1911 Encyclopædia Britannica/Crédit Foncier

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CRÉDIT FONCIER, in France, an institution for advancing money on mortgage of real securities. Due to a great extent to the initiative of the economist L. Wolowski, it was created by virtue of a governmental decree of the 28th of February 1852. This decree empowered the issue of loans at a low rate of interest, secured by mortgage bonds, extending over a long period, and repayable by annuities, including instalments of capital. On its inception it had a capital of 25,000,000 francs and took the title of Banque Foncière de Paris. The parent institution in Paris was followed by similar institutions in Nevers and Marseilles. These two were afterwards amalgamated with the first under the title of Crédit Foncier de France. The capital was increased to 60,000,000 francs, the government giving a subvention of 10,000,000 francs, and exercising control over the bank by directly appointing the governor and two deputy-governors. The administration was vested in a council chosen by the shareholders, but its decisions have no validity without the approval of the governor. The Crédit Foncier has the right to issue bonds, repayable in fifty or sixty years, and bearing a fixed rate of interest. A certain number of the bonds carry prizes. The loans must not exceed half the estimated value of the property mortgaged, upon which the bank has the first mortgage. The bank also makes advances to local bodies, departmental and communal, for short or long periods, and with or without mortgage. Its capital amounts to £13,500,000. Its charter was renewed in 1881 for a period of ninety-nine years.

In 1860 the Crédit Foncier lent its support to the foundation of an organization for supplying capital and credit for agricultural and allied industries. This Crédit Agricole rendered but trifling services to agriculture, however, and soon threw itself into speculation. Between 1873 and 1876 it lent enormous sums to the Egyptian government, obtaining the money by opening credit with the Crédit Foncier and depositing with it the securities of the Egyptian government. On the failure of the Egyptian government to meet its payments the Crédit Agricole went into liquidation, and the Crédit Foncier suffered severely in consequence. The impracticability of the credit system to aid agriculture as worked by the Crédit Agricole was very marked, and, as a consequence, the financing of agricultural associations is now entirely in the hands of the Banque de France.

The Crédit Mobilier is an institution for advancing loans on personal or movable estate. It was constituted in 1871, on the liquidation of the Société Générale de Crédit Mobilier, founded in 1852, which it absorbed.