1905.] Agricultural Credit in France. 



i53 



nature alone may be accepted ; otherwise, or in the case of 

 considerable amounts, security, either personal or on stock, is 

 required. A control over the loans is also exercised by the 

 district bank, which keeps itself informed as to the standing 

 of the members of its local banks ; when necessary, it may ask 

 for special guarantees. 



According to another system, the local banks keep a small 

 sum in hand in order to grant loans without delay, and, when 

 necessary, discounts its bills at the district bank. The total 

 sum thus kept in hand by all the local banks affiliated to one 

 district bank may amount to a considerable sum, and as it is 

 not constantly used, part remains unproductive. This method 

 is not therefore recommended, more especially as it is desirable 

 that the organisers of small local banks should not be under 

 the necessity of keeping complicated accounts. There are also 

 other systems of establishing a local bank, e.g., mixed liability, 

 the members being liable for two, three, or four times their 

 subscription, or like the older banks, that of unlimited liability. 



The local bank devotes an important part of its resources to 

 taking shares in a district bank ; indeed, commonly, the whole 

 amount subscribed by members is used in this way. The 

 capital of a district bank, however, need not be very large ; 

 for instance, if it amounted to £2,000, that sum would enable it 

 to obtain at the commencement an advance from the State of 

 £4,000, which might afterwards be increased to £8,000, as the 

 law permits the State to advance four times the paid-up capital. 

 A portion of this sum would be devoted to the purchase of 

 securities, to be deposited with the Bank of France and form 

 a guarantee fund, the remainder of the capital being placed 

 in a current account, and the bills for loans granted retained 

 as far as possible, but re-discounted when necessary. 



As an alternative, the district bank may invest practically the 

 whole of its capital in securities and obtain advances by imme- 

 diately re-discounting bills at the Bank of France. The charge 

 made by the district banks for advances or for discounting bills 

 varies from 1 to 4 per cent. Attention is drawn in the above- 

 named Report to the inadvisability of granting loans at a rate 

 below the ordinary bank charge. The advances made by the 

 State are intended merely to facilitate the establishment of 



