56 INFORMATION RELATING TO CREDIT 



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2. THE PROROGATION OF MORTGAGE DEBTS FROM 31 JUI,Y 1914 TO 31 DECEMBER 



1 91 6. — Vcrldngerung im Kriegc fdllig gewordener Hypntheken. — Bankarchiv, i February 

 1916 and I May 1917. 



At the beginning of the present war, on 7 August 191 4, German}^ 

 decreed a legal moratorium affecting all private credit. The courts were 

 authorized to grant to debtors a prorogation for three months of the date 

 on which payments fell due, if the step were justified by their economic 

 circumstances. 



lyater, on 22 December 1914 and 8 June 1916, decrees were voted 

 which concerned especially the prolongation of the period allowed for the 

 payment of mortgage debts. These decrees authorize the courts to grant , 

 such prorogation to mortgage debtors on the following conditions (art. i) : 

 i) that the debtor's economic position justify the grant ; 



2) that the debtor have shown himself worthy of the privilege by 

 his punctual payments before the war ; 



3) that the creditor suffer no extreme disadvantage. 



The prorogation is granted by means of a sentence or a legal decision 

 (art. I and 4). 



For the principal debt, that is the capital, the delay is for twelve months, 

 after which the courts are authorized to grant a new prorogation for twelve 

 months, similarly renewable. Where interest is concerned the proroga- 

 tion is for six months only and cannot be renewed (art. 2 and 5). 



Besides this legal moratorium there is a moratorium by contract ; 

 that it so say the date of payment may be prorogued b}^ a contract between 

 a debtor and a creditor. In the case of debts other than mortgage debts 

 the contracting parties may come to a free agreement as to the terms of 

 such a contract ; but in the case of mortgage debts these terms must follow 

 an agreement made among the German mortgage banks which belong to 

 the Central Association of German Banks and Bankers. This agreement 

 was concluded on i February 191 6 and signed by twenty-seven German mort- 

 gage banks. The ten remaining mortgage banks granted prorogation to 

 their debtors in accordance with the terms of this agreement, in spite of 

 the fact that they did not sign it. 



The terms of the agreement are as follows : 



1. The mortgage banks are bound to grant a prorogation of the date 

 of payment to their members, even if such is not granted by the courts. 



2. The prorogation is for a longer or shorter period — six months to 

 ten years. 



3. In granting it the creditor bank may not exact either too high a 

 rate of interest or an excessive commission. 



4. These provisions do not apply to debts contracted during tbe war, 

 in the carse of which creditors need not grant a prorogation, or ma^^ grant 

 it on conditions other than those which have been set .out. 



