EUROPEAN AGRICULTURE 255 



Association. The proportion of the loans made through the associa- 

 tion is constantly increasing and within the last six months they have 

 increased 10,000,000 marks, but the time probably will never come 

 when all of the outstanding mortgage loans will be made through the 

 land mortgage associations, as in many cases mortgages are given by 

 members of families in settlements of estates, loans are made within 

 families and through other private interests, so that in no case is it 

 likely that over two thirds of the mortgage indebtedness of a province 

 will be made through a public credit institution. 



The Business of the Land Moktgage Association 



The Land Mortgage Association of the province of Saxony, which is 

 typical of all other similar institutions in Germany, is a cooperative 

 union of the landowners of this province for the purpose of securing 

 loans for its members on their land by issuing bonds {Pfandbrief en) 

 against the same. The association is not a stock company. ISTo profits 

 are declared to individuals, but go to the reserve funds of the associa- 

 tion. Any one may become a member who is a landowner in the prov- 

 ince and pays a land tax of at least 90 marks per year, which means 

 owning from 10 to 25 acres of land, depending upon its value. 



The articles of the incorporation for the association were approved 

 by the Prussian government and the oversight of the business is under 

 the direction of the Minister of Agriculture of the kingdom of Prussia. 

 The association is independent to conduct its own affairs and to elect 

 its own officers, but the election of the higher officers must be approved 

 by the government. A farmer wanting to borrow through the as- 

 sociation makes his application. After examination of the title of 

 his farm and finding it satisfactory he has the privilege of borrowing 

 to two thirds the assessed value of his farm for taxation by giving first 

 mortgage to the association for the amount he borrows. The associa- 

 tion does not have the money on hand to make the loan, but secures the 

 same, not by selling the mortgage, but by issuing what is known as a 

 Pfandbrief or mortgage bond of equal amount to the mortgage and 

 selling the bond. There are several features of the Pfandbrief that are 

 characteristic. First, it is not secured alone by the mortgage of the 

 farmer for whom it was issued but by all the mortgages and property 

 of the land mortgage association. Second, it is transferable without 

 endorsement at any time and is an impersonal security payable to 

 bearer. Third, it is not a bond in the sense that it runs for a definite 

 length of time, for there is no fixed time at which it matures. Fourth, 

 the holder does not have the right to demand payment of the face of 

 the bond — that is, to call in the loan — but the issuer — the land mort- 

 gage association — has the privilege of paying it at any time. For 

 example, the bond may be called in and paid six months after it is 



