Polk County news-gazette. (Benton, Tenn.) 190?-191?, 1914-03-26


STA. A war like period eliminating II
the Seven Years War had reduced
the greater part Of Prussia 10 a piti-
able state OF devastation The OWL
ers Of large estates which had borne
the bruut OF the war charges were
poverty stricken. Hence In lbs
Frederick II issued a royal decree en-
abling these owners OF large landed
estates 70 secure capital necessary 10
revive their agricultural interests oy
Joining together in securing 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 H.
The owner who wishes to secure
loan gives a mortgage 10 the associa-
ton. He is required to pay interest
at the rate of from three and halt
to four per cent. and may borrow up
to two-thirds of the value OF ms
farm. This valuation is arrived at py
capitalizing the income which he can
get of from it.
1t is Characteristic of European
finance that the farm values are hxeo
largely by consideration of the actual
earning capacity of each farm. Appar-
emily the price which neighborlng
farm may bring has little to do WIN
the value which is placed upon any
particular farm. The theory is ana
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 group
of these mortgages it pledges them
by a 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
sense every member of the assocla-
ton is back of the bonds. These
bonds have always brought a good
price even in the most difficult times
financially.
The mortgage given by the lana
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 %
sixty years with an agreement lncoF-
porated into the mortgage that each
year the farmer shall pay a certain
sum of money which shall include IL
terest and a small installment upon
the principal In this way the mort
gagor gradually pays off his mortgage
paying little more than the amouAs
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 semi-annual pap
ments Other advantages are that he
will never have to renew the mort
gage which will continue to run untE
| the payments have cleared the far
of the debt; he will never be a
| PEELED to pay any renewal CONF
sion, and will never have to go
expense Of bringing down his tifV
having it examined every two yd
as Is done under our American sy
| TEN.
Reiffeson and Schulze-D elitzsch.
The Reiffeson and Schulze-Delitzsch
| banks are smaller community insdtu-
tions. organized upon the cooperative
plan, and are not operated for profit
/ to the investor Reifeson banks op-
crate more particularly in the coun-
| try while the SchulZe-Delitzsch banks
| operate largely in urban communities
1 The Reiffeson is the most purely Co
operative. While the Reiffeson banks
loan money for long period of time
they do not generally loan for so long
a 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 q fair representative of it's type
charges 61a 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. or deposits left for a
shorter time. 1t 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 as do the other banks.
Go Slow.
The best rural credit system in the
world, If actually in operation would
not prove cure-all for our present
rural ailments. 1t would not get you
anywhere. The farmer who has ne
gotiated a loan upon the most favor
able terms has made no actual ad-
vance. He is just where he was be-
fore. If / am running a losing bust
ness the more money l borrow the
worse off / am. If am not produc-
ing a good product which | can mar
ket readily and profitably, the less