158 RURAL RECONSTRUCTION 



the alternative system, for which, in company with my friend M. 

 Luzzatti, the originator of the Italian system of co-operative 

 banking, I hold strictly limited liability — liability limited to the 

 actual value of the share to be preferable — is fully sufficient and 

 effective. That system is built up on a different basis from that of 

 Raiffeisen. The effects that it looks for are purely economic. It 

 is a moralising factor in the sense in which Minghetti and the late 

 Lord Goschen both have spoken of " good economy as producing 

 good morals." It is bound to look for good character in its adherents, 

 because it can afford to deal only with persons whom it knows to be 

 trustworthy. " The best security of a co-operative bank is the 

 character of its members," says M. Luzzatti. But its main object is to 

 provide cheap and ever-available credit— available as a matter not 

 of favour, but of right — and the other banking services of every 

 description, even for men with only very small means and in small 

 amounts, such as might not suit the more pretentious joint stock 

 banks, which look for much " business." 



A brief explanation of the principles of co-operative banking may 

 possibly make the matter more clearly understood.* 



In this place a very general explanation only will have to suffice. 



A number of persons — I am now thinking only of country dis- 

 tricts — who desire to place themselves in a position to obtain credit 

 when they may want it, and also, it may be, other banking services, 

 and who find themselves under a difficulty to obtain such services from 

 an established bank, by reason either of distance, or of the smallness 

 of their wants, or of want of familiarity with banking customs, 

 join together to secure those services for themselves. Established 

 banks, accordingly, have nothing to fear from co-operative banks, 

 as the late Lord Avebury has freely acknowledged to me by letter. 

 Rather have they distinct services to look for from them — as the 

 German Bankers' Congress, composed in the main of large bankers, 

 assembled at Hamburg in 1907, has explicitly recognised. All 

 financial business must ultimately swell the flood of the large market, 

 as all rivers and rills finish by emptying themselves into the sea. 

 Italian joint stock banks have accordingly readily helped the 

 uprising co-operative banks in their weakness — not from altruism, 

 as M. Luzzatti has emphatically declared, but as finding their 

 account in it. And in Germany we find the powerful Dresdner 

 Bank willingly at the back of the two great federations of co- 



* For fuller exposition of the subject I must refer to my books : 

 " People's Banks : Record of Social and Economic Success," " Co- 

 operative Banking," " Agricultural Banks : Their Object and their 

 Work," " A Co-operative Bank Handbook," and others. 



