2«8 



[Sept. 1906. 



MISCELLANEOUS. 



AGRICULTURAL BANKS FOR CEYLON. 

 By E. S. W. Senathi-Rajah. 

 " The Credit Foncier de France."— The results obtained in Germany by the 

 Land Banks (Landschaften) were first brought to the notice of the French Govern- 

 ment by Monsieur Wolowski, one of the most eminent of French economists and 

 financiers, in a luminous treatise which he published in 1835. Ten years afterwards, 

 M. Royer, Inspector of Agriculture, was commissioned by the Government of France 

 to repair to Germany and study the system of land banks which were then in 

 operation there, and he niade an elaborate report describing minutely the mechanism 

 and operations of the chief landschaften, and the system of debentures which 

 formed the pivot of the German land banks. The Government took the matter up 

 in 1851, and an enquiry was held in which a number of distinguished financiers, 

 economists, lawyers and officials were examined, and as a result of the enquiry a law 

 was passed on the 28th of February, 1852, which laid the foundation of Land Credit 

 Societies. In March, 1852, a powerful society was formed at Paris, another at 

 Marseilles, and a third at Beners. It was, however, thought that a single society 

 having branches in various parts of France would better command credit for its 

 debentures than a number of small isolated societies. The three societies were 

 therefore merged in one and received the name of "Credit Foncier de France," 

 and received a monopoly for 25 years. Various errors were committed at first, but 

 gradually by means of great prudence in administration, by steady payment of its 

 dues to debenture-holders even in years of war and famine, and also by its 

 connection with and supervision by Government, it obtained the confidence of the 

 public. Its first heavy loan of eight million pounds in debentures was gradually 

 taken up by the public. It rose steadily in public confidence, and in 1858 at the 

 instance of Government it assumed the responsibility of issuing a loan of four million 

 pounds for drainage works which the Government itself had previously attempted 

 without success. At the instance of Government it established an affiliated society 

 for the purpose of credit agricole, that is for granting short term loans without 

 mortgage to farmers. In 1860 a new law authorised this new development and 

 granted the Society a special guarantee. In the same year another law authorised 

 it to grant loans to departments, communes and agricultural associations. Its 

 privileges were also extended to the French Colony of Algeria. These extensions 

 were all carried out at the instance of Government, and to meet the new liabilities 

 its share capital was raised in 1870 to £3,600,000. The most remarkable proof of its 

 stability was afforded by the terrible Franco-German war of 1880, which had no 

 effect whatever on its credit, while the whole loss due to the depreciation of property 

 at that critical period was only £160,000. Since the Avar of 1870, the Credit Foncier 

 de France has attained enormous development in various directions, such as the 

 extension of its business throughout various rural districts, formation of the Credit 

 Foncier of Algeria, and the Compagnie Fonciere de France and Algeria, the latter of 

 which was intended to facilitate works of improvement and construction. In 1878 it 

 issued an enormous loan of £36,000,000. in mortgage debentures of £20, bearing 

 interest at 3 %. 



The success of the Credit Foncier was at first mistrusted by many in 

 France. They said it was a novel experiment, not in consonance with the 

 manners and customs of the people, or with the social or economic conditions 

 of France. Errors were committed no doubt, but what ensured its success and 

 popularity was the principle of sinking fund and land mortgage debentures, an 



