PROVISION OF BORROWING FACILITIES. 335 



means bankruptcy, and that the societies could not succeed, but 

 practice contradicts theory e pur se mnove. It is only necessary 

 to point to the German Savings banks, with 55 per cent, 

 of their enormous deposits on rural and urban mortgages to 

 disprove Sen ULZE DELITZSCH'S theory ; the savings banks experience 

 of Austria, of Italy and of the United States is equally conclusive. 

 The fact is that the good credit of the societies prevents any lack of 

 lenders; it is said, indeed, that they have more money than 

 they can lend, probably owing to strictness in lending, that these 

 creditors are largely members, that their savings are left for a long 

 time untouched ; that, in fact, the banks find that ihey can place a 

 very large proportion of their funds in long-term investments; finally, 

 that long-term loans are all repayable by instalments, so that the money 

 is continually coming in. It is true that the societies have introduced 

 a rule that repayment of loans of any term can be demanded on four 

 weeks' notice, a facility which is also given to the creditors of the 

 society, but this safeguard is not used in practice except in cases of 

 deteriorations, or of misapplication of the loan, or of serious diminu- 

 tion of the solvency of the borrower from his own extravagance. 



Cash credits are not extensively used, RAIFFEISEN being of opinion 

 that they were unsuitable to the smaller class of peasants ; they are 

 opened chiefly for the better class. Whether the loans are granted on 

 mortgage, pledge or personal security, the administration is bound to 

 examine, every three months, the solvency of the parties, the condition 

 of the property mortgaged and the use made of the loan ; even the 

 habits of the individuals are considered. If necessary, a further 

 security is taken from him, or the whole debt may be demanded in 

 accordance with the terms of the bond. 



The right of the society to demand repayment at any time on four 

 weeks' notice is entered in general terms, but is never practised unless 

 the property has deteriorated or the solvency of the parties seriously 

 diminished, or the position of the society, by reason of demands, 

 imperatively demands this extreme measure. The advisability of this 

 clause has been much debated. There can, however, be no doubt l>u( 

 that it is necessary where property is being allowed to deteriorate, 

 or the borrower is evidently becoming insolvent through extravagance, 

 or where he has misapplied money lent for a particular purpose. In 

 the first and third cases the rule is universal in land credit societies, 

 and is especially necessary as a matter of contract where the law, as 



