136 THE LURE OF THE LAND 



currency by means of the sale of the land-mortgage 

 bonds. 



The type of the institution which shall be the bank- 

 ing unit has also been the subject of careful investiga- 

 tion. In Europe the original corporation was simply 

 a mutual association of farmers in which the borrowers 

 assumed an unlimited mutual liability. A member of 

 this association owning real estate could mortgage his 

 lands and was given the amount of his mortgage in 

 bonds, based on the collective value of all the lands of 

 the members of the association. He would then sell 

 these bonds to any customer he might be able to find 

 individually, and thus convert his mortgage into money. 

 The association of farmers simply issued bonds against 

 the collective security, which was the whole of their 

 lands, and delivered these bonds to the borrower in ex- 

 change for his mortgage. It did not necessarily give 

 any assistance to the borrower in either selling the 

 bonds or keeping their value up in the market after the 

 sale. 



Following this primitive system joint-stock banks 

 were established, and these banks had particularly for 

 their function to become a selling agency, to dispose of 

 the bonds issued to the individual mortgagor to a better 

 advantage than he possibly could by going into the mar- 

 ket himself. Thus these joint-stock banks, secured as 

 they were by the general mortgage on the lands of the 

 whole association, were able to supply the individual 

 borrower with the money which he wanted, and they 

 stood, of course, in a position to repurchase these bonds 

 whenever they saw fit, thus reducing their liabilities. 

 The amount of bonds in proportion to the mortgaged 



