Martinsburg herald. [volume] (Martinsburg, W. Va.) 1881-1920, 1912-06-15
The European System May
Be introduced In This
Country.

~HEAPER money for the borrow
ing American farmer Is the OBJ
~ iect of an investigation recent
ly undertaken by the state de-
partment through five Of its ambassa-
doris in Europe.
In America the farmer today pays
higher rate of interest for his money,
proportionate to the security which he
offers In his farm land mortgage. than
almost any other class of investors in
the country. In Europe the farmer
borrows on equal terms with the big.
gest railroad, industrial corporation or
municipality.
President Taft wants to introduce
the European system in this country so
that the American farmer can raise
money on his farm through bond
salable in any part of the country.
Cheap money, thinks Mr.. Taft, will
put it In the power of the small farm
er or the tenant who wants to start
out for himself to get his farm on a
paying basis without shouldering a
staggering burden at the outset. 1t
would thus do more than all else to
advance the black to the farm" idea.
1t would enable the farmer to adopt
the scientific methods of farming
which the government is teaching him
and which always costs money at the
start.
The investigation Is considered one
Of the most important undertakings
yet attempted in dollar diplomacy
Myron T. Herrick, the newly appoint
ed ambassador to France, is Secre-
tary Knox's right hand man in the in
vestigation. Mr.. Herrck is himself
the product of an Ohio farm and has
made the problem of the farmer
hobby for years. When the work in
Europe Is completed the state depart
ment will prepare an organization
plan to fit the scheme to American
conditions, and legislative program
will probably be mapped out for the
president to submit to congress. The
investigation is conferred about the
credit foncier of France and the
landschaften of Germany.
The Credit Foncier.
The Credit Foncier is a limited La
bility company operated under the SUI
pervision of the French government for
the purpose of lending money to public
service corporations, communities, coun-
ties and landowners and to create and
negotiate bonds based on mortgages
which are limited to the amount due
from the lender. In other words, the
Credit Foncier acts as an agent for the
French farmer, so that instead of seek
ing to raise money directly from some
local investor In mortgaging his farm
the farmer places his mortgage with
the Credit Foncier, which in turn is.
sues bond based upon that mortgage
and which can be sold anywhere
throughout the country. In this way
the French farmer is freed from the
necessity of borrowing in the limited
market of his own immediate vicinity
1t is just this restriction which is
forcing the American farmer to pay
exorbitant rates of interest and to put
up with none too acceptable terms.
In this country the farmer is practical
" forced to borrow from some investor
in his own community. If local condi.
tons make money tight" there he suf-
fers accordingly. In one section of the
country he pays 6 per cent interest and
in another 10 per cent, though in both
instances the security offered may be
the same. Never can he compete with
the bonds of the big industrial corpora
lions, though in many instances the Sc
curity which he offers is just as good
as that of the corporation.
Two Glasses of Loans.
Two classes of loans are offered to
the French farmer by the Credit Fon
cier-short time loans, running from
one to nine years, and long time loans,
running from ten to seventy-five years.
The rate of interest which the French
farmer pays is only 3 per cent per an
mum. Loans are made on first mort
gage security only, and the loan is linn
tied to one-half the total valuation Of
the property upon which it is made.
On the short time loans the borrow
er pays only the interest due at the
end of each year and at the expiration
of the loan pays back the principal
In the case of long time loans, how
ever, he is given better terms. The
principal in such loans is paid back in
annuities. which are paid together with
the interest due at the end of each
year. The annuities are spread over
the entire period of the loan. SO that in
the case of a loan for seventy-dve
years where the interest is 4.3 per
cent the amount due each year, interest
plus annuity, is only 4.4S per cent, and
in this way the farmer is able to pay
back the entire loan without great bur-
den.
Government Supervision.
The French government supervises