964 READINGS IN RURAL ECONOMICS 



high and of low degree, nor is there the same devotion to the 

 farm home. And, furthermore, social conditions are not such that 

 farmers would be willing to assume joint liability. Our experi- 

 ence with land banks and debenture bonds has not been so fortu- 

 nate as to inspire confidence in new ventures in this direction ; 

 and while it may be readily conceded that a repetition of the 

 mistakes of former years may be avoided, it will take some effort 

 to overcome the prejudice which these mistakes engendered. 



Furthermore, the debenture bond would have to meet the com- 

 petition of a flood of securities with which investors are thor- 

 oughly familiar and in which they have confidence. Apart from 

 corporation and municipal bonds, which have a wide market, 

 there are in every locality, county, village and school district 

 bonds which are backed by the taxing power of the community 

 and the issue of which is carefully guarded. Such bonds, with 

 few exceptions, bear a rate of interest much higher than that 

 which the enthusiastic advocates of debenture bonds expect them 

 to bear. How can it be expected that investors will pay more 

 for a bond secured by a farm than for a school-district bond 

 practically secured by the mutual guarantee of all the farmers 

 of the community .* 



Finally, there are already in the field excellent agencies 

 mortgage companies with well-established reputations and large 

 assets, which give the investor all the advantages held out by the 

 debenture-bond company, with the added advantage, as regards 

 securities, of having the individual mortgage turned over to him. 

 And it is difficult to see wherein the debenture-bond company 

 could offer the borrower lower rates of interest or, in general, 

 any better terms than these companies offer. The supposed 

 advantage of market ability which is claimed for the debenture 

 bond is of but little practical moment, since, as we have seen, 

 the market for such bonds is very restricted, and they are usually 

 bought as a permanent investment. 



Nor has state aid been of any great assistance in increasing 

 the marketability of the bonds or, in general, in advancing the 

 cause of agricultural credit. The state never allows itself to be 

 treated as the ordinary investor. It always requires more and gives 



