"Covered Farm Mortgage Bonds in the Late 19th Century U.S."

"Covered mortgage bonds have been used successfully in Europe for two centuries, but failed in the U.S. when introduced as farm mortgage debentures in the 1880s. Using firm-level data and a sample of loans made by one Kansas mortgage company, I find that debenture programs grew out of established loan brokerage operations and were used to fund mortgages that were difficult to broker because of size, term or risk characteristics. Debentures broadened access to the interregional mortgage market and facilitated an expansion of western farm mortgage debt before the innovation failed in the mortgage crisis of the 1890s."

The paragraph above is the Abstract of a 35-page academic paper written by Kenneth A. Snowden, an Economics professor at the University of North Carolina (Greensboro), titled "Covered Farm Mortgage Bonds in the Late Nineteenth Century U.S."  The paper documents a little-known, surprising bit of history about "the second of three unsuccessful attempts to introduce covered bonds into the U.S. mortgage market before 1930."

Issued in July 2010, the paper is available for download from the National Bureau of Economic Research (NBER Working Paper No. 16242).   There is usually a US $5 charge, but the download is free for "a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a '.GOV' domain name, or a resident of nearly any developing country or transition economy."

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