PROVISION OF BORROWING FACILITIES. 315 



they Survived by sheer inherent force and by the extraordinary 

 credit obtained by the principles of their foundation. The societies 

 were not recognized as "commercial", not entering into the category 

 of those recognized by the commercial law. Hence, as mutual 

 societies, they were merely on the footing of ordinary individuals, 

 while if they had dealings of any sort with outsiders, they con- 

 travened the law. The German law of 1868 first recognized these 

 societies of unlimited liability as legal entities on a commercial basis. 



Principles. These banks start from the fact that capital is 

 necessary to enable labourers and honest men to lift themselves higher 

 in rank, to improve their methods and instruments of their work, to 

 develop their estate, opportunities and capacity ; the object 

 of credit is the capital necessary for these purposes ; loans for 

 unproductive purposes did not enter into his idea of ' credit.' Credit 

 is, in fact, the power of obtaining capital, and capital is wealth 

 to be used productively. But he had also in view that self- 

 help is the only true source of such credit, and that capital obtained 

 by aid of philanthropy, charity, or even of the State except on a 

 rigid business footing, is an injury ; every act of benevolence 

 accustoms men more and more to dependence on charity; every 

 State intervention by way of favour renders men less self-reliant, more 

 helpless in face of difficulty. He disclaimed all external intervention or 

 interference, believing that men associated on his principles were 

 sufficient for themselves, and he proved his theory by his success. Not 

 only did the State not intervene on behalf of his work, but, after 

 European fashion, it attempted to control it by police interference. 

 Fortunately these attempts failed. Not only did the State not give 

 privileges or freedom from taxation, but its laws did not recognize them 

 as civil entities, until the law of 1868 was passed, i.e., until the 

 societies had established their position, they had no legal status, and 

 could not sue in Court or obtain recovery of their dues ; their credit 

 was based on their own respectability and solidarity, since not being 

 a recognized entity they could not be sued except individually. Yet 

 they succeeded and were an established success before the law recog- 

 nized them. SCIIULZE DELITZSCH considered that the only province of 

 the State was to remove obstacle, and he invoked its aid for this purpose 

 ^and not to obtain privileges which he steadily resisted. 



In fact the great principle which seems to underlie success in 

 the Credit associations of " small folk " is that of self-help ; credit 



