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provisions in the standard building code Not only this, but the example of which the National Board of Fire Under the mill owners in coöperating in their writers is trying to have enacted in all fire risks is being followed in the aties. 'cities were originally perfected by the It has caused the formation of mutual Mutuals. In fact, all advances in fire- mercantile companies, known as “interprevention are accredited to the Mutuals insurers,” in which the merchants of by Mr. P. J. McKeon, whose text-book two or three dozen cities band together 'on fire prevention is used by the Bureau for fire protection. Their purpose has of Fire Prevention of the New York City been partly to prevent excessive rates and Fire Department

partly to reap the benefit from the use of | Beginning in a few mills along the fire-preventing devices, as local regulations Atlantic Coast, the Mutuals now carry now compel the adoption of many de risks in all the big manufacturing dis- vices developed by the Mutuals. If it tricts of the United States and Canada were not for the automatic sprinkler Most cotton mills, originally the worst of the modern type of department store all mill risks, are now insured in the for example, would be so great a fire Mutuals whether they are located in New hazard that it would not be permittal England or the South. Mutual inspectors Yet department store owners, scattered range all through the Middle West as through many cities, have so much faith far as the Missouri River. In the Middle in fire-preventing apparatus that they West, also, their example has been followed are willing to insure one another. The by organizations of manufacturers who owners of modern office and loft buildings have formed what are known as the would probably be doing the same thing "Junior Mutuals,” and they also are but they have not had the same incentive successful.

as a special class of insurance companies, For the most part the Mutuals have known as American Lloyds, has made not written insurance on property in the a specialty of these “sprinklered risks, larger cities. Yet their influence has and insures them at rates that compare penetrated these centres.

favorably even with the cost of mutua The modern mill type developed by insurance. them is finding expression in the modern The story of mutual fire insurance loft building, the most popular type of and its effect upon fire prevention was ch! vind city structure. The Mutuals proved that summed up in a history of the Arkwright: this kind of building with enclosed stair- Mutual Fire Insurance Company of Bcom

dins with a bonus ways and shafts, solid plank or concrete ton, published last year, in commemorafloors, and flat roofs is the cheapest and tion of its fiftieth anniversary. It has most durable of structures. It is a safe insured in the course of its existence risk even when full of inflammable cotton $3,680,000,000 worth of property and has in the course of manufacture. The auto- had losses amounting to only $3,118,000 matic sprinkler can be counted upon to stop Premiums returned to policy holders all damage from fire at the point where it amounted to $21,700,000. For the whee starts. Even office buildings are now fifty years it had returned to its membes following the loft, or mill, type. In an average of 841 per cent. of premiunt: most modern offices it has been found more and, in 1910, with $270,000,000 worth id practicable to do away with subdividing property at risk, it was returning 4 walls. With builders these loft buildings per cent. of the premiums. are popular because their up-keep is The history of the Mutuals is real not expensive. The insurance rate on the history of fire prevention in ths this type is but a fraction of the rate on the country. If our fire waste is to be re old type of office building. The steady duced it must be according to the methods replacing of old structures by these they have established. Eventually their modern loft buildings, developments of standards will have to be adopted. The the Mutuals' regulations, is gradually economic waste of a quarter billiona fire-proofing our cities.

year is too large a drain to continue.

W-RATE, LONG-TIME MONEY FOR

THE FARMS

HAT THE BANKS CAN DO — WHAT COOPERATIVE SOCIETIES CAN DO

BY
RALPH W. MOSS

O

CONGRESS FROM INDLANA, AND YOYBER OY THE UNITED STATES COMMISSION LATELY RETURNED FROM STUDYINO

RURAL CREDIT IN EUROPE)

HE farmers of Europe are drawn from American banks. When they more highly organized to se- lend this money to farmers they must cure financial credit than are have a way of replacing it if their dethe farmers of the United positors wish to withdraw. The European

States, and they get money at loan associations replace their capital by rates and for longer terms. The indorsing the farmers' notes and by reus governments have given cordial discounting these notes to meet the nition to the farmers' organizations demands of their depositors without in many ways have extended aid to compelling the repayment of loans made novement. As the coöperative credit to their members. In this respect, the iations have already spread over the banking laws of European countries differ inent and are now being organized from our banking laws. For example, eland, we may safely accept the uni- the Bank of France has the legal right al testimony that these organizations to issue bank notes based upon comng from the necessity for a better mercial paper which bears three indorseem of rural credit than the com- ments. In order to meet this legal cial banks offered.

requirement the farmers organized the arm credit differs essentially from small association composed of neighmercial credit. The period between boring farmers. These small units were loan and repayment must be longer. then grouped around a regional or central

farmer cannot make his turn-over bank. The system was now complete quickly as can the merchant. In rural because a chain was constructed to join lit that properly serves productive agri- the farm with the government bank. A ure the repayment of a loan should not farmer presents his promissory note to his lemanded until the maturity of the crop association for discount. His neighbor which the borrowed capital is invested. acts as his security by indorsing this The essential problem in establishing note. This is the first indorsement. The h a system is to be found in the re- loan association then adds its indorsement cing of the money which is lent for and presents the note to the regional se considerable periods. Of course a bank. This guarantee of the association aking association must necessarily accept is the second indorsement. It now only posits in order to secure funds. This is remains for the regional bank to add its le of the coöperative loan associations of indorsement and forward it to the Bank Trope, and 90 per cent. of the money of France, which issues bank notes for it. ich they lend to their members is placed The local loan association discounts the their care by depositors. These deposits farmer's note, the regional bank redise accepted in the same way that similar counts it, and the Bank of France reansactions are conducted by American discounts it again in the form of an issue inkers. They can be withdrawn in the of bank notes. The farmer gets his money me manner that deposits can be with at low rates for long periods and yet the ultimate lender, the Bank of France, credit, it will become a question for our takes little risk, being protected by an bankers to decide whether they will offer original borrower and two indorsements. this creditor, by refusal, compel the In this way, also, the depositor in an organization of coöperative credit assoassociation is enabled to receive his money ciations. It is abundantly proved that from the association before the loan is such organizations are safe and practical. repaid by the farmer. In substance, this It is simply a matter of organizing after element is embodied in every system of models which have been proved by years rural credit in Europe. It is evident that of successful experience. it is the privilege of rediscount rather than the coöperative organization which is the foundation stone of this credit system. A modern system of land mortgage Coöperation is the method by which the credit is of greater importance to our special provisions of law are being utilized Nation than an improved system of for farm purposes.

personal credits. Our farmers are facing As our banking laws have not permitted an era of extraordinary expenditures r the issue of currency against farmers' they keep abreast of the times. The notes, no matter how many times in- depleted fertility of our farms must be dorsed, there will have to be modifica- restored; better roads are to be contions if we are to organize effective sys- structed; the quality of our live stock is tems of rural credits after European to be improved, and their numbers greatly models. But if these changes are made increased; better methods of tillage are our existing banks can utilize these redis- to be adopted; higher standards of agrcount privileges as effectively as can cultural education are to be accepted; coöperative associations. There are as and, finally, the young man is to be enmany chartered banks in the United couraged to acquire ownership of the land States per thousand population as there he cultivates so as to avert the growin: are in Germany, with its coöperative menace of landlordism. These expendiassociations. At present, neither char- tures in the aggregate will amount to a tered banks nor coöperative associations stupendous sum and their repaymer: in the United States can lend deposited should be distributed over a long period funds and meet the demands for the return of time. The rate of interest should be of these funds from any other source than reduced to the level of other financia. repayment by the borrower. It is useless undertakings of like magnitude. I to argue whether banks or coöperative Europe, money is available for such purorganizations are best adapted to advance Poses at nearly as low rates as the goverrcredit to farmers until it is made possible ments can borrow for national purpose for such business to be transacted suc- This is as it should be. In the true cessfully. The first requisite, and it is sense, the rebuilding of agriculture alor: one on which all persons can unite, is a permanent lines is a national expenditur: change in our banking system which will as vital to the future supremacy of ou permit rediscounting of solvent loans. Nation as is the maintenance of our art. This power of rediscount should be placed and navy. under governmental control. I heartily European experience has conclusive indorse that portion of the pending cur- demonstrated that land mortgage bone: rency bill which places the Secretary of can be sold in large volume at low rate Agriculture on the Federal Reserve Board of interest. The proceeds of these bond It is a great forward step in currency re- can be lent to farmers on long-time form from the standpoint of agricultural payments at a low rate of interest, with a credit and agricultural equality in the small payment on the principal whics money markets of the United States. ultimately will wipe out the debt.

Conceding that the proposed revision France, the annual charge for such mone: of our currency laws will give every proper including all principal, interest, and con- | facility for the organization of agricultural mission charges, is less than 5 per cen:

perhaps this rate will be a fair average retained by the bank, while $13.37 will for the Continent. The Government be applied to the discharge of the principal. lends money to farmers for special pur- The final payment will be almost wholly poses at a lower rate, but I am speaking devoted to the payment of principal as of the ordinary commercial rate for the the first one went largely to the payment repayment of a mortgage loan. I know of interest. In this way, one half of i per that it is difficult for an American farmer cent. will repay the principal in 54 years, to understand that a loan will be repaid provided a constant payment is maintained in full by annual payments which are on the principal for interest during the lower than our present interest charges entire period. The manifest advantages * alone; but it is a fact that can easily be are so great that we should press this demonstrated.

matter most vigorously. The usual method of negotiating these this system of making loans for agrilong-time mortgage credits is by fixing cultural purposes was first undertaken by a rate of repayment which cannot be coöperative mortgage associations in Gerchanged during the life of the loan. This many. The joint stock banks, representrate of payment includes an allowance ing private capital, accepted this plan of for current interest due on the loan, an transacting business as soon as it was amount to be kept by the bank for ad- demonstrated that farmers by coöperation ministration, and a certain sum to be could secure capital in the world's marcredited on the principal. In the lan- kets at fair terms. Both systems have guage of the bank, these are called "interest, been in successful operation for many administration, and amortization.” years. The joint stock banks have found

The standard length of time in Europe and mortgage business profitable and for a long-time loan is 54 years. For such safe from a banking standpoint. Here, a loan at the present time the rate is again, is a question of policy presented to 4.85 per cent., divided as follows: interest, American bankers. Land mortgage bonds 4 per cent., administration, .35 per cent., secured by mortgages payable on the and amortization (payment on principal) amortization principle will be introduced .50 per cent. This rate will pay both into the United States. The future deprincipal and interest and repay all charges velopment of our Nation imperatively due to the bank in 54 years. As this demands it. There are two models, each will seem almost incredible to some of which has been proved by years of students, I will give a concrete illustration successful experience. One is a bond of how it works. It does not depend upon issued against a first mortgage on real compound interest, but upon the fact estate and guaranteed by an association that though the rate of yearly payment of farmers who are the borrowers — the remains the same, the charge for interest coöperative plan; the other is a bond and administration is constantly decreas- issued on like security and guaranteed by ing because they are computed on the a joint stock bank which is an association principal sum which is constantly being of lenders. Unless our existing banks repaid. Therefore, the proportion which adopt the latter method of financing the is applied toward the repayment of the farmers of America, coöperative organizaprincipal is always increasing.

tions among the borrowers will inevitably For illustration: If the debt were $1,000, grow up because the principle of self-help the debtor will pay $24.25 every six will compel it. months. Of the first payment, $20 will have discussed only the main principles go for interest, $1.75 belongs to the bank, involved. The question of personal credit and $2.50 is applied to the repayment of falls within the domain of Federal legislathe principal. When the debt is half dis- tion while that of land mortgage goes more charged, however, this distribution will directly to the state legislatures. And be greatly changed. The borrower will there will have to be many changes in pay $24.25 as usual; of this amount, only many of our state laws before that busi$10 will go for interest, 88 cents will be ness will be on a satisfactory basis.

MCADOO

THE FIFTH ARTICLE OF
WHO GOVERN THE UNITED STATES
THE CONTROL OF THE CURRENCY PUBLIC OR PRIVATE?

BY

BURTON J. HENDRICK FALL Mr. Wilson's Cabinet sitting about a presidential table the ministers, Mr. McAdoo has Secretary is realizing his earliest aspirathe most immediate interest tions. Corporations, railroads, tunnels, in the deliberations of the and metropolitan transit systems have

present Congress. In a sense been merely the interruptions of Mr. he is its residuary legatee. The law- McAdoo's career; public life has always makers are engaged in solving the two been its ultimate goal. As a child he had great problems which have distracted imagined himself as a Congressman or a the Nation since the Civil War: the tariff Senator, a director of national policies, and the currency. In doing this they are perhaps even a President-maker; the fampiling up work exclusively for the Treasury ily traditions all naturally impelled him Department. Mr. McAdoo will have to in this direction. In the North a college enforce the new tariff law. He will have boy who entertains such ambitions usually another task entirely novel to an American says that he hopes “to enter politics." In Secretary of the Treasury, at least in times the South a young man similarly inclined of peace: the collection of an income tax. unblushingly announces that he “intends He will probably have to install a new to become a statesman." There is a wellnational banking system. This boyish- defined profession for those who combine looking Secretary may therefore find that the trade and a certain amount of legal the management of a great Nation's finan- practice: it is known as “law and statesces is as exciting a task as the construc- manship.” That was the career which tion of the Hudson River tunnels.

the youthful McAdoo had marked out for And Mr. McAdoo certainly looks rather himself. For a number of years, in young and inexperienced for gigantic Chattanooga, Tenn., and in New York responsibilities of this kind. According City, he actually did practise law; "states. to the family record he is fifty years old; manship,” however, circumstances comjudging from external evidence he is about pelled him to postpone. Now, at the age thirty-five. He is tall and slender, mea- of fifty, he has really struck his stride. suring easily six feet two; advancing years Like four other members of Mr. Wilson's have not written their traces in any en- Cabinet, Mr. McAdoo is a Southerner. largement of girth; his figure is as lithe, as This renaissance of Southern activities has well held together, as erect and graceful been generously hailed as a final bridging as a girl's. The silken, dark brown hair of the chasm of sectionalism. Perhaps has not even a touch of gray; the indenta- more than any other member of the tions in his face are not the wrinkles of Cabinet does Mr. McAdoo emphasize years, but the natural corrugations he has this idea. Certainly no one has a keener carried from boyhood. One may easily reason for bitterness; probably no Ameribelieve, therefore, what is actually a can family now in public life suffered more fact, that Mr. McAdoo finds his new from the Civil War than Mr. McAdoo's. Washington duties altogether congenial. Marietta, Ga., where he was born in 1863. He is now just beginning to live, for in was directly in the line of Sherman's march

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