[Extracts from Sir F. A. Nicholson's Report, pp. 93-96.~] 



ANALYSIS OP EUROPEAN LAND BANKS. 



An analysis of the organization and methods of the various 

 European land banks will give a more complete idea of Real credit in 

 Europe than the description of isolated institutions or separate 

 countries. This chapter refers only to institutions especially 

 established for the granting of Real credit, and not to ordinary banks 

 which merely grant mortgage loans as part of their general business, 

 nor to Savings banks which place much of their deposits in this form 

 of investment. 



Character. All institutions for the special grant of Real credit 

 are classified as private or public. 



Class I. Private institutions are associations either (a) of 

 borrowers, or (b) of lenders, that is, they are either associations of 

 mutual credit consisting of landed proprietors united in a society for 

 the purpose of obtaining loans at cheap rates for their members, on 

 the common security of all, or they are ordinary joint-stock companies 

 financed by capitalists, large or small, who are looking for a good 

 investment, and who regard mortgages merely as the means of 

 returning a good interest on their investments. Each class seeks its 

 own profit, which in the former is cheap loans, in the latter high 

 dividends. To a great extent the two classes of institutions are 

 opposed in principle ; practically however the second class are able 

 to give cheap loans by reason of the abundance of their funds, and 

 they are obliged to do so by the law of competition. Loans are 

 however probably cheaper on the whole in the former class, since their 

 credit is unlimited, they have no share capital to absorb profits as 

 dividends, and all profits, if any, return to the members. The chief 

 exponents of the former class are the Landschaften of Germ 1 any and 

 the Boden credit institutions of Hungary ; of the latter, the Credit 

 Foncier of France, and ^ the mortgage banks which have sprung 

 up throughout Europe on the model of the French institution. The 

 Italian banks are peculiar, * They are ancient banks 



which of late years have received special privileges from Government 



