500 IOWA DEPARTMENT OF AGRICULTURE 



Third. The evidence of the debt must be easily transferred in case 

 of sale; easily negotiable; liquid. Hence it must be a bond. 



Look over the list and you will find every security that sells high 

 at a low rate of interest meets these three requirements. Government, 

 railroads, industrial corporations, public service corporations, munici- 

 palities and even owners of large city buildings market their securities 

 in the form of bonds. If their securities meet the first two require- 

 ments; if they are founded on property of substantial value and are 

 first class and are widely known to the investing public, they invariably 

 obtain a low interest rate. 



An Iowa farm mortgage at one-half the value of the land, possesses 

 the first requirement. The security is absolutely first class. There is 

 no question about that. It is generally recognized that there is no 

 better security than an Iowa farm loan. Its security is the earth itself, 

 the source of all wealth. An individual farm loan, however, does not 

 meet the second requirement. It is not a standard security. The in- 

 vestor is not safe in purchasing it without careful investigation. He 

 must examine the title papers, or rather hire a lawyer whom he knows 

 and has confidence in, to examine them for him. He must look up the 

 values of the land which is no easy matter. It may be far distant from 

 the investor's home. Many elements go to make up the value of land 

 which may only be known to someone who is familiar with farms 

 where the land is located. It can plainly be seen that individual farm 

 loans can never find ready sale among the investing public. Neither 

 does th"e farm loan meet the third requirement. It is not easily trans- 

 ferred in case of sale. In order to transfer it, it must be assigned 

 before a notary public and the assignment recorded in the county in 

 which the land is situated. The abstract should be continued also to 

 insure that there was not a previous assignment recorded. 



GERMAN METHOD. 



The Germans under Frederic the Great, about 150 years ago, de- 

 vised a method of handling farm loans whereby the security can be 

 marketed in a form to meet the requirements I have enumerated. The 

 method has worked so well that it is not only almost exclusively used 

 in Germany in borrowing money on land but the other European coun- 

 tries have adopted it with some variations. Practically all of the land 

 mortgages in France are now made according to this method. Other 

 continental countries use it very extensively. Two general types of 

 institutions have been developed in Europe in thus handling land mort- 

 gages. Both perform the same functions and differ only in this re- 

 spect. One type is a non-profit seeking co-operative institution called 

 a landschaft, and the other is a capitalized corporation that pays 

 dividends. Different institutions under each type vary in regard to 

 details, but the fundamental principles of all three are the same. I 

 will first describe the type that is known best as the German land- 

 schaft. 



A LANDSCHAFT. 



A landschaft is a cooperative association of landowners, for the 

 purpose of procuring loans for its members by the issue of bonds se- 



