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something like another depression. They are much more vulnerable to economic adversity.
Security Values of Land
And Equipment Shrinking
By Murray G. Via
Land values for the U. S. as a whole have dropped approximately one half per cent per month for over a year. Loans made on recent purchase prices of farm land should have been rapid at a rate of 6 per cent per year in order for the security held by the lender to be worth as much as it was when the loan was made. However, land values in some states have dropped mcch more rapidly than in others, and loans in these states would ha e to be repaid at a rate of 10 per cent per year or better in order for the security to be maintained in the same ration as when the loan was originally made.
Ban k e r s and ethers lending money, as well as the borrower himself, should bear in mind that for five years land values on the average went up one per cent per month, and that there is a possibility they may come down equally as fast or faster if farm product prices are allowed to seek their own level.
Prices of farm products have dropped almost ¥4 since their all time high in 1948, which is much faster than land values have dropped. Likewise, collateral values of livestock, farm machinery," and equipment have dropped much faster than land values.
It now appears that lenders .should make reappraisals for full loans, especially if they are to inexperienced farmers, in order to keep these loans sound. Before making a loan the lender should' satisfy himself that the borrower has a sound farm plan that will pay net profit on a declining market. In order to do this the lender must acquaint himself thoroughly with the farmer's operations.
“Farmers’’ Planting plans . . . acreage planted to crops this spring again will be relatively large according to reports received from farmers all over the country.
“The reports reveal t h at on March 1, farmers planned to put about 277.9 million acres into 17 spring sown crops, including hay, compared with 274.2 million acres in 1949. However, the gain over last year is more than offset by the large decline in the acreage in winter wheat seeded last fall.
“Compared with the spring of 1949, farmers’ plans indicated declines for corn, spring wheat, pea
74.3%