal payments on debts"
SIN order to have farm income
reach far enough for these three
demands, we must realize there
will be fluctuations in our in
comes and take long term view
of the situation he said.
Over-extension of credit when
prices are high and refusing credit
when the bottom drops out of the
market are both evils in farm
credit, he said.
eff we can iron out the ups and
downs of farm credit we can stab
ilize agriculture" he added.
In making loans on the basis of
normal farm income, the federal
land bank has money to loan at
all times; has it available at rea-
sonable rates and can be reason
able in collecting installments
when times are bad.
Reductions Necessary
"We give fair, unbiased consid-
Grafton to the capacity of the Dor
rover to take care of the loan,"
he said.
Prices used in figuring a normal
farm income are based on prices
prevalent from 1910 to 1914, he
stated, adding that did not mean
fluctuating land values, but in
come.
mo farm debt is sound to the
lender or borrower which doesn't
provide for a year to year reduc-
tion," Gray asserted, Taking on
debts in reasonable amounts and
seeing your way clear to pay them
off must always be kept in mind"
Raising income to lower debts
was the subject in which, Profess
sor S. B. Cleland of the lUniver-
sity Of Minnesota extension divi-
sion spoke.
He described a survey made of
the earnings of $50 dairy farmers
in a section 100 miles east of here
and reported some findings of
university experts.
Farmers can anticipate prices
to some extent" he said, mention
ing outlook services available,
'But even with a given income,
expenses, if they get out of lire,
can wreck the ship"
Factors to consider in raising
net income, he pointed out, are:
returns over feed from livestock;
feeding even when prices are high
and handling cows to increase
butter fat production; crop yields,
which he said are more within the
control of the farmer through
good management than he real
ICES; choice of crops; the size of
the business; the amount of work
accomplished per man and econ
omy of overhead expense. If
great deal is accomplished per
man but earnings are dissipated
in the operation of expensive ma
chinery to make this possible,
there is a loss rather than gain, he
pointed out
"There is no such thing as easy
payments" in the opinion of j.
B. keenan,, of the farm credits
administration who asserted,
Paying debts is always painful"
To clarity sound uses of credit,
he listed unwise uses in a humor-
GUS but forceful address.
Credit should not be employed.
he said, to buy luxuries. LAY the
money on the line" he advised,
showing that carrying charges in
installment buying sometimes
amount to Is per cent of the cash
purchase price.
It should not be used to over
expand, he stated, recalling tragic
instances in which farmers Dor
rowed on clear land to buy addi-
tional acreage not really neces-
sary.
1t should not be used for specu-
lation. Don't buy materials for
a new line of production until you
know how to do it," he said.
1t should not be used to buy
without considering possible pro-