56 AUSTRIA AND HUNGARY - CREDIT 



that they accounted only for an unimportant circulation of money. Defec- 

 tive means of communicaliou and the presence of the institution of the Za- 

 droiiga contributed . much to the long preservation in Bosnia and Herzego- 

 vina of natural economy in all its simplicity, after it had elsewhere been 

 replaced by economic systems based on money. 



We should add that in these two vSlav provinces the development of 

 agrictulural credit was impeded by the existence of jurisdictory relations 

 feudal in type, which even today have not entirely disappeared and which 

 mutually connect the feudatory agas and the kmeti agricultural labourers. 

 In Bosnia and Herzegovina property in land is indeed not free even today 

 but is subject to an almost feudal regime. It is burdened with the kmeti 

 cultivators' rights of usufruct, which are unlimited as to time and condi- 

 tions, so that if a holding be alienated the cultivator's usufruct persists 

 unmodified by the change of ownership. The mere indication of such a 

 state of affairs is enough to show that it has contributed and still contri- 

 butes to impede the development of land credit in this country. 



Another hindrance to such development was the complete absence of 

 a cadaster and of registers of land, in other woids of a basis for mortgage 

 credit. 



For that matter the peasant of Bosnia and Herzegovina felt no great 

 need for credit. If he wanted money he got it easily by selling the products 

 of his land to some small dealer in the neighbouring town, from whom 

 afterwards he bought what he required : otherwise he could not have ob- 

 tained that very limited quantity of the products of agriculture or industry^ 

 necessary to him. Sometimes indeed he had to have recourse to a loan, but 

 it was always this same small dealer who became his banker. 



Such loans had three different forms : a) loans in specie were received ; 

 h) manufactured products were bought for credit ; c) provisions were bought 

 for credit generally in spring or summer, before the harvest. 



The peasant paid a grosch a month on the sums thus lent, that is to say 

 lo per cent. The law established that the rate of interest should not sur- 

 pass 12 percent, but this limitation was eluded by lumping the amount of the 

 interest and the capital. Very often also it was agreed that the debt should 

 be repaid not in specie but in kind, in other words in agricultural products 

 of which the quantity was fixed by the deed of loan, which therefore crea- 

 ted a contract truly contingent on risks. 



In the case of a purchase of provisions or manufactured products for 

 credit, the interest attaching to the correspondent value in specie was con- 

 sidered not as being separate but as swelling the sum wliich the debtor had 

 to repay. The rate of this interest varied in the proportion in which the 

 purchase price of the goods bought for credit surpassed the usual cash 

 price by from 50 to 100 per cent. 



