The Meridian times. (Meridian, Idaho) 1909-1938, 1914-04-03

STA. A war Ike period eliminating f.
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 I
revive their agricultural interests by J
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 a mortgage TO the associa-
ton. He is required TO pay interest
at the rate OF from three and q 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.
1t 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 a neighboring
farm may bring has little to do with
the value which is placed upon any
particular farm. The theory is and
| it seems to be sound, that the value
of the farm is not so much where it
! lies as il is what will it earn.
When the association has a group
/ Of these mortgages it pledges them
4 by a trust deed. and issues a series
! of bonds secured by the pledge OF
the mortgages. These bonds are then
1 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 good
price even in the most difficult times
financially.
The mortgage given by the land
owner is 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 te
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 upol
the principal. In this way the mort
t gagor gradually pays of his mortgage
. paying little more than the amour
: which would in America be requires
, as interest alone. The chief advantage
to the farmer is in this fact that b.
J is allowed to pay on the loan by maE
: ing small annual or semi-annual pay
! ments. Other advantages are that b
E will never have to renew the NOR
gage which will continue to run unit
the payments have cleared the farI
@ of the debt; he win never be con
2 PEELED to pay any renewal commits
8 sion. and will never have TO go to tn
: expense of bringing down his title G
!. having it examined every two year
! as IS done under our American sy
/, tenn.
+ Reiffeson and sehuixe-DeIitzsch.
The Reiffeson and Schulze-Delitzsc
t banks are smaller community institl
e tons, organized upon the co-operatiy
) plan. and are not operated for prof
d to the investor. Reiffeson banks o.
, crate more particularly in the coul
5, try while the Schulze-Delitzsch banl
e operate largely in urban communitie
), The Reiffeson is the most purely C
It operative. While the Reiffeson banl
e loan money for long period of tin
e they do not generally loan for so lor
N a period of time as do the Ian
j. schaften. They receive deposits fro
d their members, paying them intere
n as do savings banks. The one
lie Cassel. Germany, which can be take
lie as a fair representative Of its tyI
charges 6lk per cent. on short tin
a loans. They pay Az per cent on d
Or posits, which are left with them 4
10 an agreed long period of time. al
lg per cent. on deposits left for
N shorter time. 1t is found, howeye
to that the rate of interest varies in d
se ferent places. Since these banks mu
ID meet the competition of the joi
m stock and savings banks in each CO..
v munity. They generally are able
at compete successfully for the reas'
be their expenses are very light, tbs
officers usually serving without sala
a. and since they do not wish to ma
ne any large profits to pay on any
Id vestors as do the other banks.
he Go Slow.
ne The best rural credit system in
ar world. if actually in operation woU
Is, not prove a cure-all for our prese
he rural ailments. 1t would not get y
ne anywhere. The farmer who has !
OF gotiated a loan upon the most fav
is able terms has made no actual |
an vance. He is just where he was
fore. If l am running losing bu
nd ness the more money ! borrow {
no worse on / am. If l am not prod
TO ing a good product which | can m
RS ket readily and profitably. the less