156 RURAL RECONSTRUCTION 



It ought to be borne in mind that at the time when co-operative 

 banking was first introduced, all liability was necessarily unlimited, 

 because limited liability had not yet been thought of and was in no 

 country authorised by any statute. In itself it offers, combined 

 with undeniable dangers — which, however, may be guarded against 

 — also some distinct advantages, which in the countries used to 

 that form of responsibility are thought to be well worth retaining. 

 We may do well to remember that in the United States, just as in 

 Germany and Austria, " limited liability " is understood to extend 

 beyond the actual value of the share. In what is known as the 

 " Raiffeisen " system of co-operative banking, ostensibly unlimited 

 liability, the unrestricted liability of all members of a society, to 

 that society's creditors, for just debts is indispensable, because that 

 system in its purity dispenses altogether with shares, and in no case 

 tolerates any shares of any magnitude, and so there is nothing to 

 rely upon for security except liability ; and also because unlimited 

 liability — which the members are called upon to limit for them- 

 selves by periodical resolution, which sets a distinct bound — saves 

 depositors and other purveyors of loan money the trouble of inquiring 

 into the value of the assets of the society, the general transactions 

 being designedly individually small. Raiffeisen forbade shares, be- 

 cause he advisedly desired to meet the requirements of even very poor 

 people, who might not be in a position to take up shares, and also 

 because his system was designed, not for industrial centres, but only 

 for small rural districts and mainly for use in aid of agriculture, which 

 requires loans for long periods, such as a bank based upon shares, in- 

 volving quick returns, can only in exceptional cases grant. The share 

 bank receives its deposits and must have the money so received back 

 in little time, so as to keep its till fairly full. The term generally 

 recognised for repayment is three months. That does not suffice 

 for agricultural purposes. Our unlimited liability bank can deal 

 with its security of liability pledged as an owner of land or of a 

 building can deal with such property in mortgaging it, raising money 

 again and again as he happens to want it — without ever borrowing too 

 much, in order not to have any cash lying idle. In respect of every 

 particular loan, time is there of little consequence. Fresh money 

 may at all times be raised on the standing security. The loan can, 

 when wanted, run on for ten years and more. The Schulze Delitzsch, 

 or in its amended shape, Luzzatti, type of co-operative banking has 

 made very large sums of money available for agricultural purposes — 

 possibly more in aggregate amount than its rival. It has done so 

 dealing to a considerable extent with large farmers, whereas the 



