STATE POMOtOGICAI. SOCIETY. 29 



wants to borrow money, because of course a bond of a railroad 

 represents nothing but a loan of substantially the same charac- 

 ter as the loan made by the farmer secured by mortgage. In 

 the latter case we have complicated laws governing the mort- 

 gage. They are essentially local in character. A mortgage held 

 by a person a long distance away from the site of the mort- 

 gage is rare indeed. As a consequence of that, and pri- 

 marily I maintain owing to the fluidity of the loan instrument 

 the railroad is able to borrow at a rate of 4 or 4 1-2 or 5 per 

 cent while the farmer with security often better than that of the 

 railroad is obliged to pay 6, 7, and as I said earlier in the dis- 

 cussion on an average throughout the United States of 8 1-2 

 per cent. Now let it be plainly understood that the reason for 

 this difference is not difference in the character of the loan 

 but it is a difference in the nature of the instrument represent- 

 ing the loan. The theory or principle underlying the 

 Landschaften association is to form an association whereby 

 farmers banding themselves together and wanting to borrow 

 money can mortgage their farms and have as the representa- 

 tion of that mortgage debenture bonds substantially similar in 

 nature to the railroad bond or debenture bond in this country. 

 These bonds are highly negotiable. In Germany they are gen- 

 erally as acceptable as the bonds issued by any industrial plant 

 of any kind whatsoever. Now it is more commonly the case 

 than not that a rural loan association bond can be circulated 

 at a lower rate of interest than the average industrial bond. 



Now another feature about this Landschaften association is 

 a scheme whereby the farmer who as a borrower mortgages his 

 farm, pays back his principal gradually, let us say in a period of 

 twenty years. Suppose a German farmer wants to borrow 

 $10,000. Now the average rate on farm mortgage loans in 

 Germany is 4.3 per cent. The association would require him 

 to pay each year in addition to that 4.3 per cent, 3.2 per cent 

 to create a sinking fund gradually throughout a period of let 

 us say twenty years. This man would pay therefore, 

 $750 a year as a total upon that loan of $10,000 that he had 

 made, let us say to purchase an addition to his farm. He would 

 pay at the end of twenty years $15,000 as a total and he would 

 have acquired in that time the piece of land that he had pur- 

 chased in addition to paying interest on his loan during the time. 



