WORK DONE BY THE MORTGAGE CREDIT BANK 65 



12th., 1912, the President of the Republic was authorised to sell, either at 

 home or abroad, the bonds of the Mortgage Bank payable in current 

 money, belonging to the State and appropriated by law to the payment 

 of the national debt and to the formation of the guarantee fund of the 

 Nitrate Credit Bank. 



B>' the same law, the Government was empowered to substitute, through 

 the Mortgage Credit Bank, a part of these bonds to the value of 55,000,000 

 pesos, for an equivalent amount in bonds payable in national or foreign gold 

 at 5 % interest with i % sinking fund. The law prescribed the manner in 

 which the Bank should proceed for the destruction of the bonds for which 

 the new issue was substituted, and guaranteed the Bank against eventual loss 

 which it might suffer in issuing the new bonds, ovv^ing to the alteration of the 

 standard of international exchange. The Germanic Bank of South America 

 ofEered, in the name of a German banking syndicate, to vmdertake the finan- 

 cial business. By a definite contract of October nth., 1912, it was stipulated 

 that the syndicate should purchase the 5 °/o bonds issued by the Bank for the 

 sum of 30,999,984 gold pesos of i8 pence or 47.999,976 marks, corresponding 

 with the simi of 50,917,474 current money, the nominal value of the 

 bonds held by the State and deposited in the Bank of Santiago. The 

 issue had to be made in 117,647 certificates of 500 francs each (408 marks). 



The purchase price agreed upon was 164 pesos 25 centavos current 

 money, for every 100 pesos in gold of 18 pence. The term for repayment 

 of the bonds was fixed at 37 years, the Bank reserving the right of efiecting 

 extraordinary payments. The bonds are payable to the bearer, and are 

 printed in Spanish, German, French and BngUsh; they are exempt from 

 any tax whatever in Chile. By the terms of the contract the banking syn- 

 dicate was at liberty to invest the bonds for its own exclusive account, 

 whenever it deemed it desirable. 



The bonds in current money belonging to the State were consigned to 

 the Bank, which, by means of an ofiice specially formded for the purpose, 

 proceeded gradually to bum them. The issue of the new bonds cannot, 

 owing to the necessary formalities, be completed within the year: The results 

 of the subscription of May 14th. at 9614. with half yearly interest beginning 

 from February 15th., were very satisfactory. The bonds were officially 

 quoted on the BerUn Exchange and thus another important financial 

 market was opened to Chile. 



In addition its own special work, the Bank has undertaken the man- 

 agement of the afEairs of the Nitrate Credit Bank. This institution, by 

 law of September nth., 1912, had to cease business, and the Mortgage 

 Credit Bank has had to undertake the issue of documents of title and 

 the work in connection therewith till all liabihties are paid off. The 

 Treasury is to compensate the Bank for any losses which this might 

 inyolve. Under the above mentioned law, the Bank also took over the 

 debt of the Valparaiso Company for £31,202 and that of the Cit\ Railway 

 Company of San Bernardo for 106,937 pesos. 



