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land-credit institutions, properly so called; it should continue 

 until the laws relating to land credit are perfected for money 

 lenders of all kinds, individual and incorporated. 



Companies for insuring titles and guaranteeing mortgages, 

 by standing good for the borrower's ownership of the mortgaged 

 property or for the repayment of his loan, are very serviceable 

 in mobilizing land values, but these institutions are not of a 

 pure land-credit type because their guaranty rests upon personal 

 credit. Moreover, as they have more nearly reached perfection 

 in the United States than in any other country they need not 

 be discussed here. 



But the laws are defective or lacking in respect to the other 

 institutions. Building and loan associations have attained a 

 great development in the United States; in fact, far greater 

 than in any other country. They are, however, thrifty societies, 

 and not well adapted to agriculture. The recent attempt in a 

 number of States to convert them into credit institutions for 

 farmers has, in my opinion, done harm. 



Bond and mortgage companies have reached enormous de- 

 velopment in the cities. Most of them are safe and sound, yet 

 they all appear to be operating under defective laws. In 

 Europe these institutions sometimes are called land-credit 

 banks, or mortgage banks. They are subject to rigorous in- 

 spection under laws in all the best of which I find two basic 

 clauses. The first is that capital stock and surplus must be 

 maintained at a safe ratio to bonds; this is usually %1 to $20; 

 the second clause is that bonds in circulation must represent 

 first liens on lands of adequate value and never exceed out- 

 standing loans either in amount or in interest rate. I believe 

 that if the States would incorporate these two clauses and 

 provide for proper inspection there would be no question as to 

 the soundness of institutions of this kind. But none should be 

 allowed to do long-term mortgaging unless it has a large capital 

 stock. No investors will deal with small concerns that place 

 their funds out in long-term loans. 



Public or semi-public institutions operate with the cash or 

 upon the guaranty of government. Usually (as I said before), 

 they are established for assisting indigent and ignorant peasants, 

 or else for carrying out some national policy. None in recent 



