RURAL CREDITS 



751 



and has resulted uniformly in higher rates for money. Trie competi- 

 tion of highly organized corporation bonded indebtedness, where, for 

 the most part, the income tax is paid by such corporations, has to a 

 large extent up to the present time diminished the amount of money 

 available for farm mortgage investment. 



Farm mortgage bankers have persistently battled against these 

 obstacles and have been very largely responsible for the lowering of 

 rates, and significantly may I state that instead of being blamed for 

 the high rate prevailing in some sections of the United States thev 

 should be praised for their consistent endeavor to overcome handicaps 

 imposed upon the farm mortgage borrower in the good sections. 

 These same bankers, denned in the fore part of this paper, have 

 negotiated nearly $2,000,000,000 of the farm mortgages in force and 

 nearly all of the $1,200,000,000 held by insurance companies, trust 

 companies, and savings banks of the United States, which latter 

 volume of business represents the lowest average rate paid by farm 

 borrowers in afl sections of the United States. This may be a surprise 

 to some people who have an erroneous idea that the farm mortgage 

 banker is gouging the life out of the American farmer. 



There seems to be a general impression abroad that, in our country, 

 the mortgage debt of the American farmer was forced upon him and 

 that he is suffering a tremendous handicap by virtue of this indebted- 

 ness. If one would but stop to think, he would soon come to the con- 

 clusion that this impression is wholly wrong and without foundation. 

 Instead of being a burden, it has been the chief cause of our wonderful 

 agricultural development. The business of farm mortgage banking 

 is quite the reverse of other banking activities in that the lender seeks 

 the borrower to a much greater extent than in any other line of 

 banking. If one would stop to consider the rate of interest paid under 

 present conditions as compared with the flat rate contemplated in 

 proposed legislation (and I am now talking about the great bulk of 

 mortgages, where after making liberal allowances we may assume that 

 the rate paid by the borrower in the comparatively highly developed 

 agricultural sections would not exceed 6J per cent), it can readily be 

 seen that the contemplated saving wifl not exceed J of i per cent per 

 annum, 6 per cent being the proposed flat rate. By computing land 

 values on the basis of $100 per acre, which is a fair average for lands 

 in the better sections of the United States, and assuming that these 

 farms are encumbered to the extent of 50 per cent of their value, or 

 at $50 per acre, the annual saving per acre would be exactly I2J cents. 



