The commercial. (Union City, Tenn.) 190?-193?, 1915-11-26

, tyour questions have answered tn,
second. Let me repeat it: Who will
benefit by the per cent interest
| t he whole country will benefit by it
the farmers, the widows and or
} phans' trust funds, the railroad com
( panies, the great financial concerns
the capitalists, and, necessarily
though indirectly, the workingmeI
of the United States, for you can not
improve the condition of the farmers
turnout the country without better
ing and advancing the wage rate.
i Mr.. Smith. Is it not possible for
us to start other kinds of rural
credits system that will do the same
thing as it is proposed to do under
the Landschaft and without any such
changes in the law? If so, why
should we make such changes in the
land laws and in the land titles when
we can do the same thing in another
way? What is the matter with those
other proposals?
Mr.. Lubin. am rather glad that
you asked that question. l wish to
say the same question has been asked
| by many other inquirers. The an
swer is this: There are other sys-
TENS, such as, for instance, personal
credit, not on land mortgages. These
personal rural-credits systems are
| not under our consideration now
The matter before us is solely con-
fined to the subject of farmland
mortgage credit; and when we con-
fine the matter to this alone we will
find the Landschaft to be by far the
best and safest rural-credit system
of any in the world.
1t should be understood that in
terest on money borrowed on farm
mortgage must, under present condi-
lions, necessarily be high, for the
money lender, say, has paid out S.
900 on a mortgage, and he deposits
the mortgage in his safe, and that's
the end of his $4,000 until the mort
gage is redeemed; but, in the case of
converting the mortgage into bond,
this same $4,000 handed over to the
farmer is reproduced again by the
sale of the bond. If private banks
could do business of that kind, they
could, with very nominal amount
Of hnCinnCC
They could lend out the same $4,000,
receive their mortgage, convert it in
to a bond, get back the $4,000, lend
it on another piece of property, re-
ceive a mortgage, convert it into a
bond, and they have got their $4,000
back again ready for another loan.
They could do this indefinitely, if
it were safe, but it is not safe. 1t is
dangerous, dangerous to all concern
ed. AS was pointed out under our
present laws each State, each county,
each township, and each tract of
land is, as it were, a law to itself,
the bearing and significance of which
would have to be taken on the faith
of statements in a prospectus" or
the representation of the bank. The
bank, in turn, would have to take
their information from their agents.
The public would then have to have
faith that all was right and that all
would continue to be right.
1t can be safely predicted that a
bond of that character would not be
bought by such concern as J. P.
Morgan & Co., Kuhn, Loeb & Co., or
the New York Life Insurance Co.
| None of these concerns would buy a
bond of that kind for 10 cents on the
dollar, certainly not on long time,
at 81, and at 8 u per cent interest.
But it is safe to predict that the
same concerns would buy a Land
schaft bond if they were as safely
devised in the United States as in
Germany. They would then buy
them as freely as they would Gov
eminent bonds.
| That all this is more or less wildly
present in the minds of those with
rural credit bills in Congress who ask
that the bonds be guaranteed or pur-
chased by the Government is evident.
1t must seem obvious that any such
propositions, propositions whereby
the Government must guarantee the
bonds, or must buy them, should be
looked upon with suspicion. If the
bond is good, it will float and keep
floating without Government aid. If
it can not float of its own accord, it
ought not to be made to float with
Government aid. Government aid
applied to bond that will not float
on its own merits is doomed to fall,
lis doomed to cause disaster and loss.
And if we are to have bonds of a
character to float without Govern
ment guarantee or Government pur-
chase, then we would have to have
the same legislation that would be
required for the Landschaft system.