PROVIDING THE FUNDS 163 



bank wants to make sure of its borrower, so as to make its loan to 

 him safe. Its first source of security, of course, is his election by his 

 fellow members, who will have to answer for any default. He must 

 not be pressed to come in on the principle of " the more the merrier." 

 His intended fellow-members want to sit in judgment upon him. 

 " The best security of a co-operative bank," as already stated on 

 M. Luzzatti's authority, " is the character of its members." Some 

 optimists consider the test of election sufficient as security for a 

 certain minimum credit. Others hold that, either in addition to 

 this or else independently, the money that he has paid in to buy 

 his share or shares should entitle him to credit up to a certain limit — 

 for, in case of default, the share might be seized. Neither assump- 

 tion will stand the test of examination on business principles. For, 

 after all, members may be mistaken in the judgment of their man ; 

 and obviously the share in question is of value to the bank only 

 while it is in the hand of the member, the bank holding the money. 

 To seize the share as pledge is to seize a scrap of paper. A bank all 

 shares and no money would be worth nothing. It is, therefore, 

 essential that borrowers should be made in every case to pledge, in 

 addition to their share, some kind of security, which had far the best 

 be personal — as it necessarily will have to be in the majority of cases 

 — covered by an adequate number of sureties, whose formal consent 

 to act the bank must make sure of. Personal security has this 

 advantage, that it demobilises no possessions of the borrower, as 

 borrowing on the security of chattels or farm stock or produce 

 might do — which things, moreover, are most inconvenient security 

 for a bank to hold. Sureties, as we have seen in the Lords' and 

 Commons' Inquiries into Scotch Banking, constitute admirable 

 sentinels to watch over the conduct of the borrower whom they are 

 sureties for, and do not allow him to go wrong for their own sake. 



The outer ring for the observation of the borrower are the members 

 collectively, who have pledged their common liability for the money 

 which they raise and out of which they grant their loans. Their 

 " maximum of responsibility " begets a " maximum of watchful- 

 ness," for which the bank is systematically organised. 



It ought, once more, to be borne in mind that the co-operative 

 bank is not a business institution dealing with customers distinct 

 from itself, from whom it would be justified in taking toll for its 

 services. It is the members themselves in their collective capacity, 

 dealers and customers in one. It begins in comparative poverty. 

 People who have much money will by preference go to an ordinary 

 bank. L6on d'Andrimont, the " father " of Belgian " People's 



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