AGRICULTURAL CREDIT IN THE UNITED STATES 959 



addition of i per cent to this rate to cover the costs of admin- 

 istration and the contribution to the reserve fund makes the 

 farmer's rate from 4 to 4.5 per cent. He also pays the costs of 

 appraisement and of making out the papers. The rates of the 

 State and Provincial Banks and of the savings banks are slightly 

 higher, while those of the joint-stock mortgage banks are from 

 I- per cent to | per cent higher. That German farmers enjoy 

 exceptionally favorable rates is shown by the fact that Landschaft 

 bonds bearing the same rates as government securities are usually 

 quoted only from i to 2 points below the latter. 



The only special mortgage-loan institution in France is the 

 Credit Foncier, founded in 1852. This institution was intended 

 to render to the farmers of France the same service which the 

 Landschaften render to those of Germany. It enjoys a monopoly 

 of the right to issue real-estate mortgage bonds, and has become 

 a powerful and world-famed institution. But it has signally failed 

 to realize the hopes of its founders. Of the total rural-mortgage 

 indebtedness of France, amounting to about $3,000,000,000, a 

 little less than one-tenth is borne by the Credit Foncier. Bonds 

 recently issued (for example, in November, 191 2) bore a 4,5 per 

 cent rate. To this must be added the .6 per cent allowed for 

 administration and the expense of making the loan, which the 

 farmer pays and which in France is very heavy. Therefore, the 

 French farmer is paying about the same rate as the farmers in 

 the best agricultural districts of the United States. 



Impressed by the fact that in Europe debenture bonds play 

 so important a part in mortgage loans, the advocates of the 

 reform, whether state or federal, of mortgage credit in this 

 country base their various schemes on the issue of debenture 

 bonds. But these enthusiasts have failed to understand the limi- 

 tations of this very delicate credit instrument and, owing to 

 lack of sufficient information, have exaggerated the success of 

 Europeans in making debenture-bond loans ; and furthermore, 

 they have not attached* sufficient weight to the great differences 

 between European and American conditions. 



The debenture bond resembles the railroad bond and the in- 

 dustrial bond in being impersonal, since the borrower and the 



