AGRICULTURAL CREDIT IN THE UNITED STATES 941 



The farmers of the South depend much more on personal 

 credit than do those of the North. Forty-three per cent of the 

 farms in the North Central states are mortgaged, while in the 

 South but 23.1 per cent are mortgaged. In Iowa 51.8 per cent 

 are mortgaged ; and in Alabama 26.1 per cent. The reasons for 

 this difference are various. Among them may be mentioned the 

 fact that much of the land in the South is held in large tracts, 

 which are usually broken up into small farms under tenant culti- 

 vation. And while the owners of such tracts may often secure 

 money at favorable rates, this system of farming does not adapt 

 itself to large mortgage loaning. In the case of the southern 

 owner who himself tills the farm, the system of agriculture is 

 such that the security offered is not attractive to outside capital. 

 Agricultural practices are not standardized ; loans are small ; the 

 general prejudice of the owner against a mortgage, the prevailing 

 sentiment that a mortgage on the farm greatly impairs the mort- 

 gagor's personal credit, large homestead exemptions and lack of 

 adequate laws to protect the investor have retarded mortgage loans 

 in the South, while low land values and infrequent transfers have 

 also been important factors in keeping down mortgage indebted- 

 ness. As a result permanent improvements, which must be made 

 largely from mortgage loans, have not been made. But a tremen- 

 dous change in this regard has been going on in the South dur- 

 ing the past twenty years, and particularly during the last decade. 

 While homestead exemptions and laws protecting credit have 

 undergone little change, ownership has greatly increased among 

 both white and colored farmers. Agricultural conditions have be- 

 come more stable ; land values have risen and are much less 

 speculative than in the North ; improvement expenditures show 

 a marked increase, and while the percentage of farms mortgaged 

 and the absolute indebtedness are low in the South as compared 

 with the North, the per cent of increase in mortgage indebtedness 

 in the former section has been very much greater. For example, 

 the increase of mortgage indebtedness for the North Central 

 states was 109.5 per cent, while the increase for the South Cen- 

 tral was 484.9 per cent. For Iowa, which has the heaviest mort- 

 gage indebtedness of all the northern states, the increase was 



