ifVi s.. ^.<^% IMAGE EVALUATION TEST TARGET (MT-S) w 1.0 I.I fc^iM MkA 3.2 us 2.2 li£ 12.0 1.8 IL25 IIIIII.4 ill 1.6 V] ^^. >* c'. ^ Pliotographic Sciences Corporation €> *.<*' \ » s> ^9) 4^ ^ ■^ . ^. o 33 WIST MAIN STREIT WEBSTCR.N.Y MS»0 ,716) •'"-4503 i> .n CIHM/ICMH Microfiche Series. CIHIVI/ICMH Collection de microfiches. Canadian Institute for Historical Microreproductions / Institut Canadian de microreproductlons historiquea Technical and Bibliographic Notes/Notes techniques et bibliographiques The Institute has attempted to obtain the best original copy available for filming. Features of this copy which may be bibliographically unique, which may alter any of the images in the reproduction, or which may significantly change the usual method of filming, are checked below. □ Coloured covers/ Couverture de coufeur □ Covers damaged/ Couverture endommagie □ Covers restored and/or laminated/ Couverture restaurie et/'ou pellicul^e CI Cover title missing/ I Le titre de couvertur D D D n D D couverture manque Coloured maps/ Cartes giographiques en couleur Coloured ink (i.e. other than blue or black)/ Encre de couleur (i.e. autre que bleue ou noire) Coloured plates and/or illustrations/ Planches et/ou illustrations en couleur Bound with other material/ Reli* avec d'autres documents Tight binding may cause shadows or distortion along interior margin/ La re liure serrie peut causer de I'ombre ou de la distorsion l« loi g de la marge intAriaure Blank leaves added during restoration may appear within the text. Whenever possible, these have been omitted from filming/ II se peut que certaines pages blanches ajouties lors dune restauration apparaissent dans le texte. mais, lorsque cela itait possible, ces pages n'ont pas ixi filmAes. Additional comments:/ Conr.mentaires supplAmentaires; L'Institut a microfilm^ le meilleur exemplaire qu'il iui a 6ti possible de se procurer. Las details de cet exemplaire qui sont peut-dtre uniques du point de vue brbliographique, qui peuvent modifier une image reproduite, ou qui peuvent exiger une modification dans la methods normale de filmage sont indiquis ci-dessous. □ Coloured pages/ Pages de couleur I — I Pages damaged/ n Pages endommagies Pages restored and/or laminated/ Pages restauries et/ou pelliculdes Q Pages discoloured, stained or foxed/ Pages ddcoiories, tachaties ou piqu^es Pages detached/ Pages d^tachies r~l Showthrough/ '^ Transparence □ Quality of print varies/ Quality inigale de I'impression I I Includes supplementary material/ D D Comprend du materiel suppl^mentaire Only edition available/ Seule Edition disponibie Pages wholly or partially obscured by errata slips, tissues, etc., have been ref limed to ensure the best possible image/ Les pages totalement ou purtiellement obscurcies par un feuillet d'errata. une pelurd, etc., ont it(k film^es A nouveau de fapon A obtenir Is meilleura image possible. Tt to Tl P< o1 fil bi tt si O' fi si o T si T VI 1^ d b ri ri n This Item Is filmed at the reduction ratio checked below/ Ce document est filmA au taux de reduction Indiqu* ci-dessous. 10X 14X 18X 22X 12X iex y 20X 26X 30X 24X 28X 32X Th« copy fllmad her* has bMn raproducad thanks to tha ganarosity of: Legislature du Quebec Quibcc L'axamplaira film* fut raproduit grflca k la gAnirositi da: Legislature du Quibec QuMiee Tha Imagaa appaaring hara ara tha tast quality possibia considaring tha condition and lagibility of tha original copy and in kaaping with tha filming contract spacificationa. Original eopias in printad papar eovara ara flimad baginning with tha front covar and anding on tha last paga with a printad or illuatratad ii^npraa- sion. or tha bacic covar whan appropriata. All othar original eopias ara flimad baginning on tha first paga with 8 printad or Illuatratad impraa- sion, and anding on tha laat paga with a printad or illuatratad imprassion. Tha laat racordad frama on aach mieroficha shall contain tha symbol — *>(maaning "CON- TINUED"), or tha symbol ▼ (maaning "END"), whichavar appiiaa. Mapa. piatas. charts, ate, may ba flimad at diffarant raduction ratioa. Thoaa too larga to ba antiraiy inciudad in ona axpoaura ara filmad baginning in tha uppar laft hand comar, iaft to right and top to bottom, aa many framaa aa raquirad. Tha following diagrama illuatrata tha mathod: Laa imagaa suh/aritaa ont 4tA raproduitas avoc la plua grand soin, compta tanu da la condition at da la nattat* da l'axamplaira film*, at •» eonformit* avac laa conditiona du contrat da filmaga. Laa axamplairaa originaux dont la couvartura an papiar aat imprimte sont filmte an commandant par la pramiar plat «t an tarminant soit par la darni4ra paga qui comporta una amprainta d'impraaaion ou d'iliustration, soit par la sacond plat, salon la eaa. Tous laa autras axamplairaa originaux sont filmte an comman9ant par le pramiAra paga qui comporta unm amprainta dimpraaalon ou d'llluatration at an tarminant par la darnlAra paga qui comporta una talla amprainta. Un daa symbolaa suhranta apparaftra sur la damiAra imaga da chaqua mieroficha. salon la caa: la symbols -*> signifia "A SUIVRE", la symbols V signifia "FIN". Laa cartaa. planchaa, tablaaux, ate. pauvant dtra filmte i daa taux da rMuction diffirants. Loraqua la documont aat trop grand pour Atra raproduit an un saul ciichA. 11 aat film* i partir da I'angla sup4riaur gaucha. da gaucha h droita. at da haut it baa, wi pranant la nombra d'Imagaa nteaaaaira. Laa diagrammaa suivants iiluatrant la mAthoda. 1 2 3 1 2 3 4 s e LANDED CREDIT^ H I I— ■ l>l « ^M I ■ .^ A LETTER TO THE HON. JOHN SANFIELD MACDOMLD, M.P.P., ATTORNEY GENERAL WEST, &c. &c. &c. BY JOHN SYMONS. TORONTO : PRINTED AT THE GLOBE OFFICE, 25 KINO STREET WEST. 18G2. T -«i i ^^ a 1 v \ i 'i 'i f a i] 1 1 5: i ?! t .;) k 1 ] i f LANDED CREDIT. -«i Sir,— Tiie extraordinary success and beneficial results which have marked the establishment of Landed Credit Institutions in Europe, and especially in France since the year 1852, and more recently in Canada West, have given rise to a very general and earnest desire that Eastern Canada should possess a similar institution. The difficulty in the way of establishing the system in Canada East, appears to be the disinclination of the people to pay for money advanced on mortgage, a higher rate of interest than six per cent., a rate which, under present circumstances, is too low to tempt the investment of local capital. It is then, in the cheap markets of Europe that money in such case must be sought for ; and it is evident that as by mere private enterprise it could not there be obtained at less than six per cent., and even then, in very inconsiderable amounts, there would be no margin of profit whpiever for the costs of management, supposing a Company formed, which then must necessarily be de- frayed out of the dividend which is rightly due on the shareholders first capital. The knowledge of which fact would indeed effec- tually prevent capitalists ever embarking in any enterprise offering them such a poor return ; and so it would be almost inposssble for an independent company to exist in Canada East. It is true, that in Western Canada where eight per cent, is con- sidered a moderate rate of interest, the Institution exists and prospers as an independent company ; but its growth even here, so far away from the great mart of commerce and surplus capital, cannot be rapid and must be wholly inadequate to the requirements of the landed interest. When the necessities of a people are great arising from deficient harvests or other causes, there will always be numerous petty money lenders who step in and trade on those necesities, who demand indeed, and by immoral force receive a rate of interest far beyond the ability of the debtor to pay. Hence the mission of the landed credit system, which by creat- ing an Intermediary, holds the balance of interest even between the lender and the borrower of money. If indeed it incline at all, it is rather in favor of the borrower, on public grounds ; for in propor- tion to the superior advantages — a low rate of interest amongst others — which the system confers on him, it is seen that in like proportion are the general trading interests of the country promoted. All loan societies and dealers in money, are in the interest exclusively of the lender, and they heed not any other consideration than giving to him the highest interest they can possibly obtain. The borrower, in numerous cases, paying from 12 to 20 per cent., cannot, it is quite manifest, out of the mere profits of the land, keep up his payments to the tradesman, who in his turn is unable to meet the note he has given to the merchant ; and so at length ho succumbs under the weight chiefly of exorbitant interest. The success then of the landed credit system, depends en obtain- ing money at a low rate, and investing it at such a moderate ad- vance as to press as lightly as possible on the borrower, and yet by the large operations of the Campany to realize a sufficient profit to pay the costs of management, and a satisfactory dividend besides. The Governments of Europe have, one by one, during the last century, adopted the new system. Italy will this year have her Landed Credit Institution, with the Government guaranty. They have all seen the evils we have referred to, and have extended their aid and influence in the establishment and guardianship of the new method of lending on mortgage which avoids them. The guaranty of a Government in good repute, publishes to the world, in a breath, the soundness of any undertaking with which it may be connected, and it springs as if by magic into immediate pub- lic favor and usefulness. Look to the brilliant success of the credit fonder society of France, established by Napoleon^s Government, only ten years ago. It was thought of, and talked of for years as a private enterprise, yet nothing was done till the Emperor, in the exercise of his great power, decreed it 28th February, 1852. At a recent meeting of the shareholders, held in Mi:y, 18G2, a report on the operations of 1861 was presented by M. L. Fremy, the Governor, in the name of the Directors. I will here advert rather fully to some of the principal points in that report, and I shall, in every case, give the figures in Canada money instead of French money, in order to be better under- stood. The mortgage loans we find amounted to $18,054,464 ; the t the ' 1 communal loans to $5,958,636— total, 124,013,100. In 1860 the total was only $13,897,888. Of the $18,054,464 of mortgage loans, $500,000 were for short periods ; $17,554,464 for long periods, and the number of the latter was 1,158. In number, the loans for long periods were 63 per cent., and in amount 80 per cent, more than in 1860. Of the total, 826 amounting to $13,876,140 were on real property, situated in Paris and the department of the Seine. One of the loans amounting to $3,000,000 was to the Compagnie Immo- biliere of Paris, which now owes the Credit Foncier $5,400,000 — a sum secured on its houses in the Rue de Rivoli, Rue de Marig- nan, Boulevard Malesherbes and Boulevard des Capucines. The loans for long terms made in the Provinces were 332 in number, and $3,643,600 in amount. In 1860 the number of loans in the Pro- vinces was 119, and the amount of them $2,523,400; and in 1859 they were only 110 of $1,200,000. " Our loans in the departments have therefore" says the report " became triple in number in the space of three years, and in 1861 they were then double the total loans made in 1857, both in Paris and the departments." Of the total loans in 1861, only 3 were of $200,000 and upwards ; 8 were of from $100,000 to $200,000 ; 162 of from $20,000 to $100,000 ; 168 of from $10,000 to $20,000; 472 of from $2000 to $10,000; and 345 of $2000 and under. The average amount of the loans was $15,200, or setting aside the 3 of $200,000 and upwards, $11,600 ; of loans of the lowest amount $2000 and under, the average was $160 The total amount of mortgages for long terms lent from the establish- ment of the company to the end of 1861 was $55,115,460, and of this sum $4,353,440 have been paid back ; there were consequently due to the company on 31st December, 1861, $50,762,020. Of the total amount of loans $40,259,000 were made in Paris and the depart- ment of the Seine, the rest in the Provinces. The number of loans which made up the total of $55,115,460 was 3914, and of the latter number 2698 that is more than two thirds were below $10,000, and 1,041 more than the quarter below $2000. These figures prove, the report says, that whilst the Credit Foncier is suflSciently power ful to give to great enterprises the resources they need, it does not neglect small affairs, though the conclusion of them is often more difficult. " We do not doubt," the Report continues " that our circle of action will be further extended ; that time, example, and experi- ence will render ewij day more popular a system of loans which re" lieves the mortgff/^e debtor from the expenses and difficulties of renewals 1- 6 which grants him a very extended term, which only requires from him an annual payment scarcely greater than the interest of the capital, pays off progressively his debt, and permits him by anticipa- ted reimbursements, as much divided as he desires, to choose for par- tial or total liberation the moment which seems to him best. The Credit Foncier is in fact for the borrower on mortgage, a sort of savings' bank incessantly opened, which receives small savings with- out rejecting large ones, which capitalizes both at the rate of 5 per cent., and which besides and even without anticipated reimbursements liberates the debtor by the sole payment of the annuity agreed on. — The debts contracted with the Credit Foncier become lower every half year whilst other debts (on the old mortgage system) do not de- cline." The annuities in repayment of mortgage loans which the Company had to receive in 1861 were $2,266,300, and the amount actually paid was $2,170,768. There was consequently an arrear of $95,532, but it has since been reduced to $25,428, that is to say, about 1 per cent, of the total due. Moreover, as much as $80,236 of the annuities falling due in the present year, have already been J aid in advance. The amount of what are called communal loans, made in 1861, was $5,958,636. Adding those made previously and since the total on the 31st March of the present year was $12,319, 964. Of this total five amounting to $1,360,600 were made to de- partments; 274 amounting to $10,868,164 to towns and com- munes; seven amounting to $91,200 to syndical associations. — These loans are employed to make roads, cut new streets in towns, render wholesome the crowded parts of towns, build churches and schoolhouses, &c. For these loans the Company had to receive in re-payment $130,400, in 1861, and $200,668, on 31st January, 1862, and both sums have been paid. Of the issue of mortgage bonds (obligations foncUres) the report remarks that they increase in the same proportion as the mortgage loans for long periods. In 1861, the total bonds issued were 54,461 of 3 and 4 per cent, to the amount of $5,463,560, and 111,148 of 5 per cent, for a sum of $11,114,800. On the 31st of December last, the total amount of bonds in circulation was $50,627,860, which was less by $810,380, the amount of loans made for long and short periods. The Credit Foncier is allowed to receive deposits in current ac- counts, but both from motives of prudence and from obedience to its statutes ; it does not employ them in making loans ^or long t 1 s r '^l priods— one-half of them are deposited in the public treasury, and the other employed in operations which do not exceed 90 days.— The amount of deposits made in the course of the year was $50,558,896, and the balance on hand on 31st December last, was $11,412,252. The interest allowed on these deposits was 2^ per cent. The Company also makes advances on security of its owr bonds and other securities. In the course of 1861, it advanced on mortgage bonds, $8,115,488, and of that amount $4,317,820 were paid, leav- ing due at the end of the year, $3,797,664. On communal bonds the advances were $988,872, and the amount reimbursed was $749,- 444, leaving due at the end of the year, $239,428. The advances on other securities were $4,955,660, of which $4,437,948 were re- inbursed, leaving at the end of the year $517,712. Notwithstanding the fluctuations in the late of interest in the course of the year, the Credit Foncier did not take more than 4 per cent, for its advances on mortgage bonds, and 3^ for those on communal bonds, whilst the interest for advances on other securities varied from 4 to 6 per cent. In addition it received for different clients dividends on rente railway shares and bonds, and other securities, the amount of these dividends for the whole year being $2,271,464. It also re- ceived to take care of, for clients, mortgages and communal bonds, and deducting the withdrawals made in the course of the year— the amount of such securities held on the 31st December, was $9,398,- 300. A new Company had been formed in France, called the Credit Agricole, which the Credit Foncier had taken under its protection ; and the Report says that the hopes formed of the new establishment are likely to be realized. There is also another establishment with which the Credit Foncier is connected, the Sous Comptoir des Entrepreneurs. The amount of credits opened by it in 1861, deducting those which were repaid or expired, were 307 in number, and $5,018,456 in amount; $4,087,640 of that amount beinf- secured by mortgage, the rest in other securities. The business done by the Sous-Comptoir presents a great increase compared with that of the preceding year. The gross receipts of the Credit Foncier for 1861 were $4,184,100; the expenses, $3,574,120— leaving a balance of $609,980. Of this sum, $150,000 had been distributed to the Shareholders, as 5 per cent, interest ; and the Governor proposed that the balance, $91,996 should be set apart to the reserve; 8 $300,000 be employed in payment of a dividend of $5 per share, and the remainder be carried over to what is called the Keserve Immobiliere. The interest and dividend make $7.50 per share, and that is equal to 15 per cent, of the paid-up capital. The total of the reserve funds is $1,392,952. The Report concludes by stating, that, in consequence of the vast extension of the operations of the Credit Foncier, the Governor and Directors had determined on issuing the second series of shares, so as to complete the nominal capital. This series consists of 60,000 shares of S50 each, and the calls are to be paid— $10 on 1st July next ; $10 on 1st January, 1863 ; $10 on 1st July, 1863 ; and $20 the Ist January, 1864. The Shareholders received, in 1853, $3.50 per share; in 1854, 1855 and 1856 the same sum; in 1857, $4 ; 1858, $4.50; 1859, $5; 1860, S6; and for 1861, $7.50 per share of $50, being, as already stated, 15 per cent, per annum. From this valuable report it will be seen that the operations of the Credit Foncier of France have a very wide range. Its loans are not now exclusively confined to the object for which it was originally established, the amelioration of the condition of Agriculture. That interest, no doubt, had its first and chief regard ; but having ren- dered to it very great assistance, and the system meeting with such universal approval, the Company was encouraged to lend a very large proportion of its means on house property, in Paris— a species of security of great value, and nearly equal to a land security, when combined with a sufficient and responsible insurance. Large sums have also been lent to corporations, parishes, and associations of various kinds, for the purposes generally of constructing or complet- ing various public works. The loans to private individuals the possessors of extensive estates, were in some cases very large in amonnt, reaching as high as $200,000, and in other cases descending as low as $200. Every commune, every department, every landed proprietor, from the proud noble to the hard working owner of a few acres — almost every laborer in France has, within the last ten years, participated in the benefits of an Institution, whose inaugura- tion was gloomy in the extreme, but which was destined to eclipse in the magnitude of its operations, and in the grandeur of its results, all other Institutions whi( h were ever devised for the encouragement and development of Agriculture. The decree of 20th February^ 1852, relative to the establishment of the Credit Foncier, was at- 9 4 tacked by some as too moderate, by others as too radical — it was ex- posed to the ridicule of the sceptic, and to the hatred of certain per- sonal and institutional interests. But the Coup d'Etat of the 2nd Decmber, fixed its destinies. Prince Napoleon had to win the heart of a great people, and he set himself about the task in earnest — amongst the Institutions he desired to have founded in France, the very first in rank was the Credit Foncier. He had seen the work- ing of the German societies— he knew their organization— he had witnessed their benefits, and all his solicitude was to have them es- tablished in France. A Commission of enquiry was issued in that very same dark month of December, and the Report of that com- mission was revised, at conferences hold at the Elysce, under the presidency of the Prince himself, assisted by M. Duruflo, then Min- ister of Public Works; M. de Persigny, Ministor of the Interior; M. de Casablanca, Minister of State; M. Bineau, Minister of Finance ; M. M. Legentil, Bonjeau, and J. B. Josseau, member of the Council of Agriculture. It was after the subject had undergone the most thorough investigation, that the decree of 28th February, 1852 authorizing the establishments of Credit Foncier Societies appeared. No sooner was that decree published, than public attention was directed to the subject ; and by another decree of the 28th March, 1852, a great company, having its chief office in Paris, and at the head of which figured the names of men eminent for their knowledge of banking, of agriculture, and of commerce was constituted. The nominal capital was $5,000,000, (with power to extend to $12,000,000,) of which $2,000,000 were immediately subscribed for, but only half was called up— the State adding other $2,000,000 as a subsidy in order to facilitate and encourage the first operations of the Company, to be paid in proportion to the loans effected. By the decree and the convention which followed, the Credit Foncier de France was bound to lend only on first mortgage, and to the extent of but one half the value of the estate— the amount to be repaid by an annuity of 5 per cent., afterwards increased to 5.95 per cent., comprising the interest, the sinking fund, and the expenses of management— the sinking fund being so organized as that pay- ments to it should extinguish the debt in 50 years. The borrower, however, had always the inestimable privilege of paying off his debt at any time, either wholly or in part. After the example of Paris, Marseilles, Nevers and other centres of population soon possessed these institutions, under the authority 10 of the decree of 28th February. The whole of France became alive to the importance of the movement, and, in each case, it was noticed that men of the highest position and fortune vied with each other in tlie work of realizing the grand idea of the Emporor, and in the great benefits which tbay foresaw the new system would confer on France. They were no longer his uncompromising opponents, and almost forgot their recent loss of constitutional liberty. It was, however, a subject of grave doubt whether it would not have been best to have had one central establishment in Paris, with branches-— that is 10 say, local establishments charged with examining the requirements of the borrower, under the control of a central admini- stration, alone invested wi^h the right of granting loans and of issuing bonds or debentures. But I need uot here further dwell on this point ; I shall afterwards allude to it. We hsve seen, then, that in Paris, the Credit Foncier Company commenced business towards the b'ter end of the year 1852, with the comparatively small capital of one million of dollars paid up ; and what is the amount of its investments at the close of 1861. eight years of actual business ? Why, the prodigeous sum of $55,115,460 ! In the aunais of monetary institutions, it is believed there is no instance on record where such a large figure of profitable business has been reached in so short a time ; and wc now nsk what was the secret of the success which such figun s indicate, and which enabled the Company immediately, and during the first four years of its operations, to declare a dividend of 7 per cent., and to go on increasing the dividend, year by year, till it reached 15 per cent. ? Undoubtedly, the first motive which wei^,hed vith the Shareholder wae the possession of a land security, and the second was the strik- ing feature :.n the system of paying the loan l^ck by means of a sinking fund, which, vvhilst it daily decreased the borrower's debt, in like proportion enhanced the security of the lender; and, besides this, it was a system whi -h had been the subject of solicitude and enquiry by the Grovernment, and which now enjoyed its support and guaranty. And yet the eai'ly progress of the Con^pany wo" by no means rapid. The first thrse years its loans \. oro confined entirely to the object of ameliorating the condition of Agriculture ; they were made chiefly to small landed proprietors, end altogether did not exceed six millions of dollars ; bat the influence of the new system, on the in- creased produce of the land, and on landed proprittors, was marvel- ., r 11 louB in the extreme. The man, and he is only the type of a class comprising thousands, who had been so Icng crushed under the heel of the usurious lender, stood erect ; his gloomy anticipation of the time when he must inevitably lose his estate, and be ruined, and all that he held dear involved in his ruin, gave place to hope and energy. The little debts which had harrassed him for years, were satisfied — the interest he had now to pay, was less by one-half, and the pro- du^^e of his land increased ten fold. He felt and knew he was a saved man — happy and prosperous, because his exertions were re- quitted — and because he was : o longer compelled by a ne«essity which knew no law, to see his hard earnings find their way exclusively into the pockets of the man who had taken advantage jf his helpless posi- tion, At the end of the first three years of the existence of the Com- pany, these advantages being duly appreciated, for all France ac- knowledged them — there was an extraordinary increase in the number and amount of the mortgage loans. The applicants, however, were not now exclusively the owners of the soil ; they were no doubt the first to be benefited — and still indeed shared the chief attention of the Council of Administration ; but the cities and towns, the com- munes, the departments and syndical associations, preferred their claim — they had all real j^roperty to offer in security ; house pro- perty, yielding great rents, and which, with a responsible insurance, was second only to a land security. The loans to the communes and depaximents were all employed in the making of new roads and streets — those contracted by the Syndical Associations were for draining, irregating and constructing dikes, all works which increase the value of adjoining estates, and therefore properly within the scope of the Company's operations, when, and only when the chief object had been attained, the amelioration of the condition of agriculture. And so all these interests in turn became borrowers of immense amounts. But this was not all — another iniportont increase in the Company's business resulted from other societies, such as the Credit Agricolc, whose object was to lend to tenant farmers and the Sous Ooinptoir dcs entrepreneurs, the Builder's Auxiliary Discouiit Bank, finding it their interest to be aided and finally absorbed by what vo must now consider the greatest, mosst useful, and most solid of the financial institutions of France. Those who have'becn acquainted with the general appearance of i'griouiturai Franco for any number of years, tell us of the astonish- 12 ing improvement which the last ten years have produced, and which has been accomplished mainly by the establishment of the Credit Fpncier Society. " The appearance of a French village twenty years ago," remarks an able writer, " was that of squalid discomfort, in which even the more wealthy of the peasant proprietors were con- tent to live. Their dwellings mere cabins ; their farm-buildings mere hovels ; the church dilapidated from neglect or defaced with whitewash, carriageable by-roads were unknown, except on the great paved chaussees or royal routes constructed by Louis XIV. ; the country was intersected by mere tracts, which rendered it equally diflacult for the farmer to obtain manure for his fields, or to dispose of the produce of his harvests. Stock was extremely scarce, and the breeds of animals wretched. The only relief afforded to the exhausted soil was by a frequent but unnintelligent system of fallows— scientific agriculture^ rural machinery, artificial manures, drainage, and irrigation were alike unknown. ***** But a transformation is now going on before our eyes. In these later years agricultural progress is astonishing— it is apparent to the most superficial observation. A vast amount of building for farming purposes and for the abode of the rural population is rising on every side. Great as the architectural improvements have been in Paris and in all the great towns of France, the enormous increase of domestic rural buildings, of solid materials and good workman- ship, is even more remarkable ; for these are the practical unostenta- tious results of private wealth and industry. Here and there the old chateau or the new country house, surrounded by its park, and restored to the uses of country life, marks the increase of these tastes and pursuits among the upper classes. Roads and railroads have already opened the great majority of the departments. The fool and clothing of the peasantry have improved; fallows are less fre(iucnt to be seen ; there is an enormous increase of green crops and a proportionate augmentation of stock, and the whole system of farming is neater, more liberal, and more productive. * * * It would be unjust to preceding govcrnnionta, and espe- cially to that of King Louis Philippe, not to add that the same path was trodden with no u.oan success by the niiuistors of that reign ; and that the splendid results wo now witness are the fruits of improvements commenced under the constitutional monarchy, momentarily arrested by the convulsions of 1848, and vigourously continued and enlarged by the present Emperor. Whatever may 13 be the opinions we entertain of the political institutions of the second Empire on the ground of material improvements, it is absurd to deny that the Emperor has rendered great services to France — services, indeed, so great, that one of the charges brought against him by his uncompromising opponents is, that these benefits have caused the nation to forget even that loss of freedom by which they have been purchased. However this may be, notnlng is more certain than that the policy which has enriched the rural districts and rebuilt the towns of France — which is doubling her agricultural produce, and has more than doubled her foreign trade, is irreconcil- ably opposed to the policy of aggression and war. The two things cannot co-exist." I have dwelt at some length on the origin, position, and results of the Credit Foncier of France — not because I had not many other instances of the satisfactory working of the Instituion ; but because it is the most recent development of the system. It is the one with which, from proximity we are most ftimiliar. It is before our eyes — an astonishing and wonderful example of what may be achieved by energy of action and perseverance, and that constancy of purpose, which, through difficulties, and it may be defeats, still presses on- ward to its object. The Government of Louis Philippe had the system under consideration for years — they encouraged essays to be written upon it, and they issued commissions of enquiry. They knew its history — were acfjuainted with its advantages, with its beneficent results wherever adopted ; and they were convinced that it would be one of the most powerful means which could be adopted for the regeneration of the soil of France — they foresaw, 1 could not realize the splendid opportunity — for there were certain opposing interests which deferred action, and with which they had not the courage to grapple ; and so it was left for Louis Napoleon to reap where they had sown, .;nd who, disregarding and setting at nought all the petty sectional and personal interests which assailed him, and which deterred his predecessor, looked only to what would benefit the people whom he loved, and to whom now belongs the sole credit of founding an institution which is, and will be for all time, one of the most glorious monuments of his reign. But France has a populution of upwards of thirty niillions, and an Institution which might succeed by tlie aid of more numbiTs, would not flourish in a country where the population was small and widely spread. No dnuht t!u» TnFtltulInn in Frauot^ wuh f'lvnrod by ninny .t it 14 circumstances, though its difficulties were great, and to many minds appeared ahnost insurmountable. The old mortgage system had be- come odious in the estimation of the masses. Its reform had engaged the attention of many emminent men, and among them of the sagacious and discreet Casimir Perier, who, as early as 1826, in- voked competition on the subject, and oifercd a prize of $600 for the best essay— and, as already stated, successive governments had issued commissions of enquiry into the system, which had existed some years in the neighboring countries— the people were ripe for a change ; and moreover, when the change came, it had the all-power- ful support of tlie Emperor and the State, and of a vast population. This, therefore, might be considered an extreme case. It was, no doubt, a brilliant example of the successful working of the landed credit system ; but it was only an extreme case in regard to the num- bers of the population amongst whom it was organized— it had never before been tried on so large a scale, and its success was grand in proportion. But, wherever the new system has obtained a foot- ing irrespective of the question of population, whether great or small, its success has been I'niform and surprising; and to prove this position, I propose to give an historical n'sume of the Landed Credit system. I shall make free use of the documents which have been collected by the Freucli Government in order to give a general idea of the new Iu;-titution to those who have no recourse to the works which I shall venture to cite, and in the investigation I shall especially refer to the Ileport of M. Josseau, the Government Com- r issioner, made to 31. Dumas, the Minister of Agriculture and of Commerce— to the efforts of M. Wolowski, who was the chief founder of the Paris Institution, and to the letters of Count de Per. signy, THinistcr of the Interior— and I shall carefully note the countries and tlio populations where the institutions are founded, in order that some conclusion may be arrived at as to the applicability of the system to our own. The Institutions of Landed Credit which exist in Europe, are very numerous ; and although they all have the same object, they are founded on different bases, and may be divided into two classes. Those which are founded by associations or companies, and are administered by Directors, and Those which are founded and governed by the state. Landed Credit Companies are divided into two groups.' First.— Companies formed by borrowers, with or without tho 15 guarantee of the state, but always established under the surveillance of the Govennent, and to a certain extent with its concurrence. Second. — Companies which, although rendering service to the borrowers, are principally in the interest of the lenders. — They are founded with or without the guarantee of the State ; but in either case, conduct their business under the surveillance of the Government. In the first group are placed : 1. The Companies of Landed Credit of the Prussian Monarchy es- tablished in the following provinces, arranged in their chro- nological order : — Silesia. The Marches of Brandebor.rg. Pomerania. Western Prussia. Eastern Prussia. Grand Duchy of Posen. 2. Establishments of the Kingdom of Hanover. These are :— The Institution of Mortgage Credit of Lunebourg, established at Zalle. The establishments of Landed Credit for the principalities of Calenberg, Grubenhagen, and Hildesheim. Those established for the Duchy of Bremen and the principality of Verden, established at Stade. Those instituted for the principality of Eastern Fries- land. Another establishment of Credit for the Kingdom of Hanover, instituted for the redemption of the tithes and the serfs, afterwards extended to mortgage loans, is governed exclusively by the Govern- ment, although the guaranty is only given to a certain amount. 3. In Austria— The Institution of Credit of Gallicia. It is the only one founded in the Empire. It is managed by a Company with the concurrence of the Provincial Diet. 4. In Wurtcmberg— The Association of Credit of "Wurtemberg. Although a little different from the preceding in its organiza- tion, comes within this class of establishments. 5. In Saxony— The Association of Credit of the Kingdom of Saxony. The Mortgage Bank of the Provincial States of Upper Lusacla. This bank is administered by a delegation of the Provincial States, under the credit of the State, but not directly by it. 16 6. In Mecklembourg, the Association of Landed Credit is governed by delegates from the two Grand Duchies, under the sur- veillance of the two sovereigns. 7. At Hambourg, there is a Bank of Credit for the city property. 8. At Bremen — An Institution which guarantees the issue, by the proprietors, of mortgage notes. 9. In Denmark — P]stablishments of Landed Credit organized by borrowers. 10. In the Empire of Russia — The Association of Credit System in the Baltic Provinces, — Livonia, Esthonia, and Courland. There are farmers banks in the same provinces. 11. In Poland — The Society of Credit Territorial. In the second group of establishments of landed credit, that is to say, of those founded and governed by commercial companieg^ which are in the interest of the lenders more than that of the borrowers, we class the following establishments : — In Bavaria — The Mortgage Bank of Bavaria, which unites loans on mortgage with discount and insurance operations. In Hesse-Darmstadt — An establishment {Renten Austalt) for loaning in connection with Tontines and Life As- surance. In Nassau— The National Bank of Credit of the Duchy. The Communal Banks of Wurtemberg, making loans on mort- gage or on promissory notes. 5, In Switzerland — The Mortgage Banks of Berne and of Basle. 6. In Belgium, the Freeholders' Bank — it lends on mortgage but also on deposits. We come now to Landed Credit InstitutiouG founded and directed exclusively by the State. 1. Hesse-Cassel, the Bank of Landed Credit, instituted principally with the object to aid the redemption of tithes, servitudes and other feudal services, but making also small loans on mortgage. 2. Hanover — Institution of Landed Credit for the Kingdom of Hanover, established for the same object as just mentioned, but extended afterwards to making loans on mortgage. Prussia — Various Banks founded chiefly in Westphalia for the object of discharging incumbrances on the land and redeem- in cr feudal services. 4. Bi'.rden — Bank instituted for the same object. 1. 2 3. 4. 3 17 . 5. Denmark — Bar^k for lending on mortgage and also on personal security. 6. Great Britain — There does -^ot exist any Institution of Landed Credit, properly so ca. jd. The constitution of property and the want of a general registry are opposed to it ; but the Government, some years ago, made large advances to dis- tressed landowners for the purpose of draining their land, on the landed credit system, and the Poor-law Unions have contracted loans on the same principle, that is, of paying oflF a certain portion of the debt every year ; and in Ireland an attempt is now being made to establish the system in con- nection with sales of land in the Encumbered Estates' Court. 7. Russia — One of the most considerable establishments of landed credit is the Loan Bank of the Empire ; some other Banks of the Government established for benevolent objects, loan, on landed credit ; but all these establishments are linancial establishments, that is, they loan for their own benefit exclu- sively. 8. Belgium — The adoption of the law of 1850, presented to the Chamber by the Minister of Finance, created a very complete establishment, and is noticed as one of the best of those goverened by the State. Origin of the Institutions of Landed Credit. The first Institution of Landed Credit established in Germany was in Silesia, about 1770. The system was afterwards adopted in the Marches of Branden- bourg, in 1777; in Pomercnia, in 1781 ; at Hamburg, in 1782; in Eastern Prussia, in 1787 ; in AVestcrn Prusia, in 1788 ; in the principality of Lunebourg, in 1791 ; in Esthonia and Livonia, in 1803; in Schleswig and Holstein, in 1811 ; in Mecklinbourg, in 1818 ; in the Grand Duchy of Posen, 1822 ; in the Kingdom of Poland, 1825 ; in the principality of Kalenbourg, Grubcnhagen, and Heldesheim, in 1825 ; in the Duchies of Bremen, and of Ver- den, in 1820; in Bavaria, in 1820; in Wurtemberg, in 1827; in the electorate of Hcsse-Cassel, in 1832 ; in Westphalia, in 1835 j in Gallecia, in 1841 ; in Hanover, in 1842 ; in Saxony in 1844 ; in France, in 1852 ; in Canada West, in 1859 ; and I believe I may add, in the new kingdom of Italy, in 1802.. The earliest Institution for the purpose of making loans on the 18 Landed Credit principle, was established in Silesia, after the seven years war. The country was in a deplorable condition by reason of the war, and the low price of provisions after the war was over — the rate of interest had risen to above 10 per cent., and a commission of 2 and 3 per cent, in addition, was demanded of these ruined proprietors. — The aggregate of their debts was enormous, and they were every day in fear of losing their estates ; but they gained a temporary re- lief by obtaining from the King of Prussia an indulgence which deferred their respective payments for three years. In the meantime, the wretched condition of the landed proprietors gave to a trader of Berlin, M. Biiring, the idea of relieving the dis- tress by substituting for the responsibility of each debtor, the col- lective guarantee of a society or company of landed pi'oprietors, whose estates should all be pledged to the Company by a contract of mortgage. The adoption of the plan, imperfect as it was at first — for it was some time afterwards beforejthe grand feature in the sys- tem, that of extinguishing the debt by means of a sinking fund was adopted — produced the most admirable effects — until now the Cap- italists would not freely lend to a half ruined proprietor. It was only the small usurer, with his liigh interest and commission besides, who then engaged in the business of money lending. He knew well that his excessive charges could never be paid out of the mere profits of farming — but that consideration troubled him not — and the far- mer also knew that he could never pay those charges without postpon- ing the payments of the debts more rightfully due to his tradesmen ; more rightfully, because in one case an advantage had been taken of the necessitous ; and, because in the other, the most implicit confi- dence was reposed. But the occupation of the usurer, in Silesia at least, was gone ; and the Capitalist, properly so called, stepped in on the adoption of the new plan. The rate of interest immediately fell, and the proprietors, whose credit was only a short time before so bad, that they were in momentary expectation of being dispossessed of their estates, were thus enabled to obtain fresh and additional loans. Agriculture, more than ever, prospered ; and the land, in conse- quence of these new advantages, increased rapidly in value.^i- The irreat success of the Silesian Institution, encourasred the establish- ment of others in the countries we have already named, each Insti- * X'm\\\. 'i.'viovv.Oi.t. 1867. 19 tution po,-J',>:i. o, wo may remark in passing, were adopted by our GovernmvMit, ai.d if, at any time, the provincial exchequer should be unable to boast of an excess of receipts over payments, and the Minister of Finance should be looking wistfully around for 23 oo- ,'' .. means to supply the deficit, there would be in the simple expedient of a per centage on the annuities, or, what would be better still, a uniform stamp lax on mortgages, and, indeed, it might fairly enough be extended to all conveyances— the realization of a very respectable sum. No tax would be more easily and cheaply levied, or so justly imposed, and none would be more cheerfully paid. The number of mortgages, conveyances, releases, discharges, wills, &c., registered in five counties for the year 1861, averages 1,350 for each— the Govern- ment returns would show the accurate general average. If, in round numbers, the registrations are found to average 1,000 for cjicu of the 03 registry offices, and a uniform tax of $2 be imposed on e.",fh registration, we have, as the result, an item of revenue which a Finance Minister could not but view with undisguised satisftiction. But Canada would take higher ground ; and if any such impost were resolved on, it would be irrespective of any ques- tion of guaranty. Her recompense, if she adopted the system, would be best found in the vast increase nf +l:o material prosperity of the people, and in a proportionate augmentation of the public revenue. Riglits of the Debenture holder.— To obtain payment of his in terest, the Debenture holder does not look to the borrower indi. vidually— he looKs to the Company which charges itself with the especial duty of enforcing payment for him of the annuities due by the borrowers. Rights of the Association.— 'IXiQ Associations have no power to coerce the borrowers, so long as their annuities arc punctually paid, but as from the regular payments of the interest, depends both the exactitude of their operations and the maintenance of their credit, the legislatures accord to them the rights to exercise vigorous and summary measures against those debtors who are slow to fulfil their engagements. When the term is expired, and when repeated summonses to pay are disregarded, the association takes possession of the mort- gaged property, and appoints a receiver The seizure remains until full payment of the debt, capital, interest, and costs, unless the statute provides for the sale of the property within a certain time, or unless they permit the proprietor to free himself by putting his lands out to farm. The society is, in addition, authorized to contract a loan upon the property, in the name of the proprietor during the time they art in possession, and the completion of the sale. 24 Nevertheless, it would be unjust to apply these rigorous maxims when, ficm great calamities, which it is impossible to foresee or pre- vent, the proprietors are hindered from paying regularly their annui- ties. Also, in like case, upon notification of the disaster to the directors, they will, after enquiry, not hesitate to give the debtor according to circumstances, eith^^r an extension of time, or even a fresh advance, in cder to prevent couipletu loss of the property distrained. Reserve Fund. — To provide for contingencies, each institution possesses a fund of reserve. The fund is composed of various elements, especially of a moderate and proportional contribution, payable once for all at the time of making the loan. In Gallicia, the contribution is 3 per cent, on the sum loaned. The reserve is invcstea in such a mannei' as to be nlways available. Privileges. — The associations enjoy important privileges. In Bavaria, the association has bunking privileges, and its notes are a legal tender to a certain amount — some institutions are exempt from i,lie stamp and registry laws, from certain law costs. They are authorized to invest in lettres de gage, city funds, funds of trus- tees or corporations, of savings banks, and bank deposits. Snhsidy. — In addition to which the majority of the Institutions in their beginning arc endowed by the state. Thus, Frederick II. made to the association of Silesia an advance of 300,000 tlialers at 2 per cent., which being invested at 5 per cent., is tantamount to a subsidy of 3 per cent.* M. de Struensee, Minister of State of Prussia, in his Traite sitr le credit values the groGs profit of this sub- sidy at $13,928, and the net profit at $7500 per annum. The associations of Gallicia, Saxony and Posen, were endowed by the Government. In llussia, the Emperor Alexander, advanced the first funds no cessary for the organization of the Landed Credit Bank of Esthonia, viz., 500,000 silver roubles at 3 per cent., and 3 per cent to a sinking fund, which extinguished the luan in sixteen years. Mamujement. — The management of Credit Foncier Institutions is ordinarily composed of a Government Commissioner ; of a Board of Directors, charged with the ordinary afiairs ; of numerous employes, of a committee which meets on special occasions ; of special commis- sions in the different districts of the province; and finally by general meetings of shareholders. The .salaries and costs of managouicnt of a society which has • (Kiivn-s lie Frcilcric k- Criiml, Vol. tl. p. "s. 25 In attained to considerable magnitude, are defrayed on an average by a quarter per cent, of the loans effected. The surveillance of the state is exercised very scrupulously upon all acts of the management. The commissioner has the right to as- sist at all deliberations— his acquiescence, attested by his signature upon the bonds of the society, is a condition of the existence of these securities. The institutions, of which we have analyzed the rules, are all the work of private tnterprise. But tho^e founded and governed by the stat3, such as the Landed Credit Banks of Hesse Cassel, of Den- mark, and of Belgium, are based on the sama principles. Such is a general outline of the organization and government of the Landed Credit Institutions on the coutinent of Europe, and we proceed now to notice The results obtained hy them. If the associations of Landed Credit are powerless to create capi- tal, they have at least the virtue of circulatinj^ and better distribut- ing that which exists. At this point of view they fulfil the functions of perfect machines of circulation. Better than individual credit— collective credit, al- though not able to prevent c-ises, can at least modiry their disastrous consequences. Everywhere where they are established, they have resulted in fa- cilitating the freeing of property from incumbrance — of furnishing to the soil the means of improvement, and of imposing an obstacle to the excessive parcelling out of properties. In Germany, the property of the peasants was bi:rdoned with aa immense number of feudal charges, real and personal. Since 1815^ different laws have authorized the redemption of the greater part of these charges. The Banks of Credit Foiicicr have had the effect of rendering the redemption possible, by advancing to the landed pro- prietors funds which they have had the privilege of repaying by means of a sinking fund, and at a long date. These operations, wh^^h arc not yot terminated, especially in Austria, have in general removed the burdeii.H on proi)erty. The farmer has been enriched, and his freedom from debt has increased tl.'^ property of the country. The following is a resume of the advantages which the associa- tions of Laniled crcidit offer to the borrower and lender : — To the borrower. 1. They enable him to borrow with great casr, the sum he requires without heavy expenses of agency. 3 26 2. They avoid the possibility of his ever being oalled upon to pay off the debt suddenly or unexpectedly. 3. They give him the means of discharging the debts by small pay- ments. 4. In rigorously obliging him to pay the interest with regular ity, they create habits of order vehich, at the same time benefit his farming operations. The association in short, is inexor- able, and however little the debtor is in arrear with his annu- ity, steps are immediately ta' on to enforce payment. 5. They increase the value of landed property. 6. They render the sale and purchase of estates more easy, for a mort- gage on the Landed Credit principle is a benefit, and not as compared with the old mortgage plan, a disadvantage and a bur- den. 7. The borrower, paying his annuity, has no fear of ever being dis- possessed. The advantages to the lender. 1. They offer to him a sure investment— he has the security of a number of estates collectively, instead of only one, to- gether with the certainty of his interest being paid regularly to the day, without his ever having to seek after, annoy, or dispossess any individual — the Institution alone is responsi- ble to him. 2. The lender has no anxiety, care, or even thought, as to the charac- ter of any individual mortgagor, or of the value of the land mortgaged. 3. The security or lettre de gage which he holds is a marketable commodity easily transferred from hand to hand, and without expense, so that he can convert it into money at any moment. As we have elsewhere seen, these desirable objects are carried out by means of an association or company, and is called The Intenmdldnj.— The duties of the Intermediary are to see that the estate proposed to bo mortgaged is fairly estimated and valued. To cause the title to be investigated, and which in Franco and Prussia, and we may add in Canada, where a good system of registration prevails, this is a very simple matter in the great ma- jority of cases. The liistory of every estate, with the debts upon it, being found concisely written in a book kept at the registry office of cacli county. In England, on the contrary, necessity for a search- in"- investigation into tlio title of every borrower, would gfc-atly in- crease the responsibility of the Intermediary, and at the same time 27 dis- add largely to the cost of the transaction* — one leason doubtless why the system there has not yet been carried out to any extent. — As we have mentioned, where it has been tried, as in the case of loans made by the Poor-law Commissioners, and loans for drainage of lands, the best results have been experienced. But we proceed to consider a most important point, and which, we think, clearly de- monstrates the value of Landed Credit debentures over all others, viz — The Currency of Lettrcs de Gage. — To give a correct idea of the success which has attended the institutions of Credit Foncier, it is interesting to know the position which the lettrcs de gage, as regards their negotiation, have occupied at different epochs, and especially at that following the agitations which the revolution of February, 1848, produced throughout the whole of Germany. The Report of M. Royer, Inspector of Agriculture, and the Commissioner appointed by the French Government in 1845 to proceed to Germany to study the organization and the effects of the Landed Credit Institutions established there, informs us of the posi- tion of the principal establishments founded between the years 1808 and 1843, that is to say, during three periods : — 1st, The period of depression caused by the wars of the French Empire : 2nd, That of prosperity since the peace ; and, 3rd, That which followed the reduc- tion of the interest on the lettres de gage to 3^ per cent., and the suppression of the right which the holder of the letter de gage had to require payment at any time.f During the first period, the dcprccintion was less than that of the public funds and other securities of a public nature. During the second period, the lettres de gage arc generally quoted above par, and the suppression of the right of repayment adopted in 1839 did not sensibly affect the price, and these securities, after a mo- mentary depression, promptly rose to above par. But we refer to a more recent period. In 1848, tlie revolution of February caused the value of all classes of securities to give way. During this year, the medium price of lettrcs de gage producing 3]^ per cent, interest was in Silisia and Pomerania, 03 ; in Western Prussia, 83 ; in Eastern Prusia, 90. But to appreciate these quotations at their just value, we must view them as regards the other public securities, which experienced * " Eiiii. U"Vi«vVj" Ort. !K&T=i'it!a Kuidt'il Crt'dit— Thf article would v>M ropiy j" + hk'p no to ropayment of lottres rto giigc, p. 21. riiftiil. 28 a frightful depression after the 24th February, 1848. At this time the English funds fell 10 per cent. ; thus the Prussian rentes were quoted, on an average, at 69 per cent. ; the shares of the Bank of Prussia at 63 per cent. ; and railway shares from 30 to 90 per cent. The parallel is, then, all in favor of the lettres de gage. In 1850, the comparison sustains itself with the same advantage. Thus, whilst the public debt of Prussia, 3| per cent., was at 86^ (on 30th April, 1850,) the lettres de gage of the various Prussian banks (3|) were marked at 90 to 95f \qv cent., the lettres de gage of Po3on (4 per cent.) were negotiated at this time at 102, those of Mecklem- bourg at 103. The amount of the lettres de gage put in circulation by the prin- cipal institutions of Credit Foncier in Germany, further illustrates the importance of the services which they have rendered to landed property. The following table, compiled by M. Josseau, furnishes some useful information in this respect : — COUNTRY. Populatiop. AVhen Founded. Silesia, Prussia Silesia (Royal Institution) Brandcnbourg Pomerania Prussia — Western Prussia — Eastern Pomania OTHER COUNTRIES. Hanover Mccklombourg • Saxony Bavaria Wurtcnberg Hesse — Electorate Baden , Nassau 424,817 Gailicia, Austria 4,702,388 3,003,809 2,060,993 1,163,073 1,019,105 1,480,348 1.304,399 1,758,847 624,477 1,836,433 4,504,874 1,725,157 754,590 1.335,200 1829 1838 1837 1837 1837 1837 1844 1844 1846 1846 1849 1846 1841 1840 1840 1843 Amount in Circulation. $20,646,440 675,500 8,911,464 11,120.568 7,767,304 8,432,844 10,160.500 6,800,000 3,008,736 750,036 6,000,000 2,386,184 7,597,648 268,580 1,284,000 2,282,800 Total., ,27,827,990 104,093,604 Tiie mort-agc debt of some of tb