The Abbeville press and banner. [volume] (Abbeville, S.C.) 1869-1924, 1915-05-26
THE RURAL CREDIT
SYSTEM EUROPE
The Second of a Series of Two Ar
ticles Summarizing the Principles
Governing the Organization and
Operation of the Leading Land
Credit Institutions Of the Old
World.
BY b. L. Moss.
THE Progr essive Farmer.)

In Germany, as we noted last
week, all association of borrowers
the landschaft- provides the
means of securing cheap money for
the farmer; in France, on the other
hand, the landschaft idea has never
taken hold, and the French govern
ment has loaned large sums to far
mers direct.
In France in 1852, as a result of
a widespread demand for better ru-
raj credits facilities, there was estab-
lished tile "Credit Foncier," which
was subsidized by the government to
the extent of $4,000, 900 and given a
monopoly for rs years. This Credit
Foncier is simply a government-sub-
sidized and government controlled
bank for lending money on real es-
tate, and nc other land credit insti
tuition has ever made any marked
progress in France.
How the Credit Foncier Operates
The officers consist of a president
and two vice-presidents, all of whom
must be stockholders and are virtu-
ally government officials. In addi-
ton there is a board of directors
composed Of the president, ~vice-pres-
idents, at least 20 stockholders, audi
tors, and three officials from the
French Ministry of Finance.
The Credit Foncier has a capital
stock of $4,000, 900, and sharehold-
ers are allowed 5 per cent per an
mum out of the earnings. Originally
designed to aid the farmer primarily,
the laws governing it's operations
have been so amended that now the
larger part Of its loans are on city
property and to municipalities for
making necessary improvements and
addition to public utilities. Despite
this, however, it is undeniably true
that the Credit Foncier has been and
is of vast service to French farmers.
Both long-term-from 10 to rs
years-and short-term loans are
made; the former being always re-
payable by amortization, while the
latter may be repaid yearly or in a
lump sum. Loans are never made
for more than one-half the value of
the property offered as security.
Applications are made on prescribed
forms, and must give all necessary
details concerning boundaries, titles,
and income from the land. After
satisfying all requirements as to re-
gistered titles and claims against
the property, what is known as the
purge" is resorted to. This pro-
cess is simply the Torrens system of
title registration and guaranty, and
serves to establish as a matter of
record the indefeasibility of the title.
Money Lent at 49, Per Cent Interest
These preliminaries attended to,
the loan is made repayable in agreed
lnstallments in case it is for a period
less than 10 years; if a long time
loan, that is, for from 10 to rs years,
the borrower agrees to repay princi-
pal an interest in equal semi-annual
sums of such amounts as will entire
ly repay the Joan at the end of the
stipulated period. The rate of in
terest now paid is 4.3 per cent per
annum, and legally whatever rate is
charged must not exceed by more
than siX-tenths of one per cent the
rate of interest borne by the deben-
lures issued by the Credit Foncier to.
secure the loan. At the present rate
of interest, a French farmer with
good security may borrow $1,000 for
80 years and repay the loan with in
terest by making 60 semi-annual
payments of $29.82 each. It is in
teresting to note that the borrower
is not charged anything for the cost
of business.
Loans are given the borrower in
cash, and then the Credit Foncier
issues ~debentures against a mass of
real estate mortgages as security.
These debentures usually pay the
purchaser from 2.5 to 3.5 per cent a
year, and the fact that they are vir-
tually guaranteed by the govern