SETTLEMENT AND COLONIZATION IN GREAT LAKES STATES EF 
it calls for larger payments on the principal of the debt. The theory 
upon which land companies were proceeding is that most of the 
people who buy cut-over lands are more concerned at time of pur- 
chase with their interest payments and the amount of their first 
payment than they are with the ultimate price they have to pay. 
Whether an interest rate is high or low is something everyone can 
~ determine. It is not so easy to determine whether the price charged 
_ for the land is reasonable or excessive. An 8 per cent interest rate 
would seem much more like profiteering to a prospect from Iowa 
or the Twin Cities than $10 added to the price of the land. 
Table 16 gives the average size of the initial payments on con- 
tracts, options, and deeds subject to mortgage. For options, the 
average is 5.7 per cent of the purchase price (Table 15); for con- 
tracts, 23.3 per cent; for mortgages, 52.3 per cent. Included in this, 
however, are many initial payments larger than the company re- 
quired, and as many more that were smaller than the supposed mini- 
mum. When individual contracts were examined, it was found that 
most of the companies had taken what they could get rather than 
lose a sale. 
The average initial payment shown for contracts is too large to 
be typical for ordinary contracts, for it includes the initial payments 
of colonization firms which required a comparatively large down 
payment on the purchase price of the raw land, but agreed to make 
certain supplementary improvements, or to advance the materials 
for them up to an amount approximately equal to the value of the 
land. The standard amount required in such cases is about 35 to 
40 per cent of the purchase price of land, and about 15 to 20 per cent 
of the purchase price of the land and improvements furnished. The 
land companies not engaged in colonization were selling land under 
contract for from $1.50 to $3 an acre as initial payment. This 
ordinarily amounted to from 10 to 20 per cent of the purchase price 
of the land. 
Table 16 shows the average initial payment for each of the 15 
projects, and the relation of initial payment to the purchase price, 
to the initial farm capital, and to the initial net worth of the settlers. 
Limitations of these percentages should be made clear. In the first 
place the initial payment is that which had been made at the time 
of settlement. Some of the companies had sold on option for much 
smaller down payments, but had not permitted the settler to go on 
the land until he had accumulated a larger equity. Again, the initial 
purchase price included much more in the way of buildings and live- 
stock on some projects than on others. The table gives the values 
of building and livestock thus purchased with the land. Even in 
those projects where the furnishing of these extras at the start was 
a settled policy, not all of the settlers had elected to accept them, 
some having preferred to purchase only the bare land. On Project 
XIV the settlers had a choice and exercised it. On other projects 
the initial purchase price did not include these extras, but sub- 
sequent advances were made to enable the settler to construct build- 
ings, clear land, etc. Consequently, neither the percentage of initial 
payment to purchase prices nor to initial farm capital is fully sig- 
nificant of the extent to which all of the capital requirements of the 
| first few years were covered by the initial payment. 
