AGRICULTURAL CREDIT IN THE UNITED STATES 961 



ownership are frequent, farmers keep books much less than in 

 Europe and tax valuations afford no guide whatever. Since de- 

 benture bonds are issued against long-term loans, there must be 

 supervision of each loan after it is made, to insure tha*t the claims 

 of the contract shall be lived up to, the taxes paid, depreciation 

 of the property prevented and so on. And as mortgages are 

 gradually paid off and new ones substituted, great care must be 

 exercised to prevent the impairment of the general security for 

 the bonds through the substitution of inferior risks. In the 

 United States the expenses of appraisement and supervision in- 

 cident to the making of debenture-bond loans would be much 

 greater than in Europe, and still further expense would result 

 from the greater uncertainty of land titles. 



The great cost of making debenture-bond loans accounts for 

 the fact that in Europe the small farmers have not been able as 

 a class to avail themselves of the advantages of such loans, since 

 the profits are more than offset by the cost of making them. 

 Furthermore, while it is generally conceded that in the long run 

 the small farmer is as good a risk as the large farmer, yet owing 

 to his lack of reserves, there is greater danger of foreclosure or 

 forced management ; and these would involve expense out of all 

 proportion to the size of the loan. And finally investors are preju- 

 diced against mortgage bonds issued against a mass of small loans. 



The Landschaften are composed chiefly of large farmers. 

 They do make some very small loans, it is true, but the number 

 of such loans is comparatively insignificant and the average size 

 of the loans is large. The joint-stock mortgage banks of Ger- 

 many loan almost exclusively to large landowners. The Credit 

 Foncier also confines its loans chiefly to large farmers, as the 

 expense involved makes loans under $1000 unprofitable. In 

 191 2 the average size of its agricultural loans was $5 000. The 

 mortgage-bond institutions of Italy grant each year only a very 

 small percentage of the loans applied for. That the small farmer 

 is not served is shown by the fact that in 191 2 the average size 

 of their farm loans was $18,000. 



This inability of the credit institutions to satisfy the needs of 

 the small farmer has led the various governments to come to the 



