El Paso herald. (El Paso, Tex.) 1901-1931, 1913-11-03

In addition to their primary work OF
serving the local cooperative banks
the reginal banks are authorized by
law to make loans to cooperative pro
ducing and selling societies, and to IN
dividual farmers for acquiring and I'M
proving small holdings These act1Vl-
ties are financed by the bank OF
France for them
Credit Foncier Gets Cheap Money.
Another source of cheap money for
the French farmer is the Credit ron
cier. a financial instltuatlon organizes
in France in 1852. Incorporating, IN the
main, the best principles Of the German
land mortgage bank. It enjoys rights
under the French laws that are pos
sessed by no other institution It IS
a centralized instituatiOn rather than
a decentraIized system, yet 1t has pro-
duced splendid results in financing
French farmers and other landhOldeIs-
The government has a measurable
control over it through the appointment
of its principal officers The contld-
dence il has been able to inspire has
made it the financial agent IN bringing
borrower and lender together In one
third of the land mortgage business
Of the French Republic
The bonds of the Credit FOncier are
payable to bearer. and the claim OF a
third party to them cannot be made
except upon the allegation of loss or
theft The Credit FOncier may re-
ceive deposits up to S2O,O0O,O0O, one
fourth to be kept in the treasury and
the remainder to be invested IN gilt
edged securities, preferably govern
ment bonds While Its actlV- ties are
especially in the direction Of exploit
ing long-term mortgage business, II
also does a short term credit business
of large proportions On Iong-term
loans the period is from 10 to 15 years.
Theannuities are small. and permit the
borrower to wipe out the principal
without feeling it; consequently the
system of amortization has become
very popular in France
Differs From American System.
To illustrate the difference between
our system and that OF the Credit
FOncier, suppose an American farmer
and a French farmer each borrow
$1,000 for 10 years. The average IN
terest rate in the United states IS
seven per cent. so the American farmer
would have to pay out S1,10O to wipe
out his debt and the accumulated IN
terest. The French farmer pays II
all back on the annuity plan. which
calls for the repayment Of of S124.09
year, OF s1,240-sO in all, a saving OF
nearly $500. On thirty year loan the
American farmer would have to pay
out $500 to wipe out interest and
would accomplish it by the payment
OF S1,7S9.32. In other words the
French farmer, paying SIS Der cent
for his loan would find IL charged of
the books at the expiration Of thirty
years WllAG the american
ing seven per cent for his, would stin
have the whole principal to meet at
that time On a fifty year loan in the
Credit FOncier. an annuity OF ass per
cent wipes off both principal and in
terest by the time of its expiration
Under the French system of per-
sOnal and land credits the native
farmer has had his economic existence
rejuvenated, and stands as an object
lesson OF what banking system
framed to meet his needs will accom-
plish. It is true that in France cooper
at:ve banking has not become as uni
versaI as in some of the other COun-
tries This is attributed largely to the
fact that the French government has
so fully met the needs of rural credit
under its general system OF finance
that there are fewer communities
where additional banking facilities /
such as are supplied by cooperative
banks are needed.
TOmOrrow-The Banks of Italy.
(This Is one OF the regular features
Of The FL PasO Herald.)