Lower coast gazette., 1913-05-31
European Farm Finance.

European FdFm
Agricultural credit in Europe is divided into
two general subdivisions: first, mortgage
credit, and second, personal credit.
The institutions belonging to the first sub
division are of two classes, the first of which is
best typifed by The Credit Foncier de France
and the second by The Landschaften of Ger.
many. The institutions belonging to the sec.
ond subdivision are Of three classes, the first
of which is best typifed by any of the ordi-
nary credit banks, the second by the Raiffeisen
and Schulze-D elitzsch banks, and the third by
The Credit Agricole Of France.
There are, of course, in Europe numerous
agricultural banks having characteristics some
what different from those of the above-men-
toned institutions, but in the main the insti-
tutions included in the above outline constitute
the real basis of agricultural credit organiza-
tons in Europe and all other agricultural banks
are very largely patterned after them.
THE CREDIT FONCIER.
The Credit Foncier de France, in addition to
certain activities that are not strictly connected
with agriculture, loans money on farm mort
cages for long periods of time on an amortiza-
zion basis. The chief advantage to the farmer
is in the fact that he is allowed to pay off his
loan by making small semi-annual payments,
will never have to renew the mortgage, which
will continue to run until the seml-annual pay
ments have cleared the farm of debt, will never
be compelled to pay any renewal commissions,
will never have to go to the expense Of bring
ing down his proof Of title or having it ex-
amined every few years, as under our Ameri-
can system, and in addition will be largely re-
lieved of any anxiety lest he fail to meet the
mortgage when due and consequently lose the
farm. The Credit Foncier holds these mort
cages as collateral for its debenture bonds,
which it sells to the public and from the pro-
ceeds of which it obtains the funds to advance
to the farmers. The Credit Foncier, while un-
der the supervision of the government, is never
the less a privately owned joint stock company
and pays regular dividends on it's capital stock.
The rate of interest which is charged to the
farmer is not as low as has sometimes been
stated in America, where attention has been
called to the fact that the Credit Foncier issues
bonds bearing 3 per cent interest.
CREDIT FoNCIERR 3 PER CENT RATE.
The Credit Foncier 8 per cent rate is due to
the fact that the bonds carry with them a lot
terry feature by which each bondholder has a
chance to win a prize consisting of a large sum
of money, but the cost of these prizes increases
the actual cost of the bonds to The Credit Fon-
cier from 3 per cent up to about a per cent and
the money is then loaned to the farmer at 4 $40
per cent. Therefore, the farmer does not get 8
per cent money, as is oftentimes stated.
L~ANDsCHAFTEN.
The Landschaften banks of Germany loan
money to farmers on much the same basis as
that employed by The Credit Foncier of France
except that they do not make a practice OF pay
ing a farmer cash for his mortgage. They
simply exchange their debenture bonds with the
farmer for his mortgage and the farmer then
sells the bonds himself. The Landschaften
are under the supervision of the government
and are strictly cooperative organizations in
volving in many instances the unlimited liabil-
ity of the members, and not being operated for
a profit or paying dividends.
LANDsCHAFTEN 3a PER CENT RATE.
Attention has been called in America to the
fact that the Landschaften sometimes issue
bonds bearing a rate of interest as low as 3R
per cent, but in actual practice this Landschaf-
ten 3s per cent rate costs the farmer consider
ably more owing to the fact that the Landschaf-
ten do not pay the farmer in cash, but merely
exchange their debentures for his mortgage
and he is then compelled to sell the 3R per
cent debentures below par. The money con-
sequently costs him more than 31a per cent.
ORDINARY JoINT-sT0CK BANKS.
The ordinary form of credit bank is operated
on much the same general plan as the ordinary
commercial bank in America. 1t loans to farm