Don Mike was not such an optimist as to
believe that the report of Parker's bank would be such as to encourage
the outside bank to proceed further in the deal.
He was also aware that the loan would not be attractive to commercial
banks, who are forced, in self-protection, to loan their money on
liquid assets. He must therefore turn to the savings-banks and trust
companies. But here again he faced an impasse. Such institutions loan
money for the purpose of securing interest on it; the last thing they
wish to do is to be forced, in the protection of the loan, to foreclose
a mortgage. Hence, should they entertain the slightest doubt of his
inability to repay the mortgage; should they be forced to consider the
probability of foreclosure eventually, he knew they would not consider
the loan. Don Mike was bitterly aware of the fact that the history of
his family bad been one of waste, extravagance, carelessness and
inefficiency. In order to place the ranch on a paying basis and take
up John Parker's mortgage, therefore, he would have to have a new loan
of not less than half a million dollars, and at six per cent., the
lowest rate of interest he could hope to obtain, his annual interest
charge would be thirty thousand dollars. Naturally he would be
expected to repay the loan gradually--say at the rate of fifty thousand
dollars a year. By running ten thousand head of cattle on the Palomar
he knew he could meet his payments of interest and principal without
lessening his working capital, but he could not do it by attempting to
raise scrub beef cattle.
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