FREE TRADE IN LAND 69 



Mortgages. The number of mortgages, like the amount of 

 tenancy, is increasing in the United States. Do mortgagors become 

 owners? This point has already been mentioned. Our conclusion 

 is that a smaller and smaller per cent of mortgagors become owners. 

 On the other hand, a great many present owners will in time 

 become mortgagors. Mortgages again like tenancy differ with 

 different sections of the United States. The chief class of tenancy 

 was given as the short-term tenure. The chief mortgage system 

 to-day (before the Federal Farm Loan system has had time to 

 change it) is the short-term mortgage, namely, five years. Custom 

 has apparently established the term of mortgage as about five 

 years. The rate of interest of course varies with different sections 

 of the country. When we consider manufacture, transportation, 

 or any of the other capitalistic forms of industry, we at once 

 think of their bonds as having a fairly long time to run. The 

 ordinary corporation bond, whether it be municipal, public utility, 

 industrial, mining, or other form, commonly runs twenty to forty 

 years. Agricultural bonds, in other words, mortgages on farms, 

 have the same reasons exactly for running long periods as the vari- 

 ous classes of bonds mentioned above. A five-year mortgage means 

 that the mortgagor very commonly must renew his mortgage 

 at the end of the five years or submit to foreclosure proceedings. 

 We have developed an institution in the United States sometimes 

 known as the " padded" mortgage and sometimes known as 

 the "fake" mortgage. For instance, a farmer desiring to partici- 

 pate in land speculation arranges to buy a farm for $8,000. He 

 pays cash $4,000. He then gives a mortgage for $12,000 making 

 the apparent cost $16,000 instead of $8,000. The seller of the 

 farm gives his promissory note for $8,000 as an offset to the ficti- 

 tious part of the mortgage. When the newcomer appears on the 

 scene to buy the farm he is of course impressed with the fact 

 that the farm is mortgaged for $12,000, which is represented 

 to him to be three-fourths of its actual value. He becomes the 

 buyer then at $16,000. This form of real estate speculation is in 

 vogue in certain sections of our country. The mortgage situation 

 under the Federal Farm Loan Act is discussed in a later chapter 

 dealing with Credit. 



Free Trade in Land. The English theory that no one can 

 secure absolute title in fee simple to the land has never obtained 

 in the United States. Neither has this country hedged the buying 

 and selling of land with restrictions or obstacles as in some of the 

 older countries, the government claiming original title to the land, 



