Seventy-Thikd Annual IIeport 1299 



the advantage of Europe's long and varied experience. If the 

 American farmer cannot make it go without government subven- 

 tions, I greatly overestimate his initiative, his judgment and his 

 backbone. 



When these societies have proved a success, have accumulated 

 a substantial capital and surplus, and in other respects established 

 themselves upon a sound financial basis, then and not until then 

 will it be reasonable to expect the governnent to cooperate with 

 them by using their central institutions as depositories of postal 

 savings and other government funds. 



Much is being said upon the question of limited vs. unlimited 

 liability of shareholders. The early cooperative credit banks in 

 Germany employed the principle of unlimited liability. This was 

 true of the Schultze-Delitzsch banks and of the Kaiffeisen banks. 

 The former are now rapidly adopting the principle of limited 

 liability, while the pure Raitfeisen banks still hold to the original 

 principle, although some of the offshoots of the Kaiffeisen system 

 in other countries have giA^en it up. There is much to be said in 

 favor of unlimited liability in the early stages of cooperative 

 credit, particularly among farmers of little capital. When mem- 

 bers of a cooperative bank are held personally responsible for the 

 failures of each other, they are careful to elect only honest respon- 

 sible people to membership, they use great care in the loans they 

 grant, and concern themselves with the disposition that is made 

 of the funds borrowed. Furthermore the ability of a credit 

 society to borrow funds from other institutions will often be 

 greatly enhanced if the members of the society are subject to un- 

 limited liability. On the other hand many persons who would 

 make most desirable members of cooperative credit societies would 

 be kept out by an unlimited liability requirement. Such a require- 

 ment should not be made unless it is necessary to secure a reason- 

 able amount of funds for beginning business. Our American 

 farmers as a class are in a much stronger position financially than 

 are the farmers of Europe. In a great many American com- 

 munities sufficient funds could probably be secured for a good 

 beginning without the adoption of an unlimited liability obliga- 

 tion. In Canada unlimited liability has not been found necessary. 

 A double liability as in the case of our national banks, or even a 



