INTEOBUCTION 11 



estates were without crops and without stock, sometimes the 

 very buildings had been destroyed, and the owners had been 

 under the necessity of raising large loans, which had been 

 paid them in bad money that was under weight, but which 

 the owners had to repay in good money of full weight. The 

 interest was at least 10 per cent., to which must be added 

 2 or 3 per cent, brokerage. It was a matter of the greatest 

 importance to extricate the landowners from the meshes of 

 the usurer, and to furnish on reasonable terms the large loans 

 of which they stood in need. A merchant in Berhn, named 

 Biiring, evolved a plan to help the landowners by forming 

 Credit Associations, with power to issue bonds combining the 

 security of a mortgage with the negotiability of stocks and 

 shares. A larger or smaller group of landowners combined 

 and pledged their estates jointly as security for whatever loans 

 any of them might contract. Biiring submitted his plan to 

 the King of Prussia, Frederick II., who at once perceived its 

 ingenuity, and ordered his minister of state, von Cramer, to 

 make a report on the matter. The dehberations soon led to 

 action, and by the 29th August, 1769^ the first Credit Associa- 

 tion, called " Die Schlesische Laridschaft," had received the 

 Eoyal sanction. Four other Credit Associations, or " Land- 

 schaften," were subsequently formed in four other Prussian 

 provinces, and these five old Landschaften (" fiinf alte Land- 

 schaften ") became the pioneers of the system of long credit 

 on landed security. 



Co-operation in these first Credit Associations was com- 

 pulsory, in the sense that the owner of every landed estate 

 above a certain size within the province and belonging to the 

 nobility was compelled to become part surety for the obliga- 

 tions of the association independently of whether such owner 

 had contracted a loan or not. The Associations were to some 

 extent managed on co-operative lines, inasmuch as the 

 members managed the operations through a committee elected 

 at a general meeting, but the Associations were under strict 

 supervision on the part of the State. All moneys belonging 

 to minors and to public institutions and all trust moneys had 

 to be invested in the Bonds of the Associations (** Pfandbriefe " 

 or '* lederne Briefe ") which were printed on parchment. The 



