32 ADDRESSES 



In 1908 the largest loan amounted to 62,600 marks ($14,898.80) and the 

 smallest 600 marks ($142.80). The average was 13,000 marks ($3,284.40). 



The Credit Foncier cle France established to satisfy an imperative need is 

 a limited liability company with a capital of 200,000,000 francs, operating under 

 the supervision of the state. In the beginning (1852) the government granted 

 the Credit Foncier a. subsidy of ten million francs in order to help it make loans 

 at a rate advantageous for that time. The subsidy was not renewed, and the 

 state does not now intervene except occassionally to exercise its control. The 

 purposes of the Credit Foncier are : 



1. Lending money to land owners, counties, communes and public services. 



2. To create and negotiate real estate bonds, or mortgage bonds to a value 

 which cannot exceed the amount of the sums due from its borrowers. 



The company is permitted to receive deposits, but the aggregate of the de- 

 posits must not exceed one hundred million francs. The funds received on de- 

 posit are employed in discounting commercial bills on condition that they have 

 two signatures and do not run over three months. The shares of the Credit 

 Foncier, which are dealt in on the Bourse, are issued at five hundred francs, and 

 anyone can own them. The stock now receives 6% dividends and sells for about 

 750 francs a share. The government appoints the governor and two sub-governors. 

 There must also be three treasurers general among the 23 members of the council 

 of administration. These treasurers, as well as other administrators, are appointed 

 by the general assembly of the company. The general assembly represents all 

 the stockholders, and is composed of the 200 who own the largest amount of 

 stock. 



The two principal kinds of operations of the Credit Foncier are mortgage 

 loans and communal loans. The total of these two kinds of operations now 

 amount to more than four billion francs. So far as the possible adoption of 

 some of the methods of the Credit Foncier in the United States is concerned, that 

 part of its operations covering the making of loans to land owners is of the 

 greatest interest. Our municipalities now have a broad and steady market for 

 their securities. 



The Credit Foncier makes loans to land owners on the following terms : 



1. Short time loans, without amortization, for a period of from one to nine 

 years. 



2. Long time loans, with annual amortization, for a period of from ten to 

 seventy-five years. 



The rate of interest on the loans is 4.30% per annum, and the rate is the 

 same for all kinds of property. Loans are made only on first mortgage security, 

 and the amount of the loan cannot exceed one-half of the value of the property, 

 except that loans on wines and timber must not exceed one-third of their vavlue. 

 When the loan is made for a short period, the borrower pays each year only the 

 amount of interest due and tine principal amount must be paid in full at the end 

 of the term of the loan one to nine years. Long time loans are gradually paid 

 by means of an annuity, which includes the interest and a small fraction of the 

 principal. As a rule the borrower himself fixes the length of the time that the 

 loan is to run. The amortization extends over the whole period of the loan, so 

 that the total of the interest and capital is repaid from a constant yearly annuity. 

 Consequently, the most of amortization depends on the length of the loan and on 

 the rate of interest. On a loan running for 75 years at 4.30% interest the annuity 

 including interest and amortization, is at the rate of 4.48% per annum. The 

 borrower has the right to pay the principal of the loan at any time, and to profit 

 by the amortization already made. He can also make partial payments and there- 

 by reduce the amount of the anuity. The land owner, who wishes to build, can 

 obtain from the Sous Comptoir des Entrepreneus a society connected with the 



