88 RUSSIA - CREDIT 



to grant it on the following conditions : The borrowers were to deposit their 

 security in the buildings specified by the Bank, which v\K)uld keep the keys; the 

 loans were granted by the ordinary Discount Commissions, which fixed 

 their amount in accordance not only with the value of the security and the 

 facility of realising it, but also with the confidence that the borrower 

 inspired. 



The rate of interest was not to exceed the ordinary rate of discount. 

 The latter was still too much for the peasants to pay; so the development of 

 the institution proceeded very slowly. 



In 1893 the abundant harvest brought into prominence the question 

 of the reorganization of credit on security of grain and the Minister of Fin- 

 ance took measures, which, at first provisional, became definite in the 

 following year, after they had undergone certain modifications suggested 

 by experience. 



The formalities in connection with the loans were at first considerably 

 simplified; the borrower was able himself to keep the grain given as security 

 or deposit it with the various State functionaries or in the buildings of the 

 " arteUes ", co-operative or other societies etc. The maximum amount of 

 the loan was fixed, according to circumstances, at from 60 to 75 % of the 

 value of the security. The loans had to be repaid in instalments within 

 a maximum period of nine months, the interest varjdng from 4 14 to 6 %. 

 Not only threshed grain but even grain not threshed and other agrictd- 

 tural produce was accepted as security. The amount of the loans was paid 

 by the local treasury ofiices, or even sent through the post. 



The result of so liberal a reform was a considerable increase in the num- 

 ber of loans on the security of grain. From 1885 to 1892 the amount of 

 these loans was only 19,600,000 roubles; for the year 1893 alone it was 

 29,600,000 roubles, increasing to 50,900,000 roubles in 1894 and to 

 62,300,000 roubles in 1895. 



However, since 1896, the State Bank has thought fit to order its branches 

 to exercise the greatest prudence in the grant of loans to farmers re- 

 taining possession of their security. On the other hand, the term for re- 

 payment was reduced to six months, with a possible extension of two 

 months in certain special cases. 



On account of these restrictions, the amount of the loans decreased : 

 in 1896 to 37,500,000 roubles ; and in 1898 to 36,100,000 roubles. 



The conditions for the loans on security of grain have scarcely varied 

 since then, but, in recent years, the Government has made great efforts to 

 develop the loan business through the medium of the zemstvos, co-oper- 

 ative credit societies, private credit institutions and railwa3^s, considerably 

 reducing the rates for loans for them. Thus, in August, 1893, the 

 rate was fixed at 6 % for direct borrowers and at 5 ^ % for inter- 

 mediaries. 



The State Bank being in the first place a central Bank of Issue, the 

 decrease of its direct loans was exceedingly desirable. 



Various other steps have been taken to diminish the cost of the custody 

 of the security ; the borrowers have especially received considerable facil- 



