Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1913-06-12
METHOD
OF FARM FINANCE
Mortgage Basis of Bank Account
Interest Paid Only in
Money Drawn.


Florence. Italy. luna 1oA+ ,,o ho..,.
ming of ,,s ,r,.a..,....,..
,,a,,., VI cooperative
''0'9''S' tA' American commits.
sion on agricultural co-opcration. "a.
sembled by the Southern C,o~,,,ouo,o,
Congress. has had o..
ou..- A.. '''''7eous eA-
''S''lhE part Of Eu-
rope "here cooperative banks have no;
made much hcadway
Agricultural corporation is rroo+f,,,
in only one form in the co,i,,t,,. ,t.....
Florence, cooperative societI,. f,r .ta
purchase of agricultural mach .p.r,. e
tilzer and seeds. This is chiefly On. -
the fact that IN the carly davs tr. ,,,.-
chants of Florence were tho lerd,,y,,..,
Gnd their estates We're farnad a, ,
share Of basis by the peasants tI. land
lords furnishing the house. cattle ma.
Chinery, fertilizers and seed. and t.s
farmers furnishing the work. Tho mo.
chants were able to secure all the cr.I.t
they needed to finance their farm.
through their banks In Florence and tina
farmers themselves had no need Of
credit If crops were bad, the landlord
furnished food for the peasant farm.r
until the next harvest This system Of
land tenure stiu prevails and study OF
the systems near Florence has shown
the commission that cooperative credit
institutions are only possible where the
need is great.
/ Comparing italian conditions with
American, one OF the Florentine experts,
who appeared before the commission. su.-
eested that in the United States the solu-
/ ton of the problem Of farm finance, 80
| far as money for operating the farms is
concerned. might be found in an enlarge
ment Of the operations OF existing banks.
Signor Ahrtelli, president of the Savings
Bank Of Florence. described a practice
common with banks about Florence,
whereby the farmer gives a mortgage to
a bank and receives in return an open
account for a certain amount of credit.
Thus n farmer, who considers that ha
needs a credit of $1,000 to opcrata hl7
farm. uives a MORTGAGE for thar amount
Ito the bank. But he does not draw out
1.-The entire $4,000 at one time. As hi
moods money he draws on the hank.
If he wants 500 he draws only that
omount He NAYS interest only on tho
,rooun+ which he borrowed from the
lborl, In This vav a farmer can secure
a cradit for any amount Of mOOeE, al
v.vs readily available. and only has to
nat interest ON rho amount which he
actr,iIy uses
ror tbo long time loans If the farmers,
tbo savings hanks are allowed to invest
49,, 70 20 nor cont of their dcpos.ts in farm
mortgages These MORTGAGES are Of two
claesas those for pcrio,:y up to 10 years,
and those for. neriods of from 10 to %
,oors Tho shorter farm MORTGAGE loans
aro ron,id nv the borrowers in one lump
sr,, os 4, +bc United states. hut the
I,onger term loans are repaid by amortiza-
ton thar 10 small annual navmcnts made
rnon the nrincina1 of thc loan. The banks
arc only permitted to charge borrowers
one-boIf ner cent. more than they arc
roou,red To nav depositors. At the pres
ont ti,,o the prevalent rate is five per
cont though generally it is four per cent.
Nonc,. IS only loaned M to 20 per cent ot
tho annraised value Of the land. although
fbe hanks accent second or third mort
qepee so long as the total amount Of
, mortrare indebtedness does not exceed
| It .,, ,a,+