Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1915-02-11

time 10 recognized the world over az
gilt edged loan. Financierg are &C
customed to advise 1t as the safest In
vestment for trustees, widows and
others who are not able to pass upon
the character Of miscellaneous invest
ments.
The president of one Of the great
life insurance companies makes the
statement that his company In it's his
tory Of forty.six years has loaned
$l33,sSS,549.4 to 75,102 farmers, Sc
cured by mortgage on IL ,4s2, 1853 acres,
the average loan being s1.782. The
net loss after paying all costs, fees,
assessments and penalty interest
rates was fourteen-hundredths of one
per cent. This is substantially the
history OF all properly organized farm
land mortgage business. Some $780,.
DOC. 900 In farm mortgages are carried
by our life insurance companies-an
amount equal to 35 per cent. of the
total farm mortgages shown by the
census.
II farm loan for three years 10 q
good loan, one for ten or fifteen or
twenty years ID good. too, but no
American bank makes these long
loans. Why? We have never been
able to get any adequate answer to
this question. The general response
is an unsatisfactory one, "It isn't good
banking to make such long farm
loans" which 10 another way Of say
Ing what we have said before, that
the city banker will not meet the
needs of the farmer borrower.
There seems to be therefore no rea.
son why this fact that q long time
farm loan 10 a gilt edged loan should
not be taken into account In fixing the
interest. 1t is not possible that the
interest on these loans should be near
the rate which ia received upon bonds,
either municipal or Industrial. The
city banker viii investigate fully the
integrity and earning capacity OF
every factory that wants a loan. Is
there any reason why the American
banker should not put himself In a
position to investigate the honesty and
earning capacity of the farmer who
needs money, thus permitting him to
capitalize his character as do bankers
abroad? On the whole after looking
over the situation at home and abroad
tt is not surprising that the farmer
sometimes suggests that bankers
might well study their own activities
rather than to be butting In upon the
farmers business.
Over here Ia Germany the bankers
were formerly as slow as those of
America are now to meet this demand
for rural credit. So cooperative
credit came and Il came to stay. II
does the work and 1t does 1t well.
The question that 10 up in America
is simply question as to whether or
not the American banker In going to
Insist that the American farmer solve
his own difficulties or whether he,
the banker Is going to solve 1t for him
and be his financial hacker.
Mortgage Loans In Germany.
A cooperative loan on long mort
cages Is no new experiment One
hundred and forty years ago the
Landschaften were organized in Prus.
ssa. A war like period eliminating In
the Seven Years War had reduced
the greater part of Prussia to a pitt.
able state OF devastation. The own
ers of large estates which had borne
the brunt of the war charges were
poverty stricken. Hence In 1859
Frederick ii issued royal decree en-
ahling 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 ut 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 1t.
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
eapitalizing the income which he can
get of from 1t,
Ii 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 neighhoring
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 In not so much where Ii
lies as IL is what will it earn.
When the association has a group
OF these mortgages 1t pledges them
by 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 a
sense every member of the assoeia.
ton is hack OF the bonds. These
bonds have always brought a good
price even in the most diffieult times
financially.
The mortgage given by the land
owner Is not due at the end OF q Ger
tain number OF years. at which time