Le Nord : revue internationale des Pays de Nord - 01.06.1942, Page 159

THE DANISH CREDIT ASSOCIATIONS
i47
Soil-improve-
ment loans
at
3 per cent
31/2
J >> >>
4 „ „
4V2
“ ' * » »
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43A „ „
4V4 „ „
0.04 per cent of the loan sums
3.62
41.24
52.83
2.13
0.08
0.06
>> » )>
» » »
» » >>
» » »
» » »
» » >■>
>>
>>
The effective rate of interest at which the associations have
been able to obtain loans for their members must — whether
it be considered high or low — at any rate be regarded as the
lowest rate at which it has been possible at any given time on
the best security to obtain capital in the Danish community.
With mostly insignificant deviations to either side it has fol-
lowed the effective rate of interest on government bonds. It
has, of course, varied considerably, between 3/2 and 6 per cent,
with the minimum in the i89oies and the maximum in the period
between the great wars, the peak being reached in 1932. The
fact that in estimating the effective rate of interest one must take
into consideration a loss on the market price is, of course, the
corollary to the many advantages associated with the system
of bearer bonds, and a necessary consequence of the fact that
the rate of interest of the bearer bonds cannot — even with the
choice of several divisions at varying rate of interest — be pre-
cisely adapted to the varying market rate. The disadvantage,
however, is to some extent outweighed by the corresponding
access to redeem the loans by returning bonds bought below par;
and a system by which the associations by emission of their own
bonds obtained capital to lend in cash would involve dis-
advantages in other ways. This would demand a central organi-
sation for the emission of bonds, and this could hardly be fitted
into the Danish system, the historical development of which is
such that the associations to some extent compete and therefore
niust have a certain margin for drawing up their terms different-
ly. A joint issue of bonds of this nature does, indeed, exist within
a limited field, as the 8 associations which grant loans on agri-
cultural property pay out loans for soil improvements in com-
mon bonds. But these loans are of such a special nature (they
are short term loans fixed by public commissions, equipped with
special privileges and do not amount to large sums) that the ex-
periences can hardly be applied generally to real credit. A central
institution would undoubtedly have greater possibilities of ex-
Le Nord, 1942, 2-3 11