CREDIT FONCIER. A French joint-stock bank, whose head office is in Paris. It was established to advance money on the mortgage of real securities, but it also grants communal loans, receives money on deposit, and discounts bills of exchange. It is of special interest because of its function in creating credit upon the security of mortgage.
The conception and establishment of the bank was largely due to the initiative of the economist L. Wolowski, and it was created by Government decree in 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 the bank had a capital of 25,000.00o francs and took the title of Banque Fonciere de Paris.
The parent institution in Paris was followed by similar institutions in Nevers and Marseille. These two were afterwards amalgamated with the first under the title of Credit Foncier de France. The capital was increased to 6o,000, 00o francs, the Government giving a subvention of I o,000,000 francs, and taking control of 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 Credit Foncier has the right to issue bonds, repayable in 50 or 6o years, and bearing a fixed rate of interest. A certain number of lottery I bonds are issued, carrying prizes. The loans made by the bank must not exceed half the estimated value of the property mort gaged, 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. The capital is 300,000,00o francs, and the reserves against mortgages amount to 400,000,00o francs. Its charter was renewed in 1881 for a period of 99 years.
In 186o the Credit Foncier lent its support to the foundation of an organization for supply ing capital and credit for agricultural and allied industries. This Credit Agricole rendered but trifling services to agriculture, how ever, and soon threw itself into speculation. Between 1873 and 1876 it lent enormous sums to the Egyptian Government, obtain ing the money by opening credit with the Credit Foncier and depositing with it the securities of the Egyptian Government. On the failure of the Egyptian Government to meet its payments the Credit Agricole went into liquidation, and the Credit Foncier suffered severely in consequence. The impracticability of the credit system to aid agriculture as worked by the Credit Agricole was very marked, and, as a consequence, the financing of agricultural associations is now entirely in the hands of the Banque de France.
is an institution for advancing loans on personal or movable estate. It was constituted in 187I, on the liquidation of the Societe Generale de Credit Mobilier, founded in 1852, which it absorbed.
