AGRlCUIvTURAI, CREDIT 5 1 



' § 2. Rural I^anu Credit (Creditul foncikr rural). 



The first credit institution in Rumania to do business in mortgage credit 

 was the Moldavian Bank formed in 1856. This was a stock company, form- 

 ed with foreign capital, which in addition to its other banking business 

 granted short or long-term mortgage credit to large proprietors. The long 

 term mortgages were redeemable in seventeen years, the mortgagers being 

 obliged to pay ten per cent, as interest and amortization quota. 



Towards i860 this bank ceased to deal in credit and from that date its 

 only transaction within that sphere has been the liquidation of business then 

 in course. 



In 1872 the government brought before the chamber a scheme for the 

 formation of a mortgage bank. According to this scheme the bank would 

 have been a stock company and would have enjoyed the monopoly of grant- 

 ing mortgage credit and issuing mortgage titles on the basis of the credit 

 granted. It would bave been authorized to grant to landowners not onl}^ mort- 

 gage credit but also short-term credit for working funds, and to make ad- 

 vances to the State and the communes. 



The scheme encountered in the chamber the lively opposition of the 

 large proprietors who criticized it vehemently under the three follow- 

 ing heads ; 



i) They proposed that instead of a stock-company there should be a 

 co-operative society of large proprietors based on the principle of collective 

 liability. 



2) They proposed that there should not be a single institution enjoy- 

 ing a monopoly of the business of mortgage credits and the issue of mortgage 

 titles, but that the law shoxdd prescribe the conditions on which such business 

 should norniallj' be done, so that every society of landowners would have 

 to fulfil these conditions before it would be authorized to grant credit or 

 issue mortgage titles. 



3) Finally they proposed that the task of granting mortgage credit on 

 rural and on urban lands should be di^'ided among the institutions. 



These proposals were all passed by a majority in the chamber and were 

 reproduced in the law of 5-17 April 1873. 



Under this laW sixty large proprietors having property worth at least 

 three million francs (i) were authorized to form a mortgage bank., if they 

 would accept the clause imposing collective liability. The bank was to 

 have the form of a co-operative society which could have no members other 

 than landowners. The entrance of these into the society was to be o]:)tional: 

 but all landowners receiving credit were to be considered as members 

 ipso facto and to be collectively responsible for all the bank's engagements to 

 the extent of the value of their mortgaged lands. The law prescribes the 

 division of functions to obtain between banks granting mortgage credit on 



(i) I franc = 9 '/g ^ at par. 



