RURAL CREDITS 



727 



and the western states generally have by statute simplified convey- 

 ancing as much as possible. Descriptions are simple and definite. 

 An exceedingly large proportion of these mortgage investments, as 

 compared with investments of like magnitude in other lines, is entirely 

 safe. 



Certain eastern investors have already adopted the plan of hiring 

 trustworthy salaried agents, to make and to take care of their loans. 

 This plan is not practicable for the ordinary investor, who must 

 depend largely on some trusted middleman. It is first in order, 

 therefore, to select an honest and capable broker. Here and there 

 may be found a private broker who has clear notions of duty toward 

 his correspondents; who makes investments for others on his own 

 judgment, based on personal knowledge; who is content with a fair 

 profit himself; and who can truthfully say that he has never lost a 

 penny of his clients' money. When such a man can be found, he 

 is a treasure. His honor is of a higher sort than the honor of most 

 corporations; and, doing a business which is strictly under his own 

 personal supervision, he is less likely to be imposed upon by dishonest 

 borrowers. In judging of a loan company, a number of points should 

 be kept in mind. What is its history, and how long has it been in 

 existence ? Are its methods of placing money th,e best ? Does it do 

 business in a safe territory ? What is the standing of its officers and 

 stockholders ? Where do its officers and stockholders reside ? Does 

 it offer high rates ? Does it give good reasons for offering high rates ? 

 Does it guarantee its loans ? If so, is it because the loans are good, 

 or because the guaranty is worthless? How is it regarded by the 

 people among whom it makes its loans ? 



Let it be remembered that, because the business has proven very 

 profitable, many wild-cat companies have been formed within the 

 past four or five years. Such companies, managed by irresponsible 

 and inexperienced men, have invested much money. They are ready 

 with their guaranties and they offer high rates, but there is no sound- 

 ness in them. Tempted by high commissions, they have loaned 

 largely in excess of the security, so that the settler who desired to go 

 farther west, or to return to the East, could realize more money upon 

 mortgage than upon sale. The wild-cat company runs a brief but 

 pernicious course. It demoralizes borrowers, plunders investors, and 

 seriously prejudices legitimate mortgage business. 



The chief objection to what is called the debenture system is that 

 companies are likely to secure their debentures by a poorer class of 



