THE PRTNCIPAIv RURAL LAND CREDIT INSTITUTES 63 



3,354,000 crs. The foundation members were all nobles. The contrib- 

 ution was at least 5,000 fls.; 10 % paid up in cash and 90 % in bonds. 

 These bonds were gradually redeemed as the reserve fund was formed, so 

 that, in 1876, Vn^ of the guarantee fund had been returned to the found- 

 ation members. The last tenth is still retained and bears interest at 5 %. 



The foundation shares can only be transferred with the consent of 

 the meeting of foundation members, and the regulations with regard to 

 this are very strict. 



From the start, the founders liad special rights in connection with the 

 supervision and management of the institute. In 1880, the rules sanctioned 

 a special meeting, of foundation members, in addition to the other adminis- 

 trative authorities of the institute. This meeting has the right to submit 

 three names to the Committee of Supervision (Board of Directors) for the 

 choice of the managing director, to nominate 18 of the 36 members of this 

 Committee and send a representative to vote at the general meeting. Of 

 the ordinary members (mortgagers), only those who have contracted a 

 loan of at least 100,000 crs. with the institute may vote at the meetings. 



From the first, the State has favoured this institute, granting it 

 facihtations in the matter of legal procedure (orders of August 2"*^. and 

 September i8t^\, 1863) and exemptions from stamp duties (order of 

 June 15*^., 1863) and recognising its bonds as securities in which minors' 

 capital may be invested. 



Besides this, the institute enjoys all the privileges granted to the Au- 

 stro-Hungarian Bank by the I.awXIV of November 29'^., 1879, and the law 

 XXI of 1876 rendered valid certain provisions in its rules not in ac- 

 cordance with the regulations for Co-operative Societies in the Hungarian 

 Commercial Code. 



The loans are granted to the land holders in the form of bonds up to 

 an amount of not more than half the value of the land mortgaged. The 

 debtor may choose the type of bonds he prefers and may claim that the in- 

 stitute must sell him its bonds, without charging commission. Each borrower 

 must deposit i % of the loan received to form a special mutual soHdarity 

 fund. On the extinction of the loan, the amount thus deposited is with- 

 drawn by the member, together with the simple interest accruing. 



The borrower does not now contribute to the working expenses, but 

 only a small amount (0.06 %) to the reserve fund. But at the start his 

 contribution to the working expenses was ^/.j %. 



In 1888, the institute conducted credit operations to facilitate the recti- 

 fication of the course of streams and other works of farm improvement. 

 In order to facilitate these operations, by law XXV of June 26"\, i88g, the 

 State exempted the bonds issued in this connection from stamp duty and 

 other taxation, but fixed the rate of interest at not more than 4 ^j^ %, 

 including ^j^ %, contribution to working exj^enses. The annuities due to 

 the Institute were considered as preference credits, taking precedence of 

 any other mortgage claim, and only yielding precedence to the State and 

 communal taxes. 



