A carefully prepared abstract of the mortgage records was made for three years, 1870, 1880, and 1887, in which the amount of each mortgage and the term for which it ran were noted. From these amounts an average term for the whole annual amount of mortgages was calculated, and, on the theory that the average term of mortgages in consecutive years was substantially the same, it was assumed that the total mortgage indebtedness would be equal to the amount of mortgages recorded during the year multiplied by the average term. The plausibility of the method is heightened by the fact that there was no great difference in the average terms of the three years examined. If the amount of mortgages satisfied during each year were exactly equal to the amount recorded, this method would be proper and the result would be approximately correct; but in fact the two sums are not equal. The fallacy involved in the estimate is that of attempting the calculation of the relative distance of two moving bodies without any data relating to one of them. In this case the mortgages recorded are the fleeing hare, and the mortgages satisfied are the pursuing hound. The existing mortgage indebtedness is the distance between them, and it cannot be estimated from the speed of either alone. To illustrate: suppose that for ten consecutive years the mortgages recorded amounted to $10,000,000 annually, and the mortgages satisfied to $5,000,000 annually, the average term being the same for each year. A calculation based on the returns for the first year would give precisely the same total of mortgage indebtedness as one made on the returns for the last year, although the amount had actually increased $45,000,000. If the conditions were reversed, and the satisfactions were annually $5,000,000 in excess of the mortgages recorded, the calculations for the first and last years would again have precisely the same result, although the volume of mortgages had in fact decreased $45,000,000.

Still, the calculation is not without value, for it is evident. that the amount thus ascertained is a reliable maximum or a reliable minimum according as the volume of debt has increased or decreased through a considerable number of years. The situation and known condition of Illinois are sufficiently like those

of Indiana to justify the conclusion that the volume of mortgages has been increasing for twenty years or more in the one as well as the other, and this inference is confirmed by a comparison. of the records for the first and the last of the years examined. The total number of real-estate mortgages recorded increased from 44,290 in 1870 to 63,660 in 1887, and the amounts for the same years increased from $75,309,898 to $99,795,684. While it is possible that satisfactions might keep pace in this increase with the mortgages recorded, the contingency is so remote and every iota of evidence is so clearly against it that it must be admitted that the volume of mortgages is increasing and that the estimate is a minimum. The total amount of real-estate mortgages on Illinois property in 1887, as thus computed by the statistician, was $381,322,339, and the annual interest charge was $12,702,542. The assessed value of the real estate in 1880. was $575,441,053. The great excess in proportion of mortgage debt to land value here shown, as compared with Michigan and Indiana, is due to the different rates of assessment used in the three states. According to the census of 1880, property in Illinois is assessed on the average at 25.44 per cent of its true value; in Michigan at 37.79 per cent; and in Indiana at 48.55 per cent. Our ascertained minimums of mortgage debt therefore stand relatively as follows: Illinois, $381,322,339 of debt on $2,262,000,000 of realty; Michigan, $129,229,553 of debt on $1,143,000,000 of realty; and Indiana, $106,855,884 increase of debt in fourteen years on $1,109,000,000 of realty. The annual payment of interest by the three states on this certainly known amount of debt is the enormous sum of $29,634,393.

With this state of facts demonstrated to exist in three states that are rich in natural products, fertile of soil, and well-conditioned for commerce, it will probably be conceded that the mortgage indebtedness of the Western states is a matter worthy the attention of economists and statesmen, as well as of the people of those states. Whatever may be thought of its effects, it is a fact-mountainous and immovable. And more, the probabilities that loom far above the figures here presented make it very questionable whether the "alarmists" who have discussed the

subject have in fact materially exaggerated the existing condition.

The most serious effects of a state of general indebtedness are two first, its aggravating force in times of financial depression; second, its constant drain on the production of the commonwealth. The first is well illustrated by what has occurred in the states mentioned in the past fifteen years. For seven or eight years after the Civil War "times were good." Money was plenty, business of all kinds was prosperous, and a general spirit of adventure in business enterprises had grown up. Then came a financial depression. Its causes, for present purposes, are immaterial. History assures us that such depressions recur at intervals, from various causes, and we must of necessity treat them as conditions that may exist again at almost any time. Money became scarce. Interest was not easily met. As a rule, in the effort to keep up the interest on secured debts men pushed off the payment of unsecured debts, and so every class in the community partook of the injury, while the ready money in the country was constantly drained away from it by the payment of interest on foreign loans. In a very short time the era of bankruptcy and general foreclosure was reached. The extensive paying power of money in a community where credit is common is well understood. A pays B $100; B, with the same money, pays C; C pays D, and so on until $1000 of debt may be extinguished by the one sum. In the absence of the $100 this satisfactory method of transfer was reversed. D sued C; C sued B; B sued A; and so instead of satisfaction of debts there arose litigation, attorney's fees, court costs and forced sales of property. This was especially serious as to mortgaged property; for universally, by the terms of mortgages, on default of interest the whole debt became due and foreclosure might be had at once. Hence the amount of debt immediately payable was enormously increased at the very time when payment was most difficult, and the natural stringency of the depression was multiplied over and over again.

But this was not the worst effect. On account of sales on foreclosure, sales on execution, and the voluntary efforts to sell

land in order to obtain money, the market value of real estate was soon depressed much below its true value, and remained so for about ten years. One or two instances will show the nature of this calamity. A piece of property for which the owner had refused $25,000 was mortgaged in 1876 for $6,000, in order to . raise money to meet pressing claims. In 1879, the owner being driven to the wall, the mortgage was foreclosed and the property bought in by the mortgagee for $6,826, the amount due with accrued interest, attorney's fees and costs. In 1887 it was sold for $10,500, and the purchaser has since refused $12,000. A piece of property appraised by three sworn appraisers at $22,500 was mortgaged for $7,500. In 1878 the mortgage was foreclosed and the property bought in by the mortgagee for $4,500. Under the remainder of the judgment ($3,793) all other property of the owner was levied on and sold. The mortgaged property has since been sold for $12,000. These cases. are mentioned because they came under my personal observation, but they were not unusual instances. They are fair samples of what occurred in the majority of foreclosures in this state. It should be added that the personal judgments taken on foreclosure were usually against several persons, as each person who bought mortgaged property commonly assumed the mortgage debt. It is also to be noted that all real estate, whether mortgaged or not, felt the depression in market value. For example, I have in mind a block of unincumbered vacant lots which in 1873 were selling at $3,200 each. In 1879 they sold very slowly at $500 each. At present they are selling readily at $1,500 each.

It is very evident from these facts that mortgage debt, in times of financial depression, has a power of destroying value largely in excess of its own volume. To illustrate: in the second case mentioned the owner of the property had a fair margin of at least $4,000 above the mortgage debt, under normal conditions; under foreclosure and sale he not only lost this but also, by owning the property, suffered further positive injury to the amount of $3,793. I believe that the opinions of intelligent observers will bear me out in the statement that,

under such financial conditions as existed ten years ago, the value-destroying power of mortgage debt is at least equal to twice its volume, and this power must be kept in mind if the significance of mortgage debt is to be understood. On the mortgaged farms of Michigan the mortgage debt is reported to be 46.8 per cent of the assessed value. Assuming for the purpose of illustration that the assessed value is the true value, my proposition is that if these mortgages were foreclosed in a time of general financial depression the entire value of the farms would be consumed in satisfying the mortgages. Further than this, there would result a general depreciation of value in realty that would cause a like loss on all unincumbered property sold while the depression continued.

Of course this loss of value is relative to the owners and not absolute. The subsequent owners have the advantage of the gradual return of the market value of the realty to its normal value. There can be no loss to the mortgagee unless he sells while the depression continues. In some cases foreign loan companies have done this, and, mistaking the nature of their loss, have complained bitterly of the wild speculative spirit that had so greatly overestimated the value of the realty pledged to them. At the present time, property having regained something like its normal value, such losses have been compensated by corresponding gains, so that no foreign company, so far as I can learn, has lost anything, and some have realized handsome profits. The Connecticut Mutual Life Insurance Company, in its report of January 1, 1888, to the insurance commissioner of Connecticut, states its net gains on sales of real estate taken in foreclosure to that date at $752,175.17. This profit was chiefly on Chicago property; and I will venture the prediction that this company will realize at least an equal profit on the realty now owned by it in Indiana and Illinois.

It is plain, both from the facts stated above and from reason, that no just appreciation of the condition of owners of farm property can be gained from statistics of farm mortgages alone. The market value of farms is necessarily affected by fluctuations in the value of neighboring city and town property, and vice