T. Mikkelsen & Co.

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T Mikkol

more than 350 years, had been well pleased with the'

union with Denmark; they had — the last fifty years of
the union excepted — a brotherly feeling for Den-
mark, fought the battles of Denmark and felt the
same way as the German-speaking Alsacians feel/
towards France and the French.

The peace of Vienna wrung the three duchies from
Denmark. The blow was stunning. And worse still
was the certainty that in future we should be left alone
in a still weaker condition to fight those grown more
powerful. The defeat had been so decisive that all
thoughts of revanche were given up at once and have
never since won any footing in the nation. But the
desire for some reparation, some redress of the
wrong, has ever persisted. Only a few wished for the
restitution of Holstein and Lauenburg which always
had been German and which after the insurrection in
1848 desired to separate from Denmark — though
certainly not to join Prussia. It was felt that they
would only be what they were twenty years before
the war, — embers for insurrection and pretext for
foreign interference.

But Denmark and Slesvig had during the cen-
turies acquired many connections and had many
things in common, above all the Danish language.
More than half the native population spoke Da-
nish and to this day regard it as their mother tongue
and cling to it with fervency. Slesvig — or as it is
often called in Denmark — South Jutland, was first
known to history as Danish and its annals have been
the same as Denmark's for more than 1000 years.
After 1864 there were many Danes who wished to
have the whole of Slesvig restored: — Slesvig to the

Eider, (he old millennial frontier river between Den-
mark and Germany, if such restitution could take
place in a peaceful way. And the whole nation desired
to get back the northern part of Slesvig where the
Danish language is still prevalent.

A hope of restitution rose in 1866, when our two
antagonists, Prussia and Austria, fell out with each
other — partly over the spoil they had taken from us
two years before. All agreed that war was out of the
question for Denmark, but confidence was put in peace-
ful negotation and was not totally frustrated, as the
Treaty of Prague, in the famous Article V, stipulated
that the northern part of Slesvig was to be returned to
Denmark if a popular vote should show a majority in
favour of the return.

The hope of restitution swelled anew in 1870. Ar-
ticle V of the Prague Treaty had been put in at the
instigation of France and now it was France, the great
nation, the old love and the new benefactor of Den-
mark who went to war with Prussia and her German
confederates with all her might. The hope rose very
high and tempting voices were heard from abroad,
inviting Denmark to join France and seek reparation
for 1864. But, fortunately for Denmark, the late Chri-
stian IX, the King at the time, was a soldier himself
and understood the strength of Prussia. And at the
same time the King's wide-spread royal relations in-
formed him that probably France would be left to fight
alone and the Russian Emperor Alexander II warned
him emphatically to resist French pressure, and in
this way, Denmark came safely through a situation
which might easily have caused her complete ruin.

The year 1870, which proved so disastrous for


France, taught Denmark that, if she would not suffer
ruin, she was bound for ever to keep apart from the
quarrels of the great powers. And the lesson was lear-
ned without even having seen the dreadful fate which
this present war has brought over innocent Belgium,
— a fate so horrible that no one, if told of it
beforehand, — would have thought possible in a
world of human beings.

After her sorrowful experience in war Denmark
made her utmost to profit by peace. At the time a wave
of economic prosperity went over the whole earth
and no doubt helped the success of Danish finance
considerably, but still there is no doubt that the pro-
gress in Denmark was due to a wise change from
obsolete systems to progressive ones, a change which
again devolved from energetic personal initiative.
And this new force arose from an earnest desire to
make good the great losses in territory through a more
intensive cultivation of the soil that was left and of
the minds that were still free to think and speak in
the Danish tongue.

The last third of the 19th century witnessed the
great evolution of Danish agriculture. Formerly the
production was the crude one of wheat and other
breadstuffs but now it turned more and more to
cattle, animals and pigs and in this way produced a
more refined, costly and consequently profitable pro-
duct. Butter, bacon, meat and eggs were exported
with great profit in ever increasing quantities, in the
first place to England whose growing industry easily


absorbed it all and who on her side found it profitable
to draw a provision of perishable food from a neigh-
bouring country.

The progress of Danish agriculture depended, of
course, on the quality of the soil and the industry,
intelligence and instruction of the people, but it was
materially assisted by:

1; The system of mortgages and other real credit.

2; Introduction of co-operation in production.

3; Introduction of co-operative associations for thc_J
import of foodstuffs and fertilizers.

The regulation of the real credit has for a long time
been the aim of the Government in Denmark.

More than 100 years ago registers based on a new
system were introduced and they have ever since been
kept up to date with the most painstaking care.

In the registers every single piece of property has
a specific page and every time a piece of property is
divided, each new part gets its own page. In this way
— and as the registers are kept in different places
over the country for the surrounding district, — it
is possible at any given moment by looking at the page
of a property to ascertain at once all about it, be it
great or small. The registers are under the supervision
of the local courts.

At the page of the register the property is desig-
nated by a number, — the name of the owner is given
and all encumbrances on the property are enumerated
and also all the debts secured by it. Every entry refers


to another register in which are given in full all titles
and other deeds affecting the property.

A transfer of the property to a third person is only
valid when registered on the page of the property.
All other deeds, mortgage bonds, etc., must be regi-
stered in the same way in order to be valid and when
they are altered in any way or the mortgages paid off,
registration of the fact is necessary. All deeds regi-
stered get a visa indicating the day and place of regi-

Through this thorough and practical system it is
easy to ascertain through the register the owner of a
property and what burdens and mortgages are at-
tached to it. Conveyance as part of a lawyer's duties
hardly exists in Denmark. All doubts and questions
are solved at once by reference to the registers.

Finally it must be mentioned that nearly all ground
is free-hold and that leases are never for more than
ten or twelve years, or in the case of small farms,
for life. - J

It is of great advantage for every one having a
right over a property to be accorded full protection,
be he owner or mortgagee or what. He is entitled to
protection once his deed has been registered and re-
turned with a good visa. The Registrar has the duty
of going through the register every time he undertakes
the registration of a document and if he finds anything
that conflicts with or invalidates the right conferred,
he is to make mention of this fact in his visa. So if
the holder of a deed is not entitled to transfer or mort-
gage the property, or if a mortgage already existing
has a priority over a new mortgage, or if any other
fact violates the right that is up for registration, the


registrar's visa will indicate it and thereby show that
the new right is not indisputable. But if the visa says
no more than that registration has taken place the
conclusion is that the right which the document con-
fers is valid.

The advantages of the system are twofold: Transfer
of a title to real estate is a very easy thing and the
creation of fully protected mortgage bonds, makes it
relatively easy to obtain credits at long terms and at
cheap rates. A man may then acquire property with-
out extensive use of his capital, and so it is possible
for men of small means to become owners of large
properties, and when later on their capital increases
they are not bound to spend it all in paying off mort-
gages but may employ it for the development of the
property, improvement of the buildings, live-stock,,
machinery etc.

Having recourse to this system of registration Den-
mark has developed an economic system of credit to
owners of real property which since 1850 Jias made
it possible to procure this credit in the cheapest and
most convenient form by the creation of mutual credit

The owner of a property applies to the credit asso-
ciation for a loan. The credit association then sends
its experts to assess the property. The assessors report
to the head-office what they think the value of the pro-
perty, and the institution then grants a loan not exceed-
ing a fixed portion of the assessed value. The owner
gives his mortgage bond to the institution, and on


receiving the bond duly registered the credit institu^
tion pays to the mortgager the loan as granted. Thi$ ;
is to say that the loan is not paid out in cash but in
debentures of the lending institution. The deben-;
tures are considered a first class security and are|
easily sold on the stock exchange of Copenhagen!
where they are quoted daily and are sought for by;
investors. -^

The security of the debentures consists of all the
mortgages given out by the borrowers and the respon-
sibility of the mortgagers is even joint and mutual, so
that if one or more mortgages should bring loss the
others will make good the^losses. Further, the deben-
tures which are divided into series, — a series com-
prising the loans of say ten consecutive years, — are
paid off through annual drawings by means of small
instalments paid by the mortgagers, and in this way
the loans to the mortgagers decrease year by year
and the chance of loss grows less.

In fact only once, about 50 years ago, a credit insti-
tution of this kind for urban property had to call for
extra payments from its members to make up for
losses suffered, and this mutual responsibility has
never affected the values of the properties. And as
it is not on record that any such credit institution has
ever been unable to meet the interest on its debentures,
investors have full confidence in these bonds, and
there is always a demand for them at satisfactory
prices which correspond to the general rate of interest,
always exercising a lowering influence on the dis-
count rate.

The public get a handy, marketable investment and
the borrower gets a loan on the cheapest possible and

- J


advantageous terms. The loans are repaid on the^
cumulative system by equal yearly yieldings compri-
sing interest and amortization. If, for instance, the I
rate of the debentures is four percent annually, the
mortgagers pay four and one-half percent annually
of which four percent of the debt is interest and
nearly all the remainder amortization. In the case
cited the debts will be wiped out in about 60 years.
The costs are infinitesimal. The mortgager pays abouTJ
one pro mille yearly against the costs, and this con-
tribution leaves a surplus which the credit institutions
put to reserve, or, when the reserve reaches a certain^
point, pay back to the mortgagers.

The system of credit described has through long
use been brought to such perfection that it may be
said to be the finest in the world, and its development
has been so great that according to the latest available
statistics Denmark in the beginning of 1917 had four-'
teen mutual credit associations to which were issued
mortgages for about 1900 million Danish Kroner (about
105 million Pounds Sterling). Against these securi-
ties investors held debentures of about 1815 million
Kroner, the difference, about 85 million, being the
reserves of the institutions.

That these credit institutions have had a leading
part in providing credit for the owners of real estate
may be gathered from the fact that in 1909, when a
new valuation for taxation purposes was undertaken,
the whole amount of mortgaged credit was taken as
3200 million Danish Kroner and of this amount about
1500 million was procured by credit institutions, the
remainder being derived from savings and other
banks, insurance companies and private lenders.


What helped the progress of the mutual credit
institutions was the fact that the fine qualities of the
debentures were appreciated not only in Denmark,
but also in other countries. They were sold in foreign |
markets in great amounts, fetching higher prices than
the Danish market could afford. On the other hand j
they have, owing to the favourable exchanges, nearly
all come back to Denmark during the present war. -J

To the great credit institutions based on mutuality,
and which only grant loans against mortgages not ex-
ceeding the prior half of the value of the properties,
are added smaller ones founded as trust companies
with a capital furnished by share-holders as supple-
mental guarantee for the debentures. These compa-
nies grant loans at a higher ratio than half of the
estimated value and consequently — the security
being somewhat inferior — against a higher rate of

By these different institutions a credit is provided
for the owner of the land or ground which, as stated
above, makes it possible for him to take over a much
larger property than his own means might allow, and
once an owner of property it is possible for him to
develop his agricultural products both in quality and_
quantity. But still the owners of small farms, and
these form the majority owing to the minute subdivi-
sion of the arable lands, met with difficulty in develop-
ing their holdings, just because of their small size. /

These difficulties were overcome to a very great
extent when in the latter part of the eighties the co-op-


erative societies were introduced into agricultural pro-
duction, and the result was a great success in the
quantity and improvement of the quality of the pro-
ducts, above all in butter and bacon.

The system is very much like that in use in co-op-
erative stores, which have existed in Denmark for a
long time, as well as in other countries, mostly in
England (the Rochdale system) only, one might say,
in reversed form. A co-operative store undertakes
the purchase and distribution of the common house-
hold articles, — coffee, sugar, soap, etc; — a co-op-
erative production society undertakes the handling and
marketing of its members products.

A co-operative dairy society constructs and equips
a dairy, to which members, — all from the neigh-
bouring district, — deliver the milk of their cows.
Every morning the waggons collect the milk at the
members doors and carry it to the dairy. Here the
milk is separated and the cream is churned to butter
and the next morning the waggons take the skim milk
back to the farms to be used as food for the pigs. All
the farms sending their milk to one dairy feed their
cows in nearly the same way; some foodstuffs are
prohibited, others are prescribed in fixed minimal
quantities. By this means and through a constant
control of the milk, which is paid for by weight and
often by the percentage of cream it contains, the
cows, which in turn are controlled by the dairy's own
veterinaries, are of the best and heaviest milking
stocks and the milk is richer and yields more butter.
In this way butter is produced in greater quantity and
of a better quality. The treatment of the milk in the
dairies is based on uniform, scientific methods, the


best and most approved modern utensils are used and
that cleanliness, which is an attribute of Danish
dairies, is insisted upon.

In former times only the hand churn was in use on
the farms. The milk was produced in much smaller
quantity and the butter in quantity and quality was
much behind the present record. The co-operative
system has made it possible for the man with one cow
to produce as good butter, in proportionate quantities,
as the man with a hundred cows or more, and has
brought about the world-wide reputation of Danish
butter and the profits derived therefrom in great and
ever-increasing proportion.

For further information attention is directed to page
25 — 26 setting forth statistics showing the progress of
Denmark from 1864 to 1914 and giving some figures
on the stock of cattle and the production and export
of butter.

The other great field into which the co-operative
system of production has been introduced to the
benefit of the Danish farmer is the production of
bacon. Only a few years after the success of co-ope-
ration in dairies the first co-operative packing-house
for pigs was constructed. The system is the same as
that employed in the dairies. Members unite to build
and equip the packing-house and then send their pigs
to it, — fed according to certain fixed rules and when
they have reached a certain size. At the packing-
house the pigs are killed and uniformly treated, either
for export to England or for home consumption. The


more intensive operation of the dairies produces a
greater amount of skim milk, butter milk and serum,
thus permitting an augmentation of the stock of pigs.
The packing-houses through advice and instruction
have assisted in making the product uniform and
thus have brought good profits to the farmers.

Even outside of the dairies and packing houses
Danish agriculture has made use of co-operation in
different ways. There are numerous examples such
as the co-operative ownership of stallions, bulls,
threshing machines etc., which we do not need to give
in detail here. It will suffice to mention it just to show
how generally the small farmers through the aid of
co-operation secure the best and choicest implements
for their product.

The third factor which has aided in the improve-
ment of Danish agriculture is, as mentioned above,
also co-operation, but this time used for consumption.
Either through the dairies or packing-houses or
through independent unions, co-operation serves for
the purchase of foodstuffs and fertilizers. In this way
the small farmer gets as good a start as the great one
and procures without difficulty at the right time the
best and most appropriate supplies.

Through these great organizations the personal cre-
dit of the farmers has been greatly expanded. The
credit of a single farmer must of course always be
limited, but the financial world has come to under-
stand that the organizations form an extensive base
for credit. The single farmer may fail, but through
mutual responsibility the one pays for the other, and

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Online LibraryT. Mikkelsen & CoFinancial Denmark and the war → online text (page 1 of 5)