PARM-MOETGAGE LOAIvTS IN THE UNITED STATES. 13 



PRIVATE INVESTORS. 



No figures are available to show the amount of farm-mortgage 

 capital supplied by private investors. It is clear, however, that in 

 certain States, such as New York, Pennsylvania, Michigan, and 

 Wisconsin, the amount of capital suppHed by private investors is 

 relatively large. 



LOANS HANDLED BY BANKS. 



Besides furnishing capital for farm-mortgage loans from their own 

 funds, banks and mortgage companies act as intermediaries or mid- 

 dlemen, purchasing or negotiating large amounts of farm mortgages 

 for insurance companies and other outside investors. The estimated 

 amount of such business handled by banks is shown in the last column 

 of Table 5. In North Dakota the banks negotiate about $40,000,000 

 a year in loans for other investors, whereas the amount invested in 

 farm mortgages from their own funds is only one-eighth of this sum. 

 Similarly, in Nebraska the amount handled by banks is more than 

 three times the amount of bank capital invested in farm mortgages. 

 In most of the States west of the Mississippi River, the banks engage 

 rather extensively in the business of handling farm mortgages for 

 other investors. 



FACTORS WHICH INFLUENCE THE TERMS ON FARM-MORTGAGE LOANS. 



No factor is given greater consideration by farm-mortgage in- 

 vestors, in determining their attitude toward loans in a given area, 

 than the prevailmg method of farming. The careful investor in 

 farm mortgages considei-s all the known factors affecting the income of 

 the farm offered as a security. He studies the relation of the farm 

 income to the price of the land to determine whether the farm value is 

 on a speculative or an investment basis. He is interested in the degree 

 of regularity in income from year to year, and therefore tries to ascer- 

 tain what crops or products are raised and how far these are adapted 

 to the given conditions. He knows the extra hazards involved in 

 one-crop farming, and therefore inquires about tendencies in the di- 

 rection of diversified agriculture. He even inquires into the business 

 habits of the farm owners and the kind of care given to the farm 

 products. It is necessary, in general, to understand the importance 

 of differences along ail these lines in order to explain the variation in 

 the costs of farm-mortgage loans to borrowers. 



Climatic conditions are important because of their effect on the 

 value of the farm security. The semiarid regions of the Western 

 States do not attract capital as freely as the farming sections farther 

 east, where rain is relatively abundant. Important sources of capital, 

 including insurance companies and savings banks, often refuse to loan 

 money on farm-mortgage security where the average rainfall is below 



