682 READINGS IN RURAL ECONOMICS 



and security given for its payment. Men and women go West for 

 the purpose of bettering their condition. If they had money or 

 were contented with their lot, such would not be the case. Hav- 

 ing secured land either directly from the government or as cheaply 

 as possible from some other owner, they proceed to cultivate it at 

 once. Their little stock of money is soon exhausted, and in order 

 to make other improvements money must be borrowed, and the 

 land is mortgaged. This case is repeated over and over again, 

 until there are millions of dollars lent to the owners of Western 

 farms. The money, however, is used for improvements. Churches, 

 houses, towns, roads, drains, are constructed. Business enterprises 

 have been set on foot, and the new country has advanced rapidly. 

 The mortgage money has not been squandered ; the development 

 of the West is a proof of the statement. It has been a great 

 advantage to the settlers and to the capitalists, and only through 

 such means could this development have been possible. 



The serious effect of a general mortgage indebtedness lies in 

 the tremendous force it brings to bear in times of financial de- 

 pression and the constant drain on production. It is in time of 

 depression that the payment of interest is often defaulted. Pay- 

 ment at any time indicates that enough wealth has been produced 

 by the cultivation of the land and other sources to pay the debt. 

 But foreclosure means that the margin of value in the land has 

 been swallowed up. Foreclosures, however, have been few in 

 comparison with the number of mortgages, and this fact made 

 Western mortgages a favorite investment -with Eastern capitalists 

 until a few years ago. Consequently more money was lent than 

 could be profitably used and in many cases the farmer thus found 

 himself in a hard place, barely able to meet the interest payments 

 or compelled to foreclose. Foreclosure is a sure method of lower- 

 ing prices, for it means the disposal of property at much less 

 than its value. It is then placed on the market at a much lower 

 price than was asked before the foreclosure, and as a matter of 

 fact decreases the value of all property in its neighborhood. In 

 some cases heavy interest has been charged and people have been 

 imposed upon by fraudulent agents. From these cases an outcry 

 has arisen against Eastern capitalists, who, it was said, had lent 



