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Agricultural Credit in Germany, [march, 



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 some respects from the 

 English conception of limited liability. The amount of shares 

 and liability guarantee to be taken is not left to the free will of 

 the members, but compulsorily apportioned to the means of the 

 individual members ; thus members are required to take one 

 share for every £100 for which they are assessed to property 

 tax, and for every share they must undertake a guarantee of 

 £10. That is, they go bail for the liabilities of the society to the 

 extent of one-tenth of their possessions. The credit accorded 

 to each individual member is measured by the amount of his 

 guarantee. Thus a member holding fifty shares guarantees the 

 liabilities of the society to the extent of £500, but he will not 

 be allowed credit for £$oo, but only for about ,£375, without 

 further security, and for advances beyond this sum he must 

 give a bill or personal sureties. Dr. Rabe, writing in 1901, 

 observes that during the twelve years these banks have been 

 in existence none have failed, no losses whatever have been 

 recorded in connection with them, and they have rapidly gained 

 the confidence of the population. The value of each share is 

 put at five shillings. 



Central Banks. — It will be understood that the first need of 

 these societies, whether Schulze-Delitzsch, RaifTeisen, or limited 

 liability, was to borrow money on the cheapest terms, and 

 afterwards, as their reserves and deposits accumulated, to 

 arrange some means whereby any balance in the hands of one 

 society could be used to satisfy the wants of another. From a 

 very early period, therefore, the need of a central organisation 



..* "Co-operative Agricultural Credit in Germany." Bull. No. 2, Misc. Series, 

 Dept. of Agriculture for Ireland. 



