Chapter I. Influence Of The Progress Of Industry And Population On Values And Prices.

have described. The liability of the members is unlimited. The plan of limiting the liability to the amount of the capital deposited was tried at first, but it inspired no confidence, and the enterprise did not succeed till every member was made generally liable. Each member, on entering, is obliged to pay a small fee, which goes toward forming or maintaining a reserve fund, apart from the active capital. The profits are derived from the interest paid by borrowers, which amounts to from eight to ten per cent, which may not sound very large in our ears, but in Germany is very high. Not over five per cent is paid on capital borrowed from outsiders. All profits are distributed in dividends among the members of the association, in the proportion of the amount of their deposits—after the payment of the expenses of management, of course—and the apportionment of a certain percentage to the reserve-fund. Every member, as we have said, has a right to borrow to the extent of his deposit without security; but then, if he seeks to borrow more, whether he shall obtain any loan, and, if so, how large a one, is decided by the board of management, who are guided in making their decision just as all bank officers are—by a consideration of the circumstances of the bank as well as those of the borrower. All the affairs of the association are discussed and decided in the last resort by a general assembly composed of all the members.”334 The main part of the capital loaned by the banks is obtained from outside sources on the credit of the associations. In 1865 there were 961 of these institutions in Germany; in 1877 there were 1,827, with over 1,000,000 members, owning $40,000,000 of capital, with $100,000,000 more on loan, and doing a business of $550,000,000.335