Chapter 53

Borrowed Money

My father borrowed money in a long term loan for the farm from the Federal Land Bank of Baltimore, and he borrowed for animals, machines and supplies from Production Credit. They were both in the same office, an outgrowth of Roosevelt’s New Deal. I am sure my grandfather borrowed from some bank, likely the Harrison County Bank at Lost Creek, for the farm when he bought it from the Van Horn family in 1917. The Lost Creek bank was the only one around which survived the depression of the 30s. Walter Nutter was Head Cashier during the depression, and still held that position, at my earliest memory. His son David followed him in later years.

I heard a lot of stories about that tragic era. Uncle Gord (Gorden Kennedy, my maternal grandfather’s brother) had money in the Lost Creek bank. He heard a bank failure was coming and took half of his money out of the Lost Creek bank and took it to Jane Lew to spread the risk. The Jane Lew bank failed, and he lost that half. Uncle Erlo Davis, who married Antha, my paternal grandfather’s sister, had a substantial interest in a Jane Lew bank. They had an arrangement called “double indemnity,” which meant that when the bank got weak, stockholders had to come up with an amount similar to their initial investment to save the depositors. Uncle Erlo was able to do it, but it almost caused him to go bankrupt. Still the bank failed. Uncle Erlo never quite recovered. The big shareholders in one of the Jane Lew banks became large landholders, because they were able to anticipate the bank failure and had time to take advantage of it. Small stockholders and depositors “came out the little end of the horn.” (See chapter on colorful language, Number 16.)

I wonder whether the earlier ancestors borrowed?

When I began to farm I began to borrow from Production Credit, too. I borrowed a little from the Harrison County Bank, but that bank didn’t seem to be sensitive to the needs of farmers. In particular, they wouldn’t extend loans when things went wrong, as frequently happened in a business that depends so much on the weather and so many other variables not under the businessman’s control.

In time the Production Credit and Federal Land Bank combined to form Farm Credit. They went through a crisis in the early 90s because two of the associations (of a dozen or so) in the United States had a lot of bad loans, and the others were contractually obligated to support the ones in trouble. When I began, the local office was essentially the same New Deal organization it was originally, but now it has amalgamated into a huge credit association, covering most of the Virginias and some of Maryland.

Farm Credit makes loans of over a million dollars to some individuals. In addition to the traditional branches of agriculture, they loan for forestry, fish culture, exotic businesses like alpaca, horse business, deep sea fishing, non-farm homes in rural areas and so on.

I have a rolling account for expenses – that means I borrow for general running expense and pay back after I receive income; then I don’t have to take a new loan for the next time. This has a cap, of course. Also I have separate loans for cattle, machines, etc. Bart Zirkle was my first loan officer. His observation was very important for a young borrower: “Money is easy to borrow but hard to pay back.”

Thomas Mouser is my present loan officer. He farms too and is well adjusted and dependable. I don’t mind working with him and like him personally. My indebtedness is about 1.75 times my annual farm income, which they consider quite safe. We don’t live on the farm income, but on our retirement. We just want the farm to grow.

Aside October 1, 2001. I taught the last Chemistry classes of my teaching career at Salem, now Salem International University, in February and March 2001. It was 50 percent owned by a Japanese business man for several years, during which time it was called Salem Teikyo University. Subsequently it was sold to a company from Singapore. In the Teikyo phase there were many Japanese students, and even when I taught the classes about one-third of the students in the Chemistry class were Japanese. I found the Japanese students reticent but very hard workers. The structure of Japanese is so different from European languages it is very difficult to speak English, even when you can understand it. I met one young Japanese man who had good leadership qualities and relatively good command of English, whose name was Yoshimitsu Toyoda. I had him over to the farm several times, including yesterday.

We drove by a neat, small farm owned by a man who told a story when I was about sixteen, working in the hay field. He and one or two other soldiers fighting in the South Pacific had taken a small group of Japanese solders, four or five, who had surrendered, into the jungle and shot them, rather than turning them in as the command expected. I never thought much of the man afterwards. I debated telling Yoshimitsu this story, because we had discussed the war a little, and how the war on the Japanese front was so different from the German front, so much more vicious, but I decided against repeating it.

Copyright © 1998, 2006, 2008, 2011 S. Tom Bond (stombond at hughes.net)