34 NO RISK TO THE STATE 



there is a certain divergence of opinion as to 

 the risk involved in dispensing with a deposit. 

 This is the only serious point on which there 

 is dissension. It cannot be too strongly urged 

 that there is absolutely no risk, and in practice 

 the security to the State would be found to be 

 lessened by insistence on a deposit where it can 

 ill be spared. The difference of opinion arises 

 from a failure to differentiate between a per- 

 manent and a reducible mortgage. The security 

 of the former depends entirely on the capital 

 value of the property. The security for the 

 repayment of the latter depends on the annual 

 profits, the variations from year to year in the 

 capital value being comparatively of small 

 importance. The repayment of a reducible 

 mortgage is assured so long as the annual 

 profits are sufficient to pay the sinking fund. 

 To take the case in point : We have an annual 

 sinking fund of £12 10s., which repays the 

 capital debt in sixty years. The annual value 

 of the farm is £120. It will be readily seen 

 that the risk of capital loss is infinitesimal. 

 The demanding of a deposit, when it cannot be 

 afforded, cramps a farmer's future operations, 

 may lead to indifferent farming and a neg- 



