Atkinson on the mortgage question.

Mr. Edward Atkinson (free trader) took occasion to investigate the matter from the standpoint of the Mortgage Loan Companies, and his conclusions were published in Bradstreet's, November 12, 1887. We quote the following:

The reduction in the rate of interest has been from 10 per cent annual interest and 10 per cent commission on a five years' mortgage to an average of 6% to 71⁄2 per cent at the present time, without commission.

Many of those to whom loans were first made are now lenders through the same corporations.

The present conditions indicate widespread and almost universal prosperity. Mr. Atkinson says further on this subject in the Forum of May, 1894: There are within the United States 4.564,641 separate farms, averaging about 137 acres each, of which, in the Eastern, Middle, Western and Pacific States, So per cent are occupied and managed by their owners. Far more than one-half these farms are free of any mortgage whatever; the rest are mortgaged for far less than half their value.

The result of that investigation has sustained the conclusions which I had reached by a very partial investigation of the same subject in the preceding five years, namely:

1. That the larger part of the Western farms cultivated by owners were free of any mortgage whatever.

2. That the Western farmers were creditors rather than debtors.

3. That the burden of farm mortgages is a very light one.

In fact, the statistics of this partial investigation, which was necessarily very limited, had led me to the conclusion that there existed no great body of the people of any class in this country, who were, as a whole, so free from debt and so absolutely independent as the Western farmers of the grain-growing States.

In making provision for the census of 1890, a special appropriation of $1,000, ooo was set apart to be expended in 'ascertaining the exact condition of farms and homes with respect to mortgages. A more useful appropriation could not have been made for any statistical purpose. Mr. George K. Holmes and Mr. John S. Lord were deputed by the superintendent of the census to do this work, and there could have been no more judicious selection. On the nineteenth of December an extra census bulletin was issued, giving the statistics of the decade from 1880 to 1889, inclusive, in thirty-three States and territories. The total mortgage indebtedness of the whole country has been ascertained, and it is stated that this detailed report of thirty-three States covers seven-ninths. of the mortgages made in the United States during the decade, and that the outstanding mortgage debt on the first of January, 1890, given in this report, covers substantially five-sixths of the entire mortgage debt on acres and lots in the whole country.

The first startling fact developed by the mortgage statistics is that in these specific thirty-three States and territories nearly 7,000,000 mortgages have been recorded in ten years for a total sum of nearly $9,500, 000, 000. The final statement, covering the whole country, which has not yet been published, discloses the fact that 9,517,747 mortgages were executed in the decade 1880-89, to the amount of $12,094, 877,793.

On the first of January, 1890, the amount of these mortgages remaining unpaid in thirty-three States was $4,935, 455, 896; in the whole United States, $6,019,679,985. It, therefore, appears that during the decade one-half the mortgages incurred had already been paid.

These original mortgages executed prior to 1880 must have been wholly liquidated, mostly by payment. Evidence obtained from solvent farm mortgage companies proves that, as fast as they matured, they were either finally paid, or else in some instances new mortgages were executed at much lower rates of interest than were customary in the era of paper money in the previous decade. On this basis the summary would be:

Mortgages in force January 1, 1880, estimated,
Executed since,

Total,

In force January 1, 1890,

Paid,

The payments, therefore, amounted to 55 per cent.

$1,500,000,000

12,000,000,000

$13,500,000,000

6, 000, 000, 000 $7,500,000,000

We find that the average life of a farm mortgage is a little less than five years -rather longer in the East than in the West, but practically five years in the graingrowing States.

In a

In order to bring out the evidence of prosperity rather than adversity developed in these conditions, one must ask, What does a man, in fact, borrow, when he executes a mortgage upon land? He does not borrow money in a true sense. vast number of cases only a title to money passes in the form of a check, a draft or a bill of exchange. What he in fact borrows is the land itself, or such part of it as the encumbrance represents. If we regard foreclosure as a sign of lack of benefit to the borrower, the figures show that in all but an insignificant proportion of these negotiations it has been as much or more to the advantage of the borrower to borrow the farm or home as it has been to the benefit of the lender in securing interest on the loan. The advantage is mutual, but distinctly greater on the part of the borrower, who has been enabled to become the owner of a homestead and the improvements thereon at lessening rates of interest throughout this period.

statistics

of farm mortgages.

The first effective analysis of farm mortgages which has ever come under my | An analy notice was made by Mr. A. H. Heath, the Commissioner of Labor Statistics of sis of the Michigan for the year 1888. He obtained the data for 58 per cent of all the farms of Michigan, numbering 90, 803, assessed for $194, 854,633. Out of 90, 803 farmers 43,079 stated that their farms were mortgaged. A few refused to reply. The greater part of the remainder stated that their farms were not mortgaged. The true value of the farms which were mortgaged, estimated to be about one-half the total number, was $100,000,000; the mortgage debt $37,500,000. Of the farms investigated, 31,570 were owned or occupied by men of foreign birth, the rest by Americans. In answer to the question put to the foreign element, "Had they any money when they arrived in the State?" 8067 answered, "Yes,' giving the sum of money in their possession at $4,633, 188 in all; 23,503 answered, "No." From these data we reach the following conclusion:

It follows that these 31,570 foreigners who came from Germany, Canada, England, Ireland, Holland, Scotland and nearly every other country in Europe, from the East Indies, Australia, Hayti, Mexico and South America, had been

Real estate mortgages in England.

enabled, by borrowing money on mortgage to become possessed of real estate worth $50,000,000 more than the encumbrance and the cash brought in by themselves; and this estimate does not include the farm animals, tools and furniture used upon the farm.

The principal Western indebtedness on mortgage is in and around Chicago, but there is one startling fact to which my attention has been called by Mr. Holmes. In the great urban region in and around New York City, in Kings, Queens, New York, Richmond and Westchester Counties, in the State of New York; and in the counties of Bergen, Essex, Hudson, Monmouth, Passaic and Union, in the State of New Jersey, the real estate mortgage debt is $1,279, 343, 703. This amount is 21.25 per cent of the whole real estate mortgage debt of the United States. It is 51.04 per cent of the real estate mortgage debt of what is commonly known as the West, extending from Ohio westward to Kansas and northward to the Dakotas, with its populous cities of Chicago, Cincinnati, Cleveland, Detroit, Minneapolis, Kansas City, Milwaukee, Omaha, St. Louis and St. Paul. It is doubtless true that the value of the real estate in and about New York is far more than sufficient to sustain this indebtedness, yet it is an important fact to know where the indebtedness lies, and what is the relative burden contrasting the East with the West.

It will be remarked that the amount of the encumbrance in the eleven counties in and around the City of New York exceeds the amount of mortgages on all the farms of the United States.

Speaking further of the Census Inquiry, Mr. Atkinson says:

Thus far the mortgages upon acres have been dealt with as if they were the same as mortgages on farms. As yet no complete separation has been made, but I am permitted to make the following statement on the authority of the census officials.

In Bulletin No. 63 a partial analysis is made of the specific mortgages on actual farms which are occupied by owners apart from hired farms, and acres which are not strictly farms. Deductions from these figures, applied to the total mortgage on acres in the United States, would give the following result:

Total mortgage on acres in the whole country, January 1,
1890,.

On farms occupied and worked by owners (estimated),.
On hired farms and acres not strictly farms,

$2, 209, 148, 431

1,009, 148,431

I, 200, 000, 000

The encumbrance on hired farms is believed to be very small. The value of all the 4,564,641 farms in the United States in 1890, including improvements, was $13,279,252,649. The estimated mortgage thereon, January 1, 1890, was $1,009, 148, 431, equal to 8 per cent, subject to the addition of a small amount on hired farms.

In substantiation of these views of Mr. Atkinson, the following can be added from the last annual report of the Secretary of Agriculture, Sterling Morton. Speaking of the indebtedness of various classes of owners he says: "These figures show an enormous and constant indebtedness of the banks and bankers alongside of which the money in farm mortgages and the debts offered by farmers are relatively insignificant. The debts of railroads, bankers, manufacturers and merchants entitle them and not the farmers, to be called the 'debtor class' in America."

In closing this subject it may not be amiss to note that according to Mulhall the mortgage of real estate in England is 58 per cent of its value, and Sir Edward Sullivan says: "Since 1876 value of lands and

incomes from farms in England have fallen from 30 to 50 per cent, but the interest on the mortgages remains the same." Of these same farmers Henry Fawcett, the eminent free trade economist, says:

There are few classes of workmen who in many respects are so thoroughly wretched as the English agricultural laborers. They are in many respects so miserably poor that if they were converted into slaves to-morrow it would be for the interest of their owners to feed them far better than they are at present. Throughout large agricultural districts not a single agricultural laborer will be found who has saved so much as a week's wages. A life of toiling and incessant industry offers no other prospect than a miserable old age.

But the condition of the English farmer is not the subject of this chapter, nor is it necessary to place the American agriculturist in contrast. with the degraded and ruined tillers of other lands to prove his prosperity. He is the most happy, the most contented and withal the most prosperous of all our people. His labors, his cares, his responsibilities are all lighter than those of the average worker. His acres are his own. The products of his lands he can consume himself or sell at will. His house is a home and not a hovel.

Growth of the cotton industry.

CHAPTER V.

TEXTILES, IRON AND STEEL, AND MISCELLANEOUS INDUSTRIES.

Half a million persons were employed in the textile industries of this country in 1892 with wages exceeding $165,000,000. The cotton industry dates back over a century, the Slater Mill of 1790 being the first successful one started in this country, and in 1890 221,585 persons were employed, turning out $267,981,724 worth of cotton goods. Without a protective tariff this result could never have been accomplished. Great Britain had many years the start of us, and exerted herself by law and otherwise to crush out the industry here. American grown cotton was not then used. Slater insisted on importing his cotton from India, and the man who had predicted that the United States would one day grow cotton for the world would have been an object of ridicule. American cotton has been in use for about sixty years. In 1829 the crop amounted to 870,415 bales. In 1891 it exceeded 9,000,000 bales. A duty of three cents per pound was imposed in 1790 and remained with slight changes till 1846. From that year it continued on the free list till 1862. It was again made free in 1868 and has remained on the free list since. In 1799 we exported 9,000,000 pounds, in 1817 95,000,000 pounds, in 1845 872,000,000 pounds, and in 1894 2,669,026,886 pounds valued at $207,964,384. We grow three-quarters of the world's crop and our American mills consume one-quarter of it. Our early cotton mills endured a hard struggle. The low duties (15 per cent ad valorem) were not sufficient to enable our manufacturers to withstand English competition. In 1807 we imported about $11,000,000 worth of cotton goods from England, but in the following year came the embargo act, when imports of foreign goods were prohibited and our cotton manufactures took a rapid stride. The war of 1812 increased the output and in 1815 we had 500,000 spindles at work consuming 90,000 bales of raw cotton. At the same time England was using 235,350 bales and turning out far superior goods. In 1816 a uniform duty of 25 per cent ad valorem was imposed, this being increased to 35 per cent (minimum) in 1824. Even free traders like Professor Taussig admit that the protective duties of 1816 and 1824 were necessary for the continuance of the cotton industry of this country. Coarse cotton cloths at that time were worth twenty-five and thirty cents a yard. By 1846 the industry was firmly established and though the duty was reduced that year the reduction was slight and still sufficient. We were, however, making only the coarser grades. When the war of the rebellion came, and with it higher duties, finer grades were made. Since 1870 our progress in all grades of cotton manufactures has been rapid and constant.