FOURTEENTH ANNUAL YEAR BOOK— PART VI. 501 



cured by mortgages on their land. The landschaft issues bonds against 

 the collective mortgages of its members. The total amount of bonds 

 outsanding must always be equal to the total amount of mortgages 

 due the association, except that the accumulated surplus of the asso- 

 ciation may be loaned. There are twenty-three of these associations 

 in Germany, each confining its operations to the province in which it is 

 located. They are non-profit-seeking associations and, except in two 

 instances, possess no share capital. They are subject to state super- 

 vision through a royal commissioner, and their articles of association 

 require the sanction of the crown or the minister of agriculture. Land- 

 owners living jwithin the area of the association and fulfilling the con- 

 ditions of its articles, may not be refused loans. 



Loans are not made in cash, but in bonds of the association. These 

 bonds may be cashed independently by the borrower, or he may take 

 them to a bank which is affiliated with the association, which will sell 

 them in his behalf or advance him money on them as security. Loans 

 are limited by some associations to one-half, and by some to two-thirds 

 of the cash value of the land. They are usually made on the amortiza- 

 tion plan; that is, the principal is reduced each year by the payment 

 of not less than % of 1 per cent of the principal in addition to the 

 interest rate. 



. Loans may not be called except when the property deteriorates by 

 reason of bad farming or the borrower fails to keep up his payments or 

 otherwisie violates the terms of his obligation. The borrower has the 

 privilege of paying any part or all of the principal at his option by 

 giving notice. If he pays before due, he must pay in bonds of the 

 same kind as he received when he obtained the loan. If such bonds 

 are then above par, it costs him more to pay his loan, if below par, 

 less. When part of the loan is paid, bonds to the same amount are, of 

 course, cancelled. 



PEACTICAX WORKING. 



In order to illustrate the workings of the landschaft, I will say 

 that a man whom I will call "A" desires to borrow $.5,000 on his farm 

 that is worth $10,0'00, and that another man whom I will call "B" 

 has $5,000 which he wishes to loan. on such security. Now, as you 

 know, the ordinary method is for "A" to find "B" or the agent of "B" 

 to obtain the loan. According to the methods prevailing here now, the 

 loan would be made for five years with an optional payment clause, 

 perhaps. Experience teaches us that the average life of a farm loan is 

 much longer than five years and with the present high price and ad- 

 vancing price of land, the life of the loan will continue to lengthen. 

 So at the end of five years, "A" will be obliged to renew the loan with 

 "B" if "B" wishes to renew it or else seek a new loan elsewhere. In 

 either case, he has the commissions to pay and if a new loan, addi- 

 tional abstract fees. 



With the landschafts "A" would make his application to the proper 

 officers, who would ascertain the value of his land and examine his 

 title papers. In Germany, the land is carefully valued according to the 

 income it produces for taxation purposes every few years. In addition, 

 however, the land on which the loan is desired is valued by three mem- 



