April, 1912.] 



345 Agricultural Finance & Co-operation, 



parts of the world, namely, Banks with 

 limited liability and Banks with un- 

 limited liability— the latter are most 

 in favour in Europe, being what are 

 known as Raiffeisen Banks. Each mem- 

 ber is a guarantor for the other members 

 and mutuality of liability is the guiding 

 principle. The Raiffeisen Bank is open 

 to the poorest, the only requirement for 

 membership being a warranty of good 

 character. Such banks are co-operative 

 Banks in the truest sense of the word, 

 and on that account are ideal Banks. 



"But we think that Banks with un- 

 limited liability are unsuitable for intro- 

 duction into British Guiana at present. 

 They are no doubt suitable to the more 

 sophisticated people of European Nations 

 who know their neighbours, and can 

 watch and check their work ; but the 

 people of British Guiana are not in the 

 same position. They are averse to watch- 

 ing and checking their neigh bours' affairs, 

 and would not take kindly to the respon- 

 sibility of having to make good their 

 neighbours' defaults. 



" We accordingly recommend the adop- 

 tion of Banks in which membership is 

 dependent upon taking a share or shares, 

 and in which liability is limited to the 

 amount of the share captial. At the 

 same time in order that the ideal Co-oper- 

 ative Credit Bank should not be shut out 

 altogether, we think that provision should 

 be made in any Ordinance that may be 

 passed to give effect to our proposal for 

 the establishment of such Banks at 

 places where it may be shown that they 

 aie required and can be advantageously 

 worked. 



"Model Rules for working Co-operative 

 Credit Banks on the limited liability 

 system are submitted. They have been 

 made as simple as possible in order that 

 they may be better understood by those 

 who will require to be guided by them. 



" We suggest that each Bank estab- 

 lished in the colony should have its 

 own memberships, its own Committee of 

 Management, and be entirely independ- 

 ent of any other Bank. It should, in 

 fact, stand or fall by itself. Each Bank 

 44 



must establish its own capital of guaran- 

 tee. Such capital will consist of the 

 value of the shares (we recommend $5 

 shares) taken up by members, and, if 

 applied for, a loan by the Government, 

 at interest at the rate of 4 % per annum, 

 of a sum in no case to exceed the amount 

 paid up by the members in shares. 



"We are strongly of opinion that 

 when money is loaned by the Govern- 

 ment to a Co-operative Credit Bank, the 

 Chairman of the Committee of Manage- 

 ment should be either a Government 

 Officer or a responsible person nominated 

 by the Governor, who should remain on 

 the Committee so long as the Govern- 

 ment loan to the Bank or any part of it 

 exists. 



"It is, we think, an essential feature 

 of any scheme that loans be made by 

 Co-operative Credit Banks only to its 

 members, and only to them upon ade- 

 quate security either in the shape of 

 approved guarantors or in unencumbered 

 immovable property. We have satisfied 

 ourselves that at any rate in the first 

 instance it would not be desirable to 

 make loans at a less rate of interest than 

 12 % per annum. 



This rate, we believe, will suffice to pay 

 interest upon any loan obtained from the 

 Government as well as the necessary 

 expenses of management and super- 

 vision. Thus, if a rice farmer requires a 

 loan of $100 for six months in connection 

 with his operations he will, at the end 

 of that per iod, have to pay back to the 

 bank a sum of $106. He can, however, 

 pay back in instalments if he so desires. 



At the present time the small farmer 

 can only obtain the means of carry- 

 ing on his farm by resort to the money- 

 lender, or, if he is a cultivator of rice, by 

 getting a merchant dealing in rice to 

 finance him. In the former case we find 

 that he has to pay as a rule 1 cent per 

 week for every dollar borrowed, that is 

 to say, at the rate of 52 % per annum % so 

 that, if he borrows $100 for six months, 

 he has to pay back $126. And sometimes 

 the terms are even higher and more 

 ruinous. In the latter case, in addition 

 to paying a high rate of interest either 



