166 RURAL RECONSTRUCTION 



ties. However, these have in practice been well got over. The 

 proper policy for the bank will of course be, in order to ensure to it 

 sufficient and ever-growing strength— for the stronger a bank is 

 the more and the better service will it be able to render— to keep 

 on steadily increasing its capital, even apart from the incoming of 

 new members, who subscribe for shares. It is the capital, coupled 

 with good business management, which secures to the bank the 

 credit upon which itself depends. 



No definite hard-and-fast rule can be laid down as to the amount 

 of loan money which a co-operative bank may take, in proportion 

 to the capital of its own. Some banks consider themselves safe 

 in rising to a high figure. In general, the proportion of five loan 

 capital (meaning deposits as well as fixed loans) to one capital 

 of its own (meaning thereby share capital and reserve funds) is 

 considered safe and convenient. Among various sources of obtain- 

 able loan capital deposits deserve the preference, as supplying 

 probably the cheapest and also the best "lying" money, with- 

 in a bank whose depositors are also its responsible shareholders — 

 only a remote possibility of large withdrawals. Also one essential 

 object of a co-operative bank is recognised to be that of systemati- 

 cally promoting thrift. M. Luzzatti has called his co-operative 

 banks " perfected savings banks." And at a meeting of the 

 Royal Statistical Society, at which I read a paper on " Savings 

 Banks at Home and Abroad," in 1897, Sir E. Brabrook, then still 

 Chief Registrar of Friendly Societies, and a recognised authority 

 on subjects of thrift, pointed out that thrift societies managed by 

 their own members — such as co-operative banks are — are distinctly 

 preferable for their effects to institutions in which money contri- 

 buted by depositors is handled and disposed of by others, be such 

 even officers of the State. They are far more educational. As 

 thrift societies co-operative banks have a truly admirable record. 

 And, as Directors of Savings Banks in Italy, in districts in which the 

 two classes of institutions work side by side, have assured me, the 

 saving which co-operative banks promote, is new saving, made in 

 addition to what is brought, without any perceptible diminution, to 

 their own counters. 



It seems astonishing with what rapidity and to what imposing 

 figure co-operative banks of the type here spoken of have amassed 

 share capital and attracted deposits and business. And that figure 

 grows from year to year. And all this starting from the humblest 

 of beginnings. What is now the great People's Bank of Milan, 

 which owns near a million of share capital and transacts an enormous 



