Warsaw, Białystok, Gdynia, Grudziądz, Katowice, Kraków, Lublin, Lviv, Łuck, Pińsk, Poznań and Vilnius.

Beginnings of lending activity

1924 was a turning point in PBR s activities. A regulation issued by the President of the Republic of Poland definitively defined the bank s tasks. At the same time, financial foun- dations were laid thanks to which PBR could intensify its activities and start to pursue its main objective for which it was established playing a vital role in Poland s eco- nomic life, especially in agriculture. Then, the share capital was increased by 3 million zloty. Earlier on, the capital in Polish marks, translated into zloty, was only 1,500 zloty33. In addition, PBR was equipped with a special subsidy from the Ministry of Agricultural Reforms in the amount of 7 million zloty, slated for purchase of land estates for parceling out. Also the bank s working capital increased, paid in to the bank by the State Treasury as a subsidy for Communal Credit Unions34. At the beginning of PBR s activity, its banking operations conducted on its own account were much more modest, compared to the loans from state funds. The limited financial capabilities of the Polish state at the beginning of the 1920s forced PBR to limit its lending activity based on its own funds to short-term loans, and the bank was obligated by the government to rely in this activity primarily on social rather than economic criteria. From the money at the bank s disposal small-ticket loans were granted in order to share the resources among as many small and medium-sized farms as possible. This was visible especially in the case of working capital loans which played a vital role in the bank s policy. Based on the assumption that one of the main obstacles to economic development of the Polish rural areas in the inter-war period was absence of working capital, PBR took actions aimed at providing working capital to the weakest farms. State aid was indispens- able because without it farmers were still forced to use the services of the private lending market where the interest rates on the loans were as much as 400% per annum.

Short-term loans

PBR granted short-term loans directly only at the initial phase. Later on, there was a trend to distribute the loans to farmer associations and local funds, because, having direct con- tacts with the farmers, they have the best knowledge about the situation and needs of potential borrowers. In connection with the limitation of PBR s direct lending to farmers, based on available banking materials we are not able to determine the percentage or amount of individual branches of agricultural production in the short-term loans granted.

33. The conversion of Polish marks into zloty was effected according to the ratio 1 zloty = 1,800 thousand marks. H. Cywiński, Ten centuries of Polish money, edition II, Warsaw 1987, p. 208. L. Kokociński, Paper money in the Polish land, Warsaw 1996, p. 100.

34. PBR Report for 1924, Warsaw 1925, p. 3.

REKLAMA KREDYTU NA ZAKUP NAWOZU KAINIT WRAZ Z KOSZTAMI

TRANSPORTU DO ROLNIKA, 1928 R.

ADVERTISEMENT OF A LOAN FOR PURCHASE OF KAINIT FERTILIZER

AND ITS RAILROAD TRANSPORT TO A FARMER, 1928

100 T H E H I S T O R Y O F B G Z