Vol. XI. No. 263. 



THE AGRICULTURAL NEWS. 



171 



AGRICULTURAL CO-OPERATIVE CREDIT 



SOCIETIES IN ENGLAND AND 



WALES. 



There has j use been issued, by the Board of Agri- 

 culture and Fisheries, LeaHet No. 2(j0, dealing with 

 this subject, and from this the following extracts, that 

 are of more general interest, have been made: — 



There is nothing in the Friendly Societies Act to prevent 

 the registration of a society in which the liability of the 

 members for the debts of the society is limited to a fixed 

 sum in each case (or limited by guarantee, as it is called); 

 but no society has yet been formed on this basis, and all the 

 existing societies have adopted a rule to the following 

 effect: — 



'Every member of the Society shall be, equally with 

 every other member, jointly and severally liable for all debts 

 incurred by the Society, and for any loan which a member 

 or his sureties may fail to pay.' 



Thus in all the existing societies the liability of each 

 and all of the members for debts due by the society is 

 unlimited, and the ultimate security offered by the society 

 for advances made to it is the total [iroperty of all its 

 members put together. 



A society registered under the Friendly Societies Act 

 has to submit its rules to the Chief Registrar, whose duty it 

 is to satisfy himself that they are not contrary to the Act. 

 Most of these societies have adopted the model rules recom- 

 mended by the Agricultural Organization Society, to which 

 all but two of them are affiliated, and the others have rules 

 which are in all important respects similar, so that regarding 

 all of them it may be said that, besides the principle of 

 unlimited liability, they have the following features in 

 common. 



No one can be admitted as a member unless he lives 

 within a certain circumscribed area, such as a parish, or two or 

 more adjoining parishes, and so is personally known to most 

 of his fellow members. He must also be approved by the 

 committee as a man of good character, worthy of admission 

 to the society. All the members have an equal voice in the 

 election of the committee and the management of the society. 

 Loans to members are granted only on approved security, 

 and must be utilized only for a specific purpose, which, in 

 the opinion of the committee, is such that there is a sufficient 

 prospect to the loan repaying it.self by the production, busi- 

 ness, or economy which it will enable the borrower to effect. 

 No member can have out on loan more than £.50 altogether 

 at any time, but he can repay one loan and afterwards take 

 out another, not exceeding £50, 



The society may receive deposits, either from members or 

 non-members, and may pay interest on them. 



No profit may be divided among the members of the 

 society. All profits must be carried to a reserve fund, which 

 can only be drawn upon to meet exceptional losses by resolu- 

 tion of the general meeting of the society. Even if the .socie- 

 ty is dissolved, this reserve fund cannot be divided among the 

 members, but must be spent on some useful purpose in the 

 parish. Thus the only pecuniary benefit a man may expect 

 to gain by becoming a member of such a society is that of 

 obtaining loans for profitable purposes connected with agri- 

 culture at a low rate of interest; and if he is unlikely himself 

 ever to require such a loan his motive for joining as member 

 can only be to help on a beneficial movement, and to assist 

 his neighbours, by his guarantee and guidance, to get small 

 loans on advantageous terms. 



The accounts of the society, with the exception of those 

 relating to individual loans and depo.sits, are open to the in- 



spection of all interested in the funds. They must be audited 

 annually and submitted to the Chief Registrar, and a copy of 

 the annual balance sheet must be conspicuously displayed for 

 the information of all concerned. 



It takes some years for a credit society to get into work- 

 ing order, and the progress made can be better judged by tak- 

 ing separately the totals foi- the six oldest societies, which have 

 been at work for over fourteen years. Between them, they had 

 in 1910, 145 members (an average of 24 per society), and 

 during the year they gave out thirty- four loans, so that 

 about one in four of the members took a loan. The 

 loans aggregated £511, and averaged £15 per loan. 

 The rate of interest charged on leans to members was, 

 in four societies, 5 per cent., in one 6 per cent., and in 

 one only 4 per cent. They had secured deposits amount- 

 ing to £481, paying interest on them at .3 per cent, in four 

 societies, and at 4 per cent, in one. Two of them had 

 obtained advances from banks at 4 per cent., and one at 3 per 

 cent. During the year they earned £36 in interest, and 

 received other income amounting to £1, while their interest 

 charge was only £20, and their expenses of management £6, 

 an average of £1 per society: so that the net profit of the 

 year was £11, or nearly £2 per society. Their assets amount- 

 ed together to £743, including gifts of £65, and £556 out 

 on loan to members; and their liabilities were £538, including 

 the £481 held on deposit. Their surplus of assets over lia- 

 bilities amounted to £205 (including the £65 received as 

 gifts), so that they have now, after fourteen years of careful 

 management, built up a reserve fund equal to more than one- 

 third of what their members require in loans during the year. 

 This is their own property, on which they have no interest to 

 pay. The loans have been repaid punctually, and the societies 

 have made no bad debts, and incurred no losses, and only in 

 three or four cases have they had to call on the sureties to 

 help in repaying loans due from members. In hardly any 

 case has the surety ultimately failed to recover the money 

 from the actual borrower. 



The members agree in saying that they have derived 

 great benefits from the existence of these societies, which 

 have enabled many of them to obtain the small loans needed 

 for their agricultural operations at a lower rate of interest 

 than they would have had to pay elsewhere, and some of 

 them to obtain loans, who otherwi>e could not have borrowed 

 at all. They cite instances of men who were enabled, by 

 a loan from the society, to buy and feed sheep, pigs or cattle, 

 to hold over stock for better [irices, to procure seed, plants, 

 or manure, to work their l«nd to better advantage, or to add 

 to the area of their holdings; and of some who, by means of 

 a succession of such loans, have risen from the position of 

 labourers to that of substantial small holders. 



The establishment of these societies in the rural villages 

 in which they are found has evidently not only added to the 

 prosperity of many of the villages, but has stimulated neigh- 

 bourly feeling by showing men how they can help their 

 fellows by the exerci.se of care and mutual trust, without any 

 real pecuniary risk to themselves, has encouraged thrift and 

 efficient methods of cultivation, and has at the same time 

 increased the selfrespect of the individual members, and 

 inspired them with hopes of progress. 



It is very noticeable that the first efforts in 

 these agricultural credit societies are very small, 

 and that gradual but safe progress is made. This 

 fact may form an object-lefson in regard to simi- 

 lar work in the West Indies, and serve as matter for 

 encouragement in such work. 



