1210 Kew York State Agkictltikal Society 



another man who has exactly the same amount to invest and who 

 knows something about the farm and is willing to make a long- 

 term investment. But in Europe, through the Credit Foncier 

 de France and through the similar institutions of Austria- 

 Hungary, Gerinnny and Italy, farm credit is converted into al- 

 most as readily negotiable security as the stocks and bonds of 

 our great industrial and railroad corporations. 



How is this done ? Simply by organizing a great stock com- 

 pany, its capital constituting only its guarantee fund, loaning 

 to farmers on mortgage through the investigation of the ofhcials 

 of the company and then issuing negotiable bonds against the 

 whole mass of mortgages. The Credit Foncier de France has 

 now, I believe, about $2,000,000,000 worth of negotiable bonds 

 outstanding ; which are, I might almost say, the very best security 

 for the permanent investor on the French market, because their 

 value does not fluctuate. While the money market goes up and 

 down and government Ijonds sag away when political menace 

 clouds the sky, the bonds of the Credit Foncier, issued upon the 

 land of France, fluctuate almost infinitesimally. They remain 

 practically around par, because they are based upon security 

 which cannot be attected by social revolutions. For that reason 

 these institutions are able to go into the money markets of the 

 world and sell their bonds at the very lowest rate for which 

 money can be obtained for any purjKDse. The recent issues of 

 the Credit Foncier are at the rate of about 3Vi! per cent. The rate 

 at which they calculate that they obtain the money is between 

 3I/2 and 4 per cent, and they charge the farmer -4.3 per cent. 

 Thev are not allowed bv law to charge more than six-tenths of 

 1 per cent, to the borrower above the rate at which they obtain 

 the money. In recent loans they have not charged the farmer up 

 to the legal limit, but only enough for administrative expenses 

 and to pay a fair di\idend to their stock holders. These bonds, 

 being issued by a company having a capital of $50,000,000. have 

 the guarantee of that company for their redempticm. They rest 

 upon the land, but they have the guarantee of a stock company 

 that the mortgages have been properly investigated, that the bonds 

 are well secured, and that they can therefore be bought and sold 

 in the open market without research as to the security behind 



