18 BULLETIN 874, U. S. DEPARTMENT OF AGRICULTURE. 



There are enough deals on narrow margins of cash and at sub- 

 stantial rates of interest to cause considerable trouble if fundamental 

 conditions should become unfavorable to agriculture in the near 

 future. It may be a matter of some concern, considering the high 

 levels of value characterizing these purchases and the great uncer- 

 tainty as to the future course of prices of agricultural products, 

 that more than one-fourth of the sales were effected on a total 

 cash payment of 25 per cent or less, while nearly two-thirds of the 

 cases involved cash payments of less than 50 per cent; that the average 

 mortgage indebtedness incurred is 64 per cent of the sale price, and 

 in 110 of the cases involving mortgages it is 80 per cent or more of 

 the sale price; that one-fourth of the sales involved second or third 

 mortgages, and that a considerable majority of the mortgage indebt- 

 edness is contracted at rates of interest amounting to 5^ per cent or 

 more, whereas the ordinary rate employed in calculating farm labor 

 income is 5 per cent. 



LEGAL CHARACTER OF CONTRACTS. 



No systematic and comprehensive study of the legal character 

 of contracts was made with a view to determining the relative 

 number of the different kinds of contracts, but by general inquiry 

 various methods employed were ascertained and certain conclu- 

 sions may be drawn therefrom. 



Generally speaking, there was no extensive buying and selling of 

 mere options of purchase. It is indeed fortunate that the methods 

 employed were not carried to this extreme. 



The great majority of the contracts were contracts of specific 

 performance, that is, the seller agreed to deliver possession and 

 title of a specific piece of land in substantially the same condition 

 as at time of sale, meanwhile keeping buildings, fences, and other 

 improvements insured and repaired. The delivery of title was 

 made contingent upon the making of certain cash payments and 

 the assumption of certain other obligations on the part of the buyer. 

 For the most part, as already noted, the delivery of title and posses- 

 sion was to take place on the March 1 subsequent to the making 

 of the contract, and at that time the buyer was to make a substantial 

 cash payment upon the land and at the same time to assume formally 

 such indebtedness as had been agreed upon. 



Generally, in case of subsequent sale before acquisition of title, 

 the former purchaser entered into a formal contract of sale with the 

 new purchaser, although not yet the holder of the title which he 

 agreed to transfer. In some cases a series of these contracts of sale 

 were made for the same piece of land. 



The fact that the contract called for specific performance in the 

 delivery of a particular piece of land is of significance because if for 

 any reason one of the parties to any of the series of contracts failed 



