THE FIRST TASK OF THE PRIVILEGED AGRARIAN BANK: REFINANCING FARMER'S DEBTS

Summary: The first and foremost task of the Privileged Agrarian Bank was to grant mortgage loans to farming population in order to allow them to repay their nominally short-term debts that had pilled up with the shareholding banks and private lenders. In order to obtain the new loans for repayment of the old ones, farmers were mortgaging the sole source of their existence: arable land, gardens, vegetable gardens, meadows, grazing land, vineyards, fruit orchards, and forests. Even the small land owners were now allowed to do so in the areas under the jurisdiction of the Serbian laws, as the government of General Petar Zivkovic passed the legal norm suspending protection of the farming homestead from sale for purpose of debt repayment, which was to be in force and applied only to the mortgage debtors of the Privileged Agrarian Bank. It may sound paradoxical that the state abolished centuries-long protection of farming homestead actually at the time when the peasant was forced to guarantee with his homestead and farming land the repayment of mortgage loans that were not deployed for productive purposes, but were used for debt conversion. However, even with this special legislative measure, the Privileged Agrarian Bank was not able to accomplish its primary task. Abolishing of protected land minimum was a necessary, but not a sufficient precondition for its smooth mortgage lending in the territory of the entire country. In the circumstances of a global economic and financial crisis, the Bank was not in the position to find fresh capital for crediting the entire peasantry force seeking for its mortgage loans.