Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-06-09
Establishments for Lending
Money on Real Estate.
HOW THEY ARE OPERATED.
Their Methods in Austria, France, Italy.
Belgium, Germany and Switzerland.
Nearly All do q Successful
Business.


''the owner Of the land appears to be gener-
ally afflicted with impecunioSity, and to
need protection from the usurer quite as
much as the landleSs. In Hungary after
lS4S, when the land was eHancipated and
the rights of the mobiles over the peasants
curtailed, the owners of large estates found
themselves in serious difficulties. They
could no longer obtain forced labor, and
they were often without the capital to pur-
chase free labor. As the demand for capt.
tai arose. little or none was attainable.
There was considerable hesitation in ad-
vancing money to pr0prletorS in country
SO little known as Hungary was at that
time, and although few Of the greater
mobiles were able 10 obtain loans, the smaller
propTletorS were not in a position TO do so.
In 1873 the National Bank of Austria
took steps toward assisting the difficulties
of the landed proprietors, but the first
efforts were not very promising. Several
OF the leading landed proprietors then COM
bined together and inaugurated an institu-
tion which opened up new era in Hungar-
ian agriculture The Boden credit institute
was established in 1868, with d nominal
capital of $4,000. 1t is not joint stock
company worked for profit, but patriotic
undertaking whose object is to enable
landed proprietors to obtain loans on safe
and easy terms. The institute does not
actually lend the money, but procures the
loans at far cheaper rates than the individ-
ual is able to obtain them for himself and
at the same time supplies the lender with
the necessary guarantees and security. In
1868 the interest on capital charged was 81
per cent. and the total, including amortiza-
ton, 6$. per cent. The interest on capital
has now been reduced to per cent, and the
total annual charge to per cent.
1.-The number Of instances in which de-
fault of repayment has occurred is insight
fi.nn nf a nf MANLY pS l(n ushn
the arrears do not amount to more than
e25, GOO The money is raised by the issue
of bonds OF 100, 1000 and Zoo forms, bear
ing interest at per cent. They are repay
able at par by drawings, and must be with
drawn within period of forty years and
six months from the date of their Issue.
There are other institutions in Hungary
which make advances on real property on
similar or varying conditions. Authorities
do not agree as to whether the Indebtedness
of the land has been enhanced or decreased
as consequence, but it is admitted that
the old usurious system has disappeared,
and that the money borrowed has been
sunk in improvements, and is, therefore,
not an unprOductive charge on the land.
THE institutions in Austria for granting
real credit are of four kinds: a. Bank and
Joint stock companies licensed by govern
ment to lend money on mortgage. q. Say
iugS banks. 81 Agricultural societies, and
- Provincial 'Boden credit anstalten.'
The first two classes are worked in the in
terest of the lenders, the third and fourth
in the interest of the borrowers. As rule,
all these institutions do a successful bust
ness and enjoy high credit. The Austro-
Hungarian bank, which may be taken as a
typical institution, lends money on mort
gage at Al per cent interest and q per cent
amortization, making altogether 5 : per cent
for forty-one ard one-half years. and AZ
Z -
Bot these loans are made in scrip bear
ing per cent interest, and at present is
at par.
Several establishments for lending
money on real estates. have been founded in
Belgium, on the initiative of private
individuals. They are all limited joint
stock companies and act in the common in
tereSt of borrower and lender.
1.-THE Credit Foncier is the sole national
bank of real property in France. 1t is
under the supreme direction of the minis
ter of finance, and has an organization sim
liar to that of the Bank of France. In
addition to loans on property, it is author
lied to lend money, not upon mortgage, to
departments, communes and agricultural
associations. The capital has been grad
ually increased until it now stands at
g1,000,000. The Credit Foncier has mate
rally Gghtened the charges of the debts
weighing On property-in this sense, that
it only asks for q. IS per cent interest, while
the rate of interest paid by property at the
time Of its creation in 1852 was from TO
10 per cent. Upon .e135, 0O0.000 lent since
its foundation on real property, the society
has been forced by adjudication TO pur-
chase for e720,0O0 estates which have re-
manned on its hands in consequence of the
SS-payment of the sums lent upon them.
This is relatively small sum in compari-
son with the amount of the mortgage loans
of the society.
In Germany the Landschaften' are a
group of institutions established and admin
istsred solely in the interests of the debt
eiSs and there are mortgage companies
which also look after the business interests
of the creditors. Neither class has any
state guarantee, but they are both under
state supervision.
I'm 1861 it was aScertained that real
property in Italy Including the Venetian
province and Latium, not them united to the
kingdom) represented value of e1,00S,
600, 600, yielding an approximate income of
$40 800, 900, burdened by el69, 900. 600 of
mortgages. That is to say, the mortgages
amounted to one-siXth of the total value of
property. The mortgage banks had granted
up to December 81, 1861 loans for less than
"a, 600, 900 The average rate of interest for
Northern Italy, including expenses, was
then calculated at s per cent, yielding
total annual sum Of Ella, 520, 600 for interest
Imposts aud taxes amounted to eli, 24O, 600;
therefore, on the income yielded by
real property only e15, $50, 600 re
NAMED in the hands of proprie-
tors, not including $4,000 spent in
notarial fees, brokerage, valuations, etc.
In view of the difficult position in which
real property was placed, attempts were
made to establish an institution on the
model of the Credit Foncier of France, but
these failed. The idea was next enter
tanned of utilizing the existing mortgage
banks, soma of which dated bacl, to the
sixteenth century. In 1886 eight of these
institutions were accordingly apportioned
zones for lending operations. Their action
having proved insufficient to meet the de-
mands OF landlords, although they had en-
tered upon agreements for sum OF e13,-
239 600 to the end Of 1885, law was passed
abolishing the zones and authorizing other
companies to transact mortgage business.
Mortgage associations among proprietors
were also permitted, but none has ever been
formed. A still later law was passed in
July, 1890, authorizing a new real credit
bank, with capital of $4,000, 600 and ex-
clusjYe privilege for the whole kingdom,
apdi& is stated that steps are being taken
ippN this law into force. The rates hith-
rtoscharged have varied from to per
cen{
switzerland possesses two classes of
U6rtgage banks-state institutions and
others, partly private and partly public.
Savings banks also make advances on land.
The Bernese mortgage bank charged per
cent twelve or thirteen years ago, but it
has since reduced the rate gradually to 4
pexSent and the other real credit banks