FARM-MORTGAGE LAWS IIT THE UNITED STATES. 15 
Moreover, they often prefer securities running in even amounts for 
uniform periods of time and with a convenient means of collecting 
the interest. Many investors prefer to be relieved of all concern as 
to the keeping up of the underlying security. 
All these advantages are secured where the mortgage notes, in- 
stead of being marketed direct, are held as a collateral trust fund, 
and bond issues based thereon are placed on the market. To meet 
these requirements, institutions are needed, both to fix reliable and 
suitable standards for farm-mortgage loans, and to market them in 
the form of bonds. Such institutions can not be properly established 
without suitable safeguards. It is necessary to profit by the lessons 
of past American experience, and avoid the mistakes made by the 
debenture institutions in this country in the eighties and early nine- 
ties. The almost complete failure of the farm-mortgage debenture 
business in 1893 affords ample warning. There is need to take stock 
of all the factors that contributed to that failure. The granting of 
loans out of proportion to protection funds, the failure to build up 
adequate reserves, the basing of loans on boom estimates of land 
values, the extension of loans on lands of uncertain returns, the sub- 
stitution of inferior for standard collateral securities, the utter lack 
of inspection and supervision under State or Federal law — these 
practices quite naturally led to disaster. As a result there was an 
almost complete collapse of these early debenture companies. 
DESIRABILITY OF STATE AND FEDERAL LEGISLATION. 
In order to establish institutions through which farm mortgages 
may be properly selected, according to reliable and suitable standards, 
and through which such mortgage loans may be converted into accept- 
able securities for the open market, it is clearly necessary to have 
legislation, both by the individual States and by the Federal Congress. 
The mortgage paper of any State can not be properly standardized 
without suitable State legislation governing the validity of land 
titles and the method of foreclosure. Farm-mortgage capital will 
not flow into a State whose taxation laws render the investment of 
farm-mortgage capital in other regions more profitable. Every State 
needs to husband carefully its resources of investment capital by pro- 
viding suitable legislation for the creation of local savings institutions, 
as well as associations among borrowers for credit improvement. 
At the same time it seems clear that, if the farmers are to obtain 
adequate connections with the outside capital of the open investment 
market — connections often involving wide areas, reaching across 
many States — the problem involved is one too large to be solved 
entirely by legislation on the part of any individual State. More- 
over, a degree of uniformity in supervision and control is needed 
