30 MASS. EXPERIMENT STATION BULLETIN 405 



There were 20 farmers who had past-due mortgage interest and/or principal 

 payments. They represented 8 percent of owner-operated farms and 1 1 percent 

 of the 177 mortgaged farms. The amount owed ranged from $6 to $700 and 

 averaged $214 per indebted farm. Nine of the farms were behind from 3 to 9 

 months, eight were 12 months behind, two were 18 months behind, and one was 

 24 months behind. 



Of these 20 farms, 13 had only a first mortgage, 5 had second mortgages, and 2 

 had third mortgages. The total was 29 mortgages, of which 9 were with the 

 Federal Land Bank, 7 were with individuals, 6 were with banks, 3 were with 

 Land Bank Commissioner, and 4 were with other creditors. Of the 8 Farm Sec- 

 urity Administration clients found in this study, 5 were in this group with past- 

 due mortgage payments. 



An inherent lack of capacity on the part of the farmer or his farm, either past 

 or present, was a characteristic of 17 of these 20 farms. The other 3 were victims 

 of expansion and going into debt at high prices. Probably about half of the 20 

 tarmers, either through their own efforts or with the help of an agency like Farm 

 Security Administration, will succeed in keeping their present farm. The other 

 half will probably go out of farming or should be shifted to another farm. All of 

 those who suffered from price changes will probably succeed. Those who will 

 probably succeed were either pulling out of debt or would start as soon as a little 

 help and guidance arrived. These things are pointed out simply to show that 

 even though the debt which these farmers had was serious, still, it was a line of 

 credit. If treated as credit, it might help in pulling at least half of them through a 

 difificult situation. 



Loans on Life Insurance Policy 



Loans on a life insurance policy are in some ways costly when it is realized that 

 the interest paid on the loan is 6 percent whereas the interest received on the 

 money invested in them is much less. However, it is a comparatively simple 

 loan to get. The only security required is the cash value of the policy. 



In this study 171 or 63 percent of the farmers had life insurance policies, and 

 16 of them or 9 percent had borrowed on their life insurance. The amount bor- 

 rowed ranged from $100 to $2,000 and averaged $572. Twelve of these borrowers 

 also had mortgages, but two had loans only on their life insurance. The type 

 of policy carried by the 171 farmers and by the 16 who had loans is shown in 

 Table 36. 



Table 36. — Types of Life Insurance Policies held by Farmers and Types upon 

 Which Loans were Made, 111 Massachusetts Farms, 1941. 



Farmers with Farmers with Loans 



Type of Policy Life Insurance on Life Insurance 



Number Percent Number Percent 



Straight life 73 43 8 SO 



Limited payment life 32* 19 2 13 



Endowment 33** 19 5 31 



Several 7 4 1 6 



Unknown 26 15 - - 



Total 171 100 16 100 



*One of these also had a straight life policy. 

 **12 of these had other policies which were either straight life or limited payment. 



