10 



Fourth, there should be a clause in each law to permit combina- 

 tions among farmers' associations or small producers' or consum- 

 ers' associations. Now allow these to combine as they do in 

 Europe. There they have infinite combinations making stronger 

 the credit. The short-time credit and the long credit combine 

 until they run up finally to the Bank of Prussia, or the Bank of 

 France, and the little fellow finds his note of 100 francs in the 

 Bank of France. It would be a strange thing if a note of $20 

 of a farmer in Missouri or Kansas landed in a city bank of 

 New York; it would be lonesome, but there are hundreds of 

 millions of dollars of short-time financing paper that lie in the 

 vaults of the Bank of Prussia, the Bank of Italy and the Bank 

 of France. This system has the effect of leveling the credit all 

 over the nation. In America, in one place you have cheap 

 money and in another place it is 10 or 20 or even 100 per cent. 

 With a proper system and the land and the proper machinery 

 it is entirely possible to vitalize that credit and mobilize it and 

 increase many times the business of this country and the 

 development of it, and at the same time not break up the 

 existing credit system by leaning on the government to do it. 

 It can be accomplished infinitely better in these other ways. 



The rage for innovation and the confusion which it has 

 wrought in land credit arise perhaps from the fact that little 

 effort has been made in the movement to distinguish one from 

 the other the different kinds of institutions devised for organiz- 

 ing land credit, or to study the purpose, merits and results of 

 each kind. The organization of land credit means the substitu- 

 tion of specially designed institutions for individuals as money 

 lenders. Such institutions are of only five kinds: (1) companies 

 for insuring or guaranteeing tiMes or mortgages; (2) building 

 and loan associations; (3) Landschafts; (4) bond and mortgage 

 companies; and (5) public or semi-public banks or establishments. 



The loan transactions of institutions of the first type are 

 largely brokerage; of the second, direct investment of their 

 own funds. Institutions of the third and fourth types issue 

 bonds or debentures; and, since the bulk of the loans is made 

 through this method of finance, they tend to act as mediators 

 between investors and borrowers, and so are the best organizers 

 of land credit. Institutions of the fifth type also may issue 



