856 PROVISION Oi 1 BORROWING FACILITIES. 



Administration. A Nidhi is usually formed by a few intelligent 

 persons, generally officials and professional men, uniting to the 

 number of seven at least, and framing or borrowing a Memorandum 

 and Articles of ascociation ; these subscribe a few shares fully paid 

 up, with which to defray preliminary expenses and registration fees ; a 

 prospectus is then issued, and a meeting called by public notice to 

 explain the nature and objects of the Nidhi and a list is opened for 

 members. This or a subsequent meeting appoints the directors and 

 office-bearers, who are, as a rule, of course, the original promoters 

 of the Fund. 



General Assembly. Theoretically, the source of power is the 

 members in general meeting ; they elect directors, auditors, &c., and the 

 directors report to them annually; in practice the directors and office- 

 bearers, especially secretary, are the real society, being, practically, the 

 only ones cognizant of business and of the affairs of the Fund. When 

 the general ni3eting does attempt to exercise power, experience 

 alleges that it is frequently used badly and ignorantly, a mass of 

 ignorant voters are won over to dangerous business, to mistaken 

 appointments of directors or auditors, unconscious of the true duties 

 of such officers, or of the proper scope of genuine and safe business. 

 The power in Madras and neighbouring districts is generally exercised 

 on the "one man, one vote" principle, hence, the experienced director 

 of many years' standing has precisely the same theoretical value in 

 the meeting as the newest joined lad or the old market woman with a 

 single share. This is the strictly democratic principle adopted in 

 the Popular banks and Credit Unions of Germany and Italy, which 

 is found to work very well, the power thus given to the mass of 

 members, i. e. y to the mass of borrowers, tends but only tends to 

 prevent any diversion of the aims or funds of the society towards 

 speculation or towards private interests, or any monopoly, of the 

 administration for purposes of private gain by capitalist shareholders. 

 In the United States, however, it is common, perhaps general, to 

 allow one vote per share, it is argued by writers of the greatest 

 experience that though the "one man, one-vote" principle prevents a 

 few shareholders from combining to control the association, yet, on 

 the other hand, it allows ten men holding one share apiece to have 

 the same voting power as ten men holding ten shares apiece (S. 

 Dexter), and it is evidently considered that a universal and equal vote ' 

 is, in business matters, a dangerous vote. It is interesting that this 



