334 PROVISION OF BORROWING FACILITIES. 



Instalments, or portions of instalments, are received at any time in 

 advance, so as to remove the temptation to spend small sums. 



It is an absolute rule that the loan shall be for some useful and 

 productive purpose ; this is, in fact, one of the chief securities for the 

 repayment of the loan a security entirely lost sight of by those who 

 demand only material and existing securities. When a loan is used 

 only for a productive purpose, including in this definition the payment 

 of previously existing debts which enslave the peasant and absorb 

 his crops, the lender has the best of guarantees that his loan will be 

 repaid ; the borrower is, in fact, in a better position to repay the 

 loan than he was when he borrowed it. To this end, not only must 

 an applicant state the object of his loan, but the truth of the statement 

 must be enquired into by the committee by its local member. If the 

 loan is approved of, it must be used for the purpose stated, under penalty 

 of immediate recovery. This is not merely for the protection of the 

 interests of the society but of the member ; it is desired to teach 

 members the due use of credit and to safeguard their true interests ; 

 control of the use of credit is the base of the society's action, and the 

 abuse of this control is checked by the fact that it is the members 

 themselves who control themselves and one another, and that the 

 members are men of similar position and needs. 



The duration of loans is chiefly from one to ten years ; the 

 societies being composed of actual agriculturists, recognize that three 

 months are seldom of any use in agriculture; even the SCIIULZE 

 DELITZCH banks, where they devote themselves to the needs of 

 agriculture, find that their short loans require numerous prolongations 

 even up to two years; the same will be noticed in Italy also. In 245 

 societies, it was found that of the total outstanding amounts 15 per 

 cent, was granted for periods below one year, 43 per cent, for one to 

 five years, 35 per cent, for five to ten years, and 7 per cent, for above 

 ten years. Again in ten societies taken at random, 71 loans, or 11 

 per cent., were for one year at most, 442, or 68*5 per oent., for one 

 to five years, and 132, or 20'5 per cent., for five to ten years. 



It has been objected, especially by SCIIULZE DELITZSCII, that money 

 cannot be lent on long terms (one to ten years) as by the Raiffeisen 

 societies without great risk of bankruptcy unless they can borrow on 

 similar terms. As :i matter of fact, the societies do not generally 

 borrow on long terms, their funds are chiefly savings or deposits. ' 

 SCHULZE DELITZSCH and others proved conclusively that, by theory, this 



