100 



should be broken up, the reserve fund should remain intact in the 

 hands of trustees until another association is formed, failing which 

 in reasonable time, it should go to some public object for the bene- 

 fit of the district. Thus no temptation can arise to break up the 

 association for the sake of dividing the reserve fund. The exis- 

 tence of such a fund binds members together, for all are naturally- 

 anxious to retain their interest in it ; they strive to continue wor- 

 thy of membership, and others are attracted and incited to make 

 themselves morally eligible. 



The practice of lending is on the same lines of caution and 

 stability. Although the association exists for the very purpose of 

 lending, it deliberately makes borrowing not easy, but difficult. 

 Every borrower must prove not only that he is trustworthy but 

 that his enterprise is economically justified. Moreover, he must 

 bring the signatures of two members, as sureties on his applica- 

 tion form, who promise to be jointly liable with him. He may be 

 so sanguine as to be sure in his own mind of success, but the ob- 

 ject must be scrutinized and accepted first by his sureties and next 

 by the Committee. Once the money is granted, it must be applied 

 strictly in that particular way for which it was asked. 



Once every month the Council of Supervision meets for the spe- 

 cial object of reviewing the position of debtors and their sureties, 

 and considering the employment given to the loan money. Should 

 a surety be found to have seriously deteriorated in solvency or in 

 trustworthiness, a better surety is at once called for. If he is not 

 forthcoming, or it the debtor is found to be misapplying the money, 

 the loan is at once called in at four weeks' notice. 



Another safeguard is to insist that interest and principal must 

 be paid to the very day. The principal, for loans running any 

 length of time, is made repayable by equal instalments, and prompt 

 and punctual repayment not only facilitates the carrying on of the 

 business, but is far more valuable still as training the borrowers 

 to habits of punctuality. 



The method adopted in lending is made as simple and as in- 

 telligible as possible. All that, as a rule is asked for is a note of 

 hand, unbacked, or else backed by one surety, or more generally 

 by two, according to circumstances. That precludes all raising of 

 money by passing on acceptances. Every farthing that is wanted, 

 as far as it is not supplied by the savings or other deposits paid 

 into the bank, has to be raised by borrowing. At the outset this 

 may appear rather a cumbrous proceeding. But what with a 

 high reputation secured by exemplary business habits, and the 

 substantial guarantee of unlimited liability of all members, the 

 banks have long since gained for themselves a position command- 

 ing such very easy credit, that they have no difficulty whatever in 

 borrowing all that they want either from public banks, or from 

 private individuals, at the cheapest market rates. Confidence in 



