Bonners Ferry herald. [volume] (Bonners Ferry, Idaho) 1904-current, 1914-07-17


the Seven Years War had reduced
the greater part of Prussia to pitt
able state of devastation. The OWL
ers of large estates which had borne
the brunt of the war charges were
poverty stricken. Hence In 1859
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 we're 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 q
loan gives a mortgage to the associar
ton. He Is required to pay interest
at the rate of from three and a 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.
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
1t seems to be sound, that the value
of the farm is not so much where 1t
lies as 1t is what will 1t earn.
When the association has a group
of these mortgages 1t pledges them
by a trust deed, and issues q 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 80 that In q
sense every member Of the associa-
ton IL back of the bonds. These
bonds have always brought a 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 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 maxi
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 20 to the
expense of bringing down his title oil
having it examined every two years
as is done under our American sys
, tenn.
: Relffeson and SchuIze-DeIItzsoh.
The Reiffeson and Schulze-Delitzsct
t banks are smaller community institu
3 lions, organized upon the cooperative
: plan, and are not operated for profit
] to the investor. Reiffeson banks op
r crate more particularly in the coun
!, try while the Schulze-Delitzsch banks
8 operate largely in urban communities
!, The Reiffeson is the most purely co
t operative. While the Reiffeson bank
. loan money for long period of time
3 they do not generally loan for so lont
q a period of time as do the Land
: schaften. They receive deposits from
4 their members. paying them interes
n as do savings banks. The one a
Q Cassel, Germany, which can be taker
Q as fair representative of its typ,
charges 61a per cent. on short tim,
a loans. The. pay Az per cent on de
T posits, which are left with them To-
o an agreed long period of time, ans
& per cent. on deposits left for
q shorter time. 1t is found, however
o that the rate of interest varies In diff
Q ferent places. Since these banks mus
d meet the competition of the join
n stock and savings banks in each com
2 munity. They generally are able t,
It compete successfully for the reason
% their expenses are very light, thei
officers usually serving without salar
/ and since they do not wish to max,
o any large profits to pay of any in
d vestors as do the other banks.
o Go Slow.
o This best rural credit system In tn
II world. II actually In operation woul,
s. not prove a cure-all for our presen
o rural ailments. 1t would not get 20,
o anywhere. The farmer who has nc
u gotiated a loan upon the most favor
. able terms has made no actual nc
vance He is just where he was be
a fore. II / am running losing bug
q ness the more money l borrow tn
% worse of l am. II l am not produS
o ing a good product which l can mai
s ket readily and profitably, the less