Gentlemen: Against you individually, or as a class of persons who have accumulated more or less wealth, and who loan it at interest to those who perhaps have been less fortunate, I have not the least prejudice. I believe that yours is an honest as well as a legitimate business; that great wealth may be, and often is, won by honest means; and that it does not border upon the marvellous that the capitalist is often an honest man, and the pauper as often a rogue. I believe that you are as honest as other men are, and that if you fully understood the situation in the West and South, and knew that a certain line of conduct would result to your own advantage financially, and also be a great benefit to the whole country, you would act as other honest people would act under similar circumstances; and it is because I so believe, that I write this letter.
I write neither as a partisan nor in the interests of any party, but to give plain facts which can be easily verified, and to show how these facts are seen and felt by those who, like myself, have been born and bred on the boundless prairies, and have had a varied experience with the ups and downs of life on the sunset side of the Father of Waters. I hope by so doing to help you to realize the extent of the disasters which a continuance of the present financial policy will inevitably bring to you as well as to us.
The Actual Condition.
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.