The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-07-29
A Gigantic Corporation.

We are accustomed to regard with as
constituent the Accommodations Of All insti-
tuition like our Mutual Life Insurance
Company. Doubtless the growth of that
society has not been paralleed In this
country; but there is French association,
the Credit Foncier. which in n shorter
term of corporate existence has acquired
a far more signal development. The fact
that the Credit Foncier now holds the
Khedives deprecated paper to the amount
of forty millions OF dollars, aud that the
Legislative Assembly has lately demanded
u rigorous investigation Of its affairs, may
we'll direct attention to the history of such
an enormous concern.
Asthc name indicates, the primary object |
of the Credit Foncior was to promote the |
progress OF agriculture in France by lend
ing money on real estate. The worst fea-
ture of the commercial crisis which fol-
| lowed the revolution of lSis was the en-
| barrassment of the landowners throughout
the country, and the National Assembly
| had been asked 10 relieve their necessities
by loans which should be secured by first
mortgages, and should aggregate six hun
| dred millions of dollars. A step was pres
| emily taken in this direction by the crea-
ton of several local banks, which in some
degree remedied the lack of capital by ad-
vancng on the security named, not specie.
| but bonds negotiable on the Bourse. These
institutions were ultimately consolidated
In single establishment called the Credit
| Foncier de France. on which the Govern
ment OF NAPOLEON ILL., bestowed, by way OF
send-off, and rs pure donation, two mil
lions OF dollars. The new company bore
| all the marks OF official endorsement, its
governor being named by imperial decree,
and the Minister of Agriculture being
charged to supervise an enterprise whose
sole object was declared by it's charter TO be
the announcement of tillago and the libe-
ration of real property from oppressive
eucumbrances.
The capital stock OF the association, at
first Ave millions OF dollars, was aftcrwari
expanded to eighteen, but the insi gnitcant
sum subscribed by the founders OF the
Mutual Life would not afford more made
quate measure than do these figures, of it's
subsequent operations and present assets.
Tho loans on real estate made nv the Credit
Foncier, which in 1853 scarcely exceeded
the modest figure of $5,0O0,0OO, have in
creased thrty-fold in twenty years, and
hundred and seventy millions. Neither
does this by any means sum up the achieve
mcnts of the company within ITS legiu-
mate province. Authorized in 1860 TO issue
in return for advances TO departments aud
municipalities what were called "commu-
nal and syndIcal obligations" correspond
ing to our town and county bonds, 1t be-
, gan with an investment Of N,0OO,oDO in
these securities, which grew rapidly to
s1l2, 900, 900, the aggregate returned by n
recently published statement. Since the
short-lived and spurious grandeur OF
. LAWS Louisiana company. no schedule OF
;. assets approaching tins in magnitude has
= been put forth by "A corporation in France
> or, we may add, In any other country.
SO long as the transactions of the Credit
u. Foncier were confined to its proper sphere
the profits of shareholders were of kind
to satisfy the most unsuitable. From 1851
70 1869 tho annual dividend rose from
fifteen to thirty per cent, the latter figure
. being almost anomalous in the history OF
; European corporations. Moreover, III the
y last mentioned year so large surplus had
accumulated that sixty thousand new
. shares were issued, and distributed among
" the stockholders. Taking into accoun
= the premium at that time commanded b.
the stock this proceeding was Antamoun
to a grltuity of $40 II share. Even since
- the disastrous war with Prussia the earn
. ings of the company have been very con
- siderable. Thus for 1871 the dividend WA
A., thirteen per cent, for the two following
years fourteen and for 1875 fourteen an'
:, ahalf per cent. Lust year, too the reserv'
fund, available Cor distribution, had agal
>" risen to more than four millions of dollars
a sum almost equal to the whole capita
originally subscribed.
-, How docs it happen that an outlook e
no suspicious has suddenly been overshad
owed, and that the quotations of Cred
Foncer stock, once so stable, are no
me futterlng and sinking every day. I'll
rN narrow but safe functions primarily ac
On corded TO the company have been exceed
IRE cd. and Others inconsistent with thor
is rashly exercised. That which had To-
IL merly been n bank of deposit, restricted
~ a small category of investments, has b.
come general hank of discount for con
ny meroial paper. The hope of larger prolll
of has prompted the acceptance OF wors
no and worse collateral securities, until q 10
OF weeks ago II was discovered that tho pro
3D. erty of the stockholders and depositor
ch to the extent OF forty millions of dollar
lat was represented by nothing more substa