RURAL CREDITS 737 



property while the value of farm property is only a little over 30 per 

 cent of the value of all real property of the country. Any preference 

 they have shown for farm loans, however, is more than offset by the 

 preference the banks have shown for city loans, about 84 per cent of 

 their mortgages being on city and village property, which comprises 

 less than 70 per cent of the total real estate values of the country. 



237'. DRAINAGE BONDS AS A FORM OF AGRICULTURAL 

 CREDIT 1 



BY TOM K. SMITH 



For years and years different sections of this country have been 

 borrowing money and issuing bonds for the purpose of reclaiming and 

 protecting wet and overflowed lands. In Missouri we have been con- 

 sistently marketing such bonds for fifteen years; the issues aggregate 

 millions of dollars and are not only favorably received by our clients 

 but are purchased without hesitation. The record of payment is so 

 satisfactory that investment bankers in our state do not consider their 

 lists complete unless they contain one or more such offerings. The 

 same condition exists in almost every other state in the Mississippi 

 Valley and in many other communities where splendid local markets 

 for drainage bonds have been developed and where the buying com- 

 petition is decidedly keen. 



Very little effort has been necessary to sell the supply of drainage 

 bonds in the local markets, and dealers have not been inclined to do 

 the exploiting necessary to create a general market for their securities. 

 As a rule, the single issues have not been large and have been so 

 favorably received that nearly every one has been exhausted before 

 outside investors could familiarize themselves with the offerings. 

 Fifty thousand dollar and $100,000 issues have been the rule; $200,000 

 issues were considered large and an issue of $1,000,000 was exceptional. 



With the proceeds of these bonds wonderful results have been 

 achieved; some of the most fertile and productive agricultural com- 

 munities depend entirely upon artificial drainage constructed with 

 the proceeds of bond issues. Encouraged by these successes, more 

 extensive improvements have been undertaken and larger bond issues 

 authorized ; so large, in fact, that a broader market has been necessary. 



1 Adapted from a paper delivered at the Fourth Annual Convention of the 

 Investment Bankers Association of America, Denver, September, 1915, and 

 printed in the Proceedings of that convention, pp. 120-30. 



