El Paso herald. (El Paso, Tex.) 1901-1931, 1913-10-30
Big German Bank Quits
But Its Liquidation VIII Not Injure
1900 Rural Banks in
the Empire.
Nv Frederic j, HaSkin--
Continued from page one.)

Continued from page one)
credit. doing the several kinds of bust
ness under one head, and another which
keeps its cooperative business in bank
ing entirely separate from cooPera tive
buying, selling, and producing Eacn IS
thought to have its advantages.
Two Forms of Credit.
The two forms of credit recognized in
the German cooperative banking SyS-
TEN are the long term, secured by
mortgage; and the short term, issued
on personal security. The representa-
tive organization of the former class
is the LandSchaften, and the typical or
ganization of the latter class is the
these there are many other organiza-
tiOns which play in part a collateral
and in part an auxiliary role
Among the mortgage credit instltu-
lions other than the Landschaften are
the state. provincial, and local mort
gage credit banks. whose main mission
is to finance the breaking up of large
landed proprietOrships into small hold
ings, and to furnish the money with
which the small holdings may be
euipped with the necessary farm build
ings- Then they act IS a sort of agent
for the owner of the broken up estate.
collecting principal and interest from
the small buyers in his behalf.
As these are public Institutions. the
object of their existence is not proflt
but service. There are also number
insurance funds have been made avail
( able for the use of the farmer who
would improve his farm
Savings Banks Give Liberal Terms.
The savings banks of Germany are
cast along lines somewhat similar to
those in the United States. although
they have to compete with the CO.
operative, non profit seeking credit in
situations, and therefore are forced to
give as liberal terms to borrowers as
their situation will allow. They can
not give as long a credit as the land
mortgage banks, but they 90 give
rather a longer credit than similar in
situations in the United States.
The one thing that has enabled the
farm mortgage in Germany to become
a gilt edged security, holding its own
even more persistently than govern
ment bonds themselves. and selling at
par when government bonds are listed
at a discount, is the fact that there is
a uniform and safe system OF title
registration in Germany. a thing that
cannot be done in the United States
until many of the states revise their
land title laws But much progress in
this direction already has been made
by the work of the committee on uni
form laws of the American Bar assO-
citation, and the Fletcher bill provides
for fastening the day of uniform title
registration by providing that no mort
gage loans can be made in states where
title law does not measure up to the
Central Bank Signatures.
The Prussian government, in its ef-
fort to provide the cooperative banks
with facilities for marketing their Sc
curItieS, organized a great central
bank, which was to serve more as an
equalizer of funds in the various COM
munities than as an agency for Sc
curing additional funds from the out
side This institution tried to extend
It's aid to the town banks, but they
announced that they were well able to
stand alone, and the result was that its
activities were limited to a large de-
gree, to transactions with the country
banks Recently this central bank was
required to go into liquidation by the
government, upon the ground that it
had been engaging in some unsound
financial operations. It had relations
with a large majority of the rural
banks of Germany, and it was feared
in some quarters that its liquidation
would fall as a rather heavy blow upon
the rural banks. But the latest advices
from Germany indicate that the rural
banks will not suffer seriously as a re-
suit of its liquidation.
The failure of the Prussian central
bank is looked upon in some quarters
as a blow at any national rural credit
system. but the friends Of rural credits
point out that it means only that that
one bank had an unsound system, and
that this does not in the slightest af-
feet the general principle of rural cred
-
testimony of its merits in the success
that has attended its application in
every country to which it has extended.
Model for Cooperative Credit.
Summed up, Germany is the worlds
model for cooperative credit, and the
most encouraging feature of the sue
cess of its system is that cooperation in
credit has begotten every other form
of cooperative effort among the farm
ers, thus giving them opportunity to
improve their methods of production
and distribution in a way surprising
every other country. Started by the
farmers themselves, these credit organ
izations have been promoted by the
government, and safeguarded in a wav
that has made their names the very
synonym of confidence. Imported into
Ireland under the leadership of Sir
Horace Plunkett the system is proving
an equal success. 1t is interesting to
note that Sir Horace asserts that the
American farmer is the best qualified
of all the worlds agriculturists to
make the most of the system.
Friday; Rural credits; the Raft