Credit

South African farmers, black and white, depended on credit in the form of mortgages to buy a farm. They also might need credit between harvests to meet daily needs or to deal with the impact of natural disasters, such as drought, locusts, hail, and cattle diseases which affected their crops and animals. They might further require loans to improve their property, for example, to dig boreholes, to build or repair fences, to construct dipping tanks and water storage tanks (dams). Other reasons for Africans to seek a mortgage might be to pay for legal costs associated with a lawsuit, to buy out disgruntled co-owners, or to meet unexpected costs linked to a purchase or seller deceit. I have found only one example among Transvaal farmers, in comparison with Thaba ‘Nchu in the Orange Free State (OFS), described by Colin Murray, where the mortgage was used to pay for a son's education, in this case, to meet the expenses of a medical student studying abroad.

Whites might obtain mortgages from banks and building societies, or they might be fortunate enough to qualify for a loan from the Land and Agricultural Bank of South Africa, a semi-independent government institution created by law in 1912. The benefit of the Land Bank was that interest rates might be lower, but, equally important, mortgage repayment was based on amortisation of the repayment of principal and interest over a long period of time, perhaps 20 or 30 years. Africans were not eligible for Land Bank loans (discussed below). Certain African buyers were able to pay the seller directly in instalments once or twice a year for, perhaps, two or three years. Interest may or may not have been charged, but these Africans saved money because they did not have to pay fees associated with the taking out and registration of a formal mortgage. Or, the seller might give the buyers a mortgage.