AGRICULTUKAl. CREDIT IX BOSNIA AXD HERZI<XtO\IXA 63 



stituting the assembly of this fund should be looked upon as a direct conse- 

 quence of the personal liability thus imposed by the law on all the peasants 

 of the assembh'. 



As regards their own capital the departmental banks have much in 

 common with the other existing institutions of the same kind, of which 

 we have already spoken and which are called Menafi Sandouks. 



The same course was taken in the case of the departmental banks as 

 in that of the Menafi Sandouks. The system was adopted of causing all 

 the peasant taxpayers in a department in which there was a bank to take 

 part in contributing to its capital. They were obliged to pay a tenth of 

 the value of the lands they tilled in addition to the ordinary tithe. 



The State also takes part in the endowment of the departmental banks, 

 furnishing each of them with a capital of from 10,000 to 20,000 crowns. 

 To augment tliis endowment the capital of the abolished Tiienafi san- 

 douk in each department has been added to it, but this contribution is of 

 little importance. 



The capital which each departmental bank owns is of three kinds : 

 i) capital in shares, 2) reserve fund, 3) fund destined for objects of social 

 utility. 



The bj'-laws of each bank fix the amount of its capital in shares and its 

 reserve fund. The contributions of the peasants are first accanuilated 

 to form the capital in shares. The net profits of each year are on the other 

 hand paid into the reserve. When the sums previously fixed, as has been 

 said, as the respective amounts of the capital in shares and the reserve fund 

 have been accumulated, two thirds of the net profits go to augment the 

 capital in shares and the other third is paid into the fund destined for ob- 

 jects of social utilitj'. 



Until 1886 the departmental banks disposed only of their own capital 

 formed in the manner described. Since that date they have received, as 

 has already been said, the power to borrow from the Landesbank an amount 

 no greater than the capital with which a borrowing bank is endowed. Sub- 

 sequently, that is after 1905, this maximum limit was raised to include a 

 sum twenty times the amount of the capital of the bank desiring to borrow. 

 This power to borrow is however subject to the condition that liability for 

 the debt incurred be assumed collectively by all the taxpayers of the 

 department in question. This explains still further what we have already 

 said as to the reason for granting a deliberative vote to the peasants belong- 

 ing to the assembly of a departmental bank. On loans o'f the kind in ques- 

 tion the departmental banks pa}' interest to the I^andesbank at a rate i per 

 cent, in excess of that officially exacted by the Austrian and Hungarian 

 Bank. 



The law of 1909, which gave to the departmental banks the right to 

 receive savings deposits and employ them for the objects for which these 

 banks were formed, gave an impulse of increasing force to their develop- 

 ment. According to the general by-laws which regulate their activity the 

 departmental banks grant personal loans which may be divided into two 

 classes : 



