504 IOWA DEPARTMENT OF AGRICULTURE 



loans same as the landschaft. They operate under strict government 

 supervision down to the minutest detail. 



A joint stock mortgage bank shall not issue honds to exceed fifteen 

 times its paid up capital. A government auditor attached to each bank 

 certifies on each mortgage bond before its issue that the necessary cover 

 is existent and that it has been duly recorded in the mortgage register. 

 The law states specifically how this mortgage shall be kept. The govern- 

 ment officer may compare at any time any mortgage as shown by the 

 mortgage register of the bank with the records of the land title office. 

 As a matter of fact, the government auditor is custodian of all the 

 securities for which bonds are issued. Penalties of fine and imprison- 

 ment are provided for any infraction of the law. Loans are usually 

 made in cash instead of bonds, by these mortgage banks, as the land- 

 schaften make their loans. These joint stock mortgage banks and the 

 Credit Foncier of France belong to the capitalized incorporated type 

 and pay dividends on their stock. 



IOWA FARilER NEEDS IT. 



The Iowa farmer should adopt modern methods in marketing his 

 farm loans. He must do as governments, railroad companies, industrial 

 corporations and municipalities do; put the security in a form^ to suit 

 the investing public. For the last 100 years, German farm bonds have 

 been marketed at the same rate as provincial and state bonds, almost 

 as high as imperial government bonds. Iowa state bonds have been 

 sold at par at 4 per cent. Northwestern, Pennsylvania and other 4 per 

 cent railroad stocks have been sold at par. So have U. S. Steel stocks. 

 What German landowners have been able to do for a century, Iowa land- 

 owners can do. Do not be misled by misinformed persons who may say 

 that conditions are not so good here that such mortgage system would 

 not work in Iowa. I think that conditions for the successful operation 

 of this system are beter than in Europe. There is no place in the world 

 where a farmer can pay off his mortgage or pay for his farm quicker 

 than he can in Iowa. It is true there are many farm loan companies 

 now operating in the United States that issue bonds covered by mortgages. 

 Their bonds have not become standard, have not commanded a low rate 

 of interest because they have not observed one of the fundamental fea- 

 tures of the German and other European institutions, strict government 

 supervision and control. 



By this method, bonds can be issued in denominations to suit large 

 and small investors. The small investor should not be overlooked, for 

 there are so many of them that their individual small holdings aggregate 

 immense sums. Everybody has confidence in land as security. The 

 average investor has not the time nor the ability to look up the value of 

 the security in an additional farm mortgage that is offered for sale. He 

 likes a high grade bond. Such a bond is supplied by the landschaften 

 and mortgage banks of Europe. The government sees that the mortgage 

 is taken with care and every safeguard surrounds the issue of the bonds. 

 If the holder needs the money, he can sell his bond, as it has a market 

 value every day in the year. 



