Lower coast gazette., 1913-05-24
Farm Financing in Germany.

Germany has the best system of farm financ-
ing in the world. AS a direct result of this,
German agriculture is on a permanent basis,
and the average crop yield of Inc German En-
pire is greater than for any other equal area in
Europe or America.
German Farmers regularly secure long time
farm loans at A per cent interest, through their
cooperative farm mortgage banks-the So
called landschaften societies. These societies
are farmers organizations pure and simple
under direct government control, and have out
standing over one billion dollars in farm loans.
The loans are repaid in small annual install
ments, and after once made cannot be called in
or the interest rate raised.
The land mortgage banks OF Germany are
simply the result of applying business principles
to farm finances. Instead Of each farmer seek
ing his loan Individually, they have organized
and substituted collective credit for individual
credit and a negotiable for a practically non
negotiable security. They have organized to
market their farm securities to better advant-
age and to avoid the tremendous waste OF time
and expense involved in each farmer borrowing
Individually.
For personal credit, the Germans have de-
veloped their Raffeisen system of rural banks,
which are the model Of the world and in the last
half century have spread over practically all
Europe. In Germany alone there are over &c.,
900 such institutions doing a business of over
five million dollars a year. Through these banks
the "landless man" with character, industry
and health, has opportunity to borrow working
capital to begin farming. At the same time
they serve as savings banks for the rural popu-
lation in which they may invest their earnings
and secure interest on them. It is a remark
able fact that seventy-ive per cent of the work
ing capital of these banks is derived from the
savings deposits of the rural population.
The agitation for a better rural credit sys-
tenn in America is no passing demand that will
be superseded by something else next year. 1t
is fundamental to a permanent system OF agri-
culture. With an investment of over $40, OOO,-
O0O,0 900 in agriculture and an Indebtedness of
over $4,000, 600, 900, American farmers are be-
ginning to awaken to the fact that they are pay
ing from $500, 600, 900 to SIPS, 000, 900 more in
terest each year than WOULD be necessary if
they had their credit system properly organ
lied. We talk about economy in marketing and
distributing farm products. But where is there
the opportunity to make the saving that there
is in marketing farm securities? There is no
better security than arabic farm lands, but un-
til the mortgages are converted into negotiable
securities the farmer making a loan on his farm
mortgage is handicapped just as much as a
farmer a hundred miles from a shipping point
is in marketing his wheat crop. He is too far
from the market. 1t costs too much to get into
the channels of trade.
What American farmers need is not govern
ment loans or any special concession from bank
ers; it is simply to organize their securities
so that they will be desirable collateral for any
kind of a loan. It is because rural credit is not
organized in this country that farmers pay