122 REPORT OF THE SCOTTISH COMMISSION 



first. There was nothing but unlimited liability in Grermnay at the 

 start. At that time and until 1889 it was illegal to start a Co- 

 operative Credit Society without unlimited liability. Since the 

 founder's day the law in Germany has been altered, and there are 

 many Raiffeisen banks in Germany which have now a limited lia- 

 bility. But there is still much to be said for making the liability 

 unlimited, and where the members are all poor alike the liability 

 should be unlimited. Each then takes upon himself a similar 

 obligation. In order to protect himself he is thus forced to pay the 

 closest attention to the working of the bank. This is the surest 

 safeguard against loss. The farmers of Ireland are pretty much on 

 the same level of poverty, and the banks there are all founded on the 

 basis of unlimited liability. If banks were to be started in the 

 Western Highlands of Scotland, for example, where the situation 

 of things is pretty much what it is in Ireland, the principle of un- 

 limited liability might with advantage be followed. If, on the other 

 hand, banks were to be started in other districts in Scotland, where 

 the small farmers occupy financially different positions, unlimited 

 liability would practically make the success of the bank impossible, 

 for, however necessary a'nd unselfish it might be for a comparatively 

 well-to-do farmer to pledge his whole means and estate for the debts 

 of many less well-to-do farmers, he would not do it. He might be 

 quite willing to pledge his goods to the value of the goods of his 

 fellow-members, thus putting himself on a similar footing to every 

 other member, which no doubt would be acceptable to the lender of 

 money to the bank, or he might be willing to pledge his goods to a 

 greater extent than every other member, but it would be too much 

 to ask him to pledge his whole means and estate. We know these 

 banks have been singularly free from loss but that is not enough. If 

 there were loss, the creditor would seize upon the goods of the well- 

 to-do farmer as being greatest in amount and most available, and 

 he would be left the unpleasant duty of selling out his poorer fellow- 

 members. 



Productive Purposes 



The money is lent to members only for productive purposes. 

 This is important from the point of view of the man who lends 

 money to the bank, because it 'increases his security. It is im- 

 portant from the bank's point of view for the same reason. Possibly, 

 it is most important from the borrower's point of view for, while it 

 sets him on his feet, it develops his character. Borrowing may be 

 carried on by this system not to the detriment but to the great 

 advantage of the borrower. It is an inducement to the farmer to 

 stick in. It enables him to reap where he has sown, which is not 

 always the case with borrowed money. A farmer may borrow for 

 example from an auctioneer and be tied hand and foot for years, 

 forced to sell his stock not at the best time for himself, but at the 

 time the auctioneer wants it. It is far otherwise with these banks. 

 The farmer gets his money for the purpose of making more money 

 and has not to part with his stock until he can do so to advantage. 

 We may illustrate this by some typicp,l examples from Ireland. A 



