296 READINGS IN RURAL ECONOMICS 



Mississippi Valley was usually sold on the installment plan, the 

 purchaser paying down what he was able to pay and giving se- 

 curity for the remainder. The rate of interest in such cases was 

 10 per cent. If the planter was unable to pay when the notes 

 became due, he was obliged to borrow money from the Jewish 

 money lenders at New Orleans, paying often as much as 25 per 

 cent per annum for the loan, and pawning his furniture, jewels, 

 carpets, etc., as security. Mortgages on farming land were almost 

 unknown at the South, the low value of land and the exhaus- 

 tive system of culture making this form of security undesirable. 

 A planter's wealth was gauged by the number of negroes he 

 held, and not by the number of acres he owned. 



The crops then growing or yet to be planted became, therefore, 

 almost the only security which could be furnished by the planter 

 desiring to borrow money or purchase supplies. When a planter 

 had prepared his ground for cotton, he would go to the factor at 

 the nearest market, describe his land, and the number of acres 

 he expected to plant. The factor, having satisfied himself of the 

 truthfulness of the statement, would make the desired loan, taking 

 a lien on the crop as security. The rates of interest on these 

 loans varied considerably, according to the commercial integrity of 

 the borrower, the fertility of the land, etc., but the rates were 

 always high as compared with interest rates at the North. 

 " Every person familiar with the condition of trade in the South- 

 west," wrote a Southerner, " knows what an enormous tax is 

 levied by factors on planters for the advances made the latter. 

 Ten, twelve, fifteen or more per cent are the common rates of 

 interest charged for these loans. Besides, the planter is placed 

 completely in the power of the factor. The crop is often sold to 

 satisfy the exigencies of the latter's situation. This custom is 

 likewise most oppressive to the factor. It obliges him to keep up 

 a large amount of capital, and exposes him to a variety of haz- 

 ardous risks." Many of the factors who had outstanding accounts 

 with the planters at the outbreak of the war were completely 

 bankrupted, owing to the inability of the latter to make good 

 their promises of repayment. 



