Agricultural Credit in the Province of Saxony
The agricultural credit institutions of the province of Saxony in the kingdom of Prussia are as highly developed as in any place in Europe and are typical of the German system. The province of Saxony lies in central Germany, contains an area of 9,750 square miles and in 1910 had a population of 3,088,000, equal to 315.7 per square mile. The largest cities in the province are Halle and Magdeburg with 180,000 and 280,000 population, respectively. It is the heart of the sugar-beet district of Germany and the richest agricultural section of the entire empire. It contains 97,000 farms of over five acres in size. The estimated worth of the land per acre is $300 (for the whole of Germany it is $150 per acre). It is a typical agricultural province, in which the most intensive systems of agriculture have been developed, necessitating the investment of a large working capital per acre, which has been made available through the development of agricultural credit institutions.
These may be divided into two classes: (1) the institutions furnishing real credit, that is, loans secured on farm mortgages made through the public land mortgage bank—the so-called Landschaft of the province of Saxony, (2) institutions for furnishing personal credit, that is, working capital on short time loans and on personal security which is provided through the farmers' cooperative banks.
The Land Mortgage Association
The German Land Mortgage Association (Landschaft) was first established in 1770 by the nobility of eastern Germany, with the approval of Frederick the Great, for the purpose of securing loans on their farm real estates. Instead of borrowing individually they organized an association and issued a common mortgage bond against all of the real estate owned by the members of the association. Furthermore, the management of the association was under the direct control of the government and the officers were quasi-public officials. Other similar institutions were soon established, but confined their members to the nobility and large landowners. However, the results secured were so satisfactory, the rates of interest so low and terms of the loans so favorable that the plan extended and the farmers of the middle classes organized in a similar manner.
The province of Saxony, in which the farmers of the middle class predominate, did not organize a land mortgage association until 1864. A few years later came the war between France and Prussia (stopping industrial development) so that in reality the association did not make real progress before 1880. To-day the total mortgage indebtedness of the province is 830,000,000 marks, and over 220,000,000 marks of these loans have been made through the Provincial Land Mortgage
