Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1917-03-02
SENATE AUTHORIZES
COOPERATIVE CREDIT
Passes BILLS FOR STATE EapN
LOAN AND PERSONAL
CREDIT SYSTEM.

Legislation establishing rural cred
its and providing for personal credits
as based on the Raiffeisen system of
Germany. both introduced by Senator
Ralph Metcalf of Pierce, was enact
ed by the senate this week.
The rural credits bill, senate bill
25O, provides for the mortgaging of
land through authorized loan associa-
lions at the least possible cost or sac
rifice to the owner. The associations
must have a minimum stock of $1O.-
900. They are empowered to make
loans as first mortgages on farm
lands, a single loan to be limited to
rs per cent of the value of the stock
OF the company or association, the
corporation being permitted to loan
up to so per cent of the valuation
of the land. The associations are au-
thOrized to guarantee mortgages and
to sell them, but mortgages must con-
tain a provision for proper soil con-
servation.
The appraisal is made by two resi-
dent freeholders with a certificate
from the county assessor that such
appraisal does not exceed the true
market value. Borrowers may re-
deem their paper by paying a small
part of the principal, not less than
per cent, together with the interest.
The associations are restricted to a
charge of l per cent for their ex-
penses and profits.
Based on Wisconsin Law.
Senator Metcalf says that this por-
ton OF the bill is based upon the
Wisconsin statute that has been in
effect four years and, he said, Is work.
ing satisfactorily.
THE intention is that the stock
holders of the country banks will or
ganize these farm mortgage associa-
tions," said Senator Metcalf, 80 that
all the overhead cost will be elimin-
ated and the only item of expense will
be small salary paid to some en-
ploye in the bank for handling the
books and the business of the asso-
citation.
THUS. 1t is expected, the rate of
interest will be lower than CONNER
cial mortgage business for the reason
that the loaning company is under no
expense. is restricted to / per cent
for all expense and profit, that 1t will
have to compete with federal farm
loan associations, that the borrower
is relieved from the usual exorbitant
charge for getting and renewing a
loan and also the cost Of appraisals.
"The second feature of the bill is
the central farm mortgage associa-
ton. The locals are centralized into
an association, which has the sole
power OF issuing debenture bonds
against farm mortgages. The local
mortgage associations are required to
subscribe to stock of the central as
ISOLATION equal to Is per cent of the
local. The balance of the capital is
in founders shares. to be subscribed
for by private individuals.
Minimum Capital 100000.
1.-THE minimum stock of the central
associations shall be 100000. The
number of trustees is seven, five to be
elected by the stockholders and two
to be appointed by the governor. All
mortgages against which debenture
bonds are issued must be deposited
with the state treasurer. Debentures
can be issued up to twenty times the
capital and surplus of the company.
but debentures outstanding can never
exceed the mortgages deposited with
the state treasurer. The debentures
then have back Of the mthe capital.
liability and guarantee Of the local
association, and thus the first mort
gage upon the agricultural lands.
"The procedure IL that farmer OBJ
tains his loan upon a mortgage from
a local association; the local associa-
ton sells the mortgage to one of its
clients as the banks do now. or. hav-
ing no client desiring such invest
ment, sells it to the central associa-
ton and against the collective secur-
ity OF all mortgages. the central as
ISOLATION then issues its debenture
bonds.
"The principles Of debenture bonds
against collective mortgaged security
and the payment by amortization
form the base of the German land