310 PROVISION OF BORROWING FACILITIES. 



small or large, numerous or few, who bring their funds together in 

 order to earn the largest possible profits upon them. The primary 

 aim of this form of association is large and safe dividends, any other 

 object being secondary. But the other form is that of the association 

 of borrowers ; although in the best types of this form capital is 

 subscribed by every member, the object of the society is profit not 

 through dividends on the capital, but through personal use of the 

 subscribed capital and other capital thereby attracted; it is the proiit 

 of the members not as lenders but as borrowers that is sought, and 

 dividends therefore are not only not the object of the society but are 

 opposed to its aims, since high dividends mean unnecessarily high 

 interest on the loans. Many societies, therefore, rule out all dividends, 

 devoting all surplus profits, after the reserve is supplied, to the 

 reduction of interest, or to works of public utility ; in others a limited 

 dividend of (say) 5 percent, is allowed, especially on foundation capital ; 

 dividends are expressly recognized as temptations to forget the primary 

 object of the societies. Hence, it will be seen that in the first form 

 (lenders) tin; interests of borrowers and shareholders are opposed, the 

 former requiring low interest, the latter high dividends ; in the latter 

 form (borrowers) the interests are identical, since shareholders are 

 borrowers and require low interest first. The two classes of institution 

 may almost be defined respectively as associations of money and 

 associations of men. 



This distinction of interests, radical in itself, is not however the 

 only one, perhaps not the most important. It is almost universally 

 the case that joint stock companies are formed on the large scale, 

 establish themselves in a large town, and work from that centre 

 outwards, except perhaps in America where the peculiar institutions 

 known as National banks establish themselves in every small town as 

 independent institutions, or in Switzerland, where the country is in 

 miniature, and " Governments " exist for areas with the population 

 of a very small taluk, and where in consequence small barks start 

 up in every village. But in all other countries joint-stock companies 

 for credit purposes take their rise and first establish themselves in 

 considerable towns, one chief result of which is a large addition to 

 urban business, whether mortgage or personal, but equally commercial 

 and industrial, and, finding sufficient employment for capital ; there 

 do not exploit the rural tracts. Hence it results that, except in 

 England where the rural clientele are largely farmers of to Indian 



