752 AGRICULTURAL ECONOMICS 



In the sections where higher rates and lower valuations prevail, and 

 where a much lower volume of loans is in force, we will assume that 

 the difference in savings would be 3 per cent per annum, or 75 cents 

 per acre based on loans not exceeding $25 per acre on a $50 per acre 

 valuation. 



There are those who would have us believe that the difference in 

 saving to the farm mortgage borrower under the present farm mort- 

 gage banking system and under that proposed in the various bills in 

 Congress is the sole barrier between him and unbroken prosperity; 

 that the 12 J cents per acre saving in the one case here used and the 

 75 cents per acre in the other represents the difference between poverty 

 and affluence with the man on the farm. Such argument is not only 

 fallacious, but is extremely feeble and tends to befog a true understand- 

 ing of conditions as they exist today in the United States. Greater 

 stress might profitably be laid upon correcting evils as to methods of 

 management and costs of production on the farm, before attempting 

 to reduce interest rates on farm mortgages in the face of conditions 

 that do not warrant such reduction. Better farming methods, less 

 waste, and systematized marketing facilities will be followed by lower 

 interest rates as surely as day follows night and not before. The 

 development of our agricultural sections in the East and Middle West, 

 as compared with the South and West, amply demonstrates this 

 theory. 



I have witnessed the average in unit loans in Iowa and Illinois 

 grow from $3,000 to $8,000 in ten years. Ten years ago it cost the 

 borrower from 3 per cent to 5 per cent commission above the basis 

 rate spread over a period of five years, or f per cent to i per cent per 

 annum, or a gross of from $90 to $150 on a $3,000 average size loan, 

 and at present the gross commission rate paid rarely exceeds 2 per 

 cent and is somewhat lower in a great many cases or in amounts 

 ranging from $80 to $160 for a loan of $8,000 covering a like period 

 of time or per cent to I per cent per annum. It costs as many 

 dollars to make a $1,000 loan as it does to make one for $10,000, and 

 it is not reasonable to expect that the rate of commission will be as 

 low in districts where loan units average $1,000 to $2,000 as in that 

 district where the limit is five to ten times as great. There is some 

 need of reform in the cost of appraisement, while it must be admitted 

 that as the hazard increases, the more frequent must be the inspection 

 and investigation, and 'consequently a greater cost per unit. It must 

 also be admitted that it costs more to convince investors of the 



