Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1914-04-01

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for r.iral credit. So cooperative
credit came and it came to stay. It
does the work and it does it well.
The question that is up in America
is simply a question as to whether or
not the American banker is going to
insist that the American farmer solve
his own difficulties or whether he,
the banker is going to solve it for him
and be his financial hacker.
Mortgage Loans In Germany.
A cooperative loan on long. mort.
cages is no new experiment. One
hundred and forty years ago the
Landschaften were organized in Prus-
STA. A war like period eliminating in
the Seven Years War had reduced
the greater part of Prussia to a pitt.
able state Of devastation. The own.
ers of large estates which had borne
the brunt of the war charges were
poverty stricken. Hence in 1853
Frederick II issued a royal decree en-.
abling these owners of large landed
estates to secure capital necessary to
revive their agricultural interests by
joining together in securing a coop
erative loan. While at first these
loans were granted to only the own
ers Of the large estate this system
was afterwards adapted so that the
smaller land owner could profit by it.
The owner who wishes to secure .
loan gives a mortgage to the associa-
ton. He is required to pay interest
at the rate of from three and half
to four per cent. and may borrow up
to two-thirds Of the value of his
farm. This, valuation is arrived at by
capitalizing the income which he can
get OF from it. X X. s
It is characteristic Of European
finance that the farm values are fixed
largely by consideration of the actual
earning capacity Of each farm. Appar-
emily the price which neighboring
farm may bring has little to do with
the value which is placed upon any
particular farm. The theory is and
1t seems to be sound, that the value
of the farm is not so much where It
lies as it is what will it earn.
When the association has a group
of these mortgages 1t pledges them
by trust deed, and issues a series
OF bonds secured by the. pledge OF
the mortgages. These bonds are then
sold and usually bear an interest of
from three to three and one-half per
cent. The association not only pledges
the association itself SO that in a
sense every member Of the associa-
ton Is back OF the bonds. These
bonds have always brought a good
price even in the most difficult times
financially. s5 "A
The mortgage given by the land
owner is not due at the end OF a GER
tain number Of years. at which time
the entire principal must be paid as
are American farm mortgages. In.
stead they run for from twenty to
sixty years with an agreement incor.
porated into the mortgage that each
year the farmer shall pay certain
sum OF money which shall include in.
terest and a small installment upon
the principal. In this way the mort.
gagor gradually pays of his mortgage
paying little more than the amount
which would in America be required
as interest alone. The chief advantage
to the farmer Is in this fact that he
is allowed to pay of the loan by max
ing small annual or semi-annual pay.
ments. Other advantages are that he
will never have to renew. the mort,
gage which will continue to run until
the payments have cleared the farm
Of the debt; he will never be com.
PEELED to pay any renewal commits
sion, and will never have to 60 to the
expense Of bringing down his title or
having it examined every rwo years,
as Is done under our American sys-
tenn y.
ReIffeson and Schulxe. pelitzsch.
Tho Reiffeson and Schulze- Delitzsch.
banks are smaller community institu.
tons, organized upon the cooperative
plan, and are not operated for profit
to the investor. Reiffeson banks OPP
crate more particularly In the coun-,
try while the Schulze-Delitzsch banks
operate largely in urban communities.
The Reiffeson is the most purely CO.
operative. While the Reitfeson banks
loan money for a long period OF time
they do not generally loan for SO long
q period of time as do the Land
schaften. They receive deposits from
their members, paying them interest
as do savings banks. The one at
Cassel! Germany. which can be taken
as fair representative Of its typo
charges 61s per cent. on short time
loans. They pay AK per cent. on de-
posts, which are left with them for
an agreed long period OF time, and
4 per cent. on deposits left for q
shorter time. It is found, however.
that the rate Of interest varies in diff
ferent places. Since these banks must
meet the competition of the joint
stock and savings banks In each COM
munity. They generally are able to
compete successfully for the reason
their expenses are very light, their
officers usually serving without salary
and since they do not wish to make.
any large profits to pay OF any in
vestors IS do the other banks. I
Go Slow. &.
The best rural credit system in the
world, If actually in operation would
not prove a cure-all for our present
rural ailments. 1t would not get you
anywhere. The farmer who has ne.
gotiated loan upon the most favor
able terms has made no actual ad-
vance. He is just where he was be-
fore. If am running losing bust
ness the more money borrow the
worsesotf am. II am not produc-
ing good product which can mar.
ket readily and profltably. the less I
put into my business the better. Rural
credit without good farming and good
marketing is deluslon and a snare.
Easily obtained loans are no substi-