No. 4.] RURAL CREDITS. 137 



open market. He may make a loan for five, ten, fifteen, 

 twenty-five or even seventy-five years, in which he pays so 

 much of the principal and so much of the interest in the shape 

 of annuities. As an example, I saw this instance of a loan that 

 had run seventy-five years. I give this, because it is extreme; 

 a man borrowed of the Credit Foncier $5,000 for seventy-five 

 years. He agreed to pay 4.30 per cent for the money. The 

 obligation was drawn so that he paid 4.40 per cent instead of 

 4.30; the difference between 4.30 and 4.40 paid the loan at the 

 end of seventy-five years. He paid all during that time 4.40 

 instead of 4.30, and that slight difference amortized the loan. 

 That is the principle. Now this man receives bonds on which 

 he pays annuities; he has made his mortgage, those bonds are 

 marketable. They can be sold or used as collateral. The 

 societies federate and become collectively liable, and the result 

 is that that security — that bond on which he has financed 

 himself for so many years that he can recover out of the soil 

 enough to maintain his living expenses and pay that loan — 

 becomes a safe and readily marketable investment. The 

 borrower can call the loan and pay it all off if he wants to, but 

 the lender cannot. In other words, the borrower finances his 

 land for a time definite to himself and makes a security that 

 anybody will buy, and they sell against government bonds in 

 Italy, Germany and France. It is not any theory, it is a 

 practice economically sound that has been worked out in those 

 countries. The government should inspect it, umpire it, look 

 after it to see that it is honest. 



Second, we should have an amendment of the banking 

 act of each State, so as to permit any kind of a bank that 

 confines its credit facilities to the members to organize 

 as an association without capital stock, in the same way 

 as we have done w^ith the national banks. 



Third, a law should be enacted by the nation and each 

 State to legalize in associations whatever is lawful for cor- 

 porations. We didn't know anything about a corporation a 

 hundred years ago; now we do everything, almost, by corpora- 

 tions. It is a good form of conducting business, but let us 

 enlarge this associational form, so successful in life insurance 

 companies, so as to include all business. It is a simple thing. 



