The Bridgeport evening farmer., 1913-07-16
AMERICAN COMMISSION ON
 AGRICULTURAL COOPERATION
 STUDIES GERMAN METHODS

Weisbaden, Ger, July 16-The Amer ican Commission on Agricultural Co- operation came to Weisbaden from Heidelberg, where half a. day had been spent visiting typical local Raiffeteen societies in the neighboring farming communities. A subcommittee of the Commission remained in Heidelberg to attend the meetings of the convention of Raifffeisen Cooperative officials which began there today.
 The first institution visited by the Commission in Weisbaden was the Nassau District Mortgage Credit Bank, a government institution extending mortgage loans at cost, principally for the benefit of small farmers who pre- dominate in Nassau. It was the first institution of this type visited by the commission.
 The bank was organized in 1S40 by the government of what was then the Grand Duchy of Nassau. It has con tinuad in the mortgage business ever since and has never lost a dollar to it's bond holders. The method of bus mess is the same as that followed practically all mortgage institu- tions of Europe-that is, it accepts mortgages on real estate and issues land bonds equal in amount to the mortgages. Fhe bonds are split up into small amounts, as low as $25, in order that small investors can buy them. The money received by the bank from the sale of the bonds is used to supply money to the farmers on their mortgages. The bonds are secured by the mortgages. But the holder of the bond looks only to the bank to pay the, interest and princi- pal of his bond. The bank assumes the responsibility for the payments of the farmer and it Is this feature which makes investors more willing to buy the bonds than they are to buy the v1n Iav CTS. and also which makes the inves- tors willing to accept a lower rate of interest. The bank carriers on this business as nearly possible without profit. Where a profit is made it is turned over to the government to re- duce the taxes of the landowners.
 Tn the case of the mortgage bank of Nassau, however, there Is second guarantee placed behind the land i bonds the guarantee of the govern ment. When Nassau was an autonom- ous German state the guarantee was given by the government of the Grand | Duchy of Nassau. Nassau has been absorbed by Prussia and there is provie.sn in the constitution of that state forbidding the government to guarantee the obligations of com pany which is, permitted to assume unlimited indebtedness. Therefore the guarantee of the land bonds of the Nassau bank was turned over to the communes of the Administrative Dis trtct Of Nassau This is, however, a strong government guarantee and the sufficiency of 1t is proven in the high price, s9, maintained by per cent bonds of the Nassau bank.
 To make the governments guaran- tee cafe. conduct of the bank is plac- ed directly under control of the As sembly of the Administrative District, The actual business of the bank Is carried on by a directorate. A farmer desiring to mortgage his farm goes first to the court of registration. The system of land registration in Germany as thoroughly perfected and this is one of the most essential features to a successful land credit system. By the court the farmer is given a paper es- tabliehing his title and describing his property. This paper is sent to the land bank with the application for a loan. All loans are restricted to 50 per cent of the value of the land on
 first mortgage. If the loan be grant ed the farmers mortgage is register cd and also the bank records with the mortgage the fact that bonds to an equal amount have been issued. The entire transaction coste the farmer about $20. The bond draws interest at the lowest practicable rate-now 1-2 per cent because of a bad money mar ket--and the farmer pays to the bank this same rate of interest. plus enough to cover the expenses of the bank This is about 1-2 of one per cent in an economically conducted institution Besides this payment. the farmer pays each. year fixed amount in amorti- zation char kas-that ia a fixed amount
 which is used to reduce the principal