PROVISION OF BORROWING FACILITIES. 3l7 



results of their thrift in the shape of share capital and reserve, is not 

 only an abundant credit as shown by the deposits, which average 

 about tnree times the share capital and reserve, but a large freedom 

 both from losses or from serious failure. Losses in general have been 

 trifling, and such as are incidental to all credit operations, while the 

 general annual profits have been good; but it is doubtful if this 

 solidarity is essential to success. In Austria it is not compulsory, 

 and only half the societies have adopted it ; in Italy, where the 

 success approaches that of Germany, it is practically unknown in the 

 Popular banks ; the new German law of 1889 cancels the former 

 postulate of unlimited liability for co-operative societies, and grants an 

 option between three different methods. 



Methods. The method is that of an association, each member 

 subscribing a share, and thus realizing a share capital to serve both 

 as guarantee and as a lending fund, as well as to enforce thrift ; 

 the association is one of unlimited liability, by the guarantee of 

 which and of its shares, outside capital is attracted, which is lent 

 out on short-term loans to members only. The profits are credited 

 to the share capital, after allotting a certain amount to a reserve, 

 and to the payment of the directors and staff. Members can withdraw 

 at pleasure, but can enter only after scrutiny by the society. No 

 local limits are prescribed, but the office is usually placed in a town 

 or large village. . 



Formation of a Society. Seven persons at least must unite to 

 form a society ; these must draw up the statutes (Articles of 

 Association), the general subjects of which are laid down in the law. 

 A board of directors and a committee of supervision must also be 

 elected by the general body. The statutes, with the names 

 of the directors, must then be registered in full in a register of 

 societies kept in that Court of the district which keeps the commercial 

 register. The statutes are examined and certified by the Court, 

 which also publishes an abstract of them. Only after the above 

 registration does the society acquire a legal existence, and it is then 

 considered as a " commercial " or trading personality, subject to the 

 provisions and with the rights granted by the Code of Commerce. 



Clientele. Any one may be a member, who can prove thai he 

 is worthy of being such ; candidates must show that they are 

 prepared to join in the principles of self-help and thrift ; admis- 

 sion is granted only after enquiry into the character and 



