THE PRINCIPAL RURAI. LAND CRKDIT INSTITUTES 67 



years and the instalments were reduced to 7.5 %. The conditions were 

 modified successively in 1887 and 1893. In the latter year the instalments 

 were fixed at 6 % for loans repayable in 40 14 years. In IQ03, the Institute 

 also introduced a type of loan redeemable in 50 years. 



The first issue of land bonds was made in 1876. Notwithstanding 

 that these bonds gave right to interest at 5 ^-2% and a premium of 20% at date 

 of repayment, they were only quoted at from 66 to 69. It was therefore con- 

 sidered necessary to make a second isstie at 6% and reduce the premium to 

 10 %. This succeeded perfectly ; the bonds in fact were quoted at loi. Then a 

 third series was issued in 1881 redeemable in 27 years, at the same rate of 

 interest, without premium and the bonds where quoted at 102. 



The fourth series was issued in 1884 at 5 ^4 %' redeemable in 30 y^ 

 years. Since at that date the land bonds of this institute were accepted 

 as security by the Government and the Austro-Hungarian Bank at Vienna, 

 the prices continually rose, so that in 1887 ther-j could be issued at par a 

 fifth series at 5 % and in 1893 a sixth at 4 14> both redeemable in 40 ^ 

 years. In 1902 the seventh issue was made, at 4 %, but in 1909 it was ne- 

 cessary, when the eighth issue was made, to raise the rate to 4I2 %■ These 

 two last series were reedemable in 50 years. 



At the end of 1910, there were bonds in circulation to the amount of 

 70,636,800 crowns. The bonds at 4 14 % ^^^ a nominal value of 56,667,900 

 crs. ; those at 4 % a value of 12,120,100 crs. and those at 5 % of 1,848,800 

 crs. At the same date the reserve fund amounted to 2,056,619 crs. (in- 

 cluding the initial capital of 200,000, crs.), while the special guarantee 

 fund for the circulation of the land bonds amounted to 3,700,007 crs. and 

 the guarantee fund against depreciation of the bonds to 70,000 crs. 



§ 2. Mortgage banks and banks for mixed purposes, limited 



by shares 



Of the pure type of mortgage bank, so wide spread in other countries, 

 there is only one example in Hungary. Therefore we think it well to in- 

 clude in this section all financial institutes Hmited by shares, engaging, 

 even if it does not appear so from their title, at once in mortgage credit and 

 ordinary banking business. 



I. — The Hungarian Mortgage Bank at Budapest founded in 1869, is the 

 only mortgage bank that can be properly so called. It had not to limit it- 

 self to making direct loans to individual landowners, but to act as a 

 central bank for other mortgage institutes and, in addition to that, to or- 

 ganise a system of insurance against losses in mortgage business. 



The share capital was fixed at 2,000,000 florins, 600,000 fls. paid up. 

 Every debtor had by the rules to pay 5 % of the amounts borrowed into a 

 reserve fund or deposit securities or bonds for an equivalent amount. The 

 fimd thus formed was intended to cover losses in the banking business. 



