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Credit Banks Credit Societies

bank, money, society and central

CREDIT BANKS. CREDIT SOCIETIES. Credit banks, or agricultural co-operative credit societies as they are usually called, are to be found in various places in Eng land, and in more than 200 places in Ire land. The object of these banks or societies is to enable small farmers to obtain advances of money for application to reproductive purposes in connection with their business. The society borrows money, either from a local banker or from the Central Co-operative Bank, London, on the joint security of all the members, and lends it out to the mem bers, usually upon the 'joint and several promissory note of the borrower and two sureties. The liability of the members is unlimited, and it is on the strength of that liability that the society is enabled to borrow the money to lend out at slightly higher rates. If need be, the promissory notes of the individual borrowers may be assigned by the society as security to the local banker or the Central Bank from which it obtains a loan. The societies may also obtain capital from local wealthy resi dents who are interested in the welfare of the district in which the societies operate, and this was the main source of capital before the Central Bank was started. A credit bank also encourages thrift by re ceiving money on deposit, which is used in lending to members who require loans. When a credit bank has more deposits than it can utilise in loans to its own members, the unused balance is transferred to the Central Bank, and from there it is lent to other credit societies requiring money. The

Central Bank is worked on limited liability lines.

Each borrower must specify the purpose for which a loan is required, and bind him self to apply the money only to that purpose. Fifty pounds is the maximum which may be lent to any one member. The society, which is managed by a committee elected by the members, pays no dividend, and all profits go to increase the capital formed from the small entrance fees of the mem bers. The various societies are affiliated to the Agricultural Organisation Society.

In the event of the failure of a credit bank, the rules provide that in no case shall a Reserve Fund be divided amongst the members, but must be devoted to some local charity or useful purpose, such as a village hall, in the district in which the society operated.

A statement has recently (August, 1910) been made pointing to probable legislation to facilitate the creation of credit banks. Lord Carrington said : " I have been con sidering whether I could not devise a plan to lay before my colleagues to give legis lative, administrative, and financial facili ties for the establishment on a sound basis of a satisfactory system of co-operative credit banks, especially for the benefit of agriculture."