188 CO-OPEKATION IN DANISH AGKICULTURE 



must have their loans fully repaid in cash. The procedure 

 adopted is, therefore, as follows : the Association makes use 

 of its statutory right to give notice to repay the bonds in cash 

 at par ; at the same time the Association makes arrangement 

 with one or more banks to accept the total amount in question 

 in bonds bearing | per cent, lower interest. The cost of the 

 conversion is defrayed by the members continuing for a time 

 to pay the same half-yearly contribution as hitherto or by the 

 reserve fund. From such conversion members derive the benefit 

 of having the interest on their loans reduced by one-half per 

 cent., but care must be taken not to force a conversion in circum- 

 stances which would make the bonds less saleable, which would 

 only result in lower quotations. At the close of the seventies 

 the abundance of money benefited new members, as new series 

 were founded at lower rates of interest, while quotations for 

 earUer series rose. But the old members derived no advantage. 

 In 1887 the rate for 4^ per cent, bonds rose above par ; the 

 Government had converted its 4 per cent, debt to 3| per cent, 

 by a Law of 1886. The opportunity was taken advantage of 

 by the Credit Association for Landed Estates on the Islands 

 and the West and South Jutland Credit Association, which 

 between them converted about £4,000,000 from 4J per cent, 

 to 4 per cent. In 1889 and in 1895 when the quotation for 

 4 per cent, bonds was again at par, all the Credit Associations 

 availed themselves of the chance to convert about £27,800,000 

 of 4 per cent, bonds into 8 J per cent. This large reduction of 

 interest, close upon £140,000 annually, entailed a large expense, 

 too heavy for the reserve funds to meet, wherefore it was only 

 carried through gradually, during the course of some years, the 

 bonds being stamped with a notice to that effect. 



After the conversion the money market very quickly 

 became somewhat strained, and as early as 1900 it was neces- 

 sary to commence issuing bonds at 4 per cent, for new loans, 

 and from 1907 the 4 J per cent, series was commenced ; the 

 latter are the bonds at present most favoured by members. 



The quotations on the Copenhagen Stock Exchange are 

 generally the same for the bonds issued by the different Credit 

 Associations at the same rate of interest. This appUes to the 

 open series. For the closed series the quotation will rise when 



