CHRONOLOGICAL DEVELOPMENT OF THE ATTEMPTS FOR FOUNDING A MORTGAGE BANK IN EL SALVADOR

1820	First attempt: Driven by the difficulties faced by farmers at the time, the pro-independence leaders advocate the foundation of a mortgage bank.The historical context of the time was before the declaration of independence of the Central American provinces of the Spanish crown.
1867	Second attempt: During the administration of Francisco Dueñas (1851-1852, 1852-1854, 1856, 1863-1865, 1865-1871) by signing a contract between the government and the English subject William Kelly, the foundation of a Bank of Emissions, Deposits, and Discounts, equivalent to a Mortgage Bank, is intended.
1872	Third attempt: Under the government of Marshal Santiago González (1872-1876), the formation of a mortgage bank is planned.
1874	Fourth attempt: The president of El Salvador, Santiago González, attempts the creation of a mortgage bank again by signing a contract between José de Larreynaga and English Marco J. Kelly.
1882	Fifth attempt: Dr. Rafael Zaldívar (1876-1880, 1880-1884, 1884-1885), as president of El Salvador, approved the bylaws of Banco Hipotecario (Official Gazette, September 19, 1882). Attempt to enact the gold standard. The historical context was during the Decree of Law of Extinction of Ejidos.
1883	Sixth attempt: The signing of a counterpart entity to a mortgage bank. Issuance of the first Monetary Law that establishes the circulation of the peso divided into 10 reales.
1886	Seventh Attempt: During the presidency of General Francisco Menéndez (1885-1890) a contract was signed for the formation of Banco Territorial de El Salvador, similar to a mortgage bank.
1889	Eighth Attempt: The Government signs a contract with J.A. K. Morris to found a Mortgage Bank.
1892	Ninth Attempt: President Carlos Ezeta (1890-1894) authorizes the establishment of a Mortgage Credit Bank of El Salvador. In this year, the Colon currency is created.
1912	Tenth Attempt: When Dr. Manuel Enrique Araujo was the President of the country (1911-1913), the formation of an Agricultural Territorial Society that would function as a mortgage bank was intended.
1913	Eleventh Attempt: The President of the country Carlos Menendez (1913-1914, 1915-1918) approves the statutes of what would be the Banco de Credito Agricola Salvadoreño, the entity that would perform functions of a mortgage bank.
1921	Twelfth attempt: The President Jorge Meléndez (1919-1923) authorizes René Keilhauer to found an Issuing Bank, similar to a mortgage bank.
1922	Thirteenth attempt: During the administration of President Jorge Meléndez (1919-1923), law reforms were implemented for the creation of a mortgage bank.
1926	Fourteenth attempt: During the administration of President Alfonso Quiñonez (1914-1915, 1918-1919,1927), a bill was presented for the foundation of a mortgage bank of El Salvador.
1929	The fall in the price of coffee in El Salvador coincides with the fall of the United States Stock Exchange (“Crack”).
1930	Fifteenth try: President Pío Romero Bosque (1927 – 1931) decreed the Law of the Mortgage Bank of El Salvador. A special tax of seventy-five cents for each quintal of coffee exported is decreed.
1931	Sixtieth attempt: New taxes are created to subsidize the future Mortgage Bank. Pressure grows among the coffee growers for the creation of a Mortgage Bank.
1934	December 28th. The constitutional president (sic) Carlos Ignacio Menéndez, delegated by the general Maximiliano Hernández Martínez (1931 – 1944), signs the act of founding of the Mortgage Bank, whereas he gives the fall of the exports of coffee to Germany. [Conjunctural Conext] German coffee exportations gets down

FOUNDATION OF BANCO HIPOTECARIO

The National Legislative Assembly of the Republic of El Salvador enacted the Extraordinary Decree number 5 that contained the Law of the Mortgage Bank of El Salvador, which established the creation of a Real Estate Credit Bank. It had two main objectives: the first one was to make loans with mortgage guarantee and the second one, to issue its own obligations in the form of IDs, certificates, or other titles.

One hundred and fifteen years after the first attempts to found a Mortgage Bank, on January 29, 1935; Banco Hipotecario de El Salvador S.A. (Mortgage Bank of El Salvador) was created. The public deed of incorporation was signed in the city of San Salvador, in the presence of the lawyer and Notary Emeterio Oscar Salazar, and was registered in the Commercial Registry in charge of the first court of civil and commercial matters.

This event occurred during the administrative management of General Maximiliano Hernández Martínez. It was signed by Mr. César Cierra, President of the Assembly; JC Zelaya, First Secretary; and Pablo B. Gómez, Second Secretary. On behalf of the government, it was signed by Mr. Carlos Menéndez Castro, Minister of Finance and General Andrés Ignacio Menéndez, Constitutional President, power provisionally given by General Martínez while he was re-elected in 1935.

The extraordinary decree number 5 established that the shareholders of the Banco Hipotecario should be the Coffee Association of El Salvador with a 40% stake; Cattlemen’s Association of El Salvador with 20%; and private shareholders with 40%. The latter should be at least 12 people. The founding social capital of the Bank was 900,000 colones.

Despite the provision of the decree number 5, the shares were distributed as follows:

Coffee Association of El Salvador – 6278 shares 69.75%
Cattlemen’s Association of El Salvador – 1800 shares 20.00%
Other private shares – 922 shares 10.25%

Shareholder	N° of shares	% total
Coffee Association of El Salvador	6278 SHARES	69.75%
Cattlemen’s Association of El Salvador	1800 SHARES	20.00%
Other private shareholders	922 SHARES	10.25%

Following article 41 of the Public deed of incorporation of the company, the first Board of Directors was organized as follows:

President of the Board of Directors	Don Héctor Herrera
Vice-president of the Board of Directors	Dr. Francisco José Monterrey
1. Owner Director	Mr. Walter Deininger
1. Substitute Director	Mr. Enrique Álvarez Drews
2. Owner Director	Dr. Francisco José Monterrey
2. Substitute Director	Mr. Ricardo Sagrera Puig
3. Owner Director	Mr. Emilio Herodier
3. Substitute Director	Dr. Max Patricio Brannon
4. Owner Director	Mr. Mario Antonio Sol
4. Substitute Director	Mr. Arturo Bustamante

This Board of Directors held their first session on the same day of the signing of the public deed of incorporation, at 8:00 p.m., in the office of Dr. Emeterio Oscar Salazar. In that meeting, they agreed that as long as it does not have its own building, the Bank’s operations would begin in the social headquarters of the Coffee Association of El Salvador.

On April 24 of that same year, the first issue of 10-year mortgage securities at 6% annual interest was agreed. On May 31, the Board of Directors agreed to grant the first mortgage loan to Mr. Antonio Lopez, for the amount of 2,000 colones, with a term of 3 years at a 6% annual interest. It included a mortgage guarantee on a property located in the San Jacinto neighborhood and another located next to the Polar brewery, becoming.

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CHRONOLOGICAL DEVELOPMENT OF THE ATTEMPTS FOR FOUNDING A MORTGAGE BANK IN EL SALVADOR

FOUNDATION OF BANCO HIPOTECARIO