The Raymer enterprise., 1914-03-26

dDle state or devastation. The own
ers OF large estates which had borne
the brunt Of the war charges we're
poverty stricken. Hence In 1863
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
eratiye 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 a
loan gives 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 off from it.
II 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 II
lies as 1t Is what will 1t earn.
When the association has a group
OF these mortgages II 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-
tion Is back OF the bonds. These
bonds have always brought good
price even In the most difficult times
financially.
The mortgage given by the land
owner Ia not due at the end Of 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 a certain
sum OF money which shall include in
terest and a small installment upon
the principal In this way the mort
gagor gradually pays off 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 off the loan by max
ing small annual or semiannual pay
ments. Other advantages are that he
VIII 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 20 to the
expense OF bringing down his title or
having 1t examined every two years.
as is done under our American sys-
TEN.
Reiffeson and Schulze. De Iitzsch,
The Reiffeson and Schulze- Delitzsch
banks are smaller community institu-
tions. organized upon the cooperative
plan, and are not operated for profit
to the investor. Reiffeson banks op-
crate more particularly in the coun.
try while the Schulze-D Delltzsch banks
operate largely in urban communities.
The Reiffeson is the most purely CO.
operative. While the Relffeson banks
loan money for long period of time
they do not generally loan for SO long
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 It's type
charges 612 per cent on short time
loans. They pay Az per cent. on de.
posits, which are left with them for
an agreed long period of time, and
per cent. on deposits left for
shorter time. II is found. however.
that the rate of interest varies In dif.
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 off any in.
Yestors as do the other banks.
Go Slow.
The best rural credit system In the
world, II actually in operation would
not prove cure-all for our present
rural ailments. 1t would not get you
anywhere. The farmer who has me-
gotiated a loan upon the most favor.
able terms has made no actual ad-
vance. He is just where he was be-
fore. II ! am running a losing bust.
ness the more money | borrow the
worse of | am. II am not produc-
ing good product which can mar.
ket readily and profitably, the less |