64 HUNGARY - CREDIT 



The Hungarian Land Credit Institute began its career with the issue 

 of land and other bonds. The latter were given to land owners who con- 

 tracted short term loans, for 15 % of the value of the mortgage if the loan 

 was for 5 years and for 25 % if it was for 10 years. Up to 1870, bonds 

 at 6 % had been issued up to the amount of 1,070,000 florins. The land 

 bonds bore interest at 5 V2 % ^^^ were redeemable in paper. But since 

 the paper circulation with its fluctuations in value affected the price of 

 securities and they also had only a limited sale, in 1872 bonds were 

 issued redeemable in silver in order that they might find purchasers abroad. 

 In more recent years an attempt has been made to place land bonds re- 

 deemable in gold in Germany but it was not crowned with success. 



The price of the bonds redeemable in paper varied in the ten years 

 1871-1880 from 81 to 8y, so that the borrower had really to pay a rate of 

 about 6 14 % "^ot including sinking fund. 



On Februarj^ i**., 1877, the Institute issued land bonds redeemable 

 in paper at 5 % and so reduced the contribution the borrowers had 

 to pay to working expenses from ^ to ^/g % ; in 1880 it issued bonds at 

 4 ¥2 %' which were placed in Vienna and at P^rankfort. In 1887 it began 

 to issue bonds at 4 %. In 1895 the older bonds at high interest were 

 converted, on payment of a premium, into bonds at 4 %. With this 

 conversion, which was fully successful, was associated an issue of land 

 bonds at 3 ^ % , which had already been decided on three 3^ears before 

 and which was made abroad at the average price of 91. 



The amount of the mortgage loans rose at the end of 1910 to 

 381,929,357 crowns as against 284,748,759 crs. lent in 1900. In addition 

 to this on December 31'*., 1910, the institute had conducted improvement 

 credit business to the amount of about 75,000,000 crs. 



At that date the institute had a special guarantee for its bonds in a 

 reserve fund of 18,884,390 crs., for mortgage loans, another of 8,431,520 crs. 

 for improvement loans and a mutual solidarity fimd of 5,577,526 crs. The 

 net profits accumulated since the foundation of the institute amounted to 

 14,426,795, crs. since the whole of the credit balance had to go to increase 

 the capital of the institute even after the special reserve funds contemplated 

 in the rules have been formed. Thus the total capital (including the con- 

 tributions of the foundation m.embers and of the State) amounted in 1910 

 to 48,655,641 crs., or 10 % of the Institute bonds. 



We must finalh' observe that the Hungarian Land Credit Institute, 

 in addition to land credit operations, also engages in other business, de- 

 posit business, discounting etc. 



2. — The National Land Credit Institute for Small Landowners was 

 founded at Budapest in 1879 ^^^ the State favoured its foundation with 

 a grant of 500,000 florins. 



The privileges, conferred b^^ Law XXXIV of June 8^-'. ,1871 on the Hun- 

 garian Land Credit Institute, were extended to this Institute. Here also 

 we find two classes of members, foundation and ordinary members. The 

 foundation members are those contributing to a guarantee fund with shares 

 of 100, 500 or 5,000 florins. They are only liable up to the amount of 



