734 AGRICULTURAL ECONOMICS 



the local supply of capital is inadequate to meet the needs of 

 rapidly developing communities. How great this assistance of life 

 insurance companies has been to these sections is shown by the 

 fact that their outstanding loans December 31, 1914, amounted to 

 643 per cent of the farm loans reported by the Census of 1910 in 

 the Northwest, 59 per cent in the Southwest, 37 per cent in the 

 South Atlantic, and 30 per cent in the Gulf and Mississippi Valley 

 states. 



We have already said that about 40 per cent of the mortgages 

 held by life insurance companies were on farms, while 60 per 

 cent covered other real property. This might suggest the thought 

 that life insurance funds had been invested disproportionately as 

 between these two classes of securities. However, the average per 

 cent of values loaned on farms for the whole country is i .859 per cent, 

 while on the other hand the companies have loaned but 1.259 per 

 cent of the values of other real property. While companies have 

 loaned to the amount of 3^ per cent of the estimated farm values in 

 the great agricultural section, they have loaned less than 2 per cent 

 in the manufacturing and commercial sections on other real property 

 values. Furthermore, while life insurance companies have made 

 nearly 40 per cent of their mortgage loans on farms, only a little over 

 30 per cent of the total realty values of the country are in farms, so 

 that favoritism, if any, has been shown in behalf of farm loans as com- 

 pared with loans on other kinds of real property. 



A careful examination of Table "F" will show a close and appar- 

 ently a very direct connection between high average farm values and 

 low interest rates. It appears that there are thirty-one states in 

 which farm land values average $20 .00 or over per acre. In eighteen 

 of these the average interest rate on farm loans is 6 per cent or less. 

 There are seventeen states in which farm values average less than 

 twenty dollars per acre. In eleven of these states the average interest 

 rate on farm loan is over 6 per cent. 



Other things being equal, the states in which up-to-date enter- 

 prising farming leads to good buildings, well-stocked farms, good 

 crops (farming with profit), are those which attract capital and 

 secure low interest rates. If "other things" are not equal, if there 

 are antiquated laws as to titles, transfers, and foreclosures, or 

 statutes intended to circumvent the operation of economic law, the 

 flow of capital may easily be turned aside and interest rates thereby 

 increased. 



