160 RURAL RECONSTRUCTION 



Well, the people spoken of, as we assume, join together. We are 

 now dealing with strictly limited liability organisations. They take 

 up their shares, the value of which will have to be regulated according 

 to their circumstances. It is, of course, advisable to fix it so that 

 even poor people can afford to take up a share, but on the other hand, 

 it is evident that small shares can command only small credit. 

 Schulze Delitzsch was for large shares, in order to compel members 

 to save up money and so convert themselves by degrees into small 

 capitalists. He allowed a long time for paying up, but the paying 

 up must be steady. Once you can get them to understand the 

 benefit of accumulating money for the said purpose, a better effect 

 is secured by the method which M. Luzzatti has made his own, 

 namely, of having small shares, but making them to be paid up — 

 by instalments, it may be — in comparatively short time. M. 

 Luzzatti favours a period of ten months, one tenth every month. 

 But that is a matter of detail. Not a few of his banks allow twenty 

 and even thirty months. Our law allows a member to acquire an 

 " interest," which means a holding in shares, independently of 

 deposits or advances, up to £200. Shares may, as observed, be large 

 or small. I know one Italian small folk's bank which does exceed- 

 ingly good work with its four-shilling shares. The money raised in 

 the form of shares is not really intended as money for lending pur- 

 poses. Its main object is, by offering security, to stand the racket 

 in case of any loss, to attract other money in the shape of deposits 

 or loans, with which the bank will then carry on its business, taking 

 such money at a low rate of interest and lending it out at a slightly 

 higher rate. The bank is not there to earn a large profit in order 

 to be able to pay its members a high rate of dividend. It is there 

 to render its members a service, supplying them with credit — and 

 other services — at the lowest possible cost. Accordingly, all that it 

 wants to do in the matter of a good balance sheet is to have a 

 sufficient balance over at the close of the year to carry a proper 

 allowance to reserve. Excess profit would mean that it had been 

 charging its members too much, and ought to be met by reducing 

 the charges. Dividend on shares must certainly be limited to the 

 current market rate for money. 



The chase for profit which, when indulged in, has meant deadly 

 poison to co-operative banks, being ruled out, the bank has all the 

 easier task set it in discharging what is a vital point in its duty, 

 the obligation to study safety, avoidance of risk conscientiously, 

 rigorously, one might almost say, religiously. Risk must not be 

 run. As a matter of fact, inquiries made from time to time have 



