The Scranton tribune. [volume] (Scranton, Pa.) 1891-1910, 1897-05-27
The American Credit Foncier.


The American Credit Foncier.
On this page few days ago we out
lined the plan of John r. Dos Passos
Of New York to alleviate agricultural
discomfort by bringing to the farmers
door the same banking advantages en-
joyed by the merchant in the city, and
suggested certain objections which that
Plan seemed to invite. The New York
correspondent of the Springfield Re-
publican has since mads public an in
terview with Mr.. Dos Passos which
offers now light uron his interesting
enterprise.
After pointing out that present short
term farm mortgages draw interest
averaging nearly 10 per cent, which is
utterly ruinous to the farmers as busi-
ness conditions now stand, Mr.. Dos
Passos notes the causes which have
contributed to the numerous failures
attending present banking overtures to
the farming communities: 1st, no mar
ket for the mortgage companies bonds;
I'd, mortgage terms too short; Sd, in
terest rates too high and 4th, gross
carelessness in the placing of loans.
In this system 1 am advocating" adds
he, loans will be limited to so per cent.
of the value. Money will not be loaned
unless the borrower can show an in
come from which the annual charges
can be paid. The borrowers character
as a man of industry and honesty will
q ir1I VI.
has protected life insurance as a bust
ness will be applied to the loaning of
money on land" He continues:
The capitalization of the company at
$lO,OOOO0O is a necessity of its nation
wide conduct OF that sum $25, 900 900 in
vested in government securities will be
held as reserve. The remaining $75,-
100000 will not, as some imagine, be locked
up and withheld from circulation, but will
be kept active in other cognate business
channels and used to protect it's bonds.
For the company will not hand over cash
when it makes loan on land. 1t will is
sue its bonds against the amount. These
bonds VIII be salable In the open market
and will bear interest at $365 per 500 per
annum. They will be maintained at par,
and may soon be expected to command
premium, following the case of the bonds
of the Credit Foncier of France. These
3 per cent. Credit Foncier bonds, / may
say, sell at los, while the 3 per cents of
the same class and denominations, of
French rentes, namely, the 100-franc
bonds, sell at 101 They are regarded in
France as worth four francs more than
French government bond. 1t is plain to be
seen that when every bond issued at 1855
is based on a carefully protected mort
gage that pays $685. the bonds of the COM
pany, backed also by the $25 OC0, 900 reserve
and the 900 Of working capital, will!
be a desirable security. The limit of is
sue of these bonds will be 50, 900 0OO, ,OO0 If
you imagine that sum loaned by this com"
pany to the land owners, and the same
amount subtracted from the sum now held
at short term, high interest mortgage, you
can figure out very easily a saving to
the farmers of $l0O 100000 a year. The
other business of the company will be the
placing of loans on mortgage upon other
properties than land. Nothing of the ven-
turesome, projecting kind-the exact oppo-
site, indeed, of the Credit MoLilier idea
but loans based on solid, existing business
and material. 1t VIII not conduct a bank
ing business, such as implies the payment
of money on demand checks. The stock
of the company will be issued in small
shares, and the thrift of the whole country
invited to share in it. 1t Is designed to
have the president of the company and
two of the directors appointed by the gov
ernment, and a continual and complete
oversight of it's workings provided. Notn-
ing in fact will be left undone &c make it
safe to invest in and sound to carry ON.
Concerning the bonds of his proposed
company Mr.. Dos Passos declares they
will represent an increase of the cir
culating medium, since they will be as
readily eXchangeable as money. That
is surely in their favor Each bond will
represent something actual, tangible"
And he concludes with the assertion
that something must be done, and
done quickly to relieve the situation.
Either the best business principles ap-
piled to the needs of the hour must
prevail or the country will be hurried
through a series of empirical changes
that will land us no one knows where"
This may be admitted without involv-
ing an Endorsement of Mr.. Dos Passos'
specific remedy. We must say that as
he explains it, the project looks invit-
ing; but it must be remembered that
it proposes practically a government
monopoly in the loan and trust BUSH
ness, which, If not paternalism in ex-
treme form, is certainly a hazardous
stretch of the federal prerogative. The
plan might work to advantage so long
as kept on its original lines and re-
stricted by the rules which Mr.. Dos
Passos lays down; but the certainty
Of a swift and awful collapse should
these lines be departed from is some-
thing appalling,