Seventv-Third Annual Report 1229 



gage debtors, who pool their united responsibility to guarantee 

 the payment of debentures which they issue as a registered society 

 to secure money to loan on mortgage to their individual members. 

 They issue no stock. It is the principle of our partnerships 

 applied to land mortgages. Surely we can all understand that. 



Land mortgage banks are also used in Germany and other Euro- 

 pean countries to finance farm mortgages. These are corpora- 

 tions especially organized and safeguarded with authority to issue 

 debentures and to do the work for which they are created. We 

 have similar corporations in this country serving other interests. 

 The only difference is that our institutions are properly organized 

 to make money for their stockholders, and to serve what we call 

 business interests. These European banks are organized, not for 

 profit, but for the convenience and benefit of borrowers on farm 

 mortgages. Surely there is no need of mystic suggestion or 

 romantic figures to describe a simple business of this kind. 



The European application of these simple principles is, how- 

 ever, important. To the system itself there are three important 

 requisites : 



1. The issue and sale of debentures. 



2. The creation of a sinking fund. 



3. A small annual payment in addition to the interest, by 

 which the debt is finally wiped out. 



To the borrower there are four important considerations: 



1. The privilege of contracting a loan for a long term of years, 

 during which the loan cannot be called so long as he pays his 

 annuitv. 



2. A low rate of interest. 



3. Instead of being obliged to pay in bulk at the close of the 

 mortgage period, there is a provision for making small annual 

 payments which puts small savings to immediate profitable use, 

 and which gradually and regularly reduces the debt until the 

 mortgage is finally wiped out at the end of the contract period. 



4. While not compelled to pay until the end of the contract 

 period, he may liquidate the mortgage at any time and secure a 

 release of the mortgage contract. 



The period of contract is usually optional with the borrower 

 within a limit of from ten to seventy-five years. The annual 



