Crédit Foncier de France
INTERVIEW WITH M. TOUCHARD, SECRETARY[181]
Q. Is the Crédit Foncier a public institution?
A. Yes, it is a mixed institution; it is at the same time a joint-stock company and a society under the control of the Government by reason of privileges which the Government has granted to it.
Q. Who are the shareholders?
A. Any one; the shares are dealt in on the Bourse. The firm capital is at present 200,000,000 francs; the shares are issued at 500 francs.
Q. What dividend do you pay?
A. We now pay 6 per cent.; for several years it was only 5 per cent.
Q. Does the Government receive no income from it?
A. No; on the contrary, the Government began by giving us a subsidy of 10,000,000 francs; that was at the beginning, in 1852, in order to help us make loans at a rate advantageous for that time. This subsidy was not renewed, and the State does not intervene now, except occasionally to exercise its control.
Q. Does the company appoint the officers?
A. The Government appoints the governor and the two sub-governors. There must also be three treasurers-general among the 23 members of the council of administration. These treasurers, as well as the other administrators, are named by the general assembly of stockholders; but before presenting their names to this assembly, it is customary to obtain the approval of the Minister of Finance.
Q. Do you pay the same taxes as the other banks?
A. Yes. We are treated like any ordinary bank. We have the special privilege of issuing bonds secured by mortgages. It is a very complicated system in France; there are legal complications which would render it impossible for any corporation to undertake the business unless it had special privileges.
Q. Are you confined by law to business with mortgages?
A. We have two principal kinds of operations—mortgage loans and communal loans. The total business of the two branches of operations amounts at present to about 4,000,000,000 francs. Operations on so large a scale involve a considerable transfer of funds, and make necessary a treasury service requiring, of course, the use of banking methods. Our statutes, therefore, recognise our right to carry on ordinary banking operations, within certain rather sharply defined limits.
Q. How is your banking business limited?
A. We are allowed to receive deposits up to a maximum of 100,000,000 francs.
Q. Do you invest in securities other than mortgages?
A. We employ our deposit funds in discounting commercial bills on condition that they have two signatures and can be presented to the Bank of France; that is to say, they must not run over three months.
Q. You take mortgages on private estates?
A. Our mortgages may be on houses or on rural property.
Q. What is the precise relationship of the stockholders to the business of the company? Have they really a voice in the administration?
A. The two hundred largest stockholders meet once a year to ratify accounts, vote the dividend, and consider the questions docketed for the day of the meeting.
Q. What is the usual length of time for mortgages on real estate?
A. Our statutes allow us to loan for seventy-five years on ordinary rural or city property. In the case of summer resorts and certain other property liable to depreciate rapidly, for the sake of prudence we do not generally lend for more than thirty years; besides, the borrowers always have the right to repay at any time, and they often avail themselves of this right, so that the average length of our loans is much less—hardly exceeding fifteen or twenty years.
Q. What is the cost for amortisation in the long mortgages on property in the country?
A. The amortisation is spread over the whole duration of the loan, so that the total of the interest paid and the capital reimbursed forms a constant yearly annuity.
Q. Do you employ your amortisation funds to buy new mortgages?
Q. May you call your bonds at par? Are they payable at par at your option?
A. In our recent issue we have put that clause in, viz., that we can redeem our bonds at par. Generally we only redeem a certain portion of them each year, which are drawn by lottery.
Q. What is the minimum size of your mortgages on private estates?
A. There is no minimum; but we do not care to make very small loans because it costs too much to foreclose.
Q. What percentage of your total business is in the country and what in the city?
A. About one-half in Paris, and our best business is in Paris. The urban mortgages cause us less difficulty, and the tendency is for the proportion of them to increase.
Q. Who are the subscribers to the bonds, and what are the usual sums subscribed? Are they small or large?
A. They are bought by small people, and generally remain in the hands of persons of small capital. This is one of the reasons why their quotations show so little fluctuation.
Q. Do you lend on farms?
A. Yes. Up to one-half, except on forest land, vineyards, and the like, on which we lend only one-third. We do not lend on mines. On factory buildings we lend only on the value of the ground and of the building, independently of its industrial value.
Q. What other institutions of this character are there in France?
A. There are no others; we no longer have a legal monopoly, but we very nearly have a practical monopoly. There are private individuals who make mortgage loans, but no large company makes this the principal feature of its business.
Q. How long has it been the privilege of the Crédit Foncier to add lotteries to its loans?
A. It has done so from the beginning, although we are obliged to ask the permission of the Minister, but it is on that account that we have been able to place our bonds so low.