396 PROVISION Ol 1 BORROWING FACILITIES. 



supply such credit mainly on personal security and for productive 

 or provident purposes. Loans are also frequently granted for part 

 or full payment for holdings in those parts of Germany where small 

 holdings predominate ; and a certain number of credit societies have 

 carried out, with good results, the purchase and breaking up of 

 fairly large properties. 



German rural societies, nearly all of which bear the double title 

 of Savings and Loan Banks, derive the greatest part of their working 

 capital, in fact, over 90 per cent., from the deposits of members and 

 of non- members resident within their own areas. Among the advan- 

 tages they offer to the rural population as savings banks are almost 

 absolute security, attractive interest, and proximity. The security 

 of depositors' money is safeguarded in ordinary circumstances by the 

 fact that the rural society confines its business to a small area and to 

 simple, well-secured transactions ; by the regular examination of the 

 state of its business by the board of supervision (whose members bear 

 a special responsibility under the Act); by the general knowledge 

 of the affairs of the society being common to the bulk of the members; 

 by regular outside audits ; and if all these should fail, through the 

 joint and several liability incurred by members. This liability is 

 unlimited in the case of 92 per cent, of the societies. The legal 

 provision that the total amount of the savings deposits that may be 

 accepted, and of the loans that may be contracted by a society, 

 as well as the provision that the limits of the advances that may be 

 made to individual members, must be annually fixed by the general 

 meeting of members, prevent the extension of business beyond the 

 collective solvency of the members comprising the society. The 

 history of German rural credit societies has demonstrated the excel- 

 lence of the security offered : it is affirmed that depositors have never 

 suffered loss. And in the sixteen years 1895 to 1910 only 19 rural 

 credit societies were involved in bankruptcy proceedings : a striking 

 record when it is considered that since 1901 there have beeri over 

 10,000 societies and since 1909 over 15,000 societies of this kind 

 in Germany. Compared with other banking and credit undertakings 

 one German writer has computed the frequency of bankruptcy 

 per 10,000 undertakings over the period 1895-1905 as being fifty-five 

 times more frequent with them than with the credit societies. 



These societies pay from 3 to 4 per cent. at least 70 per cent. 

 appear to pay 3i per cent, and over on deposits; and they endeavour 



