296 Cooperation in Agriculture 



required. Some societies demand an entrance fee of a 

 few cents, which goes to the reserve. This reserve will 

 be dealt with below. 



"The societies in general, having no share capital, do 

 not lend their own funds. The candidate for a loan asks 

 that debentures may be issued against a mortgage of his 

 property. This is then examined. If the security is 

 approved, the candidate executes a mortgage deed to the 

 society, which thereupon issues debentures which are 

 placed on the market and, being sold, provide the funds 

 for the loan. In the old banks the debentures are simply 

 handed to the borrower, who sells them for himself. In 

 the new land banks either this is done, or the bank sells 

 them and pays the borrower the value if below par, or if 

 they sell above par, then the face value, the surplus going 

 to the reserve; or they simply issue debentures on the 

 market and pay the borrower the amount of the loan as 

 settled. It will be seen, then, that the banks have no 

 capital and no need for it. 



"The debentures are for the usual class, secured not by 

 the particular mortgage on which they are issued, but by 

 the whole mass of mortgages held by the bank and by all 

 its proper forms of security, viz., the property of the mem- 

 bers, the reserve or guaranty fund, and even the sinking 

 funds. In some banks a debenture holder has the right 

 (never needed, however) of requiring a court to assign a 

 particular mortgage against his debenture as a specific 

 security hi case the bank should fail to pay him his interest 

 or capital due. A debenture holder cannot demand pay- 

 ment of his debenture, except when it is drawn for pay- 

 ment. But the bank can call hi any at six months' 



