36 BULLETIN 1295, U. S. DEPT. OF AGRICULTURE 
this formed a principal source of income with at least one land com- 
pany operating in the Lakes States, and a considerable source of 
income on another. Land selling under such a scheme becomes a 
sort of device to part the prospect from a little money. The margin 
of payments down plus installment payments over salesmen’s fees 
and general operating expenses may not be great, but with an 
efficient organization can average at least 30 per cent. 
Probably as many settlers drop payments under contract as under 
option, but not so large a percentage because of the greater number 
of contracts. Much land was being sold under contract to persons 
who did not move on at once and many of these for various reasons 
let their contracts lapse. Even among those who moved on, the num- 
ber who dropped payments was appallingly large in some areas. 
- Only part of the time was it possible to sell the contract. No con- 
tracts were found which required the land company to buy back 
the contract, but many of the companies were doing it, at least in 
part of the cases. It is considered wise policy to help a discontented 
settler get away as quickly as possible and feeling as satisfied as 
possible. In almost any case, the company will have little to lose, 
because the improvements on the place, if the settler has made 
any, will more than offset the bad effect of an abandoned holding. 
The settler, on the other hand, has probably lost several hundred 
dollars of savings and earnings. 
A few companies were giving titles subject to mortgages with one- 
third or less paid down, thus obviating in the majority of the cases 
the need for a contract. At the other extreme were those who sold 
mostly under contract, using no mortgages. Many of these com- 
panies, however, would give a deed with mortgage if the settler 
really wanted it. Often the settler preferred to remain on a con- 
tract basis, because he was getting along well under the arrangement 
with the company not pressing for payments, whereas a mortgage 
would have put him under definite obligations. Usually in such 
cases the company has demonstrated its honest intentions in the 
community; but it is probably wisest to give the settler a deed when- 
ever he wants it, because it gives him a somewhat more secure tenure 
and is likely to prevent him from abandoning the project. Many of 
the companies that were using mortgages freely did so as a part of 
their plan of financing operations, for a mortgage is more mer- 
chantable than a contract. Five years was the usual period for mort- 
gages, but 30-year amortization mortgages were being introduced 
in a few colonies. 
Of 472 contracts studied, 278 called for 6 per cent interest, 8 for 
614 per cent, and 78 for 7 per cent. Table 16 gives the averages by 
projects. In 1919, a few were asking only 5 per cent. The com- 
panies had usually been able to borrow the necessary funds in the 
money centers at rates low enough to entail no direct losses at these 
rates. In only a few cases had losses been incurred in this way. 
Six per cent was less than prevailing rates on first mortgages in the 
northern part of the Lakes States. 
The actual interest rate specified in a contract, however, is more or 
less nominal. The rates of interest charged and the price per acre 
at which the land is sold are, in a sense, simply reciprocals of each 
other. Five per cent interest on $25 per acre calls for approximately 
the same annual interest payment as 8 per cent on $15.62 per acre, but 
