In 1886, the chief clerk and trusted agent of a great loan company, who
has since been in the employ of Jarvis Conklin & Co., said to me: "There
is plenty of money to loan, but the securities are practically
exhausted." Everything "in sight" was covered with a mortgage. The few
who had escaped the mania of speculation did not want any mortgage on
farm or city property. Loans since then have been mostly renewals, and
for a time one company loaned money to be paid to another; but, with a
few exceptions, the Eastern money borrowed since 1880 has not been paid,
and anyone familiar with the facts does not need the gift of prophecy to
foretell that, under the present conditions, it never can or will be
paid.
The mortgages, bonds, and most of the coupons you still hold, and, in
many cases, you also have a deed to the property; but neither the one
nor the other is of any practical present value. The mortgagor is dead,
moved away, bankrupt, or working at daily labor--when he can get
work--for his daily bread. Therefore the debt is worthless, and the
property is but little better. The very best of it--costly business
blocks in the heart of the cities--is unremunerative. No intelligent
poor man would, or could, take a brick block as a gift and keep the
taxes and interest paid.
And perhaps the larger share of the city property is unoccupied or
paying no rental. He who rides upon a Western railroad can see the proof
of this from the car windows. In every city, town, village, and on not a
few farms, can be seen the broken or boarded-up windows which are the
footprints, not of time, but of the Eastern mortgage. This property
belongs to you. No Western man pays taxes or interest, and no one
expects to pay the principal. No one wants the property; no one has any
use for it; and no want ever existed which it was calculated to fill,
except in the brain of the monomaniac who built it. Whether you have
"foreclosed" or not, the property is virtually yours; the mortgagor has
no equity in it. While he had an equity, the decline in prices affected
that equity; now it affects only _your_ interest.
You own our business buildings, mansions, and cottages. You have an
everlasting grip on our public buildings, Board of Trade halls, Young
Men's Christian Association buildings, and even our churches. The Rev.
Mr. Wooley, in the pulpit of the Central Christian Church of Wichita,
said recently: "Every church building in this city, except one, is
heavily incumbered, and most of them are practically insolvent." Even
the "calamity howlers" of the "Populist" party are afraid or ashamed to
tell the truth, "and the whole truth," about our financial condition.
And it is not improving. A few farm mortgages are being paid, and
scarcely any new ones are being made except renewals; but all the
reduction so made is more than equalled by the sum of defaulted interest
payments on mortgages outstanding. The statements in the papers, that
the mortgage indebtedness of Kansas--or some other State--was reduced so
many thousand dollars during the past year, are misleading. They are
regularly published to restore "confidence." For the benefit of my
Eastern brother, I will explain, lest he may imagine that we are each
year paying back more money than we borrowed during that time, and that
therefore, in the course of geologic time, our debts would be paid.
The "reduction" is a reduction of record only. I have known of the
payment of $25 to reduce the record of $650, and $20 to make a
"reduction" of $400; and for various reasons many mortgages are
cancelled without any cash payment. These are well-known facts, and I
could give a long list of those which have come under my own personal
observation, while the mortgages which I have known to be paid in full
might be counted on the fingers of one hand.
In addition to this, nearly every city or incorporated town, and many of
the counties, have a bonded indebtedness as large as they can possibly
carry. In some cases bonds have been issued and sold to pay interest on
other bonds, and in one case at least--Pratt Centre--the interest
payments have been discontinued "by order of the council."