748 AGRICULTURAL ECONOMICS 



St. Louis, St. Joseph, Portland, South St. Paul, Omaha (2), and Kan- 

 sas City (3), some of them for over twelve years; and one of them is now 

 being organized in Chicago. These companies have a paid-in capital 

 stock ranging from $50,000 to $300,000^ and are usually closely affiliated 

 with a national or state bank, as are trust companies in the larger cities 



These companies are informed of desired loans through country 

 bankers or by receipt of direct applications, the latter usually from 

 the larger "cattle-growers." In some cases the company on its own 

 initiative urges cattlemen in whom it has particular confidence to 

 undertake feeding operations at a time when the beef market offers 

 a favorable opportunity for such production. In every case a salaried 

 examiner of the company inspects the plant and herd of the cattle- 

 grower and his personal capacity and integrity before the granting of 

 a loan. And thereafter the examiner, on his regular circuit, maintains 

 a continuous inspection and volunteers advice designed to protect 

 the value of the security given for the loan. When a loan appli- 

 cation has been acted on favorably, a promissory note and chattel 

 mortgage are taken. The funds of the company then advanced to 

 the borrowers may be utilized to buy more cattle, to pay outstanding 

 debts such as those for feeding expense, or, as is often the case, to 

 pay for the very cattle which are pledged as security for the loan. 

 In a few cases where the cattle-grower enjoys an exceptional credit, 

 funds will be advanced for the full purchase price of a herd for 

 seasonal feeding purposes, or to develop two-year-olds into finished 

 four-year-old beef cattle. The loans granted are seldom less than 

 60 per cent of the known value of the cattle. 



To secure a buyer for the note and mortgage is the second primary 

 function of the cattle loan company. If the loan is a small one, 

 usually $10,000, it may be sold entire, the chattel mortgage assigned, 

 and the note indorsed to the buyer. If the loan is a large one, of 

 $50,000 to $100,000, it is necessary to subdivide it in order to provide 

 a ready sale. The mortgage and note are assigned in parts of $5,000, 

 $20,000, or other denominations, to suit the convenience of the buyers 

 of the paper. In this case the assigned parts, since they are indorsed 

 by the loan company, are equivalent to a "debenture" issue secured 

 by a pledge of specified assets held by the company for the protection 

 of the note-holders. The size of mortgage loan most frequently made 

 is $10,000, while loans of $100,000 are exceptional. 



The business of cattle loan companies approaches closely to the 

 functions of the commercial paper broker. The cattle loan company 



