Kankakee Valley Post, Volume 12, Number 9, DeMotte, Jasper County, 8 January 1942 — FARM TOPICS [ARTICLE]

FARM TOPICS

FARMER WARNED ON WAR BUYING Bargains for Cash Will Prevail After Emergency.

By H. C. M. CASE

(Head of Agricultural Economics, Collegp Of Agriculture. University of Illinois.) There will be plenty of bargains for those having the cash when the war emergency is over and farmers facing rising prices should keep this in mind. . As improvement costs increase it may be well to postpone some improvements until costs are lower and labor and materials are' easier to obtain, rather than pay a high price now: In fact, future construction of this kind will help prevent a-, postdefense depression. Farmers will be tempted to overexpand their operations and investments in response to high prices, but nothing is more important to the farmer than careful financial plans, especially to farmers burdened with mortgages and other financial obligations. Farmers free of indebtedness with money to invest may still make some wise investments but should avoid heavy new obligations. The inflation of land values and of prices of other things farmers bought during the last war, is recalled, which later were paid for with farm products at greatly reduced prices. Many farmers lost title to their property because they were unable to meet their obligations. Current low interest raffs, which are not assured for a long time in the future, may lead some farmers to overpay for land. While low interest rates bring a lower annual payment, usually they, have the influence of raising prices of land and other commodities bought. Hence the purchaser in the end has a much larger principal, to pay. For example, a 5 per cent S6O mortgage is much more favorable than a 3 per cent loan on SIOO. Although the annual interest paid is the same, the principal is S4O more in the latter case. In order to avoid the ill effects of a post-war depression, farmers were advised to consider seven points: (1) Avoid land inflation by not purchasing at high prices; (2) avoid long term debts or obligations that fall due in large* lump sums; (3) pay off current, debts; (4) improve land to meet more easily post-war low 7 prices; (5) provide better living conditions in the home; (6) create reserves by prepaying interest and principal on debts, as well as to provide good cash reserves; (7) postpone high-cost purchases until after the emergency, if possible.