INTERNATIONAL INSTITUTE OF AGRICULTURE 
 
 THE LANDSCHAFT 
 
 Co=operative Rural Credit. 
 
 Addenda to the 35,000 Edition of September 14, 1913. 
 
 BY 
 
 DAVID IvUBIN 
 
 To the Reader. 
 
 The publications of the International Institute of Agriculture familiar- 
 zed the American people with the workings of the European cooperative 
 ural credit systems, and chis led to the following events : 
 
 First : the Nashville Conference, under the auspices of the Southern 
 -ommercial Congress. 
 
 Second : the rural credit plank in the platforms of the three political 
 arties during the late presidential campaign. 
 
 Third: The instruction to the diplomatic officers in Europe toinvesti- 
 ate and report on the subject. 
 
 Fourth : the comprehensive report b3^ Ambassador Herrick. 
 
 Fifth : the favorable stand taken by Ex-President Taft in his letter 
 o the Governors. 
 
 Sixth : the investigation hi the European countries by the American 
 Commission and the United States Commission. 
 
 Seventh : the stand by President Wilson. 
 
 The New York “ Evening Post ” of August 13th. sa^^s : “ President 
 Vilson, in a statement issued to day, pledged his administration to secure 
 y legislation a rural credit s^^stem for the benefit of the farmers of the 
 Jnited States. The President says : 
 
 “ There is no subject more important to the welfare of the industrial development of 
 re United States; there is no reform in which I would myself feel it a greater honor 
 privilege to take part because I should feel that it was a serv’ce to the whole coimtry 
 the first magnitude and significance... This is otir next great task and duty.” 
 
2 
 
 Mixing op Systems. 
 
 Pending the report to be made by the American Commission, Senator 
 Fletcher introduced in the Senate a measure (S. 2909,) embracing a plan 
 for local rural banks, State rural banks, and a National Rural Bank of 
 the United States of America. 
 
 Shortly after introducing his bill, Senator FJ etcher asked me for com- 
 ments and criticisms on the same. These are contained in m}^ booklet 
 “ The Uandschaft ” of September 14th, to which these pages, covering 
 subsequent correspondence, are an addenda. 
 
 In reviewing Senator Fletcher’s bill I pointed out, first, that in its 
 provisions it is ecclectic, embracing points taken from almost all the rural 
 credit systems of Europe, and, second, that such ecclecticism is contrary to 
 the spirit and intent of those systems as shown by their mode of operation 
 in the European countries. The bill, for instance, combines under one 
 system personal credit and land mortgage bond credit, although European 
 expeT'ience has shown that such combinations are impracticable. 
 
 The next point which presents itself is this : shall the proposed rural 
 banks be mutual banks, farmers cooperative banks, or shall they be profit- 
 earning, joint-stock banks? 
 
 It was shown that there are objections to both these alternatives ; 
 that farmers, on the one hand, have not the requisite technical, financial 
 experience to run complicated and far-reaching mutual banks ; and on the 
 other hand, that joint stock farm mortgage banks for profit present the two 
 following serious objections : 
 
 The New Trust. 
 
 First: the danger in attempting to do a land-mortiage business over 
 an extensive area, is aptly pointed out by a former Secretary of the 
 Treasury, who, speaking of the disastrous experience with land-mortgage 
 banks of thirty years ago, says they " became foolish enough to think 
 that they could loan in half a dozen States whithout beiirg misled by 
 agents ”. As a result they were compelled to back up their loans by a 
 series of guarantees. 
 
 Second : supposing these banks overcome the difficulties in 
 the way, is there not a danger that wffien once a series of profit- 
 earning mortgage banks would succeed in planting themselves firmly in the 
 field, that they would soon find it profitable to merge their interests under 
 one directorate ? And should this take place would not a new^ trust then be 
 born in the United States fraught with graver menace to the well-being of 
 the American people than any other trust now existing ? And ii so could 
 it not almost be predicted with certainty that such a trust would, in time, 
 not alone dictate the rate of interest and the conditions of the loan, but 
 would also dictate the price at which the farmer should sell his product ? 
 Would not such a trust then be in full control of the economic life of the ^ 
 
American farmer, and ultimately, also of the law-making powers of the 
 nation? These are the dangers to be guarded against. 
 
 What the American farmer should have is a real cooperative rural 
 credit system, and I believe the best system for that purpose would be the 
 ^ Tandschaft as in operation in Germany. 
 
 The farmer as borrower through the Tandschaft is seldom if 
 ever forclosed, for, though the Landschaft has the right to forclose without 
 recourse to the courts, it is a right which is seldom exercised. Experience 
 » in Germany has shown that it is to the interest of the Landschaft to aid 
 an unfortunate member with advice, direction, and mutual assistance 
 rather than to foreclose him. But so long as it is to the interest of the profit 
 earning, joint-stock mortgage bank to foreclose would it hesitate to do so 
 promptly ? 
 
 During the past decade the American farmers have had years of pros- 
 perity, and yet the United States Census Report shows that 37 % of the 
 American farms are now worked by renters, and that the increase in tenancy 
 during the past ten years has been at the rate of 16 %. Let the same ratio 
 of decrease in land-owning farmers continue during the next few decades 
 and the American Republic will, in substance, have ceased to exist; it 
 will then exist in name only, in reality it will be dead. 
 
 Be it remembered that the factor that makes liberal government pos- 
 sible is the conservative, for he serves as a check on the demands of the ra- 
 dical. It is the middle-path between the radical forces on the one hand, and 
 the conservative forces on the other, which gives, as Confucius says, the 
 golden mean, making liberal government possible. And who is it that does 
 not know that the radical is the urban, the city-man, whether he be laborer 
 or whether he be millionaire ? 
 
 And the conservative, where is he from ? Where but from the country, 
 from the farm; he is the land-owning farmer. This indeed is he; and 
 note well, this farmer, this conservative, is the last to change the style 
 of his garments, the mode of his speech or his line of thought, his belief 
 or his prejudices. But for all that he has his value. His chief est value 
 consists in just this very conservatism, and it is this conservatism which 
 acts as a brake holding back the urban radical. His service in the be dy po- 
 ; litic can be compared to the service of the governor on a boiler and engine. 
 He regulates the speed and controls the tension. 
 
 But when is the rural citizen a conservative ? Only so long as he is a 
 land-owner. Transform this land-owning farmer into a renter, and you 
 , have transmuted the conservative into a radical. 
 
 The adoption in the United States of a cooperative rnral credit system 
 ^ would tend to eliminate the renter by winning back to the soil the land- 
 owning farmer, and keep ing him there. And it is in the light of what ^has 
 eo just been said that we should interpret the motive which prompted the Pre- 
 si dent to utter the pregnant words : 
 
 € There is no reform in which I would myself feel it a greater honor or privilege to 
 take part, because I should feel that it was a service to the whole country of the first 
 ^ magnitude and significance... This is our next great task and duty ». 
 
— 4 — 
 
 Comments and Criticisms to Senator Fletcher on his Bill, S. 2909. 
 
 Dear Senator Fletcher : 
 
 luLernational Institute of Agriculture, 
 
 Rome, Italy, October 7th, 1913. 
 
 I am in receipt of your letter of September 15th, asking for further comments and criticisms 
 on the cooperative rural credit measure you have introduced into the Senate (S. 2909). 
 
 You say : “ The bill which I have introduced is not, as I conceive it, subject to the objections 
 and criticisms offered by you. ” 
 
 A careful reading of your letter gives me the i mpression that you favor the French rural 
 credit system partly on the ground that as France is a Republic, the Americanisation of the 
 French system would be more acceptable to the American people than would that of the 
 rural credit systems .of monarchic countries. 
 
 lyet me quote from your letter ; 
 
 “ I have just read the address of Mr. Touis Dop to our Commission. It is very fine, and he 
 certainly presents the French system in a very forcible way. What are your objections to 
 that system ? Wherein do the local societies differ from the Raiffeisen associations, and wherein 
 do the District and Central Banks differ from the Dandschaft ? France, being a Republic, 
 and in view of what Mr. Dop says, the French plan and ideas might receive, when adapted and 
 modified to suit our conditions, more favor here than any other. The bill which I have intro- 
 duced, S. 2909, it seems to me is somewhat Americanising the French system. I would be glad 
 for you to write me fully after you read the bill and also read my speech to the Governors”. 
 
 h 
 
 To WHICH SHAFT WE GIVE THE PREFERENCE? 
 
 Having read the bill and the speech I will now proceed with my comments and criticisms, 
 varying somewhat from the consecutive order in which your questions have been placed. 
 
 To begin with, if the French system of local and regional banks you propose would give us 
 better economic results than the German Fandschaft, then we should give the preference to the 
 French method. But if the German Fandschaft would give the better results, then it should 
 have the preference, for it seems to me that in rural credit systems the comparative value should 
 be determined by the dollar gauge rather than by the political gauge. 
 
 I will now try to answer your question as to the differences between the leading systems. 
 According to the “ Outline of the European Cooperative Credit Systems,” by the International 
 Institute of Agriculture, they are as follows : 
 
 First : The Raiffeisen is a system of personal credit for short time loans guaranteed by the 
 collective unlimited liability of all the members. 
 
 Second : The Schulze- Deli tsche is a personal credit system for short time loans, mainly 
 adapted to urban conditions, with unlimited or limited liability. 
 
 Third : The French system of local and regional banks is operated through State aid, 
 and is a system of short time personal credit for farmers, mainly through discounting promis- 
 sory notes ; also, to a limited extent, for small loans on mortgages. 
 
 Fourth : The Fandschaft is a system of long term amortisable loans on mortgage security, 
 on which bonds are issued and sold in the open market. 
 
 The way to Safeguard. 
 
 In considering the adaptability of these various systems for the United States, we are 
 first of all confronted by a psychic factor which must not be lost sight of. The psychic factor 
 that I refer to is the condition of mind operating in the older and more conservative countries, i 
 
 
— 5 
 
 in contradistinction to that which operates in newer countries under more liberal forms of 
 government. 
 
 lyet me illustrate. Given, say, a rural credit system, devised and operated in the older and 
 more conservative countries, and the first thought of the members will be scrupulous attention 
 to carrying out the rules laid down for them ; they will be likely to proceed on in their duties 
 along those lines. In newer countries, however, under more liberal forms of government, the 
 first thought is likely to be how to improve on the details and on the system as a whole. Pa- 
 rallel to this thought there will be a searching scrutiny for the weak spots in the system, when the 
 query will present itself to some : “ How can we beat the game ? ” To this some may object 
 by the enquiry; “Are the people of the older and more conservative countries more honest 
 than those of the newer countries under more liberal forms of government ? ” And the answer 
 is, no, but the average level of intelligence is higher in the newer countries, minds are more 
 active, there is a quicker grasp of the laws of cause and effect, of means to ends, therefore they 
 are more susceptible to avail themselves of opportunities, whether for good or for evil. 
 
 Realising all this, the founders of the rural credit systems for the United States should 
 carefully map out the details so as : 
 
 First ; to necessitate the fewest subsequent changes ; the routine duties should be so 
 simple that they can be readily performed by the average farmer ; 
 
 Second : to ensure that unintentional or intentional departures from the prescribed rou- 
 tine can be so readily detected by all concerned and so promptly counteracted as to render loss 
 from such causes practically impossible; 
 
 Third : no room should be left for anyone, no matter how skilful and crafty, to “ beat the 
 game”. 
 
 What way, then, is there to avoid weak spots, to ensure the regulated operation of the pres- 
 cribed routine, to prevent attempts at “beating the game ?” 
 
 Publicity apt kssentiau. 
 
 And the answer is obvious: the system should, first of all, be so simple that each detail be 
 clearly understood and easily carried out, but, above all, there should be the ^widest possible 
 publicity. Take it in the case of the appraisement of land- values. In Germany these are safe- 
 guarded through the control of a government official on the Board of Directors of the Uand- 
 schaft. This official is appointed for life by the King. In addition to this, the other Tandschaft 
 officials are semi -government employees (see page 41 of the second edition of the “ Outline of 
 the European Co-operative Credit Systems ” by the International Institute of Agriculture). 
 
 In my booklet “ The lyandschaft” (pages 20 and 21) you will see that I have suggested an 
 Interstate Federal Commission as a substitute for this German system of official and semi-official 
 safeguard ; but the point that is most insisted on is the need for the widest possible publicity 
 in every stage of the routine. It is therefore proposed : 
 
 First - that public hearings be held by the lyandschaft at which criticism of the values 
 assigned to the lands be publicly given by those who choose to appear ; 
 
 Second - that the proceedings at these hearings, together with comments and opinions 
 by the public at large, be transmitted to the Interstate Federal Commission, so as to guide and 
 infiuence its action ; 
 
 Third - that the Interstate Federal Commission hold public hearings, and that its pro- 
 ceedings and decisions be printed for general distribution. 
 
 In the safeguarding functions set forth on page 23 of «The Iyandschaft» booklet, I suggest 
 
 f 
 
— 6 — 
 
 that the Interstate Federal Commission hold the lyandschaft mortgages in trust, and issue on 
 them the partially filled out bond to be transmitted to the borrowing members through the I^and- 
 schaft. In this connection the possibility presents itself of following the mode of the Raiffei- 
 sen banks in Bohemia, by utilising the post-offices to perform the functions of intermediary clerk 
 and cashier. 
 
 Now, to return to your question : « Wherein do the (French) district and central banks 
 differ from the lyandschaft ? » The first difference is this: the French district and central banks 
 are of the same type as the Raiffeisen banks ; they are for loans on personal security for small 
 amounts ; they issue no bonds ; whereas the Tandschaft is for credit on the security of land, \ 
 
 issuing bonds on land-mortgages, and for amounts up to half of the value of the land assetsg 
 
 How TO Convert Land Values into Liquid Assets. 
 
 The French system is suited to the needs of peasant farmers; whereas the Landschaft would 
 meet the needs (as in Germany) of land-owning farmers. While there may be some limited need 
 in the United States for loans on personal security, for a system like the Raiffeisen or the French 
 local aild district banks, by far the greater need is to render land-values a liquid asset, there- 
 by rendering possible the issuance of bonds on mortgages, as is done under the Landschaft 
 system. Besides, as you know, the French local and regional banks obtain their operating 
 capital through the French government, from the Bank of France, and such a State-aided 
 system is paternalism pure and simple. 
 
 Now, when we come to the other form of credit in France, to mortgage credit, we are 
 brought up to the fact that the Credit Foncier, which provides it, is a profit earning, joint stock 
 mortgage bank. There is nothing of the cooperative principle about it, not any more than in 
 any profit making joint stock bank in the United States at the present time. 
 
 It would still miss the Purpose. 
 
 « But », you may ask, » if the Credit Foncier provides mortgage credit in France, why 
 would not such a bank do so in the United States ? » And the answer is that even if it would, 
 it would still miss the purpose ; the purpose which can be met by the cooperative Landschaft 
 system, as shown by the following : 
 
 First : the joint stock mortgage bank is simply a toll-gatherer ; it gathers money from the 
 public and lends it out at interest. It lives largely on the difference between the rate it pays 
 the public and the rate it charges its borrowers. Whereas, through the Landschaft the farmers 
 would obtain the money they require, as in Germany, at first hand, from the public direct. 
 
 Second : while on the one hand, it is in the interest of the joint stock bank to foreclose 
 mortgages, thus tending toward the elimination of the land-owning farmer; on the other hand, 
 it is in the interest of the Landschaft to save its members from foreclosures, thus conserving 
 the land-owning farmer. 
 
 Third : dealing as it does with the individual farmer, the joint stock bank does not tend 
 to the upbuilding of cooperative effort ; whereas the Landschaft would be the first step towards 
 rendering cooperation in production and distribution economically effective. 
 
 Summarising, the case stands as follows : you favor the French system, but we find that 
 there are two kinds of systems in France. One is an adaptation of the Raiffeisen system for 
 personal credit, for which the Bank of France (a joint stock bank) is required by the French Go- 
 vernment to provide the working capital ; the other is the Credit Foncier, a joint stock bank, / 
 
— 7 — 
 
 which furnishes mortgage credit. The first system is financed through pure paternalism, and 
 would be impossible in the United States, and even if possible, such a personal credit 
 system would not be nearly as economically effective as the Uandschaft, which presents no 
 such objections. 
 
 As for the Credit Foncier, that is not cooperative at all ; it is merely a joint stock bank 
 ^ lending money to individual farmers, as any joint stock bank in the United States may now do. 
 
 Now, in your proposal you seem to [have combined the features of both these French 
 systems, the personal credit and the mortgage credit, in such a way as to involve a com- 
 I plicated banking system, requiring high technical skill to carry it out ; whereas the Uand- 
 
 schaft offers a simple working system for the effective attainment of economic results much 
 needed in the United States. 
 
 The Poeiticai. Vaeue of the Landschaft. 
 
 El conclusion, let me quote from my letter of Octber 2nd to Mr. Charles K. McClatchy 
 of the Sacramento « Bee ». ' 
 
 « On the face of it, it may seem that the Eandschaft is merely a system for aiding the farmer 
 to get a loan in a simpler manner and on better terms than he can get it now. But, on closer 
 scrutiny, itwillbefoundthattheEandschaft meansmuch more than that. It notalone means the 
 conservation of the farmer, the land-owning farmer, but it means the conservation, through 
 him, of the American Republic. The day before yesterday, while President Wheeler, of the 
 California University, was going over this subject with me in the American Room in the Institute, 
 he referred to the prosperous condition of the American fanner, especially of recent years ; 
 but when I drew his attention to the facts set forth by the United States Bureau of the Census, 
 showing that the tenant farmers of the United States now form 37 % of the total number 
 of American farmers, that the increase in their number during the past decade was 16%, it 
 set him to thinking seriously. Just let the renters multiply at the same ratio for the next 
 few decades, and we shall have this new world phenomenon ; on the one hand, Eeland, 
 now being freed from tenancy, will rise from the lowest economic and political level to the 
 normal line on which free men should stand, and, on the other, the United States, as the 
 result of the continued increase of tenancy, will descend from the highest level down- 
 wards, when the American people will receive the reward of those who sell their birth-right 
 for a mass of potage. » 
 
 Rome, Italy, October i6th, 1913. 
 
 You inform me in your letter of September 23rd, that there was a meeting of the United 
 States Commission at which were present Dr. Butterfield, Dr. Coulter, Congressman Moss and 
 yourself, and that you placed my communications before them. 
 
 In regard to my proposal, as set forth on pages 20 and 21 of the “Eandschaft” booklet, 
 on the matter of the appraisement of land-values, you say : 
 
 “ All of us, I think, agree that your method of arriving at the valuation of the property 
 mortgaged would scarcely be workable. Borrowers would not like to have their property posted 
 and displayed, and its value subject to criticism by any one in the community, and so much 
 ^ publicity given to their private affairs. ” 
 
 t 
 
 L 
 
— 8 — 
 
 Is the Objection Vaeid? 
 
 I do not think this objection is either valid or final, for, in the first place, the very founda- 
 tion for the security of the French system, which your bill embodies, indeed of any and all the 
 cooperative credit systems, is the most thorough-going publicity on the loans within the li- 
 mited sphere of their operation. 
 
 Take it even at the present time, before a farmer can obtain a loan on a mortgage he must 
 submit all questions concerning his land to the fullest scrutiny on the part of the lender, and the 
 mortgage is then entered on the public records. This is surely publicity. 
 
 “ But, ” you will say, this is limited publicity, and what is set forth on pages 20 and 21 
 of the Eandschaft booklet is unlimited publicity ; it is, as it were, publicity to the whole world, 
 and constant publicity too, so long as the mortgage is in force. ’ ’ 
 
 Yes, that is correct ; but, in the case of a loan made by the local money-lender, there is, as 
 it were, a monopoly of knowledge ; the monopolist in this case being the money-lender ; and 
 what is the result ? Clearly this ; that the borrower, the farmer, must accept the terms and 
 conditions of this monopolist or go without the loan. He is in the position of a purchaser com- 
 pelled to buy on credit, and from the only store that will give him credit. In such a case com- 
 petition does not enter into the matter at all. Whereas in the Eandschaft, under the general 
 publicity as proposed, there would be many competitors to furnish the loan, and not alone 
 willing but eager to do so. 
 
 Now, as these competitors would come from all parts of the country, the result would be 
 tliat the farmer, as in Germany under the Eandschaft, would obtain his money at from 3 to 5 
 percent, and for as many years as he would wish. And, mind, the interest he would pay, being 
 on the amortisation plan, would, at the same time, free him from his debt. 
 
 Of course farmer A would have the right to object to the publicity which all this would 
 involve by remaining outside the Eandschaft. But as soon as he would see farmers B, C, D, K, 
 and F getting their money on the Eandschaft plan, as soon as he would see the benefits accruing 
 to them therefrom, he would be likely to waive his scruples as to publicity, and clamor to be 
 admitted to the Eandschaft. What I state here is by no means simple theory ; it is hard fact as 
 shown by the operation of the Eandschaft during the past 150 years in Germany. 
 
 * 
 
 Shifting the Basis of Security. 
 
 Were we to attempt other means of establishing land-values than this proposed general 
 and constant publicity, we would be driven to rely for the safety of the bonds on a series of arti- 
 ficial guarantees ; and the statement by Geo. K. Holmes, of the United States Department 
 of Agriculture (see page 21 of the “Eandschaft ” booklet) fully confirms the fact that such 
 guarantees in the land-mortgage bank movement of 30 years ago were a delusion and led to 
 widespread ruin. 
 
 The fundamental defect of a proposal providing for guarantees is that it shifts the question 
 of security from the intrinsic value of the land to the intrinsic value of the guarantor. While 
 such a system of guarantees may be effectively applied to county or municipal bonds, or to bonds 
 of a railway line or a great industrial plant, it can not be effectively applied to land values in 
 heterogeneous localities. The German Eandschaft system has no such defect. There, as is 
 here proposed, the security behind the bond is the value of the land itself, ascertained in such 
 wise as to leave no doubt in the mind of anyone, anywhere, as to the validity of the valuation. i 
 
— 9 ~ 
 
 Before proceeding further, I deem it important to refer to your combination of the personal 
 credit and the land mortgage bond system. You propose in your bill that these two forms of 
 credit should be combined in your rural banks, perhaps as different departments, but still as 
 parts of the same system. I think this would be a mistake. In my letter of October 8th to 
 Dr. Owens, pertinent to this question, 1 said : 
 
 “ There is one point that I would like to emphasise, and that is the need, as shown by Euro- 
 pean experience, for keeping apart, in any system that may be framed, the two forms of credit, 
 the personal security credit and the land mortgage bond credit. You cannot have a little of 
 the Raiffeisen and a little of the Tandschaft mixed together. They will not mix any more 
 than oil and water. There is room in the United States for both, but I should say that the 
 proportion would be about as follows : lo % for the Raiffeisen or its derivatives, and 90 % 
 for the Dandschaft ”. 
 
 Mortgage Banks versus the Landschaft. 
 
 And now for another point ; you put forward the question whether “ the plan of the mort- 
 gage banks, after all, may not prove the most feasible plan through which a system of rural 
 credits can be established in this coimtry ”. 
 
 I do not think so. If the satisfactory working of the land-mortgage banks in Germany 
 and France is quoted as an example, we must bear in mind that they are satisfactory there 
 for two reasons : 
 
 First : in Germany their rates are governed by the competition of the great farmers’ 
 cooperative credit associations. 
 
 .Second : the land mortgage bank of France, the Credit Foncier, in return for the mono- 
 Ijoly of the land-mortgage business granted it by the Government, may only charge the farmer 
 a rate of interest on mortgages fixed by national law. 
 
 These two actuating features secure the satisfactory working of these mortgage banks so 
 far as the farmers are concerned. But to build up in the United States a number of heteroge- 
 neous mortgage banks in various localities, without the competition of the cooperative associa- 
 tions, would but create a number of local monopolies, whilst a system of centralised mortgage 
 banks would be likely to drift toward the vortex of ruin. 
 
 This is clearly shown by Mr. E- M. Shaw, Secretary of the Treasur5^ under President Mc- 
 Kinley, from whom I have previously quoted, who points out that in the disastrous land-mort- 
 gage bank movement of thirty years ago, centralised mortgage banks, or mortgage banks doing 
 business over a wide area, were largely compelled to rely on indirect information in the matter 
 of the value of appraisements, and that in floating their bonds they had to back them up by a 
 series of guarantees, and when the day of reckoning came they were one and all found wanting. 
 
 The findings. 
 
 And what conclusion does all this bring us to ? 
 
 We find that mortgage banks, if uncentralised would be inadequate, and if centralised 
 would be dangerous. 
 
 We find that personal credit and land-mortgage credit cannot be blended into one system 
 with safety or with profit. 
 
 We find that if we are to proceed ahead with the establishment of cooperative rural 
 credits, unaided by national subsidy and unaided by national guarantee, we must have the 
 ^ Eandschaft system. 
 
 f 
 
We find if there is to be a I^ndschaft system, whereby land mortgages in given localities, 
 in given States, are to be converted into long term bonds, to be sold in the various parts of the 
 United States, and to be bought as an investment for trust funds, for the funds of widows and 
 orphans, that this may only be done when safeguarded b}'^ national law and placed under na- 
 tional supervision. 
 
 But will not the Uandschaf t be opposed by the banking interests ? Before a correct answer 
 can be given to this question we should define what is meant by “ the banking interests. ” In 
 the first place, the bankers of America are not a homogeneous body. There are, on the one 
 hand, bankers who are struggling to accumulate, and, on the other hand, bankers who have al- 
 ready made their accumulations. It is from among the first subdivision that the opposing force 
 may be expected, for they will fear entrenchments upon their profit earning domain by the 
 cooperative farmers’ Bandschaft. But no opposition need be feared from the second subdivision 
 of the banking interests, from the bankers who have the accumulations. Their keen business 
 insight will, on the contrary, prompt them to aid the Bandschaft movement, for they under- 
 stand that the prosperous stability of the American farmer is the safest guarantee for pensist- 
 ence in the value of their holdings; they will realise that the upbuilding of the Bandschaft wiU 
 act as an effective insurance for the maintenance of their interests. 
 
 Nationab Law and State Law. 
 
 Your two main objections to the adaptation of the Bandschaft in the United States would 
 however, seem to be the following: 
 
 (1) To permit its operation under national law there would have to be concurrent and 
 uniform State laws ; 
 
 (2) As the Federal Government cannot compel the States to enact such laws there can 
 therefore be no Bandschaft under national law. 
 
 Now, if these objections are valid against the Bandschaft it would seem to me that they 
 would also be valid against the local national rural banks, the State national rural banks, and 
 the National Rural Bank of the United States of America, as proposed in your bill. But I beUeve 
 your contention is not valid so far as the Bandschaft is concerned. I agree with you that 
 the Federal Government cannot compel the States to enact laws, but no such compulsion was 
 contemplated. 
 
 The proposal is that the Federal Government enact laws permitting the establishment 
 of Bandschafts, under charters which it is to issue, all subject to certain stipulations and 
 conditions. 
 
 When this is done, it will then be incumbent on those States in which Bandschafts are 
 wanted to enact such legislation as may entitle the farmers to obtain from the national govern- 
 ment the charters requisite for going ahead. In other words, the State in which no Bandschaft 
 would be wanted, would have no need to legislate for one ; but the State in which a Bandschaft 
 would be wanted would enact laws enabling the cooperative groups of farmers composing the 
 Bandschaft, to comply with the stipulations and conditions for proceeding on. 
 
 How would this operate ? Bet us see. 
 
 Say the Federal government has enacted its laws ; that would be sufficient notice for the 
 States to proceed ahead. But supposing that no State proceeded ahead ? Well, in that event, 
 there would be no Bandschaft. But supposing one State did proceed on and enacted the re- 
 quisite concunent legislation, supposing it were Iowa ? Well, if the Bandschaft were to prove 
 of the economic value to Iowa that it is claimed that it would, it would not be long before, say, 
 Wisconsin, would follow suit ; and so on all along the line. 
 
II 
 
 It will thus be seen that there would be no compulsion or coercion in the matter ; all that the 
 Federal Government would do would be to render possible the lyandschaft in those States that 
 wish for it. 
 
 I How TO GIVE Dynamic Vaeue to Static Assets. 
 
 ^ But why the need for national law ? 
 
 Because it is proposed, through the Eandschaft, to convert the farmers’ static land assets, 
 f in any given locality, into a dynamic asset in the form of a negotiable bond. If (through publicity 
 
 given the land values as proposed in the Eandschaft booklet, pages 20 and 21) this bond be 
 rendered an unquestionable securit3%ever5rwhere, and at any time, and if it be readily transfer- 
 able from hand to hand, it will then sell as high and at as low a rate of interest as Government 
 bonds. But this may only be done by placing the Eandschaft under national law' for the pur- 
 pose of safeguarding its operations. You understand, of course, that in all this the Federal Go- 
 vernment is not to be held financially responsible, is not to guarantee, it is simply to safeguard. 
 
 As you know, I am but repeating here what I have already set forth many times. But 
 in saying this I would not have you understand that I am getting impatient. I fully realise 
 that it takes time and patience to change opinions. I can see that 3^ou now have a far dearer and 
 more comprehensive view of the Eandschaft than you had a few months ago, and I feel convinced 
 that it is onty a question of time when you will agree with me in this : that if there is to be co- 
 operative credit for the American farmer and in the interest of the American farmer, it must be 
 had through the Eandschaft system pure and simple. That system can be Hade to provide 
 not merely for long time mortgage credit, but, as you will have seen from pages 23 and 24 of 
 my booklet, it can also be made to provide for short time and for open account credit. 
 
 Close study will, I believe, show that the Eandschaft is absolutely the safest and simplest 
 and most advantageous form of cooperative credit that can be devised for the American farmer. 
 The moment you step outside of this system, the moment you have the farmer enter the arena 
 of banking, the moment you set up the local, the State and the National rural bank as proposed 
 in your bill, that moment you enter the domain of hazard. You enter the stagnant swamps of 
 guarantee regions; guarantees here, guarantees there, guarantees ever5rwhere, but security 
 nowhere. 
 
 And right here you ask, how can the Eandschaft be had when in some “{States the law re- 
 quires that the mortgage will have to be foreclosed by suit brought by a bill in equity, where a 
 decree is finally entered, and a master is appointed to ascertain the amount due, and given the 
 power to advertise the property for thirty days, and sell it at a public sale the first Monday in 
 the month, and then report the sale, and have it confirmed, and after its confirmation the mas- 
 ter makes a deed to the purchaser, all of which takes from three to six months time, whilst in 
 other States a similar procedure is required , and then the law provides that the mortgagor will 
 have one year in which, after the sale is m.ade, to pay up the debt and redeem his land ” ? 
 
 And then you proceed to answer thus ; 
 
 “ It is impossible for any Federal law to alter or change these State laws or rules of pro- 
 cedure ”. 
 
 The Law and the Path. 
 
 But is this answer final and conclusive ? Bj' no means, for you will see from vrliat I have 
 already said in this letter that there is no call for the Federal law to do anything of the kind. If 
 a State wishes to persist under laws which are antiquated and subversive of its best economic 
 interests, it has the right to do so. And so long as such laws are in force they must be obeyed. 
 
 ® But there is no law which saj^s that the law may not be changed, and so long as this is the case, 
 
 V 
 
 f 
 
— 12 — 
 
 and so long as each State has a legislature for the purpose of modifying and changing its laws, 
 so long does that set aside the conclusion you have arrived at. I^t the federal laws but 
 lead the way and action in the States will follow. 
 
 The very genius of the American people is centered in this : that the ideal is ever to the 
 fore, the eternal target at which we should aim. And the very life of the American people 
 is involved in the persistent struggle to reach this ideal. It is this struggle which makes for 
 freedom, which evolves progress. 
 
 And so, my dear Senator, we need have no fear of antiquated laws standing in the way when 
 once it is made clear that they obstruct the path. I,et it be clearly perceived that the lyandschaft' 
 is on the line not merely of economic advantage but also of political advantage ; that it is fre 
 from admixture with the baser forms of socialism and populism ; that it is on lines true to 
 American ideal ; and it will be accepted by the American people as the path to travel on. 
 
 Yours very sincerely, 
 
 David Lubin, 
 
 Delegate of the United States, 
 
 International Institute of Agriculture, Rome, Italy. 
 
 List of the^ Adhering States to the International Institute of Agriculture. 
 
 z 
 
 2 
 
 3 
 
 4 
 
 5 
 
 6 
 
 7 
 
 8 
 9 
 
 10 
 
 11 
 
 12 
 
 13 
 
 14 
 
 15 
 
 16 
 
 17 
 
 18 
 
 19 
 
 20 
 21 
 22 
 
 23 
 
 24 
 
 25 
 
 26 
 
 27 
 
 ADHERING STATES 
 
 Germany 
 
 Argentine 
 
 Austria 
 
 Hungary 
 
 Belgium 
 
 Brazil 
 
 Bulgaria 
 
 Chile 
 
 China 
 
 Costa Rica 
 
 Cuba 
 
 Denmark 
 
 Ottoman Empire 
 
 Egypt 
 
 Ecuador 
 
 Spain 
 
 United States 
 
 Ethiopia 
 
 France 
 
 Algeria 
 
 Tunis 
 
 Great Britain and Ireland 
 
 Australia 
 
 Canada 
 
 British India 
 
 New Zealand 
 
 Mauritius 
 
 ADHERING STATI<:S 
 
 28 
 
 29 
 
 30 
 
 31 
 
 32 
 
 33 
 
 34 
 
 35 
 
 36 
 
 37 
 
 38 
 
 39 
 
 40 
 
 41 
 
 42 
 
 43 
 
 44 
 
 45 
 
 46 
 
 47 
 
 48 
 
 49 
 
 50 
 
 51 
 
 52 
 
 53 
 
 Union of South Africa . . . . . 
 
 Greece 
 
 Guatemala 
 
 Italy 
 
 Eritrea and Italian Somaliland 
 
 Tripoli and Cirenaica 
 
 Japan 
 
 Luxemburg 
 
 Mexico 
 
 Montenegro 
 
 Nicaragua 
 
 Norway 
 
 Paraguay 
 
 Holland 
 
 Dutch East Indies 
 
 Peru 
 
 Persia 
 
 Portugal 
 
 Roumania 
 
 Russia 
 
 Salvador 
 
 San Marino 
 
 Servia 
 
 Sweden 
 
 Switzerland 
 
 Uruguay 
 
 PUBLICATIONS BY THE INSTITUTE 
 
 I. BULLETIN OF AGRICULTURAL STATISTICS (Monthly - in French, English, German Spanish 
 Italian). 
 
 BULLETIN OF THE BUREAU OF ECONOMIC AND SOCIAL INTELLIGENCE (Monthly, 
 about 250 pages. - Edition in French, English. German, Spanish and Italian). 
 
 BULLETIN OF AGRICULTURAL INTELLIGENCE AND PLANT DISEASES (Monthly, of a*^ 
 250 pages. - Edition in French, English, German, Spanish and ItaJan). 
 
 4. BULLETIN BIBLIOGRAPHIOUE HEBDOMADAIRE (issued every Saturday). 
 
 MONOGRAPHS ON AGRICULTURAL CO-OPERATION IN VARIOUS COUNTRIES (vol. i and 2