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Agricultural Credit in Germany, [march, 



broadly be divided : those founded on Schulze-Delitzsch system 

 and those based on the Raiffeisen principle. The difference 

 between them has been frequently explained, and it will be 

 sufficient here to indicate the distinction somewhat briefly. 



Schulze-Delitzsch Banks. — The Schulze-Delitzsch Credit 

 Societies were designed by their founder, after whom they are 

 named, mainly for the benefit of mechanics and small trades- 

 men. They grant loans on promissory notes and bills for short 

 periods of from three to nine months, and at the same time 

 encourage their members to deposit their savings with the 

 society. At the time of their foundation they rested on the 

 principle of unlimited liability, but in later years limited liability 

 was also introduced, especially as their accumulations of capital 

 increased. Unlimited liability and self-help were, however, 

 declared by Schulze in 1858 to be the only principles justifiable 

 in economy, and, moreover, " particularly suitable to the charac- 

 ter and manners of our people." As a matter of fact, the col- 

 lective liability of the members to the extent of their whole 

 means was at that time the only system recognised by the law, 

 but by an Act passed in 1889, the limited liability of members 

 was admitted. A new form of unlimited liability, by which the 

 member's risk was rendered more remote, was also introduced, 

 but has been but little adopted. 



In the Schulze-Delitzsch 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 instal- 

 ments. 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, &c. 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 re- 

 quired in addition. The societies are usually established in 

 towns, but are open to anyone, regardless of place of residence 



The rate of interest on loans demanded by these banks is 



