724 AGRICULTURAL ECONOMICS 



now operating in Nebraska and Kansas alone. While the individual 

 broker confined his operations to his own and adjoining counties 

 the corporation took states for its field, established local agents, and 

 adopted the plan of taking all mortgages in the company's name. 

 Then the process of securing a loan would be about this: the borrower 

 applies to the local agent, who requires him to fill out and sign and 

 swear to the truthfulness of an "application," in which he sets forth 

 the exact description of the property offered as security; how much 

 of the land is under cultivation; when he bought the land and how 

 much he paid for it; what improvements are upon it fences, houses, 

 barns, cribs, etc.; the cash value of the improvements; the present 

 cash value of the land; the crops of the previous yar and the current 

 year; the rental value; the location of the land with reference to 

 railroads, towns, schools, churches; the assessed valuation; the tax 

 thereon; the cattle on the premises; the purpose for which the money 

 is borrowed; the total valuation of the borrower's property, real and 

 personal; the state of the title. In a word, he is made to give all 

 the information which can be of any conceivable use in determining 

 the value of the real and personal security offered. Then the local 

 agent and two or more disinterested residents indorse on the applica- 

 tion a sworn appraisement of the land. The application is sent to 

 the company, and an agent from the home office is sent out to inspect 

 and report. If his report is favorable, a bargain is struck as to the 

 rate of interest, which is usually the lowest rate that will float the 

 security in the East at par; and as to the amount of the commission, 

 which is the company's profit. As to the payment of the commission, 

 various plans are in use. The most profitable method is this: out of 

 the proceeds of the note and mortgage the negotiator receives all the 

 expense of making the loan, and his commission. For many years 

 this commission was enormous. The companies located at St. Paul, 

 Omaha, Des Moines, Kansas City, St. Joseph, Topeka, Denver, or 

 Dallas, sometimes received as high as a 15 per cent commission on a 

 five-year loan, and for many years the home company never received 

 less than 10 per cent. The local agent exacted all that he could above 

 this amount. Another custom as to commission is to secure it by 

 notes and a second mortgage. This commission is usually made pay- 

 able in ten semi-annual instalments. On default in the payment of 

 one instalment, the Whole sum becomes due. 



Embodied in the note or mortgage are all conceivable provisions 

 for the protection of the lender. Interest is made payable semi- 



