ALGERIA - CREDIT 



soil. The colonists are however short of capital : they need credit and 

 therefore the collaboration of the banks. The banks have, like the settlers, 

 profited by the lessons of an experimental half century and have also tak- 

 en on a distinct^ Algerian character. In the midst of their business dif- 

 ficulties they have worked out their methods and become aware of the part 

 they have to pla}-. As years pass their functions become more and more im- 

 portant. Agricultural wealth grows with increasing rapidity and receives 

 from credit increasingly powerful aid. 



We have said that the foreign trade of Algeria has doubled in ten 3'ears. 

 The value of the paper held b}' the three chief banks has been multipUed 

 by five in the same period and this fact is the measure of the part the 

 banks have taken in colonization — a part which has been preponderant. 



§ I. The character of the credit afforded to coloxizatiox. 



The problem of credit in Algeria is posed as follows : 



" It is easy for colonists to procure land, but only uncultivated, bush- 

 grown land, or — what is worse — land overgrown with deep-rooted len- 

 tisks and palm-trees. To bring it under cultivation, erect buildings, buy 

 machines and build up stock — all this asks for more than hard work and 

 courage. And when a well worked farm has arisen out of the Arabian 

 hied, circulating funds are still needed, to cover the costs of the seeds, the 

 maintenance and the harvest which allow the annual course of agricultural 

 labour. Must the colonist from the outset have all the capital which he 

 has to invest ? Will he be able to contract for a long-term loan, like a 

 French landowner who wishes to improve his property' ? " 



Land credit as understood in France did not seem to be adapted to a 

 new country Uke Algeria. What after all is a mortgage of bush-land worth ? 

 A borrower has, as in all countries where the value of the soil has not been 

 realized, no assets but his chances and his hope. It has been deemed im- 

 prudent therefore to trust him with capital of which he would be master 

 for a long period. 



Moreover he cannot make his farm in a single year but brings his 

 efforts to success gradually. It is enough to grant him every season advan- 

 ces proportionate to the harvests which invented capital ma}' be expected 

 to produce. The risks of loss are thus diminished, and progressive efforts 

 can be helped by successive advances for short terms. Thus the creditor 

 follows the fortunes of the debtor step b\' step. Each period brings him a 

 reward. Each j^ear his security is strengthened b^' the increased value of 

 the property, and his mortgage, if he have one, has eventualh' a firm basis. 



This transaction may be compared with that which enables a trader to 

 open a credit account : there is no single grant of one loan but a series of 

 successive operations. But thej- are timed more slowly than in the trader's 

 case in accordance with the seasons — advances being granted when the 

 season opens and repaid at harvest-time. 



