The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1913-10-17
COOPERATIVE RURAL CREDIT.

| important discussion now going on
| relative to the need of providing
more adequate and facile financial
assistance for the agriculturists comes
from David Lubin, the delegate of the
United States to the International In
stitute of Agriculture, Rome, Italy. 1t
/ is a small brochure made up in the
main of letters from Mr.. Lubin re-
plying to inquirers for his opinion on
some of the plans in this direction
that have been suggested And while
Mr.. Lubin finds merit in many OF
these suggestions, he is of the opin-
ion that it might not be well to take
up with any new plan. because of the
risk of failure, when there are tried
plans in. existence and which have
been in successful operation for years
in European countries.
One of these is the Landschaft sys-
tenn of cooperative rural credit that
has filled the bill entirely in Ger
many, and which Mr.. Lubin thinks
can be placed in operation in the
United States.
In my opinion" writes Mr.. Lubin
in one of these letters which is ad-
dressed to United States Senator
Fletcher, there is no reason why the
Landschaft can not be adopted in the
United States with the same safe
guarding features that operate in
Prussia. The plan of the LandSchaft
is so simple that it may be explained
to and understood by any person of
average intelligence. Given state and
national laws enacted in the United
States on the basis of the European
safeguarding method, and the matter
becomes quite easy. A body of c1t1-
zens in a certain locality, presumably
neighbors, form a Landschaft operat-
ing under state and national laws AS
in operation in Prussia this Land
schaft has limited functions, restrict
ed in the main to the trusteeship of
the mortgages, given it by its mem
bers on their lands. On these mort
cages it issues the Landschaft bonds
for amounts varying from one-half
to two-thirds of the appraised value
of the land. AS stated to the Ameri-
can commission at the meeting at
Dresden by Hofrat Bach, the Land
in contradistinction to the joint-stock
mortgage banks, which are associa-
lions of lenders
ing business whatever; in fact. it
transacts no business except that
above stated-that is, it gives the
borrower a bond for his mortgage; |
the borrower then proceeds to sell |
the bond in the open market and |
puts the money in his pocket, and |
that is the end of the money so far |
as the Landschaft is concerned. All |
? I,o
the interest and amortization on his
bond until the debt is extinguished. |
If he does not do this, the Landschaft |
takes possession of his land, has it |
sold to the highest bidder, and re-
turns to the borrower any balance
left over and above the amount for
costs. The Landschaft can do this
in Prussia without any recourse to a
lawsuit. Substantially, the Land
schaft in all this has the power of
final decision vested in a supreme
court. If no such power can be
granted, then it would be unsafe to
have a Landschaft in the United
States; in fact, we could not have it,
for the purpose of the Landschaft is
to secure longtime loans with amor
tization at 8, II and 4 per cent, and
this interest rate would double or
treble itself as soon as doubt as to
the validity of titles and other ques-
tons between borrower and lender
would be considered admissible. The
Landschaft in Prussia has no such
questions to contend with. The Land
schaft directors forecIose without re-
course to lawsuits. Their decision is
final.
And the question may be asked:
Would not such Landschaft system
be likely to lend itself to failure
through dishonesty or incompetency
on the part of the directors? 1t GER
tainly would if it were not for the
safeguard furnished by state and ma
tional laws. In Prussia this safe
guard is the sine qua non of the
Landschaft. One of the members Of
the board of directors of the Land
schaft is appointed by the king-ap-
pointed for life-while the other
are in substance semigovern-
ment officials so long as they hold the
position of directors of the Land
schaft. 1t is the safeguarding, the
rigorous safeguarding, of his system
by the Prussian government that
gives the bonds the high value they
have in the open market and which
makes them saleable at the low rate
of interest which is paid on them. Re-
move this government safeguard and
the bonds will slump in price at once
and the interest would have to be dou-
bled or trebled before they would SELL
In fact such bonds would not sell at
all, for a bond in the open market, sub
ject to the law of certain district,
in that district, may only
have a limited and local value Such |