66 BULLETIN 1295, U. S. DEPT. OF AGRICULTURE 
could profit from the increments which they themselves had helped 
to create. Moreover, in some cases the price of partly improved land 
was so low as to make the company’s prices look unduly high. By 
securing options or listing most of the partly improved land in the 
ter ritory, the companies were able to raise the prices, or “stabilize” 
them, as they expressed it. An additional reason for this policy was. 
that it filled the territory more nearly full with the company’s own 
settlers, which is desirable from the standpoint of community organi- 
zation. 
FINANCING OF THE COLONIZATION COMPANY 
Companies selling cut-over land which they originally acquired for 
lumbering are in a more favorable position in the financing of their 
colonizing work than the companies which have purchased their land 
for resale. The investment of the former class consists mostly of 
taxes and a little overhead expense, together with compounded in- 
terest. The cash payments they receive on the land enable them to 
make advances to settlers out of current receipts. Such companies 
usually sell on contract and do not give mortgages as security for 
loans. 
On the other hand, the colonization companies developing tracts of 
land which they acquired for this purpose usually need to keep their 
investment low, because their funds are likely to be limited and be- 
‘cause their profits depend upon their rate of turnover. Plans used 
for financing operations were as follows: (1) Selling mortgages as 
soon as the settlers’ holdings are so improved that the balance of the 
debt can be put into salable mortgages. (2) Putting the mortgages 
up as collateral, say, at the rate of $120 000 of mortgage collateral for 
$100,000 of loan, the ratio allowed depending upon the condition of 
the settlers’ holdings when the mortgages are written. Under this 
plan, the colonization company has to stay with its settlers and look 
after them until the mortgages are finally paid off. (3) Using con- 
tracts as security for bond issues. The land company secures the bond 
company by hypothecating its equity in the land sold on contracts 
to settlers. 
Companies that were acquiring lands for purposes of sale obtained 
them under various arrangements, as follows: (1) Buying out- 
right, which takes a large amount of capital; but if the margins are 
large and sales are made rapidly, the amount required is less than 
one would suspect. (2) Acting as agents for landowners, the land- 
owners paying all expenses, advancing loans, and paying the sal- 
aries and commissions. (8) Obtaining an option from the land- 
owners, which usually required a general cash payment at the 
time the option was made out, and the agreed-upon price per acre 
whenever any piece of land was sold to a settler. Under such an 
arrangement, there might be duplicate transfers whenever a sale is 
made, one from the landowners to the colonization company and the 
other from the colonization company to the settler; or the coloniza- 
tion company might carry the settler on contract until the deed was 
finally granted, when there was a double transfer or else the deed 
was made direct from the landowners to the settlers. Amount of 
capital required depends upon which of these plans is followed, 
upon extent of colonization service and loans to settlers, and upon 
rate of selling, 
