AGRICULTURAL FINANCE 31 



The type of policy on which loans were made is not particularly important. 

 However, it does show that a slightly higher proportion of those with endowment 

 policies had borrowed on their life insurance. Furthermore, the fact that 19 

 percent of the farmers with life insurance had endowment policies is also of note. 

 A little more than half of these also had mortgages. For those with endowment 

 policies and mortgages, the best plan would have been to pay off the mortgage 

 before investing in endowment insurance.'' 



Summary of Credit Use 



Only 16 percent of the farmers interviewed were not using some credit. Mort- 

 gages were by far the most important type of credit both from the point of view 

 of the proportion of farmers using them and the proportion of the total debt on 

 farms. The largest number of mortgages was for no more than $3,000, but most 

 of the total mortgage debt was represented by mortgages over $3,000 in size. 



The four most important sources of present mortgages were banks. Federal 

 Land Bank, individuals, and Land Bank Commissioner. Banks and individuals 

 were the most important sources of mortgage credit when these farms were orig- 

 inally acquired; but, by refinancing, the Federal Land Bank and Land Bank Com- 

 missioner had reached a comparatively high level of importance. 



Less than half the farms which started with a mortgage were mortgage-free 

 after 30 years. However, most mortgage contracts, even on these farms which 

 had been mortgaged for 30 years, had been outstanding a shorter time than this 

 because the original contract had been refinanced. Mortgage refinancing appeared 

 to be rather widespread.^ 



"Short-term" credit is not discussed as a separate item. Credit other than 

 mortgages is discussed as notes, open accounts, etc. Nearly two-thirds of the 

 farms had some credit other than mortgages. 



Notes were outstanding on about two-fifths of the farms March 1, 1941. Both 

 the amount outstanding per farm and the original amount per note were in 

 most cases no more than $600. However, as with mortgages, the largest total 

 dollar volume of notes was represented by the larger notes. 



Almost half of all the business in notes was done with banks. Dealers or the 

 companies they represented held about a fourth of the notes. Although indi- 

 viduals were a relatively unimportant source of credit on notes in numbers, they 

 held several large notes which were about a fourth of the amount of all notes 

 outstanding. 



Most of the notes had been made for general farm expenses, equipment, and 

 livestock. However, notes for building and the repair of hurricane damage ac- 

 counted for a third of the dollar volume. The notes with banks covered the widest 

 range of purposes. 



Nearly two-thirds of the notes had been outstanding less than a year, but two- 

 thirds of the amount due on notes had been outstanding more than a year. Credit 

 by notes does not seem to have a very high degree of seasonality, and, especially 

 from the point of view of loaning agencies, has a fairly constant year-round 

 volume. 9 



About half of the farms were using open accounts as a source of credit. Most 

 of the accounts were for no more than $400. Grain and supplies such as fertilizer, 



'An endowment policy combines both insurance and investment. The farmer with a mortgage 

 who invests in an endowment pohcy uses funds in meeting pohcy payments which would yield a 

 higher return if used to pay off the mortgage. 



°For more detailed summary of mortgages, see summary for that section, p. 20. 



"For more detailed summary of notes, see the summary for that section, p. 26. 



