Le Nord : revue internationale des Pays de Nord - 01.06.1942, Blaðsíða 160

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LE NORD
ploiting the money market with a yiew to emission and con-
version at favourable times, but it would at the same time intro-
duce into the credit association system that element of banking
which the Danish credit associations have always endeavoured
to keep out of their operations. The Danish system has con-
sidered it consistent with the greatest justice to leave it to the
individual borrower to dispose of his bonds himself, so that each
individual loan might be obtained at the exact market rate of
the day. The Danish associations have also found it an advantage
that their system has rendered superfluous the State guarantee
for the emission which elsewhere has been regarded as necessary
in connection with central institutions. The Danish state has cer-
tainly guaranteed the interest on “small holder” bonds, but this
is only due to the fact that the State has wished to promote the
parceíiing out of small holdings. For special reasons a similar
guarantee of interest payments has also been given for interest
payments on certain series of the South Jutland Credit Asso-
ciation bonds.
Other schemes have also been proposed to stabilise the market
price. But it has not been possible to find a measure by which
the rate of interest on “fixed value bonds” might be determined
in a way satisfactory to both debtor and creditor. And a rate
of interest varying with the market rate would hardly satisfy
the party in whose disfavour the market moved — some ex-
perience of this has been gained from certain State loans to small
holders. It has been tried to improve the prices by creating a
foreign market by means of bonds issued in alternative cur-
rencies. The experiment, of course, derives from a more innocent
period when exchange rates were considered stable, and in the
case of one association it led to the only instance — apart from
the abovementioned case from 1857 — of the collection of ex-
traordinary contributions from members. The associations were
saved from the worst consequences by a ban on the export of
bonds, and since 1933 the issue of such bonds has been forbidden.
A less risky road to the foreign capital market — and a compro-
mise on plans regarding a combination of the associations with
a view to a joint issue of bonds — was found by the establish-
ment in 1906 of the Mortgage Bank of the Kingdom of Den-
mark. This institution was based on a basic capital invested by
the State and its object was to support the market price of the
open series of the associations by purchase of the bonds, which