The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1913-07-19
AIDING THE GERMAN FARMER.

In one of the recent reports of the
| activities of the American commits
| sion on agricultural cooperation, which
| is now carrying on investigations in
! European agricultural centers, there
is an interesting description of the
methods of government banking that
are pursued in Germany to give as
sstance to farmers. While in Weis-
baden, the commission visited the Mas
sau District Mortgage Credit Bank,
government institution extending mort
gage loans at cost, principally for the
benefit of the small farmers who pre-
dominate in that region. This bank
was organized in 1910 by the govern
ment of what was then the Grand
Duchy of Nassau. 1t has continued in
the mortgage business ever since and
has never lost a dollar to it's bond
holders. The method of business is the
same as that followed by practically
all mortgage institutions of Europe
that is, it accepts mortgages on real
estate and issues land bonds equal in
amount to the mortgages. The bonds
are split up into small amounts as
low as S25, in order that small invest
ors can buy them. The money receiv-
ed by the bank from the sale of the
bonds is used to supply money to the
farmers on their mortgages. The bonds
are secured by the mortgages. But the
holder of the bond looks only to the
bank to pay the interest and principal
of his bond. The bank assumes the
responsibility for the payments of the
farmer and it is this feature which
makes investors more willing to buy
the bonds than they are to buy the
mortgages offered by American farm
ers, and also which makes the investors
willing to accept lower rates of in
terest. The bank carries on this bus
mess as nearly as possible without
profit. Where a profit is made it is
turned over to the government to re-
duce the taxes of the land owners.
In the case of the mortgage bank of
Nassau. however, there is a second
guarantee placed behind the land bonds
the guarantee of the government.
When Nassau was an autonomous Ger
man state the guarantee was given by
the government of the Grand Duchy
of Nassau. Nassau has been absorbed
by Prussia and there is a provision in
the constitution of that state forbid
OlIlS the government To guarantee the
obligations of a company which is
permitted to assume unlimited in
debtedness Therefore the guarantee of
the land bonds of the Nassau bank
was turned over to the communes of
the administrative district of Nassau.
This is, however, strong government
guarantee and the sufficiency of it is
proven in the high price, 80, main
tanned by per cent bonds of the Mas
sau bank.
To make the governments guarantee
safe, conduct of the bank is placed df-
rectly under control of the assembly
of the administrative district. The act
ual business of the bank is carried
on by a directorate. A farmer desir-
ing to mortgage his farm goes first to
the court of registration. The system
of land registration in Germany is
thoroughly perfected and this is one of
the most essential features to a sue
cessful land credit system. By the
court the farmer is given a paper es-
tablishing his title and describing his
property. This paper is sent to the land