52 RUMANIA - CREDIT 



cultivated land and those granting it to proprietors of urban land. It 

 makes the maximum rate of interest 7 per cent. 



On the basis of this law there have hitherto been founded: a mortgage 

 bank for granting credit to proprietors of rural lands, and two mortgage 

 banks — at Bucharest and J assy — for granting it to owners of urban land. 

 We will here deal only with the first of these banks which was founded 1-13 

 June 1873 at Bucharest and is called the Prima Societate de Creditul Fun- 

 ciar Ruman (First Society of Rumanian Ivand Credit). 



The following are the chief characteristics of this bank : 



i) It has no capital in shares, that is its members pay no admis- 

 sion fee. A due of 2 per cent, is however levied on the credit granted, and 

 thus is formed a guarantee fund which remains in the bank until the debt 

 is extinguished. When it has been extinguished the mortgager receives the 

 whole deducted sum without interest. Side by side with this guarantee fund 

 there is a reserve fund, formed of : a) ^ per cent, on all credit granted ; 

 b) 90 per cent, of net profits. The reserve fund is the bank's property and is 

 restored to the mortgagers only after the extinction of debts. The deduction 

 of 14 ^^^ 90 P^'^ cent, is interrupted as soon as the reserve fund amounts 

 to 5 per cent, of the amount of existing debts. 



2) The bank grants credit onl}^ to owners of rural land. The grants are 

 for long and short terms. lyong-term credit (ten to sixty years) is secured by 

 a first mortgage of rural lands and may not be for more than 50 per cent, 

 of the value of the mortgaged land. The debt is extinguished by annual 

 amortization. Short-term credit (three to ten years) is also guaranteed by 

 a first mortgage on rural lands : the debt is extinguished by annual amortiza- 

 tion or it is repaid in a single sum. Mortgagers used in the bank's first 

 years to pay interest at the rate of 7 per cent, but this rate is now 5 per cent 



3) The mortgager receives the amount of his advance in mortgage 

 titles at par. He must himself place them on the market for securities. 

 When he pays the amortization quota of his debt he may do so in cash or 

 in mortgage titles at par. 



The mortgage titles are payable to bearer in sixl}^ years, and all State 

 banks accept them as security. Until 1881 they produced interest at the 

 rate of 7 per cent. The rate was in that year reduced to 5 per cent, and titles 

 previously issued were then convertd. Since 1898 only mortgage titles 

 at 4 per cent, have been issued. Those at 5 per cent, have not however been 

 converted so that both are in circulation. 



4) Until 1882 the bank was authorized to grant credit seciired by 

 mortgage titles, but business of this nature has since been forbidden and 

 suspended. 



5) The adininistrative council has eight members elected by the ge- 

 neral meeting. Side by side with it there are the managers, namely one 

 manager and two vice-managers, all nominated by the administrative coiin- 

 cil. The right of inspection belongs to a government commissioner nomi- 

 nated by the Minister of Finances. 



6) A deduction ofjjgo per cent, is made from net profits in order to 



