101

THAT VITAL THING, DEBT

Mrs. Peattie Discourses on It in Connection With Mortgage Statistics.

What the Figures Tell of the Movements and Emotions of the People-The Sowing of 1887 in Nebraska.

It is a difficult thing to make the mortgaged indebtedness of a country interesting or simple reading. Yet there is no subject which more nearly concerns the happiness of men and women that this For is proportion as men enjoy the fruits of their labors, are they free men No man is free who must give the results of his toil to another man

If this fact had always been fully appreciated by Americans, they would not, perhaps have reached a point where the present financial depression became an inovitable thing If they had been more patient in earning and less eager to borrow, if they had developed resources, instead of specuating in possiblities, they would not now, so many of them, find themselves hemmed in by a wall of debt. For men build barriers of debt so high that never while life lasts, can they surmount them. And they are too often prone to acquire these debts recklessly in the hope of large success, and then, when they fall to meet the drain they have put upon themselves, to find fault with the system which permitted them to commit such effort. On the other hand, there are circumstances which sompel a man to become a borrower. And these conditoins arise, primarily form the system of land and money which obtains here. But not to go into questons so large, and concerning which there are so many differences of oppion, it may be intercatling to those who are themselves struggling under the burden which borrowed many imposes, to know something of the condition of the people, in this respect, all over out beautiful but much siffering country.

Among the extra census bulletins are some which deal whith the statistics of farms, homes and mrigages and which represent a new departure on the part of government Mr. Robert P. Porter, chief of the census bureau, says: "It is, I be lieve, the first time a government has ever attempted to invade for statistlcal purpose the realm of private indebtedness."

He gives some idea of the labor involved in the extraordinary investigation in the following sentence. "The employment of a small army of 2500 special agents and clerks to make an abstract of every mortgage placed on record in every county of the United States for the last ten years has attracted attention to the dangers of these incumbrances, to the enormous burdens in the way of interest, to the alarming extend to which usury is practived, and to the defectiveness of these records in all parts of the country. The agents of the census office have, as a matter of fact overhauled the records in every state and territory. They have travled on horseback and on foot through the most sparsely settled districts of our vast domain in search of mortgages, and have doen their work so industriously and so thoroughly that we now have on file in Washington, as a result of their labor, the abstracts of about 9,000,000 mortgages."

It would be impossible in the space of such an article as this to deal with all of the states of the union. Therefore it may be best simply to use Mr. Porter's figures as they refer to states which topographically, or naturally, or in products, or manner of people, greatly contrast with one another.

In a letter accompanying his report to the secretary of the interior Mr. Porter says concerning this state:

"The reall catate mortgage business of Nebraska during the ten years 1880-1800 is represented by 837,873 mortgages made to secure a debt of $274808,858. Of this debt 48 44 por cent remained unpaid January 1,1800. Nenty one-third (81 90 percent) of the existing debt is on village and city lots, and the principal prtion of this is in the counties of Douglas and Lancaster, containing, respectively, the cities of Omaha and Lincoln In Douglas county the existing debt is $27,004,041, of which 87 60 percent is on lots In Lancaster county the exisiting debt is $9,172,266, of which 64 97 per cent is on lots

IN some of the more prominent characteristics of its real estate mortgage indebredness Nebraska occupies a place between Kansas on one hand and Iowa and Illinois on the other The per capita indebtedness of these four states is as follows

Kansas............................................................... $170
Nebraska............................................................ 120
Iowa...................................................................104
Illinois................................................................100

Existing mortgages vover 14 083 200 acres in Nebraska, and these are 58 13 per cent of the total number of taced acres in the stae This is lower than the Kansas percentage and higer than the Iowa and Illinois percentages, as is shown below

Kansas............................................................... 61 55 percent
Nebraska............................................................ 58 13 percent
Iowa...................................................................46 96 percent
Illinois................................................................80 75 percent

Again Nebraska occupied an intermediate place in proportion that the debt on acre tracts bear to the estimated true valye of the acre racts that secure it. The proportions for the four statics shown are by the following percentages

Kansas............................................................... 47 53 percent
Nebraska............................................................ 44 47 percent
Iowa...................................................................43 13 percent
Illinois................................................................88 25 percent

Mr. Porter points out one fact which is very much to the credit of Nebraska, and that is that the cause for mortgages almost invariably is improvements and purchases, In shortm they represent growth and activity, and in no way decay or a running behind. They show, on the whole, the consciousness of strength, not weakness. At the same time there is not a doubt about many of them having been incurred under protest. This is particulary the case in the farming districts, where the need for securing agricultural implements of the expensive sort, the occasional failure of crops, and the other exigencies of agricultural life have compelled farmers to assume second mortgages, frequently at usurious rates of interest

Yet it is noticeable, and I cannot refrain from calling particular attention to the fact that a very large percentage of the mortgages are on town the city lots Whereas it is very well known that it is not city men who speak much of the oppression entailed by the mortgage, but almost universally such complaints come from the famer This may be because of the dull and isolated nature of American farm life, and the fact that the farmer and his family have fow amusements to divert their minds from their monetary difficulties They are forced by the nature of circumstances to concentrate their attention upon themselves. There is also this to be taken into consideration in palliation of the loud complaints of the farmer, and that is that his living comes, directly form the ground, and he, therefore, attaches more importance to the undivided ownership of it than does the man in town, who, deriving his living from other means, think of the ground as his accumulation over and above.

The comparison of the mortgages upon farms and upon town lots is interesting As quoted from the census bulletin they are as follw:

'Mortgages on Acros- On acre tracts, including all farms, a debt of $181,429 was placed during the ten years which is 66 12 per cent of the total number. A debt of $7,583,593 was placed on across in 1880, and this increased to $20,214,151 in 1887, the amount in 1888 was $21,60,914. IN 1889, $25 401,455. The increase of 1880 over 1880 was 234.93 per cent. In 1880 14,100 mortgages on acres were made in 1889, 29,012 mortgages."

It is, by the way, of pecillar interest to note the effect which the year 1887 had upon Nebraska. That was the climax year of te state. The large number mortgages lucurred that year show the immigration which brought to Nebraska and to Omaha the memorable 'boom' which may or may not have been a piece of good fortune. But to return to the subject of.

'Mortgages on Lots-A debt of 802,939,337 was placed on lots during the last decade or 33 87 per cent of the total amount of acres and lots, adn this was represented by 112, 445 mortgages or 33 28 per cent of the total number. The annual increase of the debt on lots is more marked than the increase of the debt on acres. In 1880 the incurred lot debt was $1,790,003 and the yearly increase was constant to $21,152,083 in 1887, the amount was $16,728,953 in 1888, and $19686,095 in 1889, or an increase in the last year of 9909 78 per cent of the amount of 1880, The mortgages on lots made in 1880 numbered 3,419 in 1880, 19,629"

Concerning the mortgaging as to countless the report says: "By far the leading county in amount of mortgaging done during the ten years is Douglas county, with a population of 108,008, and containing the city of Omaha, whose population is 140,453 an increase of 219 73 per cent over that of 188-, In this county 32,603 mortgages were made during the decade to secure a debt of $52,942,447. The number and amount of these mortgages are chiefly chargeable to lots, the number of mortgages of lots being $31 393 and their amount $46,536,069. The annually inccurred lot debt was $523,499 in 1880 $1,475,811 in 1884, $3758506 in 1885 $8725,813 in 1888 and $10,014,034 in 1889. From 188- to 189 the annually incurred dent increased 1,81863 per cent."

This will, of course be considered a sign of activity-of the enourmous increase of human interost and confidence in the state. Whether it is prosperity or not each person must decide for himself. It represents the structures of civilization. It may be builded upon the rock or the sand That is a matter of opinion. It stands for credit. And the business of the world could not, so they say, be conducted without credit and nothing else which can make possible such a panic as the one from which we are now suffereing

However, this is a thing aside. There is a general idea abroad that it is the west along which so suffers from mortgages, and we are apt to think of ourselves as the victims of eastern capital. We might occasionally be frank and admit that if eastern captial has got in here ti is because it was sought for. All sorts of inducements have been offered to it, and are still being offered And the money losned by eastern capitalists has usually been in large amounts and for a fixed, leagal, as as custom goes, reasonably reate of interest. The usury has generally proceeded from men among us, and very frrequently from farmers who have become money loaners and who loan small amounts of money on short time and mothly interest. Or in cities such as Omaha and Lincoln, it has been the local money sharks who have pished men to the wall, menanced them with the fatal chattel mortgage, and very frequently from farmers who have become money loaners and drained the blood form mens bodies by absorbing the fruits of their toll from day to day. The east is mercenary enough- no doubt about that But at the present time when certain ill advised persons appear to be in a semi seditious frome of mind, it is as well to remember the truth about these things And apropos of that, the condition of Massachusetts will be worth taking inot consideration. The following is quoted "During the ten years 1880-1890, 250,232 real estate mortgages were mde in the state of Massachusctts, representing an incurred Indebtednesa of $508,455,550 The debt remining in force January 1, 1800, is $323,277,668, secured by 178,202 mortgages and of this debt $42,441,247 incumbers 920,313 acres and $280,836,421 incumbers 132,683 lots The mortgage movement of the ten years, which has been an increasing one without interruption, began with an incurred debt of of $28176,133 in 1880 and ended with $75 526,544 in 1880 , an increase of 108 05 per cent, while the population increased 25 57 per cent during the same time. During the decade a real estate mortgage debt of $103,635,825 was incurred in Siffolk county, which cointains the city of Boston, and the existing debt in county is $123,734,937 In eight of the fourteen counties the existing debt is more thatn $10,000,000 each"

Although Massachusetts is so old that we of the west are apt to think of it as belong well estbalished in al ways, it is, in fact, given to new ventures. Boston has felt a tremendous acceleration of business during the least ten years, and particularly during the last five years The stream of immigration flowing through this country had made its way through Massachusetts, and the dift of Puritan substratum. The large number of manufactureis, with their operatives receiving steady salaries has caused a desire for homes, and this is anohter ting whihc has had its effect in accelerating what Mr. Porter calls the 'mortgage mocement." Besides, Boston has been undergoing a translaion. The parts of town which used to be most desurable are so no longer, and the moving of those who wish to be in te best kept locality, and the subsequent building of new homes is another of the causes. But above all, undountedly, the reason lies in the rapid development of business which is winning for it a reputation of commercial activity whihc does osmething toward compensating for it warning reputation as the literary center of the country. For that is a reputation which is rapidly being transferred to New York.

The quotations of the figures concerning debt and ownershop of land in Georgia will furnish one more contrast, and will show how all parts of the country are struggling along under the same burden. Mr Porter says 'In regard to farm in Georgia, the conclusion is that 58 1- per cent of the farm families hire and 41.90 per cent own the famrs cultivated by them, that 8 88 per cent of the farm own subject to incumbrances, and that 08 63 per cent own free of incumbrances. Among 100 farm familes fifty-eight hire their farms one owns wiht incumbrance and forty one own without invumbrance. On the owned farms of this state there are lens amounting to $1607,300, which is 41 80 per cent of their value, and this debt bears interest at the rate of 8 33 per cent making the acerage annual interest $57 to each family. Each owned and incumbraces farm, on the average, is worth $1,627 and is subject to debt of $68

The corresponding facts for homes are that 70 00 per cent of the home families hit and 21 00 per cent own their homes, that 07 22 per cent of the home owning families own free of incumbrance and 2 78 per cent wiht incumbrance In 100 home families, on the average, 79 hire their homes, 1 owns with incumbrance and 20 own without incumbrance The debt on owned homes aggregates $1,051,754 or 42 50 per cent of their value and bears interest at the average rate of 6 80 percent of their value, and bears interest at the average rate of 6 80 percent, so that the average amount of interest to each home averages $80. An average debt of $1,020 incumbers each home which has the average value of $2,396"

At the conclusion of this report is a significant sentence. It is this 'Real estate purchased and improvements, when not associated with other object, caused 83 60 per cent of the farm camiles of the state to incur 37 00 per cent of the farm debt and 61 71 per cent of the home families to incur 57.00 per cent of the home debt."

It resolves itself, therefore to a very large extent, into a struggle for the ownership of land. For the price of land is so disproportiontely high as compared with the average income of a man that it must be, at best, an exveedingly difficult thing for a man of the ordinary term of life, with no start in the way of money and the current expense of a growing family, to acquire for himself enough of the ground of the earth to live on.

One might be reconciled to this if it appeared to be natural But is not so. It is natural that a man should assume the ownership of the product of God And the first owner was nothing but the man who was strongest wnd who helped himself to the most.

But, plainly put, how is a periodical panic avoidable, no matter what the monetary system, when so large a proportion of mankind is paying interests in order to hold the possession of land In short, where debt exists upon conditoins so false, contraction of credit cannot but cause a panic. And when this is complicated by two vital influences, both in a fluctuating condition, money and the tariff, it takes both patriotism and hope to make one see beyond the dreary pucrile financial worries of the present into the time when men shall have discovered what the true conditions are which surrpund freemen. Elia W. Peattie.