PROVISION OF BORROWING FACILITIES. 381 



They i'all into two classes "pure" and "mixed" Mortgage Banks. 

 The former, 29 in number, restrict their business to the following : 

 loans on mortgage and issue of mortgage bonds ; the acquisition and 

 sale of, and lending on, mortgage security ; the grant of loans to public 

 bodies and to light railway undertakings ; the purchase on commission 

 of stocks and shares ; the collection of bills and cheques ; safe-deposit 

 business, and the acceptance of deposits at interest. The " mixed " 

 banks engage in ordinary banking business, but speculative business 

 is prohibited. 



All Joint Stock Mortgage Banks require the special authorisa- 

 tion of the State ; and are subject to State supervision in every 

 branch of their business, each Bank being assigned a Commissioner 

 who, before any bond is issued, has to certify that it is duly covered, 

 and who, jointly with the Bank, has the custody of all its books, 

 documents and cash in hand. 



Only about 6 per cent. (34,000,000) of the total mortgage 

 loans outstanding at the end of 1911 were secured by mortgages on 

 rural estates, and in 1909, 91 per cent, of the total loans outstanding 

 on rural mortgages had been granted by one Prussian and seven 

 Bavarian Banks. The Act requires that, in so far as bonds are 

 issued upon the security of rural mortgages, half of the total amount 

 of this class of loans, which are advanced by any Bank, must be 

 made subject to annual sinking fund payments of at least one-quarter 

 per cent. ; the majority of Banks require such payments in respect 

 of all their rural loans, and fix the minimum at one-half per cent. 

 Rural mortgagors must be accorded the right to repay loans in whole 

 or part before the stipulated period under the sinking fund scheme, 

 and may only waive such right for a period not exceeding ten years 

 from the date of loan. Moreover, although the annual payments 

 on account of interest remain unchanged, regardless of the progres- 

 sive diminution of the capital debt by payments to sinking fund, 

 yet the interest falling upon the amounts credited to sinking funds 

 is annually applicable to that fund. No agreement permitting a 

 Bank to call in a loan is valid. Minimum loans are fixed by some 

 Bank* the Bank showing at present the largest total of rural loans 

 fixes it at 50 ; and the maximum loans may not exceed three-fifths 

 of the ascertained value on first mortgage, or, with the concurrence 

 of the State concerned, two-thirds of such value. Loans must be 

 paid in cash as a rule : payment in bonds is only permissible if the 



