4io 



Agricultural Credit Societies. 



[SEPT., 



small area. It is obvious that where loans are granted on 

 personal security an intimate acquaintance with the circum- 

 stances of each of the members and particularly of their 

 character, for sobriety, honesty and integrity is absolutely 

 necessary. This can hardly be the case if a society extends 

 beyond the limits of, at the most, two or three parishes, but 

 the need for limiting the area necessarily results in each 

 individual society possessing but small powers of raising 

 money. 



Advantages of a Central Bank. — The drawbacks connected 

 with this restriction of the operations of the societies were 

 recognised in Germany at a very early stage in the existence 

 of the Raiffeisen banks, and the need was felt for a central 

 institution which could borrow money on the collective 

 responsibility of a number of societies, and also utilize any 

 available balance in the hands of one society for the benefit 

 of another. Provincial central banks were therefore formed 

 and these were again, in some cases, centralized in a still 

 larger institution. At the present time the principle of a 

 central bank may be said to be recognised in all the continental 

 countries where co-operative credit has been at all developed, 

 though there is some difference of opinion as to the methods 

 on which it should be managed. In England an institution 

 of this kind, known as " the Central Co-operative Agricultural 

 Bank, Limited," has been registered under the Industrial 

 and Provident Societies Act, 1893, for the purpose of financing 

 the village co-operative credit societies affiliated to the Agri- 

 cultural Organisation Society. 



It is hoped that this bank will also enable the societies to 

 overcome certain difficulties which have been experienced in 

 dealing with their deposits. These deposits ought to form 

 the principal source from which their working capital is 

 obtained, but it is pointed out in the report of the Agricultural 

 Organisation Society for 1906 that if a large deposit is offered, 

 the society may not be able at the moment to lend it out,, 

 and its only course is to pay it into its own account at the 

 local joint stock bank, where, if it is earning interest at all, 

 it is not earning as high a percentage as the society is obliged 

 to pay for it, and the society accordingly loses. Again, if 

 the deposit is withdrawable at short notice the society cannot. 



