The evening herald. (Klamath Falls, Or.) 1906-1942, 1913-06-11
COOPERATION IN
ITALY EXPLAINED
BANKER RELIEVES
ENLARGEMENT OF AMERICAS
SYSTEM OF RANKS WOULD
SOLVE FARM PROBLEM
ESPECIAL Cable to The Heraid)


FLORENCE. Italy. June n.-At
the beginning OF its investigation OF
cooperative banking societies. the
American commission on agricultural
cooperation. assembled BY the South
ern Commercial Congress. has had
the advantageous experience Of hrst
visiting n part Of Europe where CO.
operative banks have not made much
headway.
Comparing Italian conditions with
American. one OF the Florentine ex-
perts who appeared before the COM
mission suggested that In the United
States the solution Of the problem OF
farm finance. SO far as money for op-
Grating the farms Is concerned. might
be found In an enlargement OF the
Operations OF existing banks.
slgnor Martelli. president Of the
Savings bank OF Florence. described
Ia practice common with banks about
Florence. whereby the farmer gives q
mortgage to a bank and receives In
return an open account for certain
amount Of credit. Thus a farmer who
considers that he needs a credit OF
$4,000 to operate his farm gives q
mortgage for that amount to the
bank. But he does not draw out the
entire $4,000 at one time. As he
needs money he draws on the bank
II he wants $500. he draws only that
amount. He pays interest only on
the amount which he borrowed from
the bank. In this way farmer car
secure a credit for any amount o
money, always readily available. and
only has TO pay. interest on th'
|iamount which he actually uses.
For the long time loans OF thu
farmers. the savings banks are al
lowed TO invest up to 80 per cent o
their deposits In farm mortgages
These mortgages are OF two classes-
those for periods up to ten years. ant
those for periods OF from ten TO thirt
years. The shorter term mortgag
loans are repaid by the borrowers !!
one lump sum. as In the Unite'
States, but the longer term loans ar
repaid by amortization-that is. smal
annual payments made upon the prin
cipal of the loan. The banks are onl
permitted to charge borrowers one
half per cent more than they are n
quired to pay depositors. At the pres
ent time the prevalent rate 10 8 pc
cent, though generally It Is 4 per cen
Money is only loaned up to 90 pc
cent OF the appraised value OF tn
land, although the banks accept SCI
ond or third mortgages, so long q
the total amount OF mortgage indeb'
edness does not exceed 30 per cent.
There is also a mortgage bank !
Florence, the Monte di Paschi. found
ed by one of the early dukes OF FloI
ence. which has carried on prom
able and beneficial business to thi
day. This bank issues mortgage Dc
! bentures at 3h. AZ and per cen'
Most OF the debentures now outstand
ing are at per cent. They sell
trihe under par. which is the usua
condition in Italy. and their marke
price compares favorably with gov
ernment bonds.
The cooperative societies TOR pu'
chase among the land owners hav
been successful. The farmers them
selves do not belong TO these socl
eties. but the land owners do oil tn
purchasing of farm machinery an
fertilizer. These societies are ais
active from an educational standpoint
land maintain agricultural experts