Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1913-07-11
THE CREDIT FONCIER

! rms is no tault or the farmers, nor
reflection upon the soundness Of
farm land as a security. 1t was the
fault of spectators who, either
through ignorance or greed, forced
ponies on the nation In order that
they might profit from a business
conducted more with an eye to prof
its than to safety.
Nevertheless it is the farmers VINO
must pay the fiddler. For every doll
lar lost in investments in America /
farm mortgages it win be Just that
much harder now to establish a mort
gage banking system that can bring
low interest rates to farmers. There
fore it is essential to secure just as
strong a backing for farm mortgage
bonds as possible. The confi1euce Of
investors must be secured; Cor the
more faith they have in the bonds
| the lower the interest rates with
which they will be content. And to
secure that confidence the orgariza-
ton standing back of the bonds must
have the strength of Gibraltar. What
| is it that secures a government bond?
| 1t has the name of the government
| back of 1t. 1t would not be practic-
able to place Uncle Sans name back
of mortgage bonds, since it would in
crease his obligations to the danger
/ t,,f I, tr
tions, and involve him in banking
| business, which 1t is his wise de-
termination never to touch. But 1t
would be a good thing to place back
OF those farm mortgage bonds a
power as nearly equal to Uncle Sam s
as could be obtained. 1t would be
good to take advantage of Uncle
Sam S strict supervision and to offer
mortgage bond of such high stand
ing that the government would he
willing to invest funds in it--for in
stance the funds accumulated
through the postal savings banks. If
that could be done there would prob
ably not be much trouble in selling a
mortgage bond at a low rate of in
| terest.
For these reasons it would seem
beneficial, if not essential, to con-
struct mortgage banking system for
the United States along national
lines. Some of the larger states
might get along successfully by them
selves, but the majority of them
could hardly hope for a national, and
none of them an international, mar
ket for their mortgage bonds. A
statewide market would not be ade-
quate in most instances and there
does not seem to be any argum ent
in favor of state institutions over a
national institution, provided a way
can be found for the national institu-
ton to offer first class service to the
farmers of all states. 1t must be ad-
mitted that an Independent state in
stitution which could serve the
farmers we'll would be infinitely pre-
| ferable to a national institution
which could not, even though the ma
tional institution had far greater
strength than the state.
In Germany, as We have seen, the
mortgage associations are provincial
institutions for the most part, which
would correspond to a statewide as
ISOLATION of farmers in the United
States. The formation of a national
| association in Germany was not sue
cessful, because of the peculiar or
ganization of the association, which
| depended upon a representative con-
troll. In Germany the work was start
ed century and half ago, and the
provincial institutions, with the long
handicap they enjoyed, together with
the legal privileges extended them,
were able to build up a prestige that
made national institution practic-
ally unnecessary. Moreover, Ger
many has not the same money prob
lens that are found in the United
States, where there is one rate of
|
interest on one coast and a different
rate on the other.
In France the American Commits
sion has had an opportunity to study
an entirely different type of mortgage
system. The Credit Foncier of
France is distinctly a national or
gantzation The difficulty expert
enced in Germany in organizing a
national institution was overcome by
substituting a privately owned stock
company for the cooperative form of
organization of the German associa-
tons. In Germany all of the farm
ers who borrow from an association
are members of the association, and
have the right to vote in all matters
concerning the conduct of its affairs.
Because of the size of these associa-