Show r Y Y 1 I V DAILY DAIL Y HASKIN LEFt LETtl RURAL RUP CREDITS 1 I IX The German Land Mo Mortgage gage operative Co credit Is a a. product of a R. blood bloody war It was first developed with wIlh reference to land tand then with reference to personal liability It Is la also alo tho tho product of or tyranny although It has sufficed to release re- re lease leane millions from the tyranny of ot debt I M Mand and the tho thralldom of ot poverty crt Looked upon when It begun began as aR an unmitigated evil v l by the tho rich land holders bolders upon pon whom It was is forced It has lias persisted and has haa brought Lt Innumerable blessings to mi millions lons of ot poor peasants the while not nol hurting th the ilch land holder We Vc must go back to the Seven Years Years' war In iii Germany to 16 sec ace the tho beginnings of of ot operative eo rato credit th pie present ent system op o war hit tho the noble land holders a terrific blow them land hand poor POOl in inthe the tho superlative tI C degree They had acres J and auth acres of land but hut they had not a amark murk mark with which to cultivate it To add adl to the tho confusion contusion Frederick the Great suspended suspended sus sus- all Interest charges n against d debtors debtors debt debt- bt- bt ors ora for tor a period parted of ot three years and afterward afterward afterward after after- ward extended the period thereby banishing ban tho the money moncy lender and l leaving the theland theland theland land owner with no power to get moneys money At this Juncture there came upon the scene a A. Berlin business man Herr Buhr- Buhr bIg IlIg who had tho car ar of or tho the great monarch monarch mon moo arch Require the nobles to pool their I credit raid paid he to Frederick and then the they can borrow money So-a So royal rol edict was issued forcing the nobles to join the H whether they wanted to borro borrow horrow bor hor- row ro money or 01 not and to make their lands liable without limit for all ull loans loan granted b by the association In that Idea were born the two greatest factors In In modern commercial life the life tho trust and the thc lie operative co credit association Experiment la In Success Successful u The Tho experiment worked like hiko a charm I Soon the as association found Itself with unlimited credit in keeping with the tho un unlimited unlimited unlimIted un- un limited liability l It extended and so the first L. started Others were formed forme-d voluntarily And from tram that da day to this nearly a century a half halt the associations of ot borrowers In Iii Germany have thrived and have havo made German Grman agriculture agriculture agriculture agri agri- culture the worlds world's best example of ot tho the pO possibilities of ot the soil boll The principle behind tho t-ho land mortgage bank b. whatever er Its nature Is lar I the same as that behind our c currency system tern tem em The Tue government O tells tell t us that there Is 4 a dollar of or gold old behind every eVer paper dollar dol 1101 dol- dol lar mr In circulation and so o 0 we prefer preter the paper to tho the coin So the land mortgage mortgage- bank says thorn there la Is a ft mortgage behind ever every bond hond it issues Issues Issues-a a mortgage that has perhaps 2 of ot property behind every overy dollar doHar It represents representS and and tho Investor is glad giad to get hold oC of It Under our system the matter of at mortgage mort mort- gage 30 loans Is IR a personal one Each lender must know financial responsibility of ot tho the borrower and the value of or tho the mortgaged mort niort- gared property Under the mortgage bank system the banking experts look after this The result is is that the land mortgage mort mort- gage gago becomes as impersonal as a a. railroad mort mortgage a get Under the tho German system when one ono buys a land hand bond he buys bUS it just jus an as the American Investor buys huys a railroad bond Behind Behind- It lies a mass of ot underlying mortgages mort mort- gages gaes In addition to tho tilO other assets of the tho bank Issuing It and behind that tho the liability of or all its members In former years every member of a operative co-operative land mort mortgage age bank was liable without limit although the tile tendency now is 18 toward a limited liability and a large cash reserve reser Is Guaranteed by Bond Originality the th dl did 1 not give cash ash to a member in exchange for tor his mortgage It gave cave him Instead a abond abond abond bond containing a promise to pay both principal and Interest In case of ot det default b by the debtor This was simply a process of guaranteeing an individual mortgage with an individual bond Later they undertook un un- un- un to collect the thc Interest and princIpal principal prin prin- cipal on behalf of ot of the the lender and afterward afterward afterward after after- ward adopted tho present practice of or handling han ban dung tho the whole tr transaction transaction advancing advancing the mone money to the tho debtor de selling t the bond to the creditor collecting principal and Interest from tram the tho debtor and redeeming the bond for the tho creditor This revolutionized the mone money lending tending business and built up a system of ot credit combining the Issuance of ot bonds the gradual grad grad- ual repayment of ot the principal by the mortgage maker and the th building up of at a a. sinking fund to meet the tho bonds when they should fall ton due Each of at these functions Is Indispensable ablo to the success of ot the system ys- ys tem tern but tile the Jrr them Is the Principle sf of amortization dc decides ld how The r man many years ears he pa pay back bach lCk the he loan Un and It lit th h hIt It Into so o many mony annual mist meet these that as well as hIs hIs' 1 lat means sustained l effort at trUPI thereby getting ont ont-e Inculcating the It also duces the tho habIt o or Interest borrower bm 1 from n Year r to year yea at time increasing tb the with a each th tho margin between tho ho mort Elge and the size lIlze of oC the Ule Few v Shares Are Paid In The present da day pI ply syndicates teA 0 of borro themselves with capital capita 10 upon th and Upon tho lie tal sible t methods 0 of repayment these Societies In there Utere 1110 no h In and when there are ar certain ro a percentage ot of the made The Tho mt candidate for tor a asks that n. n be d. d mortS dge on his Property Uhl gage gago Is oo ho he gets obis bis the tho society hip in tho 1110 market o Pt fore tho bond does docs The Tho ma bond does In tOI fi In a morti nt but In the masses of the The Tue result Is 18 that I 1 I per percent cent bondi bondt usually a at t a premium While th the d de In fifty years tara be rower roWel d dors dop no not ha have hae e to let It run long tong Ho lie can cali anticipate Jus Just JUS T annual The payments as os ho he desires 4 Js to tendency in the lie Germany today Is Is' i J. J Jo 16 pla place e eA esp rte rowing facilities In iii lie tho hands hand of o th borrower He Js' Js furnished thi 1 a loan closer r lP margin of ot tl the value pf th the pro pledged p Where th the big borrow borrower P his buildings building or his hili r e a small sto stock t k borrower can 1 gt J gl-J 1 adva avan advance I u on them upon In conne connection with bf bis' bis Under tho ho la law Jaw v no cart can to place a loan where tho the borrower th the conditions of ot security rp required must Inform tho lie borrower of The Hie n 1 of or Its as appraisal of pro property proper erty js is mado made by a 1 of of bors bors- n none of ot whom mn may fre be e the borrower Loans Joans cannot b bL bAr re n except whore where the tho borrower allow property to deteriorate te In such t tr r property to affect th thud the soiling selling value aluc of or pi D Desire Land Laud Mortgage Bonds Bond Th Tho Thid result of or the he op operation ra of of th opera operative thc land laud mortgage bunks bun Brought Into exl existence a l lar larg Q ni in hI of or banks of this n a and this in iii turn has hlas brought at Germany German a condition where farm fam gages ha have become th the tue fu s o of oC investment E Even En n o mean menn no more moro to tile the Inv rtha tha land and mortgage bonds and the he d Ci farmer finds his lila securities th tho mo moi li after of ot any any on the market HIs HIs' I Is Iii gilt lt cd edged ed lie can borrow on a at terms both with respect t to low lh Ih rates rales and anti easy instalments of of ot can tho the principal ll as as th government go 4 Compared with our American AmericanS a gj where tho the land mortgage is la atu ati most difficult of ot all nih s 's securities to to-fi wh where rc the term of ot repayment Is IB J Iti k a fourth as long as that 0 of other c of ot securities and wh where re rethe the farmer himself up against the highest t fa tal Interest large argo an terms of or rep repayment the German makes ours look more than a center of or date dato Although the tho American f at the basis of or all American Yil has never been touched by th i ii alchemy of or transmutation of money and nd mone money Into proper prope needs cot of farmer require IbI an pie pi lEi farmer must labor labo financial aI conditions that were wore re reg out of ot date in Germany JOOn x n after lea achieved its independence i In the tho articles that follow tollow ther will have a glance a at t how tha thai Gi system of ot rural finance works when planted t to other lands how lands how it has hu a farmers of ot Italy Itah upon their econ how hott It has aided tho the French achieving his economic independent how it is transforming rural Ireland advocates of at rural credits for tor tHe Ulet I States see In the universality of lu cess an effective answer to the conti that what might work in Ge Germany many not succeed in the United j r I Tomorrow RURAL CREDITS i X Tho X-Tho The French System I 6 |