The commercial. (Union City, Tenn.) 190?-193?, 1915-11-26
(, There is simply a board of


cent interest. He is given bond
which he negotiates in the open
market at 80. Does he not obtain
his money at discount and pay in
terest on the face value of the bond?
What would be the advantage to a
man to borrow from this organiza-
tion at less than par when he could
go to an outsider and get the full
amount of his note at the same rate.
of interest?
Mr.. Lubin. That would all depend
upon a question of land tenure, and
a question of the character of the
valuation. Your question is tenta-
lively correct but hardly comedies
with the facts as they are. In the
first place, there is not farmer any
where in the world that can get
money on an ordinary farm mort
gage at per cent or per cent nor
for per cent, and very rarely for
per cent. Normally the rate is from
8 per cent to IL per cent, and some
times higher than that when the
cost of record searching, legal re-
quirements, commissions, and other
incidentals are considered. The few
cases in the United States where
mortgage loans on farms can be had
for less than per cent are cases
where there are special reasons for
1.-THE borrower has considerable
wealth outside of the piece of land
he may mortgage. In other words,
he is considered "good" Independent
of the mortgage. Even then he may
only obtain a loan for a few years,
and must go to the expense and
trouble from time to time to renew.
In a hearing on the Hollis-Bulkley
bill one of the managers of the Pru-
Dental Life Insurance Co. testified
that his company had large sums of
out for which they received
over per cent. That
seems low enough, but on cross-ques
tioning this witness it was found
that there was a middleman between
the Prudential Co. and the farmer.
The Prudential received this low rate
from the middleman, but the farmer
paid his s, or s u, or 8, or 10 per
cent, as the case might be. The mid
dleman,. in fact, served as a sort of
for his own benefit.
Let it be understood once for all
that the farmer at present can not
have mortgage loan in the United
States from so to IS years at any
rate of interest, nor can he get mon
ey on mortgage of his farm at any
such rate as 3, 31a, or 4 per cent
with or without amortization. He
would find it a hard job to get it
to-day at double that amount. He
would find it no hardship to get it
at all at 3, 3 Il, or per cent, as he
would elect, under the Landschaft,
provided, of course, that the Land
schaft is properly constituted, as in
Germany. And then take the matter
Of cancellation, if he takes out a
mortgage to-day for 10 years he can
not cancel that mortgage until the
1C years are up. Under the Land
even if the bond reads for rs
years, he can cancel it day or two
after he has mortgaged his land. All
he needs to do is to buy the bonds |
back in the open market, bring them
20 the directors, and he receives his
mortgage back on demand, and is !
rec from debt right then and there.
Now, as for the selling of the bond
1t 92 in the open market, if he sells
t for 92 he can in all likelihood buy
t back for 80. If his Landschaft
stands high, it will sell for above
)ar and not at 92.
It is the Landschaft that can do all
hat, provided the underlying laws
# the Landschaft are made to apply
lere as in Germany.
1t would be we'll to understand
irst of all that we should carefully
void adopting some plan simply be-
ause of some inspiration that may
nd its way into the heads of those
yho are looking for inspirations in
he financial line. A plan may seem
0 be logical, may seem to be plausi-
ly put, plan may even be elo-
uently advocated, but which might
4 the end prove to be a serious loss
D borrower and lender. 1t is no
lore practical to play finance from
written plan than it would be to
roduce symphony music by handing
novice a violin and a written SYM
hony and expect him to play. In
latters of finance, especially so in
case where speculation is almost
1tirely eliminated, it is the safest
purse to go down to the bedrock of
1perience.
We have had experience in the
ase of the. Landschaft. It has op-
'ated for Isl years. 1t is operating
ow during this great war in Eu- .