2i2 Agricultural Credit in Hungary. [July, 



for many years. Many of these were based on the Raiffeisen 

 system. In 1898 an attempt was made to control the work by 

 a law which provided for the establishment of the National 

 Central Credit Co-operative Association as a capitalising centre 

 for those co-operative associations which complied with its pro- 

 visions. Under the new law co-operative societies may be 

 formed only subject to the approval of the authorities, or of 

 some public institution, such as the Agricultural Society, the 

 Chamber of Commerce and Industry, or with the co-operation 

 of the Central Credit Bank. Their operations are to be confined 

 to their own parish or some similar area. Interest on capital 

 is limited to 5 per cent., and members' liability for their society 

 is extended to five or ten times the value of their share. As an 

 inducement to associations to form themselves under this law 

 privileges were offered, consisting of tax and stamp exemptions 

 and advantages in validating claims. 



The foundation capital of the National Central Association 

 was raised by its founders, and by the co-operative associations 

 affiliated with it as ordinary members. The founders, viz., the 

 Government, some corporations, and private persons, brought 

 as their share £1 74,250, and the associations as regular members 

 £32,700. The State subscribed .£42,000, and by reserving to 

 itself the appointment of the president and some other officers, 

 as well as permarent supervision by a Government Commissioner, 

 it exercises a controlling influence. The King also took shares 

 to the value of over £2,000. The first Report of the Associa- 

 tion explains briefly its method of working: The members of the 

 affiliated co-operative associations obtain loans by promissory 

 notes or bills, and if the associations are unable to meet the 

 demands from their own capital and from deposits, they obtain 

 the necessary money by indorsing the bills and assigning them 

 to the Central Association. The money resources of the 

 Central Association, in addition to the foundation capital 

 consist of State and savings deposits of about £475,000 in value 

 the sale of interest-bearing bonds issued under legal authority 

 amounting to about .£480,000, and finally, the re-discount of bills. 

 Count Mailath explains that these interest-bearing bonds may 

 be issued in return for the promissory notes which the Associa 

 tion holds from members of local banks, brought to it for dis- 



