Miscellaneous. 



426 



In the Schulze-Delitzch societies every member subscribes a certain share 

 of the capital, no one being allowed to exceed a certain limit. This is payable in 

 one sum or in monthly instalments. Loans are granted to members only, without 

 enquiry as to the purposes for which they are required, on security, which may 

 take the form of mortgages, guarantee by another member, bills, etc. They are 

 only granted for short terms, and this is one of the features which distinguish 

 these associations from those on the Raiffeisen principle. Deposits are received 

 both from members and from other persons, and these, together with the small 

 capital, form the fund from which loans are made, while the credit due to the 

 unlimited liability of the members enables these societies to raise any money which 

 may be required in addition. The societies are usually established in towns, but are 

 open to any one, regardless of place of residence. 



The rate of interest on loans demanded by these banks is higher than that 

 required by the Raiffeisen associations, and they are not so generally adapted to 

 agricultural requirements as the latter. It would be a mistake, however, to suppose 

 that they do nothing for agricultural credit, as, according to the figures of 1902, 

 28^ per cent, of the members were peasants and farmers, 2Ah per cent, mechanics, 

 and 10 per cent, merchants and dealers. The number of societies belonging to 

 the Schulze-Delitzsch Union was 899 with 533,888 members. 



Raiffeisen Banks.— The loan and savings banks founded by Raiffeisen 

 may be said to have three main objects : (1) to encourage thrift among the agri" 

 cultural population ; (2) to satisfy the demand for loans on personal security ; and 

 (3) to act as bankers in the country district. They rest to an even greater extent 

 than the Schulze-Delitzsch societies on the principle of solidarity or unlimited 

 liability, in that practically no share capital is raised, the money for working the 

 society being obtained from entrance fees, subscriptions and deposits, and borrowed 

 from persons outside the society on the collective security of the members. Loans 

 are advanced only for reproductive purposes, evidence being required for a reason- 

 able prospect of repayment at the date fixed, and they must be guaranteed by 

 another member of the society. The operations of these societies are limited to 

 small areas, usually a village or small town, so that the personal character and 

 circumstances of applicants for loans may be known to the members and committee. 

 The administration is honorary, no salaries being paid (except a trifling sum to the 

 secretary), and all profits realised go to a reserve fund. 



Banks with Limited Liability.— The foregoing classes of associations 

 depend on the joint and several liability of the members for any losses incurred by 

 them, but since the passing of the Act of 1889 the establishment of co-operative 

 societies with limited liability has become possible. The system has of late been 

 more largely adopted, and at the beginning of 1905 there were 1,623 credit societies 

 with a membership of 356,000 on this basis out of a total of 14,272 societies. 

 Societies of this class exist to a considerable extent in Pomerania and Prussian Saxony, 

 where the principle of unlimited liability has not been regarded with favour. Dr. O. 

 Rabe observes that in Prussian Saxony, " where there is a mixture of large, medium, 

 and small properties, unlimited liability is not suitable, as it puts too heavy a burden 

 on the man of property for the benefit of those of smaller means. The view that 

 unlimited liability confers greater authority and credit on co-operative societies 

 is not correct. For what does a co-operative society with unlimited liability 

 represent when, as a general rule, only persons of small means have joined as 

 members ?" 



The German system of limited liability as applied to co-operative societies 

 differs, however, in respects from the English conception of limited liability. The 

 amount of shares and liability guarantee to betaken is not left to the free will of the 

 members ; but compulsorily apportioned to the means of the individual members ; 



