for liberty to do just as he pleases with the money, without asking the advice or consent of his neighbor. He would regard independence as cheap at that price.

What can be done for the tenant? Nothing that I can see until the tenant becomes a somewhat permanent fixture in the community. And he will not become a permanent fixture so long as he is renting on a short lease, nor until his relations with the landlord are such that he can take root in the community and become part of the social order. You cannot build a high civilization, nor any other thing, on a shifting, changing population. When our population becomes stable, as the populations of the older countries have become, and when landlords and tenants are better acquainted with each other and have become parts of the social system, it may then be possible to organize credit associations under the Raiffeisen system, by which money can be secured at lower rates and for longer periods than now. For then it will not be so much a matter of importance what a man has as what he is.

The poorest of the poor in the congested districts of Ireland can borrow money from their credit banks at as low a rate as the best farmer in Illinois and Iowa, but it is in the small amounts suited to his needs, and because of limited or unlimited liability and supervision by a committee. That time may come with us, but it is not now.

Can you imagine an Iowa farmer, even as a renter, allowing a committee of his credit bank to determine whether the investment he proposes to make of the borrowed money is a good investment for productive purposes, whether he buys cattle at the right price, feeds or cares for them properly, and when he shall sell them?

What many farmers want is facilities for getting in debt. What they need is facilities for getting out of debt. If mortgage companies can provide a form of mortgage that will extend the time of payment from five years to ten, fifteen, or twenty, it would be a mighty help to men who have borrowed $50 to $100 an acre on lands in the corn belt.

195. A BETTER LEASING SYSTEM NEEDED1
BY HENRY WALLACE

Cheap money, as it is proposed to furnish it on land security, would simply increase the speculative fever and boost farm lands until they would not pay 1 per cent on the investment. We have Adapted from a letter to Commercial and Financial Chronicle, XCVII (1913),

entirely too much speculation now. Nor would it help the renter, comprising about 40 per cent of the farmers, a little bit, he having no security to offer.

Ex-Secretary James Wilson and myself spent two months in Great Britain last summer making an investigation of agricultural conditions there.

The farm-credit systems of the Old World will not do here at all, at least not now or in the near future, for the reason that they involve unlimited liability, and, furthermore, on short-time loans require supervision of the farmer who seeks the loan. They are a splendid thing for the poor farmers in the Old Country, who are forced by circumstances to assume unlimited liability, to limit loans to productive purposes, and to require supervision by a committee of the association.

Imagine a western farmer having a committee decide whether he ought to buy a cow or not, to see that he buys the right kind of a cow, gets her at the right price, and then feeds her right. Imagine an Iowa farmer in order to secure a loan having a committee see whether or not he should buy a lot of feeding steers, and then see that he feeds them on the most approved methods. Neither would the western farmer consent or be liable for the debts of a "landschaften association." It is doubtful if he would do so even to the extent of his own borrowing.

In

The real trouble with the western farmer is with our leasing system, which in the majority of cases is simply a conspiracy between the landlord and the tenant to rob the land and divide the loot. the Old Country the government provides for the maintenance of soil fertility by giving the tenant the right to recover for any fertility he has put in the soil which he has not had opportunity to recover. On the other hand, it forbids the tenant to sell certain crops off the land unless he restores to the land the manurial value of the crop sold. For this reason tenants are not anxious to change farms and the landlord does not often want to make a change.

With long leases and the rights of the land and the tenant secured there will be no need for any additional facilities for borrowing money.

196. THE JEWISH AGRICULTURAL AND INDUSTRIAL AID SOCIETY1

BY GEORGE W. SIMON

In the matter of rural credits there are some who firmly hold that, our people being different and conditions here being different, we cannot transplant to this country the European rural credit systems; that it is impractical and even impossible. It might be of interest, therefore, and to some even a revelation, to learn that here in the United States the French Crédit Foncier system, or long-term rural credit, has been in operation for the past twenty-four years, while the German Raiffeisen system, or short-term rural credit, was established in this country in 1909, and has been in actual operation since 1911. This work has been done under the auspices of a philanthropic organization, subsidized by the Baron de Hirsch Foundation, namely, the Jewish Agricultural and Industrial Aid Society.

The Baron de Hirsch Fund was established in 1890, and from its inception has made loans to Jewish farmers in the United States at a moderate rate of interest and upon easy terms of repayment. The great increase in Jewish immigration to this country naturally increased the demand upon the activities of the Fund, and new and more urgent problems arose. In view of the growing importance of the agricultural phase of the activities of the Fund, the Board of Trustees found it necessary to create a special organization for that purpose. Accordingly, in 1900, the Jewish Agricultural and Industrial Aid Society was incorporated. The chief object of the society is to render financial assistance to Jewish immigrants who wish to become farmers, or to enable those who are already on farms to maintain their foothold. In view of the fact that our resources are limited, we do not, as a rule, make loans on first mortgages, but on second, and even third and fourth mortgages, supplemented sometimes by a chattel mortgage or other collateral security. Loans are made either toward the purchase of a farm or its equipment, or both. Loans are likewise made to those already on the farm to enable them to make improvements, to buy additional equipment, or for like purposes.

During the fourteen years it has been in existence our society has granted, in round numbers, 3,000 loans, aggregating $2,000,000. The loans are made at 4 per cent interest, on long-term mortgages, running on an average for ten years. The terms of repayment are based Adapted from an address before the Second National Conference on Marketing and Farm Credits, April 17, 1914. (Unpublished.)

largely upon the ability of the farmer and the earning capacity of the farm. The character of the farmer is taken into as much consideration as the real estate security. The proof of the soundness of our experiment is that, in spite of the inferior security which we accept, our losses, during the fourteen years, were less than 2 per cent and the repayments 30 per cent. The payments to the society for the fiscal year ended December 31, 1913, amounted to $100,091.04 on the principal and $30,292. 18 in interest.

Our society made loans in 32 states and in Canada; thus our operations cover a much wider territory than that of all the European land-credit banks combined. It proves that the rural credit system is practical and adaptable in every state of the Union. The time of free land being past, land is now a good security, provided we have good farmers on it. I believe that land is worth as much as the man who is on it, and we do have some good men on our farms.

Our experience has shown that, after receiving loans on second and third mortgages on easy payments, our farmers were still struggling against trying difficulties. There arose in our rural districts a new class of money-lenders, who gradually preyed upon the farmers until they had them completely in their power. Sometimes they are the local storekeepers, sometimes "just neighbors." Like the hookworm prevailing in the South, these money-lenders infest the body of our farmers and sap all their energy and strength. To free the Jewish farming communities from these parasites we decided to organize among them co-operative agricultural associations, by means of which the farmers could help one another.

It was not very difficult to introduce these credit unions among our farmers, for we had already organized the farmers into local groups or societies. This we succeeded in doing through the activity of our Educational Department, which issues the Jewish Farmer, a monthly periodical published in Yiddish, the editorial staff of which has charge of the extension work. The local societies were afterward centralized into a Federation of Jewish Farmers of America. Through this federation we spread the gospel of co-operation and introduced the Raiffeisen system.

197. STATE RURAL CREDIT LEGISLATION1

Legislation dealing with rural credits has thus far been enacted in some fourteen States. Briefly, and roughly, the State laws are designed to make available the cash and credit of the State through

I

Adapted from the Outlook, financial advertising section, February 23, 1916.

the creation of land banks, the stock of which is owned by loan associations. Encouragement is given to building and loan, farmers' loan, land and loan, and rural savings and loan associations, and credit unions and co-operative banks are authorized. These institutions or associations, which are purely mutual and co-operative, receive the applications, grant the loans, execute the mortgages, and deposit them with the land bank. The land bank, acting as between the State and the borrower, deposits the collected mortgages with the State comptroller and issues against them bonds bearing a lower rate of interest than the collateral. These bonds are considered legal investments for savings banks and trust funds, and they are, no doubt, exempt from personal taxation in the State of issue. The Land Bank of New York has recently sold at par $50,000 of its 4 per cent bonds, secured by deposit of $50,000 in first mortgages bearing a rate somewhat higher than the bonds, probably 5 per cent. The mortgages were sent in to the Land Bank by various New York State loan associations, and they are said to have covered about $17,000 of farm and $33,000 of city property. The borrowers repay through the loan association in instalments covering a period of years.

198. THE FEDERAL FARM LOAN ACT

The Federal Farm Loan Act, which appeared on July 17, 1916, provides for the following organization of rural credit facilities:

Federal Farm Loan Board.-This board, which has general supervision of the system, is composed of the Secretary of the Treasury (ex officio) and four members appointed by the President, with the approval of the Senate. Members shall serve for eight years and receive a salary of $10,000 per annum, together with necessary traveling expenses.

The powers and duties of the Federal Farm Loan Board include the organizing and chartering of land banks and farm loan associations; regulation of interest rates and all other charges on loans; making examinations and requiring reports; and supervising the issue of farm land bonds.

Federal land banks.-Continental United States is to be divided into twelve "federal land bank" districts. A federal farm loan bank shall be established in each district; later branches may be established. Each bank is to be managed by a board of nine directors: six of them local, elected by the farm loan associations of the district; and three of them district directors, appointed by the Federal Farm Loan Board.