The local administration of the law in the various Departments is looked after by the patronage committees, the creation of which is compulsory for each Department. These committees are virtually propaganda committees, investigating, encouraging, and spreading information on the housing question, thrift and saving, cooperation, and even old-age insurance.

LEGISLATION IN FORCE IN AID OF OWNERSHIP OF SMALL HOLDINGS.

FACILITIES GRANTED TO PURCHASERS.

It will be recalled that under the act of 1906 the largest ground area that could be purchased by the indirect aid of State funds in connection with a detached house was fixed at 10 ares (10,764 square feet). It was largely to make possible the purchase of a more extensive ground area, and thereby to encourage the worker of small means to settle in the suburban districts, that the act of April 10, 1908, was passed, known as the Ribot law on small holdings (petite propriété). It has since been twice amended very extensively— February 26, 1912, and February 11, 1914. This act makes possible the purchase of as large an area as 1 hectare (2.47 acres) in connection with a single detached house. Furthermore, for the purposes of the act, and to serve as the intermediaries between the borrower and the State, real estate loan companies (sociétés de crédit immobilier) may be organized. They play the same part under this act as do the building and loan associations under the act of 1906. The State makes its loans to the real estate loan companies at 2 per cent interest as compared with 3 per cent to the building and loan associations under the act of 1906. The reason for this lower rate to real estate loan companies is explained by the fact that they are compelled to lend at lower rates to the borrower than are the building and loan companies; and the State has further protected itself by requiring the individual borrower of the funds of the real estate loan companies to take out term life insurance to guarantee the payment of his debt, whereas this is optional with the company or the borrower who deals with the building and loan association operating under the act of 1906.

Inasmuch as the provisions of the act of 1908 are very similar to those of the act of 1906, the summary which follows will be made. very brief.

INDIVIDUALS ENTITLED TO LOANS.

These are, in general, the same as under the act of 1906, namely, wage earners, farmers on a small scale (owners or tenants), artisans or shop owners, and those who either work with members of their own family or employ not more than one additional employee.

The maximum size of a field or garden plot, as already stated, which may be purchased in addition to a single detached house may not exceed 1 hectare (2.47 acres). The actual rental value of the house, in such a case, must not exceed the maximum fixed for lowpriced dwellings in that locality; the cost of the additional field or garden plot may not exceed 1,200 francs ($231.60), including the expenses connected with the loan, such as life insurance and the drawing of the contract; and, lastly, the purchaser must agree that he himself or the members of his family will continue to cultivate the plot as long as it remains in his possession. Fields and garden. plots purchased with loans extended under this act are granted all the tax exemptions allowed under the law of 1906 except the 12-year exemption from the land tax.

By the amending act of February 11, 1914, a borrower may secure a loan for the construction of outbuildings on his property to the extent of four-fifths of their contemplated value or cost of construction. This loan, however, is limited to a maximum of 2,000 francs. ($386). On the same conditions an owner of a detached house may secure a loan for the purpose of erecting a shop on his premises.

REAL ESTATE LOAN COMPANIES.

The real estate loan companies, together with certain public and semipublic bodies, form the link between the State and the individual borrower, and only through them does the borrower get the use of the State funds. These companies are constituted as joint stock companies or corporations with limited liability. Their capital, originally fixed at a minimum of 200,000 francs ($38,600), was changed in 1912 to 100,000 francs ($19,300). To be entitled to receive State funds from the National Old-Age Retirement Fund the companies must conform to all conditions required of the building and loan associations under the act of 1906. (See p. 131.) Thus, they must limit their dividends to 4 per cent on their actual investment. In return for these limitations they are granted the usual tax exemptions (see p. 131) and are privileged to have certain public bodies subscribe to their share capital: (1) The general savings banks, (2) charitable institutions, and (3) Departments and municipalities.

CONDITIONS GOVERNING LOANS TO INDIVIDUALS.

Each prospective borrower desiring a loan from the real estate loan company must (1) be able to furnish at least one-fifth of the purchase price of his holding: (2) he must deposit with the State insurance institute a single premium on a term policy running for the period of his mortgage as a guaranty of the payment of the mortgage in case of death before completing payments thereon.

1 See table, p. 129.

And, then, as a final guaranty of his fitness to receive a loan from the company (3) the borrower must produce a certificate from the local patronage committee of his district that he fulfills all the conditions requisite for a loan. Furthermore, (4) all his plans and specifications must be approved by the local health authorities in order to attest the fact that his house will be sanitary and healthful. Loans to borrowers under this act must not bear interest in excess of 3.5 per cent. This, it will be noticed, is lower than is the case for loans under the act of 1906, in which the rate was fixed at 4 per cent. This discrimination is probably meant to favor the small cultivator and truck gardener and thus induce migration into the country from the city.

Although it is nowhere stated in the law, but has been left to practice, loans to individuals run for varying terms of 10, 15, 20, and 25 years, and are payable in equal annual installments with the privilege of anticipating payments at any time.

CONDITIONS GOVERNING LOANS TO BUILDING ASSOCIATIONS.

The legal character of these associations, whether joint stock companies or cooperative associations, determines the conditions and rates of interest at which they may borrow from the real estate loan companies. The joint stock or noncooperative limited liability companies must pay interest on their loans not in excess of 3 per cent, while the cooperative associations are required to pay not in excess of 2.5 per cent. These advances from the real estate companies may be loaned only to individuals who come within the classes specified by this act (1908) and that of 1906. An additional favor is granted the cooperative associations in that they are permitted to loan these funds, without complying with the other conditions governing advances to them, to those of their members who have four or more children under 16 years of age, and to those who contemplate the construction of a tenement to be rented principally to members of the association.

TOTAL AMOUNT STATE MAY ADVANCE TO REAL ESTATE LOAN COMPANIES.

The total amount made available from State funds for loans to these companies is 100,000,000 francs ($19,300,000). The total amount that any particular real estate loan company may secure in advances from the State is not limited to a fixed maximum, but is conditioned on certain financial facts connected with the companies. Any real estate loan company duly approved and incorporated by the State is entitled to secure an advance from the State to an amount equal to (1) one-half the amount of the capital subscribed, but not paid up, plus (2) an amount equal to the guaranty which each company is required to deposit to the credit of the State in the Bank.

of Deposits for the proper conduct of its business, usually the amount of paid-up stock, plus (3) an amount equal to six-tenths of the value of the property offered as security for its loans; to all of which is added (4) an amount equal to the mathematical reserve of the insurance policies taken out on the lives of those shareholders of the company for whom the company has paid the premiums. This last condition apparently excludes from the calculation the reserve on those policies the holders of which have paid their own premiums in advance at the time they made their loan. The amount that would be so excluded is probably very insignificant and would count for little in determining the maximum borrowing capacity of the company, because, in practice, very few individual borrowers from the companies actually pay their single premium in advance, the general practice being to add the amount of it to the face of the loan and then to liquidate it gradually in the equal annual repayments on loans.

case.

The above factors, which go to determine the maximum advance that the State makes to any real estate loan company, are, perhaps, a trifle involved, and are, therefore, illustrated by a hypothetical Let it be assumed that a real estate loan company incorporates with a capital of $100,000, of which one-fourth, or $25,000, is paid up, leaving $75,000 not paid up. Let it be further supposed that one-fifth of the value of the property on which the borrowers make their loans is $60,000. (Prospective borrowers under the law are required to put up this proportion of the value of the property which they contemplate buying.) On the basis of these suppositions the real estate loan company may secure from the State in advances an amount equal to the following:

One-half capital not paid up..

Amount guaranteed by the State (capital paid up).

$37,500
25,000

Six-tenths of value of property on which loans are made
·1% (60,000×5)= 180,000

Insurance reserve.

Total.....

36,000

278,500

For the purposes of this case the insurance reserve has been calculated as 15 per cent of the mortgage security which the policies are supposed to cover. This mortgage security, as required by the law, is six-tenths of the value of the property which is being purchased plus the two-tenths which the borrower is required to pay down at the time of purchase, or a total of eight-tenths of the value of the property, amounting in this illustration, therefore, to $240,000, 15 per cent of which is $36,000.

It is further provided by the law that, if municipalities and Departments are willing to guarantee the payment of the annual installments on the loans of these real estate companies to the extent of

one-tenth of the State advance, then, in calculating the total borrowing power of the company, the mortgage credits owned by it may be included to the extent of seven-tenths of their value instead of sixtenths. Those companies which can secure this guaranty from a municipality or Department are then privileged, if they so desire, to have the amount of their advances doubled.

In negotiating their loans, the companies apply themselves directly to the Bank of Deposits, which bank is charged with making the loans, after having the authorization of the supervising commission created by the act for that purpose and acting under the minister of labor.

STATE LOANS TO OTHER THAN REAL ESTATE LOAN COMPANIES.

Three other types of associations, in addition to the real estate loan companies, may receive loans from the State for the purposes of this act at the customary reduced rate of 2 per cent. These are: (1) Cooperative building associations; (2) recognized associations of public welfare; (3) friendly societies and federations of these.

Cooperative building associations, in order to profit by this privilege to the same extent as real estate loan companies, must (1) show an investment of 25,000 francs ($4,825) in the particular work contemplated by the law and (2) must guarantee their repayments either by the deposit of a bond, making themselves and their members jointly and severally liable, or by securing municipal or Departmental guaranty for the payment of these loans. In any case (3) consent to the receipt of such advances must be had of the minister of labor, and proof shown that the funds so advanced are used for the express purposes of the law.

Recognized associations of public welfare (associations reconnus d'utilité publique) to obtain advances must likewise show (1) authorization by the minister of labor for the receipt of such funds, (2) must deposit with the Bank of Deposits a bond of 100,000 francs ($19,300) in State securities or those guaranteed by the State, and (3) agree to use the money so advanced for the express purposes of the law. It is further provided (4) that their loans to third parties may not draw interest in excess of 2.25 per cent.

Friendly societies and federations of these, in order to benefit by these State advances, must comply with the conditions imposed on associations of public welfare except in so far as the burden of a special guarantee bond on their part is somewhat lessened by allowing them to count as such special bond to the extent of 100,000 francs ($19,300) the liquid funds that they may have deposited on current account in the Bank of Deposits, provided they continue to yield 4.5 per cent interest. In other words these associations are permitted to use liquid funds on deposit as the equivalent of real estate security for covering their loans.