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buildings and to make other improvements, and that more than ninety-four per cent of the debt stands for an equivalent of durable property acquired by the debtors by means of the indebtedness. Almost all of the debt is of a voluntary origin, as the word "voluntary" is ordinarily understood. That is, mortgage debtors have not been forced into this debt to avoid misfortune, but rather have undertaken it to improve their condition and to increase their happiness. Within the limited view of the subject to which we are here confined for the moment, it is not fair to compare the condition of the mortgage debtor, as such, with his condition as it would be if he owned his mortgaged real estate free of debt: the proper comparison is with his condition as it was before he entered into debt to buy real estate or other property. Before incurring debt he weighed its benefits against its disadvantages and his action was decided by a preponderance of benefits, in his own estimation. He may have made a mistake, but it is not reasonable to suppose that it has been the uniform experience of all, or nearly all, mortgage debtors to miscalculate the consequences of this indebtedness. If they had done so, mortgage debt would not be voluntarily assumed by any considerable number of persons.

So here we have an increasing mortgage debt, increasing both absolutely and in relation to real estate value, and a debt that is mostly voluntary in its origin. In casting about for an explanation of this increase, it may at first be conjectured that it is accounted for by a growing need for greater possessions of wealth. But the average amount of each mortgage made during each year of the decade does not sufficiently support this conjecture. In 1880 the average was $1149 for the thirty-three States previously referred to, and, with some variations, the average rose to $1544 in 1889, an increase of thirty-four per cent. This looks like a very inadequate cause for nearly a triplication of mortgage indebtedness within ten years, when viewed with regard to the increase of wealth, but without regard to its distribution.

It is only when distribution of wealth is thought of, that the facts are harmonized. The facts are understandable if we regard the real estate purchasers of 1889 as less able to advance the full payment for their purchases than their predecessors were in 1880, not so especially because of the greater costliness of the purchases in 1889, as because of decreasing ability to bring forth the purchase price. In other words, a concentrating tendency of wealth ownership is indicated.

In qualification of this inference, it may be said that individual needs for larger amounts of capital have been growing. The merchant, for instance, needs, or, at any rate, wants more capital than his predecessor did and will place a mortgage on his home when he buys it rather than to pay for the home with capital taken from his business. Or, the owner of land and building used for business purposes prefers to borrow part of its cost and to confine the ownership to himself rather than to associate with himself co-owners who will supply capital of their own enough to make mortgaging unnecessary.

Yet, with the admission that these courses may have become more prevalent, it can hardly be established that the demands for more capital than before account for all, or most, of the approach to the real estate debt limit during the decade. The average mortgage has not increased enough in amount to produce such an effect. A large majority of the mortgages (seventy per cent) secure loans of less than $1000 each and almost the entire number (ninety-seven per cent) secure loans of less than $5000 each. According to the statement of the Bradstreet Company, the average amount of assets possessed by bankrupts engaged in business, increased from $6306 in 1880 to only $8692 in 1890, or thirty-eight per cent; while the average liabilities increased from $13,131 to $16,399, or only twentyfive per cent. Along with nearly a threefold multiplication of mortgage debtors during the ten years preceding 1890,

there has been a probable concentration of real estate ownership, relative to population. These facts contradict a supposition that mortgage debt and mortgage debtors have increased chiefly because of demands for larger amounts of capital, and are consistent with the inference that the increase has been due to a concentrating tendency of wealth. Are mortgages evidences of prosperity, or not? In their inception, with a view to their purposes and with a general average of experience, yes. Mortgage debtors have intended to place themselves in better circumstances, and most of them would doubtless rather remain debtors than to part with real estate equivalent in value to their mortgage debts. The voluntary character of this kind of indebtedness proves a general consensus of opinion that it is a means of promoting prosperity. Otherwise the purchase of real estate and the erection of buildings with the aid of mortgages would cease.

But to the extent that mortgages are an evidence of the concentration of wealth, the answer must be qualified. If we bear in mind the mortgage debtors of any given time, we must hold them as agreeing that they expected to improve their circumstances when they became debtors, and that the failure to realize their expectations, if there has been any, has not been complete enough to make them desire to cancel their mortgage debts by surrendering an equivalent of property. When the succeeding mortgage debtors of a subsequent time, however, are considered, in comparison with the preceding ones, a concentrating tendency of wealth, if it will be admitted, will be regarded as increasing the proportion of the individuals who need to borrow in order to promote their prosperity and consequently to make a more equal distribution of prosperity.

While mortgage debtors must admit that they have done better to obtain real estate on credit than not to obtain as much of it as they have done, or not to obtain it at all, they are nevertheless in a situation where they feel the pinching effects of a reduction or loss of income more than real estate

owners do who are not debtors. This is owing to the interest that is wanted by the mortgagee. To understand this, a farmer may be thought of as cultivating a farm owned by him free of mortgage. The prices of its products enable him to live well and to save $300 yearly. But a time arrives when the prices of products fall so as to cut off this saving and also, perhaps, to lower his standard of living. Still he does not need to draw upon his invested capital; as far as wealth goes, his loss is a negative one. He feels the loss, but it does not make him poorer and he need not lower his standard of living until his customary margin of saving has been more than extinguished. On the other hand, suppose that he has on his farm a mortgage on which he must pay interest of $300 every year. Prices of products are high, and he lives well and collects from consumers the amount of the interest charge. Crop failure or a depression in prices of products follows. His loss is a lower standard of living and perhaps a positive loss of wealth, which he did not suffer when his farm was free of mortgage. He could forego the saving of $300, but he cannot forego its payment as interest, and his ability to endure financial stress is inferior to what it was when he was out of debt. Therefore, while his mortgage, in its purpose, is an evidence of his effort to better his condition and, in its consequences, in an average of experiences, is an evidence of more or less gain in prosperity, if the farmer's condition with a less valuable farm free of mortgage is kept in view for comparison, yet he is peculiarly sensitive to a loss of the interest-earning power of the wealth that he has borrowed. Let there be a failure of crops, so that the interest burden cannot be shifted upon consumers, and farmers begin to think of political revolution and of schemes of legislation to lighten their load of debt.

It is estimated that during the decade under consideration the annual interest charge on the real estate mortgage debt of the country has increased from $175,000,000 to about $400,000,000. At the end of the decade the entire private

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debt of all sorts, including that of quasi-public corporations, must have been charged with the payment of as much as a billion dollars, or about one-tenth of the annual product of wealth, or about one-half of the annual increase of wealth, so that the principal item of the interest charge was the interest on mortgages. While the facts expressed by these large numbers may have an influence on the distribution of wealth, they give no idea of the weight of the interest burden resting on the individual debtor. How great or little this is has been ascertained for mortgaged farms and homes that are occupied by owners in twenty-two States. Among the larger burdens for farms are $138 in New Jersey; $97 in Iowa; $95 in Maryland; $89 in Rhode Island, and $80 in South Carolina. The smaller burdens are $33 in Maine; $41 in Tennessee; $57 in Georgia; $66 in Wisconsin, and $67 in Minnesota. For homes the heavier burdens are $108 in Rhode Island; $98 in Massachusetts; $94 in Minnesota; $93 in New Jersey, and $90 in South Carolina: the lighter burdens, $41 in Maine, and $51 in each of the States of Iowa, Tennessee and Wisconsin.

The debts on which these amounts of interest are paid annually are related to the values of the security in proportions varying from about one-third to about one-half, so that the larger amounts of interest may ordinarily be quite as easily paid as the smaller amounts, possibly more easily paid. In the case of a farm, it would seem as though the increase of live-stock might offset the interest charge without bearing heavily upon the farmer's resources. A horse, or one to four cows or steers, sold every year, are enough to prevent foreclosure of the mortgage. In regard to homes, their values, and hence their incumbrances, are usually adjusted to the incomes of their owners. The fact that mortgage debt is assumed so generally, with the experience of many debtors constantly in view, indicates that the burden of the interest is not regarded as offsetting the benefits received from the borrowed wealth.

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