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Nebraska Community (Chicago, 1941); Eleanor H. Hinman and J. O. Rankin, "Farm
Mortgage History of Eleven Southeastern Nebraska Townships: 1870-1932," University of
Nebraska, Agricultural Experiment Station Research Bulletin, 67, Lincoln, 1933; William
Gordon Murray, "An Economic Analysis of Farm Mortgages in Story County, Iowa, From
1854 to 1930," Research Bulletin, No. 156, Agricultural Experiment Station, Iowa State
College of Agricultural and Mechanical Arts, Ames, 1933; David Rozman, "Land Credit in
the Town of Newton, Manitowoc County, Wisconsin, 1848-1926," Journal of Land and
Public Utility Economics, v. Ill (1927), November, pp. 372-384; U. S. Census Office,
Report on Real Estate Mortgages in the United States at the Eleventh Census, and Report
on Farms and Homes at the Eleventh Census, 1890. Since 1930 various agricultural econo-
mists have published mortgage studies dealing with the recent history of farm mortgage
loans in restricted areas. An excellent example of the techniques used is provided by Jos.
Ackerman and L. J. Norton, "Factors Affecting Success of Farm Loans," Illinois Agricultural
Experiment Station Bulletin, 468, Urbana, 1940.



92 KANSAS HISTORICAL QUARTERLY

years had elapsed. There was little difference between the per-
centage of homesteaded and the percentage of pre-empted land
which was mortgaged within the first year of ownership. All of
the mortgages on pre-empted land were placed, however, by the
end of the third year of titled possession, while 16% of the home-
steaded land was mortgaged after the third year of titled posses-
sion. All of the timber claims were mortgaged in the first year
after title was obtained. Only four out of 70 successful home-
steaders, or 6%, commuted their homesteads and paid for their
land at the pre-emption rate of $1.25 per acre. Two of the four
mortgaged their land, but only after two and five years had elapsed
after the date when they acquired title. That the pre-emptors
and those who commuted homesteads bought their land for cash
seems to have had little effect upon the percentage of those who
mortgaged their holdings soon after obtaining title. Fifty percent
of the mortgagors among pre-emptors and "commuters" encumbered
their land within a year of acquiring title; 58% of the homesteaders"
who mortgaged did so during their first year of titled possession.

TABLE 3
DATE OF ENCUMBERING GOVERNMENT LAND

Home Pre-emp- Commu- Timber Combined
steads tions tations Claims Totals

Mortgaged: No. % No. % No. % No. % No. %

within 6 months after title, 20 52 4 50 . / . . 3 60 27 51
between 6 months and 1

year after title 2 5 1 12X . . 2 40 59

between 1 year and 2

years after title 6 16 2 25 ,, * 8 15

between 2 years and 3

years after title 4 11 1 12^ 1 50 .... 6 11&

between 3 years and 5

years after title 5 13 . . .. 1 50 . . .. 6 11&

more than 5 years after

title 1 3 1 2

Of the 61 individuals to whom the Santa Fe deeded land, 19, or
32%, mortgaged all or part of their holdings. Ten of the 19 mort-
gaged all or part of their holdings within six months after they had
obtained title. One other purchaser mortgaged within a year after
the Santa Fe had given him his deed, a second within two years, and
the remaining seven recorded mortgages on their land from two to
13 years after acquiring their deeds from the railway. A smaller
percentage of those who paid hard cash to the railroad for their
land found it necessary to mortgage that land later than did those
who homesteaded government land. As in the case of the govern-



FARMER DEBTORS IN PIONEER KINSLEY



93



ment land which was mortgaged, however, more than 50% of the
railroad land encumbered by its first owner was mortgaged within
six months after title had passed.

In total, the farmers of Kinsley township recorded 343 first mort-
gages and 80 junior mortgages between March 15, 1876, and De-
cember 31, 1905. In only a few years, however, did second mort-
gages play a significant role in farm financing in the township.

Four first mortgages were filed on the security of agricultural
land in Kinsley township during 1876. During the next 30 years,
filings rose and fell in a cyclical pattern. Peaks were reached in
1879, 1886 and 1905. In 1879, 30 mortgages were recorded to the
value of $16,821. In 1886, 52 mortgages represented loans of
$62,538. The same number of mortgages was filed in 1887, but the
amount of funds transferred under their terms dropped to $53,644.
In 1905, 26 mortgages secured a total debt of $70,806. The lows
occurred in 1883, when three mortgages totaling some $2,000 in
value were filed, and in 1896, when one mortgage secured a loan
of $375.

TABLE 4
MORTGAGE DEBT IN KINSLEY TOWNSHIP



, FIRST MORTGAGES N

Number Amount Acres



Second Mortgages
Number Amount



1876
1877
1878
1879
1880
1881
1882
1883
1884
1885
1886
1887
1888
1889
1890
1891
1892
1893
1894
1895
1896
1897
1898
1899
1900
1901
1902
1903
1904
1905



4

9

12

22

14

4

2

2

5

15

37

38

13

10

4

9

12

10

10

2

1

1

2

4

10

18

11

21

17

24



$1,299

3,711

4,320

16,249

8,003

3,200

1,600

1,200

2,850

16,554

55,462

48,120

40,300

12,640

5,050

7,658

14,200

9,800

9,270

550

375

550

650

7,447

4,780

13,550

17,300

27,072

29,596

68,771



640

1,353

1,670

3,191

1,598

597

241

400

1,043

2,411

5,991

5,284

2,611

1,986

929

1,038

1,630

1,344

1,928

50

160

320

400

531

1,791

2,584

296

3,618

4,220

6,125



1
8
8
1
1
1
1
2
15
14
14
3
2
1
1
2



$100

572

1,387

73

1,000

732

1,000

881

7,076

5,525

11,358

25,772

2,625

75

1,500
900



140
4,800

400
2,035



, TOT,


\.L ^


Number


Amount


4


$1,299


9


3,711


13


4,420


30


16,821


22


9,391


5


3,273


3


2,600


3


1,932


6


3,850


17


18,435


52


62,538


52


53,645


27


51,658


13


38,412


6


7,675


10


7,733


13


15,700


12


10,750


10


9,270


2


550


1


375


1


550


2


650


4


7,447


11


4,920


18


13,550


12


22,100


21


27,072


18


29,996


26


70,806



94 KANSAS HISTORICAL QUARTERLY

The percentage of agricultural land under first mortgage behaved
in the same fashion as did the number of loans outstanding and
the value of the first mortgage debt. Slumping somewhat between
1880 and 1885, it reached a peak in 1890 when 42% of the agri-
cultural land in the township was under mortgage. By 1900 the
percentage stood at 15%, but the figure had risen to 25% by 1905.

TABLE 5
FIRST MORTGAGE DEBT AT S-YEAR INTERVALS

Number of Value of Encumbered Percentage

First First Acres of Acres

Mortgages Mortgages (Agricultural) (Agricultural)

Jan. 1, 1880 35 $20,093 4,766 17%

- " 1885 26 15,465 3,755 13%

" " 1890 76 109,478 11,851 42%

" " 1895 47 59,483 7,140 25%

" " 1900 25 30,183 4,225 15%

' 1905 46 50,562 7,139 25%

The first peak of mortgaging in the township coincided with the
first large issue of titles by the federal government. In 1879 there
were more final certificates issued than in any other year in the
history of the township. The 26 settlers who obtained final certifi-
cates in 1878 and 1879, had, for the first time, real estate security
which they could convert into funds. Accentuating the demand
for equipment and supplies, which one suspects was normal in a
pioneer area, was the drought which struck the counties of the
99th meridian in 1879. In April, 1880, the Edwards County Leader
passed along the rumor that the county commissioners had passed
an order at their last meeting which forbade the township trustees
to extend aid to parties who were able to work and had mortgage-
able property. 20 The editor stated that such an order should cer-
tainly be passed if it had not already been done.

In all, title to 57 tracts of government land was granted during
the seven years, 1874-1880. During the same period, title passed
from the Santa Fe railway company on 24 parcels of land. Those
same years saw 78 mortgages filed.

The majority of the mortgages which were recorded by the
farmers of Kinsley township before 1881 evidently represented an
effort to obtain supplies and equipment. Of the 61 first mortgages
filed in the five years, 1876-1880, ten were apparently negotiated
to refinance mortgage loans which were coming due. Six repre-
sented part of the payment in real estate transactions and four

20. Edwards County Leader, April 22, 1880.



FARMER DEBTORS IN PIONEER KINSLEY 95

settlers evidently borrowed to pay out on their pre-emptions. 21 Five
loans patently represented mercantile credit, since they were drawn
for uneven sums payable at the store of R. E. Edwards. When
these 25 loans are eliminated, 36 are left unexplained. Lumping
the five mercantile credit loans with the 36 unexplained loans, 41
loans were unconnected with real estate transactions or the act of
refinancing previous obligations. Presumably these 41 loans, or
67% of the first mortgage loans obtained by Kinsley settlers in the
early period of the township's history, were used to buy food,
stock and equipment, although a few doubtless financed the mort-
gagor's departure to other pastures.

During the real estate boom of the mid 1880's, land sales and re-
financing accounted for a much more significant proportion of the
first mortgages than during the 1870's. Of the 90 first mortgages
recorded during 1885, 1886 and 1887, 58, or 64%, were obviously
refinancing or related to real estate transactions. By the years 1903,
1904 and 1905 this percentage had risen to 71%. 22

It has been pointed out in other studies that hard-pressed settlers
often commuted their homesteads with borrowed funds. As soon
as such settlers had evidence of title they secured their loan with
a mortgage and used any surplus in the loan above the land office
price for family living. Such mortgages, it is inferred, were born
of desperation, or of the desire to obtain speculator's profits by a
quick sale as soon as the settler had obtained title. Similarly, the
pre-emption law was used to obtain title quickly. 23 Since none of
the commuted homesteads in Kinsley township was mortgaged
within the first year after title had passed from the government,
such use of the commutation clause of the homestead act was not
illustrated in Kinsley township. However, 50% of the pre-emptors
who mortgaged their claims did so during the first six months of
ownership. Presumably these settlers used a portion of their loans
to purchase their land. But the percentage of pre-emptors who
mortgaged within six months of obtaining absolute title was no

21. When a mortgage was recorded within six months after purchase of the property by
the mortgagor it was assumed that the indenture represented part of the purchase price.
Undoubtedly the assumption leaves a margin for error.

22. This total includes eight mortgages filed by six purchasers of railroad land within
six months after the Santa Fe had issued the deeds.

23. Charles Lowell Green, "The Administration of the Public Domain in South Dakota,"
South Dakota Historical Collections, v. 20 (1940), pp. 204-225, and Harold Hathaway
Dunham, Government Handout, A Study in the Administration of the Public Lands, 1875-
1891, pp. 188-190. Basic material is contained in the Annual Reports of the General Land
Office during the 1880's, in Thomas Donaldson, The Public Domain, and in the Report
of the Public Lands Commission (1905). Actually Kinsley township was settled for the
most part before the abuses of the commutation clause of the homestead act and the pre-
emption act became most widespread.



96 KANSAS HISTORICAL QUARTERLY

greater than the percentage of homesteaders who mortgaged their
holdings during the same time.

Of the 19 purchasers who mortgaged railroad land, ten did so
within six months after they had obtained their deeds. In every
case, these men closed out contracts which still had several years
to run. Presumably these buyers were mortgaging to obtain the
funds with which to pay off the railroad. Since the prevailing inter-
est rate on mortgage funds stood above the rate specified in the
Santa Fe contracts at the time, they must have discerned some other
advantage in obtaining full title to their land. Such advantage per-
haps lay in the ability of those who had outright ownership to give
a warranty deed promptly in case the opportunity to sell presented
itself.

During 1876 and 1877, 13 loans were made on first mortgages in
Kinsley township. Ten of the mortgagees were residents of Ed-
wards county. Between 1878 and 1894, the borrowers of Kinsley
township obtained more than 50% of the funds borrowed on first
mortgage in all but two years from outside Kansas. Only six loans
on first mortgages were recorded between 1895 and 1898 but they
were all obtained within the county. Between 1899 and 1902, out-
of-state capital was again the most important source of credit.
Beginning with 1903, however, local lenders became more important
than nonresident lenders and this continued to be the case through
1904 and 1905.

TABLE 6

PERCENTAGE OF NONRESIDENT CAPITAL LOANED ON FmsT MORTGAGES IN
KINSLEY TOWNSHIP: 1876-1905

Year Percent Year Percent

1876 27 1891 82

1877 24 1892 74

1878 66 1893 52

1879 88 1894 96

1880 99 1895

1881 100 1896

1882 . . 1897

1883 100 1898

1884 47 1899 77

1885 60 1900 90

1886 65 1901 51

1887 76 1902 83

1888 96 1903 20

1889 88 1904 48

1890 66 1905 42

The creditors of Kinsley farmers resided in most of the central
and northeastern seaboard states, as well as in Missouri, Illinois,



FARMER DEBTORS IN PIONEER KINSLEY 97

Indiana and Ohio. A few loans may well have come from Great
Britain. The first Eastern investor to lend money in the township
was William H. Hanson of Suffolk county, Massachusetts, who in
1876 lent $350 at 8% per annum on the security of the southeast quar-
ter of section 6, T25, R19. The next year, E. R. Robbins of Middle-
bury, Vt, was in the field. With others of his family, he was to
make numerous loans in the township. In 1878 the National Loan
and Trust Company of Topeka entered the district. Other com-
panies followed the next year, which also saw the Travelers' Insur-
ance Company of Hartford become the first of the Hartford insur-
ance companies to lend funds in the township. 24

Many of the most important of the early Western mortgage agen-
cies lent funds at Kinsley. 25 Of these, the J. B. Watkins Land Mort-
gage Company of Lawrence made the greatest number of loans
over the period of this study. 26 Drawing funds from both Great
Britain and the Eastern United States, this company made at least
38 first mortgage loans in the township, totaling over $30,000. Fif-
teen of these loans, however, represented part of the purchase price
of sales made by the company while disposing of foreclosed land,
or they were loans drawn by the company on its own land in an
effort to raise capital.

An effort was made to work out the proportion of the funds
loaned on first mortgage which the mortgage agencies brought to
the township. In only three years, between 1879 and 1888, did
they handle less than 40%. Again in 1891, 1892 and 1893, the mort-
gage companies apparently played an important role, but the loans
of these years were drawn for the most part on the companies' own
property, as their officials strove to raise funds on the large amounts
of land which they were foreclosing. By 1894 most of the com-
panies had entered receivership. In 1901 the J. B. Watkins Land
Mortgage Company, and the Warren Mortgage Company of Em-
poria, appeared among the mortgagees in Kinsley township, but
the loans of the first company represented only a portion of the sale
price of land which was being sold incident to the liquidation of the

24. The Annual Reports of the Connecticut Commissioner of Insurance Companies con-
tain much information on the lending activities of the Hartford companies. See particularly
1875 and 1876. The lending policy of the Travelers' Insurance Company is described in
the 1891 Report, pt. 2, pp. xxx and xxxi.

25. The Annual Reports of the Connecticut Bank Commissioner, 1888-1895, of the
Massachusetts Commissioner of Foreign Mortgage Companies, 1890-1895, of the New York
Superintendent of Banking relative to Foreign Mortgage, Loan, Investment and Trust Com-
panies, 1891-1896, and of the Vermont Inspector of Finance, 1889-1893, provide the most
satisfactory catalogue of the Western mortgage companies of this period.

26. A. G. Bogue, "The Land Mortgage Company in the Early Plains States," Agricul-
tural History, v. 25 (1951), January, pp. 20-33.



98 KANSAS HISTORICAL QUARTERLY

corporation. The Warren Mortgage Company, however, was doing
a legitimate brokerage business.

During the heyday of the Western mortgage companies in 1886-
1887, the newspapers of Kinsley carried the advertisements of at
least nine loan agents representing mortgage companies, three in-
digenous loan companies and three local banks. Puffing the agent
of the Watkins company, the editor of the Kinsley Graphic re-
marked, "L. W. Higgins is loaning money at rates so low, and on
time so long that the borrower is liable to forget that he ever has it to
pay." 27

The commissions of the mortgage companies and of the local
agents were often taken in the form of second mortgages. At least
50% of the second mortgages filed from Kinsley township were of
this type. The notes backed by such mortgages seldom stipulated
a rate of interest but merely specified that the principal should be
paid in ten equal semiannual installments.

The role of the local banks in the field of farm credit is worth
mention. Two banks were started in Kinsley during the 1870's.
The Edwards County Bank began operations as a private bank and
the Edwards Mercantile Bank grew out of the merchandising busi-
ness of R. E. and W. C. Edwards. In 1882 the Edwards County
Bank was organized as a state bank with a capital of $32,000. By
August, 1887, this capital had been increased to $100,000 and was
supposedly paid up in full. In January, 1885, the Kinsley Graphic
listed among the things that it would like to see, "At least two more
banks in Kinsley so that money could always be had whenever good
security was furnished." 28 In March, 1887, the Kinsley Exchange
Bank was organized as a state bank with a capital of $50,000. The
officers of this institution came from Iowa. During July of the same
year, the Edwards Mercantile Bank was reorganized as the First
National Bank of Kinsley. Thus by the summer of 1887 there were
three incorporated banks at the service of the community.

Before 1900 the three banks made only eight loans on real estate
security in Kinsley township totaling $14,563. With the exception
of three loans to the amount of $4,733, these loans were secured
by second mortgages which bore a higher rate of interest than did
the first mortgages of the same years. If the $3,439 lent by R. E.
Edwards in the same period and secured by six first mortgages and
five second mortgages is added in, the total of $18,002 allocated by

27. Kinsley Graphic, March 12, 1886.

28. Ibid., January 16, 1885.



FARMER DEBTORS IN PIONEER KINSLEY 99

local credit agencies still falls far short of the $30,000 which the
J. B. Watkins Land Mortgage Company provided. The local banks
were more interested in short term loans backed by chattel or per-
sonal security than in first mortgage farm loans.

But the local banks did perform a useful function in the long-
term field by acting as local agents. The Bank of St. John which
was located in an adjoining county, the Edwards Mercantile Bank
and later the First National Bank of Kinsley, the Kinsley Exchange
Bank, and the Edwards County Bank, all acted as local agents for
either mortgage companies or individual Eastern investors. If the
local banking institutions and capitalists did not themselves lend
heavily on first mortgage they did perform the function of bringing
lender and borrower together. In 1887 there was a tendency for
this function to be shifted to a separate agency. The Kinsley
Loan and Trust Company, which was organized in 1887, num-
bered R. E. Edwards of the Edwards Mercantile Bank among
its directors and the Edwards County Investment Company, or-
ganized at about the same time, listed L. G. Boies of the Ed-
wards County Bank on its governing board. This development
marked an attempt on the part of local men to enter the invest-
ment company field and to obtain all instead of merely part of the
middleman's fee or commission on funds which were sent from the
East for investment.

The local banks shared in the financial misfortunes which struck
down the nonresident investment and mortgage companies. The
Edwards County Bank entered receivership in 1890. It was fol-
lowed three years later by the Kinsley Exchange Bank. The First
National managed to survive the year 1893 and reorganized under
a state charter in 1894. 29

The provisions in the mortgages filed on land in Kinsley town-
ship varied in their complexity. When the mortgagees were local
men, the indentures were usually simple and short a mere transfer
of the security in case the terms of the notes should be broken. The
mortgages filed by Eastern investors or their agents were much
longer and filled with a greater variety of terms which were de-
signed to safeguard the mortgagee.

In most of the forms used by Eastern investors, the failure of the
mortgagor to pay taxes and the insurance on improvements promptly
broke the contract. But in no case of foreclosure in the township

29. For a comment upon the difficulties faced by a national bank in this area see the
Kinsley Graphic, February 16, 1894; also James C. Malin, "The Kinsley Boom of the Late
Eighties," The Kansas Historical Quarterly, v. 4 (1935), May, p. 184.



100 KANSAS HISTORICAL QUARTERLY

did such grounds serve as the sole excuse for bringing suit. Gen-
erally a clause was included, "waiving all exemption, appraisal and
redemption laws." Often the mortgagor authorized the levy of $25
for attorney fees in case he allowed his loan to become delinquent.
It was generally specified that default would entitle the mortgagee
to immediate possession of the premises and rents, issues and
profits. This clause had no validity in so far as actual possession
upon default was concerned, but evidently did insure that the pur-
chaser of the sheriff's deed was entitled to any crops growing on the
security when the deed was issued. Most mortgages recorded by
nonresident mortgagees named a place of payment in the Eastern
United States a provision which insured that the mortgagor would
pay the cost of exchange.

More unusual was the clause used by J. B. Watkins in 1879, which
specified that payment should be made "in gold coin of the United
States of America." This proviso reflected the fear of Watkins' con-
servative clients that the monetary supply of the country was about
to be inflated by large infusions of greenbacks or silver. 30 In 1879
E. R. Bobbins inserted a clause seldom found in the mortgages on
the land in Kinsley township when he bound several mortgagors to
"break forty acres of prairie within a year." 31

The average rate of interest on first mortgage loans stood in 1876
at 11%. From this figure the trend was downward until 1889, when
the rates of interest on nine mortgage loans averaged 7.4%. Over the
next ten years the annual average stood between 8% and 10%, with
the exception of 1892, when 12 loans called on the average for
interest payments at the rate of 6.9% per annum. The loans of this
year were unusual in that five of them were drawn by the J. B.
Watkins Land Mortgage Company and the Jarvis Conklin Mortgage
Trust Company on holdings which they had foreclosed. Since the
companies were themselves paying the interest on these loans, the
rate was put at 6%, which had little relation to the price of funds in
Kinsley township. After 1899 the average rate on loans recorded
from Kinsley township hovered around 7%, with the 22 loans, which
were recorded in 1905, averaging 6.6%.

30. Edwards county, "Mortgage Register A," p. 300; J. B. Watkins, Lawrence to Ed-
ward Lewis, Philadelphia, Pa., December 2, 1878, "J. B. Watkins Papers," University of
Kansas.

31. Edwards county, "Mortgage Register A," p. 344.



FARMER DEBTORS IN PIONEER KINSLEY 101

TABLE 7
INTEREST RATES IN KINSLEY TOWNSHIP

Number Rate Number Rate

1876 4 11% 1891 6 8.356

1877 7 10.7 1892 12 6.9



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