14 BULLETIN" 384^ U. S. DEPARTMENT OF AGEICULTURE. 



a certain figure. It is still uncertain how far the results of dry-farming 

 methods will be able to overcome the diffidence of conservative 

 investors with reference to loans in semiarid territory. 



The character of the soil and the general contour of the country are 

 also important. Capital does not flow as freely to southern Illinois 

 as to other parts of that State, partly because of differences in soil 

 conditions. Similarly, the Ked River Valley, in the northern part 

 of Minnesota and North Dakota, attracts capital relatively more 

 freely than north-central Minnesota, largely because of differences in 

 natural conditions. Illustrations of the effect of soil, contour, and 

 chmate on the flow of farm-mortgage capital could also be given 

 from other parts of the country. 



The distance from financial centers is an important factor. In 

 studyuig the average interest rates for the different States, a gradual 

 rise in costs is noted as one moves outward from the leading financial 

 centers. 



The character of the financial agencies through which farm-mort- 

 gage capi4.al reaches the farmer is also of great importance. One 

 needs to consider the part played by agencies that render local 

 savmgs available for this purpose as weU as the kind of facihties 

 through which outside capital reaches the farmers of any given 

 locahty. Where local savmgs institutions have been well developed, 

 as in Iowa or California, the effect on available local capital for farm- 

 loan purposes is readily discerned. On the other hand, the result of a 

 general lack of suitable local savings institutions, as shown espeoiallyiji 

 many regions of the South and West, is hkewise apparent. 



THE NEED FOR IMPROVED FACILITIES. 



The practice of drawmg on outside capital for farm-mortgage loans 

 is found, as has been stated, both in the most highly developed 

 agricultural sections of the corn belt and in' the relatively less 

 developed agricultural regions of the South and West. The general 

 need for suitable facihties through which outside capital may reach 

 the farmers in different parts of the country is therefore clear. In 

 the United States it is a fairly well estab fished practice for country 

 banks or real estate firms to act as local agents or correspondents for 

 outside or distant investors, either direct or through other middle- 

 men. It is also the usual practice to market the farmer's mortgage 

 note in its original form. This makes it necessary to find a purchaser 

 who wants a mortgage of a given amount, running for a given time, 

 and with given terms. Obviously, paper of this character will not 

 sell as readily in the open market as standardized securities. Dis- 

 tant investors are not generally in a position to have first-hand 

 knowledge of the farm security underlying a given mortgage note. 



