82 BULLETIN 1266, U. S. DEPARTMENT OF AGRICULTURE. 
the basis for providing long-term mortgage -credit facilities through 
credit associations in Denmark. 
The Danish credit associations are a modified type of the Prussian 
" Landschaften.'' They are not regular banking institutions, nor 
do they supply members with personal credit. The association is 
nonprofit and voluntary, and the membership consists of borrowers 
seeking individual loans against first mortgages on their real estate. 
The association brings together the borrower with real property as 
security, who seeks a long-term loan at low rates, and the lender 
who seeks a safe investment yielding a fair return. As regards the 
creditors, all risk is practically eliminated, because of the associa- 
tion's solidarity through the principle of joint liability. 
No person becomes a member in a credit association until he has 
received a loan from an association against the first mortgage 61 of 
his real property. According to the Danish law of 1850, the farm- 
land loans granted by a credit association can not exceed 60 per cent 
of the amount at which the property is valued. The loans granted 
usually do not exceed 50 per cent of the value. 
The loans granted by the credit associations bear a low rate of in- 
terest and run for a term of 45 to 60 years. The borrower pays the 
association a fixed semiyearly installment and this covers the in- 
terest and repays the principal, on the amortization plan, during 
the term of the loan. Such loans can not be canceled so long as the 
borrower pays his regular semiyearly installments. For instance, 
on the most popular type, the 4| per cent bonds, the borrower will 
pay 5 per cent on the orginal loan ; after the interest on the bonds is 
cared for, the remainder goes to redeem the bonds, to defray admin- 
istrative expenditures and to form a small reserve fund to care for 
any possible losses in each series. This reserve fund is returned to 
the members in that series when their loans are liquidated. 
The loans are granted to the borrower in the form of credit asso- 
ciation bonds, which may be disposed of readily on the Copenhagen 
Stock Exchange or privately. Daily quotations on the stock ex- 
change record the market facilities for such bonds. The interest rate 
ranges from 3-| to 4r| per cent ; the 4J per cent bond is the most com- 
mon type. The interest is paid to the creditor by the credit associa- 
tion. The credit association issues these bonds in series and the mem- 
bers within each series are mutually liable for all mortgages within 
that particular series. Each series closes when its total capital 
amounts to at least 10,000,000 kroner ($2,680,000 at par). 
The Danish Government gives no financial support or guaranty to 
the credit association; but, in accordance with the law of 1850, all 
credit association bonds enjoy exemption from taxation (stamp duty 
exemption). Government supervision gives the credit associations a 
degree of stability which inspires confidence among bond purchasers. 
The credit association is governed by a democratic membership con- 
trol. Only borrowers become members. Only the members have 
voting privileges, except in one association where the creditors may 
also vote. The association's territory is divided into district units. 
Members in each district elect one representative, and these form the 
« A law of 1R07 provides for the formation of second-mortgage " Hypothekforeningerne " 
associations. There are threeof these associations dealing in farm-land properties, whoso 
aggregate loans March 31, 1922, totaled 55,273,000 kroner ($11,651,548 at exchange as 
of that date). 
