Rural Credit 285 



may be in the form of a mortgage on the lands of the 

 members of the banking society as in the Landschaften ; 

 or it may be a collective personal guarantee given by the 

 members of a bank to repay the loans extended to the 

 members. In the case of the Raiffeisen rural banks, un- 

 limited liability is a fundamental part of the system; in 

 the Schulze-Delitzsch system, the liability of the members 

 may be either limited or unlimited. In the rural credit 

 systems of this type the collective personal guarantee as 

 pointed out by Dr. Lorenzoni is in fact indirectly a 

 property security. 



Based on these collective guarantees, capital is secured 

 for the members in a variety of ways. In all cases it is 

 readily secured from the large banking institutions at 

 low rates of interest. In France the government furnishes 

 the main source of capital for the cooperative banks. In 

 Germany the Landschaften issue bonds and secure their 

 capital from the investing public ; the Raiffeisen banks 

 depend on their current deposits, savings deposits and 

 reserve funds, and on the loans which they obtain from 

 the central and other banking institutions. 



The following are the principal safeguards for loans 

 given on personal security in addition to the loans secured 

 on mortgages as outlined by Dr. Lorenzoni to whom the 

 author is indebted for a large part of the data included in 

 the rural credit discussion. 1 



" (1) That loans are only made to members of the group 

 and that only persons known to be trustworthy are ad- 

 mitted ; 



"(2) That membership is confined to persons residing 



1 " An Outline of the European Credit Systems." 



