Show go operative k farm arm I 1 IL 1 nor an fn 01 how it Is done in europe and may be done in Al america alberica to the profit of both farmer and Con consumer sunter by MATTHEW 8 DUDGEON copyright 1814 western paper unton union AMERICAN BANKER HAS SOMETHING TO LEARN derlin berlin germany somo some of 0 us tubes lubes are laughing a little at the bankers said a successful farmer to us before we left the states wo we have actually farmed successfully tor for years have studied farming in agricultural colleges we think we know our business fairly well its ita certainly funny to read speeches by hankers bankers telling us hov to farm I 1 have come to the conclusion that the bankers know so little about farm loans that they would do better to study and discuss their own business than to try to teach us ours and we have concluded that there Is some force in what the farmer says tho the A bankers association and state bank associations are actively promoting agricultural advancement tho the work undertaken by them includes soil surveys experiments with fertilizers hiring experts to make practical demonstration upon the farm education in road matters and so eo on indefinitely the bankers a are rd duplicating what whai the federal agricultural depart department meni is doing what every agricultural college is doing and what every farmers institute is doing they are going into the held of production which is important but which after all is one in which the farmer remarked one is led to think that the bankers of the country have unanimously concluded that they know their own business so thoroughly that their elevating educational instincts can get opportunity for expression only by doing missionary work among us lowly farmers and elevating this ignorant class to their own high plane of intelligence worst banking for farmers we have been going plough eur ope accompanied by agricultural cultural experts wo we have talked with leaders in agriculture in several countries we have read bulletins and books galore on oil apicultural al cultural methods abroad we consumed government allsto we have seen and heard and studied about all the most scientific up to date farming methods but felti ir the tha experts with us nor we i have auve been able to recall a single idea on agricultural production that is not being more or less widely worked out 1 in america by these lowly lo farmers whom the bankers are so benevolently and condescendingly instructing on oil the other hand so far as we can discover the united states slates is the only country in the civilized world where banking methods have not been abden in any degree adjusted to the needs of the farmer sometimes over here in europe the joint stock bank does the work more oten often it is a operative cooperative co credit bank that loans to farmers but some bani stands ready to meet the farmers needs everywhere except in the united states in america as nowhere else tho the banker takes the tha terms calculated to accommodate the city me merchant and finan ciers and inflicts them upon the protesting farmer sixty and ninety day loans are just what are needed in the city but they are of no possible use to the farmer A merchant or commission man gets his returns promptly i and can meet ninety day paper nt at maturity but tho the farmer cannot buy calves or pigs and fatten them market them and get returns short of a much longer period the rural bc rower who invests the borrowed money in seeds or fertilizers cannot hope to realize upon his investment short of df six ix or eight months it la Is riot not so a question of interest as of terms and methods in many localities interest rates are fair in some places interest on oil farm loans loang is too high dut but it is true ov in america that the bankers stubbornly refuse to the farmer tho the sort of loans loana which lie he needs and the banker banke r v who 0 sits behind the cashiers desk writing speeches about better farming drops his facile per pen long enough to crowd down the throat of some borne farriar patron who should have em eight months loan foan a three months loan which la ix as apt to cripple as to 0 help belp WW 1 ilow how the vian man on the farm can borrow money advantageously and economically no Is an important question it may not be ba so important as good marketing but it Is important enough ills his loan should be on terms which meet his occupation and hla his financial resources if he cannot get these terms from his banker ho fie will naturally try to got them elsewhere the question la is will tho the banker force him to seek loans elsewhere or will ho meet the needs needa of the farmer thero there la Is little doubt that the banker could couff give longer time on sate safe personal paper there la Is little doubt that lie he could arbanie arrange for long time real estate mortgages when a f armar r borrows to buy a farm and C gives ives a mortgage for the loan there Is no reason why it should riot not be ii a long time amortization mortgage permitting repayment in annual or semiannual semi annual payments extending over ten twelve or twenty years gilt edge edae security A good first mortgage on re real I 1 estate running for fora ka considerable period ot of time Is recognized the world over as a gilt edged loan financiers are accustomed cus tomed to advise it as the safest investment for trustees widows and others who are not able to pass upon the character of miscellaneous investments the president of one of the great life insurance companies makes the statement that his company in its history of forty six years has loaned 13 to farmers secured by mortgage on acres the average loan being the net loss after paying all costs tees fees assessments and penalty interest rates was fourteen of one per cent this is substantially the history of all properly pio perly organized farm land mortgage business buel nesa some UK farm mortgages are carried by our life insurance companies an ralf amr equal to 35 per cont cent of the to rn mortgages shorn abor n by the ct cb if f farm loan for three years la Is a good loan one ond for ten or fifteen or twenty years Is 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 good banking to rank malt such long farm loans which is id another way of dayi 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 reason why this tact fact that a long time farm loan Is a gilt edged loan should not bs be taken into account in fixing the interest it Is not possible that the interest on these loans should be near the rate which la Is received ed upon bonds either municipal pal or industrial the city banker will investigate fully the integrity and earning capacity of every factory that wants a loan Is IB I 1 there here any reason why the american att banker er should not put bimo himself elf in a 1 position to investigate the honesty and capacity of the farmer who needs money thus permitting him to capitalize his character as do blinkers bankers abroad on the whole after looking joeking over tho the situation at home and abroad it la Is not surprising that mhd farmer sometimes suggests that bankers might well study their on activities rather father than to be butting iu in upon the farmers business over pare hare in germaey the bankers were formerly as slow as those thom of america are now tn neet this demand for rural credit so bo operative cooperative co credit came and it 1 came to stay it does doea the work and it does it well the question that ja h up in america la Is simply a question at a to whether or not the american bank r to Is going to insist that the american farmer solve I 1 hla it s own or whether be the banker Is going to solve it tor for him and be his financial backer mortgage loans in germany A operative cooperative co joau on long mortgaged la Is no new one hundred and forty years ago the Landa chatten were organized in 14 sla bla A war like period culminating in tho the seven years war had reduced the greater part of prussia sla to a pitt ablo of devastation tho the owners ot of largo large estates which had borne tho the brunt ot of tho the war charges were poverty stricken blence in 1769 19 Prod eicle 11 II issued a royal decree on abling those owners ot of large landed estates to secure capital necessary to revive their agricultural interests Inte reata by joining together in securing a coop co op loan while nt at first those loans veto granted to only tho the owners ot of the large estate this system was afterwards adapted so BO that the smaller land owner could profit by it tho owner who wishes to secure a loan gives it a mortgage mort gago to the association ito iio to la required to pay interest at tho the rate of from three and a halt to four per cent and may borrow up to two thirds ot of tho the value ot at hla his farm this valuation Is arrived at by capitalizing the income which lie ho can on from it it Is ii characteristic of european finance that the farni farm values art fixed largely by consideration of 0 tho the actual earning capacity of each farm apparently tho the price which a neighboring farm liay bring has hao little to do with tho the value which la Is placed upon any ally particular farm the theory la is and it seems to be ba sound that the value of the farm to Is not so eo much where it lies ns as it Is what will it earn when the iho association has a group of those these mortgages mortgagee it pledges theta them by a trust deed and issues a series of bonds secured by tho the pledge of the mortgages these hondo bonds are then sold and usually ally bear an inte interest rost of from three to aliree and one halt half per cent the association not only pledges the association itself so that in a sense every member ot of the association is back of the bonds these bonds have always brought a good price even in the most difficult times financially tho the mortgage given by tho land owner Is not due at the end of a certain bertain number of years ot af which time the entire principal must bo be paid as are american farm mortgages mortgage a instead they run for from twenty to sixty years with nit an agreement incorporated into the mortgage that each year the farmer shau shall pay a certain sum of money which shall include interest and a small installment upon the principal in tills this way the mortgagor gradually pays off its hla mortgage paying little more than tho the amount which would in america be required as interest alone tho the chief advantage to the farmer la is in this fact that he Is allowed to pay off the loan by making small annual or semi semiannual payments other advantages are that he be will never have to renew the mortgage which will continue to run until the payments have cleared the farm farin of the debt he will never be corn T belled belled to pay any renewal commission and will never have to go to the expense of bringing down his title or haying jt it examined every two years as Is done under our american system and schulze delitzsch the and schulze delitzsch banks are smaller community institutions organized upon the cooperative plan and are not operated for profit to the investor banks operate more particularly in the country while the schulze delitzsch banks operate largely JA in urban communities the Relf teson Is the most purely cooperative while the banks loan money for a long period of time they do not generally loan for so long a period of time as do the land schaffen hatten ec they receive deposits from froin their members paying them interest as do savings banks the one at cassela germany which can be taken as a fair representative e of its type c charges G 6 per cent on short time lime loans they pay 4 per cent on deposits which are left with them for an agreed long period of time and 4 per cent on deposits left for a shorter time it Is found however that the rate of interest varies in dlf dif ferent places since these banks must meet the competition of bf the joint stock and savings banks in each corni they generally are able to com compete pete successfully for tho the reason their expenses are very light their officers usually serving without salary and since they do not wish to make any yirgu profits to pay off any investors as do the other banks go slow ilow the best rural credit system tn in the world if actually la in operation would not prove a curp cure all for our present rural ailments it would not get you anywhere the farmer who has negotiated a loan upon the most favor able terms has made no actual ad vance ila ha Is just where he was be toro fore it if I 1 am running a losing business the more money I 1 borrow the worse off I 1 am it if I 1 am not producing in 9 a good product which I 1 can market readily and profitably the less 1 I put into my business the better hural credit without good farming and good marketing is a delusion and a a snare nare easily obtained loans ore are no fuesti atutes tor for brains br alna and bli siness sense bense and a marketing system rural credit can do just ono one thing it can enable a roan man xo to got possession oi of a farm and the equipment with which to farm if the farming bustness business into which the loan launches him is not a paying business the loan has simply injured him ay by getting him into a losing venture I 1 said eald a loan will enable him to get possession ot of a farm and equipment this possession Is temporary and will be of via makei makes the land and equipment hlo bla own by repaying the loan and of his bid honest and hard bard won earning after all it is rural earnings which spoil success and good marketing conditions whether Phet ber coop co op or otherwise are ara an absolute |