Wednesday, October 22, 2008

Mortgage difficulties in 1830: Henry Van Der Lyn as Nostradamus

Reading through part of the Diary of Henry Van Der Lyn (New York Historical Society, Vol. 1, pps. 245-46) today, I was struck by the following entry, dated 1830. It isn't written in quatrains but it does reinforce Mark Twain's notion that history, if it doesn't repeat, at least rhymes:

There was a company chartered Last winter by the Legislature in N.Y. called the Trust Co[mpan]y which is now lending money all over the state, where ever they have applicants, at 7 percent on Bond & Mortgage. They have the lands of each applicant appraised & lend him 1/2 of the appraised value for a term of years. Interest payable every six months. This is a dangerous business both for the Company & the Applicants. Many persons will take larger sums of money than they otherwise would, merely because it [is] as easy to get a large as a small sum and will thus encumber their property by a claim they never can meet, when it is called for & will be disabled by the every encumbrance to obtain any new credit. They will thus live with[ou]t hope and their mortgaged farms will soon show all the ruin & waste attendant as an occupant who has no interest in keeping up the constant repairs necessary to maintain a farm in good condition. Others will endeavor to Mortgage their farms for all the money they can get & never intend to repay the money, making use of this scheme of borrowing in order to sell their farms to the company. Thus in the end a Number of farms will fall into the hands of the Co[mpan]y which they will not be able to rent for any cash rent, and which they will not be able to sell for 1/2 of the money they advanced. At this moment a great deal of money is (I may say a very unusual quantity) is loaned by the Banks at Utica & by this Trust Co[mpan]y on apparently very easy terms, but the time for repayment will soon come & a reaction on the very Banks, who are now so profuse is at hand, when many borrowers will be cramped & be ruined & property will have to change hands; and a general depression, confusion & scarcity of money, will inevitably follow. In short, the Co[mpan]y at N.Y. should not lend their money on the security of farms in the Country: & Persons here, should never, without the most despearate necessity encumber their farms by a Mortgage as they thereby at once lose their independence, their spirits & their Ambition.

No comments: