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Volume IV



Dallas, Texas, June 15,1949
R E A L - E S T A T E

Farmers will need and continue to use more
credit in the future than they have in the
past, according to the American Bankers
Association. In a bulletin with the same title
as above, the Association points out that the
average size of family farms is increasing and
that this means larger investments of capital
than ever before. Technological developments
make it necessary to have machinery to carry
on crop production and conservation pro­
grams, to control insects and diseases, and to
carry out other sound farming practices.
Farmers currently are buying government
bonds and holding them while borrowing
money for short-term needs, and this practice
is expected to continue. Also, a larger num­
ber of farms are being operated by men well
past normal retirement age, and a large
amount of credit will be required to transfer
these farms to younger men. After viewing
the outlook for larger farm credit needs, the
ABA presents in its bulletin the outline of a
plan of procedure that country banks may
follow in making sounder farm mortgage
The primary security back of a farm mort­
gage loan is the income-producing capacity
of the farm itself, under average manage­
ment. A good farm mortgage loan, says the
ABA, is one on a farm which will produce
sufficient income to pay living and other ex­
penses, with enough left to cover interest
and principal payments on the mortgage in
accordance with the terms under which the
mortgage was made. Regardless of how a
farm mortgage is secured, the first claim on
the income of a farm will always be a living
for the farm family that operates it. After
this claim come taxes and operating expenses.


Number 6


Repairs and improvements also must be paid
out of the farm’s income before interest and
principal are paid on the mortgage. The in­
come of the farm, therefore, is subject to
three or four claims before interest and prin­
cipal can be paid.
The ABA bulletin considers farm mortgage
lending in five separate phases. The first of
these is the receiving of applications for loans.
Much time can be saved for both the bank
and the prospective borrower if a general
evaluation of the proposed loan is made at
the first interview with the applicant. Many
times a bank customer will not have a very
clear idea of the total amount he needs to
borrow or the total amount that he can bor­
row. His first interview with the bank rep­
resentative should serve to explore the farm ­
er’s need for credit and the basis upon which
a loan could be made. When a mortgage loan
cannot be made on one basis, sometimes the
circumstances are such that the application
can be changed to make it acceptable to the
bank. The ABA advises bankers to use loan
application forms on which the applicant is
asked to provide such information as his
financial statement, personal data, and a de­
scription of the farm and its organization.
The ABA booklet includes suggested loan
application forms which can be used by banks
or adapted to their needs.
The second phase of farm mortgage loan
operations is the working out of a plan of
repayment. The most highly recommended
practice is for loans to be amortized, because
this is in the best interest of the farmer as well
as the banker. The loan, says the ABA, should
be amortized on a plan adapted to the bor­

rower’s ability to pay, and the loan contract
should permit the borrower to pay faster than
required by the contract if he desires. Subject
to applicable banking laws, both the terms of
years and the frequency of payments should
depend upon the type of farming, the quality
of the farm, the size of the loan, and the bor­
rower’s ability to meet the payments. In cases
where farm income is primarily from the sale
of crops, it is usually desirable to have pay­
ments made at the time the crops normally are
sold. On dairy farm mortgage loans, it may be
desirable to have payments made monthly or
Banks generally follow one of two basic
amortization plans. In one, described as the
Diminishing Payment Plan, the amount of
principal payments remains constant, while
the amount paid in interest declines with each
payment, making each succeeding total pay­
ment smaller. The other plan, which is used
more commonly and known as the Constant
Payment Plan, calls for the same number of
dollars to be paid to the bank on each pay­
ment date throughout the entire life of the
loan. In this type of repayment plan, the inter­
est portion of the loan payment becomes pro­
gressively smaller, while the portion applied
to principal gradually becomes larger. Tables
for computing payments under these plans arc
included in the bulletin. The use of a pay­
ment card or receipt book to record payments
for the borrower has been a successful prac­
tice in many banks.
The third phase of farm mortgage lending,
as outlined by the ABA, is sound appraisal,
which is the foundation of satisfactory lend­
ing. The appraisal of a farm is not a science
but is an expression of the judgment of an
appraiser selected by the bank. It includes
(1) inspection of soil, topography of the
land, and farm buildings, to secure an accu­
rate idea of their physical productivity; (2)
consideration of the equipment and the man­
agerial ability of the farmer himself, to get
some idea of how well the soil is likely to be
employed; and (3) checking roads, churches,
schools, and availability to farm markets,
which also affect the salability of the farm.

The history of farm mortgage credit em­
phasizes the fact that current market prices
of farm land and of farm products are not
a proper basis for extending long-term mort­
gage credit. Rather, banks should adhere to
values based on the farm commodity prices
which appear likely to prevail over a period
of future years. Basing loans on normal val­
ues of land and normal commodity prices
will prevent many difficulties for both farm ­
ers and lenders. The ABA bulletin contains
much information that would be helpful to
bank appraisers in appraising a farm. It also
includes forms to be used or adapted for use
in appraising farms for loan purposes.
The fourth phase of farm mortgage lend­
ing is the closing of the loan, which comes
after the loan has been approved and the
terms of the loan have been accepted by the
borrower. This includes such matters as the
actual signing of the papers and the arrang­
ing for the deed of trust and the insurance
on buildings. The place for keeping these
papers varies with different banks, but a loan
file in which all the papers on an individual
borrower are kept in a single folder is recom­
The final phase of farm mortgage loan
operations is servicing the loan, which means
maintaining helpful and friendly contact
with the farmer. This may involve occasional
visits to the farm, providing the farmer with
economic information which will help him to
operate his farm efficiently and to keep in
a safe financial position, as well as checking
on payment of taxes, and so on. Reports con­
taining information obtained by inspections
of the farm should be collected in the loan
As banks engaged in farm mortgage lend­
ing take steps to improve their loan opera­
tions by use of credit files containing ade­
quate information on the borrowers, they
will be putting their loan service on a sounder
basis. A specified plan in making of farm
mortgage loans, including the taking of an
application, the making of a sound appraisal,
and the compiling of full credit information

about the man and the
important bearing upon
relations of the bank and
officers and directors in

land, will have an
the over-all public
give backing to the
their approval of

Copies of the bulletin reviewed here may be
obtained from the American Bankers Asso­
ciation, 12 East 36 Street, New York City.

Higher Sheep Profit Gained from
Quality Foundation Animals
Quality foundation animals are a prereq­
uisite to higher profits in sheep raising, says
Dr. H. M. Briggs, Animal Husbandry De­
partment, Oklahoma A. & M. College. This
is an important consideration for sheep rais­
ers who are increasing or improving their
Both native ewes and western ewes have
their merits, depending upon the objective of
the producer. Native ewes are preferable for
mutton production because of their confor­
mation, or form, and the wool clip from a
well-bred flock usually exceeds in quantity
that from a fine wool flock. Ewes of this type
have proved useful to the producer who
wants only a small flock. They usually can
be secured locally, and flock replacements can
be selected from the ewe lamb crop.
There are several advantages in having
western or fine wool ewes, in addition to the
exceptionally fine quality of wool produced.
The initial investment is smaller, and they
require less feed than the heavier natives.
They are easy to obtain in large numbers and
ordinarily will breed and lamb early. The
chief disadvantage of western ewes is their
mutton conformation, which is not particu­
larly desirable. They are also likely to have
fewer twins than natives and are more nerv­
ous at lambing time, but they do make good
mothers if handled properly.
If fine wool ewes are used in the produc­
tion of lambs for market, they must be bred
to good purebred mutton rams that will give
the lamb crop thickness of fleshing, says the


sheep specialist. The cost of using a highquality purebred ram is a minor item in sheep
production when one considers that the ram
may sire 35 to 40 head of lambs per year and
may be used over a four- or five-year period.

Control of Coccidiosis in Livestock
Coccidiosis, which is sometimes called red
dysentery, is caused principally by confining
livestock in unsanitary pens or lots or by per­
mitting water holes to become contaminated,
says Dr. W. C. Banks, Extension Veterinarian
of Texas A. & M. College. When large herds
of cattle are fed outdoors, muddy, wet
ground around haystacks, feed troughs, and
watering places becomes a problem. Dr. Banks
urges farmers to fill in the low spots and pro­
vide sufficient drainage so that the ground
will dry out. Frequent removal o f barnyard
manure to fields also helps prevent coccidiosis
and, at the same time, builds crop and pasture
Since this disease affects the younger ani­
mals— from four months to two years of age
—it is advisable to separate this age group
from the older animals. Infected animals
should be penned to themselves as much as
Treatment of diseased animals may be
accomplished with sulfaguanidine, says Dr.
Banks. One grain of the drug per pound of
animal is the recommended dosage. For ex­
ample, a 500-pound calf might need 500
grains a day, or roughly one ounce. It is rec­
ommended that the treatment be divided into
four doses, or one-quarter ounce at a time.
Sudan Grass Makes Excellent Hay
Sudan grass is a cheap, easy crop to grow;
it has practically no weather hazards; and in
feed value it compares very favorably with
leading top-quality hay crops such as alfalfa,
lespedeza, and Bermuda grass, says the Lou­
isiana Extension Service. No other grazing
crop will give as much return on labor and
investment during July, August, and Sep­
tember. Sudan grass is a tropical plant and



should be planted now, but plantings can be
made through July.
If planted early for hay, it is often pos­
sible to get three cuttings on good fertile
land. Growth from planting time to the
earliest grazing stage requires about 30 days.
The best hay stage requires about 60 days.
If grown in rows for hay, 7 to 10 pounds
of seed should be planted per acre. For graz­
ing purposes the stand should be thicker than
for hay, with 12 to 15 pounds of seed planted
per acre. If broadcast, from 25 to 30 pounds
should be used per acre, but this method of
planting should be used only on the most
fertile land; on prairie, bluff, and hill soils,
planting in 2- to 3-foot rows is better and
safer for both hay and grazing. Row plant­
ing may be done with any ordinary planter
equipped with a sorghum plate.
Rotary Hoe Does Economical Job
The rotary hoe, a tractor attachment, is
speeding up cotton cultivation, especially in
west Texas and the Plains area. Mr. Fred C.
Elliott, Extension Cotton Work Specialist of
Texas A. & M. College, states that it works
best on the young cotton seedlings in getting
rid of the grass and weeds early. As cotton
gets taller, this weeding machine does not
work so well.
There are several things to remember when
using the machine. It should be set only deep
enough to break the crust of the soil. The
shallow action of the picks then pulls up
the tender weeds and grass, leaving them to
dry out in the wind and sun. The weeding
process can be done most effectively about a
week after a rain, when the soil crust has
hardened but is not too hard. The best oper­
ating speed for the rotary hoe is between six
and eight miles per hour— at least four and
a half miles per hour, running in third gear.

Price Support Announced for 1949-Crop Rice
A program to support the price of 1949crop rice at 90 percent of parity as of August
1, 1949, has been announced by the United

States Department of Agriculture. The pro­
gram will be implemented by non-recourse
warehouse-storage and farm-storage loans and
by purchase agreements with producers. Eli­
gibility requirements for rice, for producers,
and for associations of producers are the same
as those under the 1948 program.
Loans and purchase agreements will be
available on rice produced in Louisiana and
Texas from time of harvest through Jan u ­
ary 31, 1950. The loans will mature on April
30, 1950, or earlier upon demand.
Interim Price Support for Early-Harvest
Interim 1949-crop wheat loan and pu r­
chase agreement rates have been authorized
by the Department of Agriculture in speci­
fied counties in 11 states, including Arizona,
New Mexico, Oklahoma, and Texas, and at
three terminal markets, including Galveston,
Texas. Department officials stated that in­
terim rates are established in advance of the
beginning of the marketing year so as to
make price support available to producers o f
early-harvested wheat. Appropriate adjust­
ments, based upon the final rates for price
support, will be made at the time of final

The World’s Champion Junior Rodeo will
be held at the Rodeo Grounds in Big Spring,
Texas, June 27-28.
The Twelfth Annual Wool and Mohair
Show is scheduled for June 29-30 in Sonora,
The Tenth Annual Cotton Research Con­
gress will convene in Dallas on July 28 for a
three-day session.
New Mexico Agricultural Experiment Sta­
tion, State College:
Conservation Practices fo r the W heat
Lands of New Mexico, Circular 221, by
Leonard R. Appleton.