Lower coast gazette., 1913-06-28
Banking System of European Farmers

tvpe of mortgage system. II oieo0 -. =
Of France is distinctly a natlonal ofganl1aeon :
The difficulty experienced IN GERMANY ~ NV !
1.-Two q national institution was overcome Dy
substituting a privately owned stock company !
for the co-operative form OF organization ol
thn German associations. In Germany all Oh Tue
farmers who borrow from an assoclatloi aie
nooohers of the association, and nave the flghc
to vote in all matters concerning the conduct "a
tic affairs. Because of the size OF these assocla,
+ions this vote is seldom exercised dlfectiy' puI
Gill tho Individual farmer has a voice. IN the
Fronch organization it was obviously lmposslDie
to olive the farmers a representation Ill us
mortgage bank since it was a prlvateiy-owneu
affair. But what the farmers lost IN. tlat WY
the Government made up for by saying " ene
land bank: Though you may mahage youa
own affairs, you must not cnarge the W.
more than a certain rate OF lntefeSt, yoo ~" -"
divide your profits and invest your o" Ponar ~
Won are told, and you must allow the uoVein.
ynont 70 annoint YOUR Governor and the TWO
SUBJ Governors of your company.
Th;s sounds somewhat like saying that you
NAV have YOUR own pudding but | VIII eat II
for VOL, Yet the dividends of the Credit ron
cior have been sufficient to keep its stock always
IN demand and that is all that is necessary. FOR
tha aim of the company, or at least OF the gov
ornmont in permitting the organization OF tne
comnanv. was to help the farmers and only IN
cidentallv to pay stock holders. Inc stocknola-
orc must be allowed enough to induce them 70
keen their money in the company, OUT liiele -
no need of that interfering Win the require
ments of the borrowers. ,..oouu ,,ndor
The Credit Foncier is placed dlfectly uloel
the supervision OF the Ministry Oh 7 lllanoe ~
Treasury Department OF the FRENCH W.
roant Js Governor and two sub-Governors are
amounted for life by the President OF the ne
n1hl;c In these officials rests the executive
mower Three high Government othclais mus
alwavs he on it's board of directors. Inc Doara
Of directors consists of the Governor, the TWO
sub-Governors, the three auditors OF the COM
nanv and twenty to twenty-three others. Inc
hoard is elected at the annual meetlng % uie
s4ookboldars Only the two hundred largest
Stockholders NAV be present at this meeting al,
though other stock holders may be represented
INV nroxv Each member has a vote Tor every
Az Shares of stock held either personally OF oy
nroxy. However, no stakeholder may nave niols
than five votes for personally owned stoch anu
five for stock held by proxy. The meeting aiso
elects the auditors, receives the reports = .mo
Governor and auditors, ana votes uponal. IN ~,
Tore not specifically taken from Its controi ny
low 0f the nro6ts of the society, a 3 per cent
dividend is first paid to the stockholders, ana
than from 5 to 20 per cent OF the REMAINDER Is
oarr;nd over to the reserve fund until IL Is equai
o+ Toast tn one-half of the capital stock. Inc III
vestment of the reserve is left to the directors
hit Of the share capital, one-fourth must DE III.
,ostad in French government securlties aAo
ano'f fourth in Office buildings OF the society," Sc
]onr;t;es denosited with the bank OF france as .
a,orantv for advances, or loans to french COL
onies. The surplus may be used IN the mortgage
business of the society or in acquiring CONNER
rial naper acceptable by the BANK OF rrahce' "
securities for deposit therein. ms IorM ~ y
management greatly restricts the powers u ~
nrivate shareholders, places a large polelun =
the power in the hanas OF the uoVeihihen. On
for the protection OF the Dondholoefs' ehsu,e
the maintenance OF an adequate reserve alu
canital invested in the most conservative oil
so1pnd securities. The Credit Foncier is neve
nermitted to issue mortgage bonds to more ina
twenty times the value OF it's capital.
Tho dehentures or mortgage bonds OIL I'll
Credit Foncier are issued payable 10 Deale
and are exempt from taxation. trust ana pus
liz funds NAV be invested IN them.
With regard to the rights OF the borrower
+be Credit Foncier is not permitted TO cnare
more than 6 percent on loans to lanooWne
over and above the rate OF interest Whlch
,nns+ nav ON it's own debentures. This shoV
the verv small margin, one-half OF one per cen
practically. on which a big land bank can ope
ate and paw profits. At the present time u
rate Of the Credit Foncier is 4.S per cent !
mortgage loans. With the legal margin OF
ner cent, this means that the Credit foncl
must have secured its money at 81 per cel
AZ a matter of fact an issue OF SlOO,OOO,ooo
mortgage debentures in 1912 at 8 per &c
which was oversubscribed Is times, It IS i
probable that even a strongly constructed =
tional land bank in the United States Sta 4se eo saaa;
money at this rate, but this shows the aav "a
ace t would be to American farmers 70 I IL
= national land bank which could carry TN
mortgage debentures into the European mn M
Ret Where cheaper money can be found: :, tn h
IS q secret, however, to the extraordinary $
cass of the French debentures. Prizes are p
m a certain number of debentures OF each
sue. For instance Of the $lOO,OoO,ooo Wo
snoken of above, the first fifty or first one n
dred drawn out of a wheel at the time that
debentures are redeemed, will draw pr,
which NAV in exceptional instances amount
as much as $4,000 on a single bond. II mi
w. t-A.I 49, - A William. ryr+n 1c