Evening Republican, Volume 20, Number 288, Rensselaer, Jasper County, 2 December 1916 — Purpose and Size of Farm Loan [ARTICLE]

Purpose and Size of Farm Loan

Washington, D. C.—Every farmer before borrowing money should ask himself certain questions, according to Bulletin No. 409, “Factors Affecting Interest Rates and Other Charges on Short-Time Farm Loans,” recently published by the U. S. Department of Agriculture. Very often the farmer who does not ask himself these questions may find that the banker will require answers before he. makes the loan. “As the importance of promoting rnd encouraging improved systems of farming becomes increasingly apparent,” to quote the bulletin, "attention will be directed more and more toward such questions as the purpose and size of farm loans. How are the proceeds of a proposed loan to be employed? Are they to be expended for a productive purpose, such as would lead to improvement in the farming business? Is the size of the loan well adapted to the purpose in view? Does tl.e period for which the loan is to run conform to the time the capital is actually needed? All of these questions have a direct bearing on the costs of short-time farm loans. Purpose of the Loan. The use of any given loan ought to yield a return sumcient at least to repay both interest and principal.. If the returns are not sufficient for this purpose, then the money should not. t oorrowed. rue only way in which the use of credit can be directed so as to serve the interests of improved agriculture is to control the extension of loans so that they may be used for productive purposes only. This means, at the same time, a safer use of credit. _ In some localities banks offer loans to farmers" at reduced rates of interest when the money borrowed is used for some specific and approved purpose, such as the purchase of live stock, the building of silos, or the making of other improvements which will make farming more profitable under the given conditions. Size of the Loan. The banker usually charges a higher rate of interest on a small loan than on a large one. The clerical and bookkeeping expenses are the same in both cases. Unless a higher rate were charged on small loans, . the point would be reached where the expenses connected with such loans would be greater than the interest. On the other hand, it pays the banker to handle large loans at a lower rate of interest.., “The importance of restricting loans to those for approved productive purposes and of having the size of the loan conform to the requirements of sound farm investment has been recognized by some bankers to such an extent that they employ advisers who discuss such questions with their farmer patrons in order to promote the inter.estss of their farm-loan business. This plan has been followed by banks in the Central West, in New England, and in the South. The plan of one of the southern banks may be taken as an example. The agriculture adviser employed by this bank, after a conference with the prospective borrower, decides whether the proposed loan is businesslike and expedient. If the purpose of the loan meets with his approval, he works out a plan of procedure with the farnfer. The farmer may consider that he needs a loan of SI,OOO. As a resplt of his conference with the adviser it may be found that S7OO is sufficient. They discuss the safety of the proposed investment, the additional equipment necessary, and in case live stock is to be purchased, the crop rotation that will furnish the most economical supply of food. These items are all arranged and agreed upon before the bank makes the loan. After the loan has been made and the capital invested it is the cmty of the adviser to visit the farm from time to time to see if the plan adopted is adhered to and if the investment is yielding proper results. Such a plan means added protection to both the farmer and the banker.” t Worth It. “Clara!” He breathed the word as a sigh of deep .devotion, and laid his hand upon his throbbing heart. The damsel waited coyly. “Clara," he made another start, "I love you—l love you with all the ardor of a nature free from guile. Whisper but one word, the word which will make me the happiest of men. Or, if your maidenly modesty seals your lips, give me some token, some memento which I can treasure as a souvenir t>f this blissful day. Oh, Clara, one lock of your auburn hair—one little curl ——” As his voice died into a breathless si’ence Clara blushed and cast „ her eyes down. Then, as her wooer picked up a pair of scissors, she stayed his hand. “No Percy, they are unnecessary,” she murmured, as Bhe unhooked her switch. “It cost me 30 shillings, but love like yours is worth it.”