BUYING FARMS WITH LAND-BANK LOANS. 
19 
It is a striking fact that the average rate of interest on second 
mortgages is about the same as the average on first mortgages made 
by private lenders, as obtained by an earlier investigation made by 
the department. In fact, the average rate on first mortgages, 6.9 
per cent, is slightly higher than the average for second mortgages. 
A comparison of average rates by Federal land-bank districts shows 
also a considerable degree of correspondence. (See figs. 5 and 6. 1 ) 
While the averages for the two classes of mortgages are only roughly 
comparable, the correspondence in the two rates is sufficiently close 
to suggest that probably rates on second mortgages do not tend to 
average much higher than those on first mortgages. 
Nr^-^ 
RATE OF INTEREST PAID 
ON 
SECOND MOF 
?TGAGES 
^^/f -ujj' 
K^, / "T"" — ■ 
€ -4 M f 
suj.;{ 
( / i /-,_ 
i — 6.i_, ! — 
1 M 
\~)^' 
\ v / j- 
\ N ' / 
\ x *■— 1 
\ \ ' — "~~4 
— 1 
7.1 \jpl 
6.9 
i Y' / """" 
'/ 
[ \ 7.6 j 
\~ 
7.9 
J. ;< ^ ^"^ 
FIGURES SHOW BY LAND BANK DISTRICTS 
AVERAGE RATE OF INTEREST ON SECOND MORTGAC 
;es V.Ji 
FIRST MORTGAGE HELD BY FEDERAL LAND BAN 
ks 
. ^' 
Fig. 5. — Average rate of interest paid on second mortgages, by Federal land-bank districts. 
The tendency for average rates of interest on second mortgages to 
approximate closely the first-mortgage rates has been confirmed also 
by a recent survey of land sales in Iowa, where the average rates on 
second mortgages proved to be 5.7 as compared with 5.3 for first 
mortgages. 2 
At least two important conditions may be considered responsible 
for the tendency. In the first place, a large proportion of second 
mortgages are given to sellers of land who for one reason or another 
are willing to give better credit terms than would be allowed if the 
1 The data on first mortgages are based on reports for 4? States, the results of which 
are published in Department Bulletin 384. This bulletin gives no average for the entire 
United States. The average employed above, therefore, is an average by States. More- 
over, the data were obtained in 1913. For these reasons the averages are only roughly 
comparable. 
2 Farm Loan Values in Iowa, by L. C. Gray and O. G. Lloyd, Bulletin S74, U. S. Dept. 
of Agriculture, p. 17. 
