PROVISION OF BORROWING FACILITIES. 301 



banks of Switzerland, frequently takes the form of subscription for 

 shares; in many cases it is paid back when a reserve has been 

 established. Ordinary shares need no. remark. In some banks the 

 amount of capital is fixed, so that operations, which are usually limited 

 to a multiple of the capital, are also limited, but in most, the capital 

 progresses up to a certain maximnm with the operations ; e.y., in 

 the Credit Fonder of France the maximum capital fixed by the 

 statutes is 8,000,000 sterling; the actual capital at any moment 

 must be one-twentieth of the bonds in circulation and is now (1892) 

 6,820,000, the debentures, mortgage and communal in circulation, 

 aggregating about 120,000,000. In the German and Austrian 

 banks, the necessary proportion of capital to debentures is 1 to 5, 

 1 to 20, &c. Many banks, even when constituted with a capital of 

 their own, obtain State subventions, e.g., the Credit Foncier of France 

 has a grant of 400,000, but this is usually credited to the reserve. 



Reserve. The reserve is an obligatory element in all cases. The 

 German Landschaften provide a reserve from the principal or interest 

 of the State subvention, from profits, from unforeseen receipts, and 

 from profits on the issue of their debentures, from contribution and 

 commission paid by borrowers ad hoc, and included in the annuites or 

 deducted from the principal at the time of borrowing. The Hungarian 

 Boden credit institution has, as a reserve, the founders' shares one- 

 tenth paid up the Government contribution for the purpose, the 

 whole net profits of the institution, the special guarantee fund, and 

 a percentage payable by the borrower with each annuity. The first 

 two have been described under capital ; the third is possible in this 

 institution, since as their is no share capital there are no dividends 

 to be paid ; the fourth item is derived from a one per cent, deduction 

 from the amount of all loans made at the time of payment, but 

 returned to the borrower with interest after his loan is paid off : the 

 fifth item is a "06 per cent, addition to the annuity. The Credit 

 Fonci^r of Fance takes for its reserve from 5 to 20 per cent, of its 

 net profits, and it should accumulate up to a maximum of one-half 

 of the/hare capital, The employment of the reserve is various; in 

 general it is to guard against unexpected losses; in some cases its 

 interest goes to pay for the administration. The funds of the reserve 

 are usually invested in Government paper or other good securities or 

 in small and safe banking operations of quick return. There are 

 special reserves as noted under the Credit Foncier of France, e.g., to 



