AMOUNT OF LOAN, $1,000.00. LENGTH OF TERM, 30 YEARS. RAte of Interest, 5 PER CENT. SEMIANNUAL PAYMENTS, $35.00.-Continued

What can you do for the landowner in such states as Iowa or Illinois? Frankly, I don't see anything you can do that you are not doing already. In Iowa, for example, loans on farms range from 5 per cent to 5 net, probably 6 to the farmer. When farmers in these states quit investing in outside states they will take care of their borrowing neighbors on a smaller margin of security than you will and will eventually put you out of business.

The local banker, and often without expense, lends to the farmer and takes a mortgage. The larger bank in the city takes it off his hands, or the insurance companies East and West. In fact, these companies are now eager for mortgages at 5 per cent net to them. In short, with two-thirds of the banks in Iowa owned or at least controlled by farmers, it seems to me that they have about all the credit they need.

The rate of interest might be reduced 1 per cent, if it were practical to organize landschaften in these corn states. In fact, we can readily see how a few large landowners, by combining their credit and increasing it by becoming mutually liable for the debts of their organization, might secure a reduction of 1 per cent per annum. With our mixed population, however, this is not practical. The average loan in Iowa -and I presume it is so in Illinois, eastern Kansas, and Nebraskais about $4,000, and the average farmer would gladly pay $40 a year

1 Adapted from United States Investor, XXVI (1915), 1986-87.

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),

I

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.

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. In 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 SOCIETY'

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.)