Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1913-03-01

A~AyO~ ~&0D #..eaE
mind by Il lottery feature. The man VINO
buys q bond and Is lucky enough to
draw the right number receives a large
premium, A recent newspaper report
tells of q poor peasant who was thus
lucky and drew a prize Of $4,000 francs
($l2, 5000. This gambling feature APP
penis to tho poor investor, and Is none
the less gambling because sanctioned by
the government. As such. 1t would not
meet with approval in this country.
Plan Of Loanino.
Bonds are issued every few years IN
large quantities, as high as $751; 900. 600
in, the aggregate. This capital is loaned
out in a few years and new issues are
; hoated. They are quoted on the market
| daily like other securities and their
price is fairly constant. They have a
! fixed maturity, but may be called in at
| any time. The money raised in this way
is loaned to farmers under the following
! conditions: ~ Loans may be granted
for any period from. l to Is years, and
are made only on first mortgages; CD
| The loan cannot exceed one-half of the
| value Of the %mortgaged property; CD
On short time, loans. from l to 8 years,
| the borrower Is required to pay only the
interest annually; "a in case OF long
| time loans. the borrower pays not only
| the interest annually but also a small
| sum to pay OF the principal. Interest
| runs only on the unpaid part Of the
principal; 90 the borrower has the pri-
| vilege of fixing the time the loan is to
| run and Of paying it of at any time.
The essentials Of the German and
French systems are alike. In both, the
farmer can borrow at low rates for as
long a period as he wishes. Both sys-
tens require the borrower to pay off the
principal on the installment plan, in adj
dition to paying the yearly interest on
the loan. In both countries, special
laws were passed to help along the farm
credit movement. The Ho Myron T.
Herrick who made a special study of
these European methods Of financing the
farmer calls attention to the fact that If
we are to adopt either Of these plans
here should DC no profit to promoters in
the organization Of such corporations
and the return to the stockholders must
he kept within reasonable limits. III
other words, the borrowers and not the
stockholders should be the chief bcnc-
liciarics Of the success Of the undertake
ing"
Provision For Small Loans.
outside the question of long time
loans, there still remains the problem Of
small loans, running. for a brief period
Of perhaps three to six months. The
average American banker does not care
to be bothered with these accommodation
loans. For this reason, the farmer finds
his note shaved at 10 per cent. In prac-
tically all of the countries of Europe,
except England, there are cooperative
banks organized, controlled and financed
by the farmers themselves where such
accommodation can be had. In Germany,
the two famous types are the Schultz
Dclitszch banks, which operate princi-
pally in small towns II the Iiaifeisen
banks which operate in villages and in
the, rural regions. While neither one is
entirely suited to u conditions, the
Raffeisen system is the one that could
best be transplanted with notifications
lIltO IIllS country. Dull !uIC very uculo
cratic in organization. The small parish
or district of about 400 population is the
unit for the association. These local as
sociations in turn aret federated into
larger groups or unions aud the unions,
all belong to one central organization.
Foster Community Spirit.
/, These cooperative banks raise money
from general deposits by the people liv-
ing within the district and also by bor-
rowing from the central bank. This capt.
tai is loaned to the individual farmer on
his personal note. unsecured. BY any pro-
perty or chatter mortgage. as Is usual in
this country. but with the security Of
the endorsement Of some neighbor. who
pledges for the borrower. Before a
man can borrow in this way he must
show hat he needs the money n in
tends to use it for some worthy purpose.
One feature tina would not appeal TO
the avcrag American farmer Is the up-
limited liability for all members. Each
becomes liable for all the debts Of the
other members of the local association.
The Gcrman likes this idea becaus he
says that it makes each feel that
he is a part Of the community and not
an isolated unit. It Is lard for Ameri-
cans to believe that these banks have
been wonderfully successful and at the
same time exceedingly safe. -Aeir
strength lies in union. There arc now
something Ike 4,ooQ Rai1eisen banks in
Germany with about 5000 others pat
termed after this model. The business
OF these banks run up into the hundreds
Of millions annually.