878 SUCCESSFUL FARMING 



should have a close relation to the productive life of the improvement for 

 which the money is borrowed. (4) Provision should be made in the long- 

 time loan for the gradual reduction of the principal. (5) As low interest 

 rates as possible should be secured." 



Farm Mortgages. — A farm mortgage is a legal document w r hich usually 

 transfers the title of land or an equity in it for a money consideration. It 

 is redeemable upon fulfillment of the stipulated requirements. It is usually 

 safe to mortgage a farm for one-half its actual value. The more stable land 

 prices are, the greater the relative proportion that may be covered by a 

 mortgage. In this, as in case of other credits, much will depend on the 

 character and ability of the one giving the mortgage. Some men are able 

 to secure mortgages covering three-quarters or more of the actual value of 

 their property. 



According to the census of 1910, 62 per cent of the farms in the United 

 States were operated by owners. These are the only ones for which statis- 

 tics relative to mortgages were obtained. Of these, 33.6 per cent were 

 mortgaged. The average mortgage per farm was $1715, while the average 

 value of mortgaged farms was $6289. The average mortgage is, therefore, 

 27.3 per cent of the actual value of the mortgaged farms. A study of the 

 census figures shows that mortgaged indebtedness does not necessarily 

 indicate a lack of prosperity. This form of indebtedness is higher in Iowa 

 and Wisconsin than in most other states. These are prosperous agricul- 

 tural states. 



Farm mortgages are of prime interest chiefly to four classes: (1) 

 owners of farms, w r ho live on them and operate them; (2) absentee owners, 

 who generally operate through tenants or by managers; (3) prospective 

 owners, including tenants and farm laborers who hope to become owners; 

 and (4) those individuals, institutions and organizations having funds to 

 loan on farm real estate as security. Some of the questions in connection 

 with farm mortgages are: For how long a period should the mortgage run? 

 For what purpose should money be borrowed? How is the loan to be 

 repaid? What institutions should be allowed to negotiate loans? Where 

 is the money to be secured? These and many other questions arise in 

 connection with farm mortgages. 



The period for which mortgages run has been settled by practice in 

 some localities. Occasionally they are renewed every second year; more 

 frequently every third year. In other localities they run five years, and in 

 some exceptional cases ten years. Seldom, if ever, are farm mortgages 

 drawn for a period longer than this. In many instances, the period of 

 time is too short. It should not be determined by custom, but should 

 depend upon the purpose for which made. If a mortgage is negotiated 

 for the construction of farm buildings, the time should be sufficiently long- 

 to make reasonably certain the payment for these out of farm profits. The 

 duration of the buildings covers many years. If money is borrowed to 

 equip the farm with machinery, the time of the mortgage should be shorter 



