Raiffeisen held, and our experience in Ireland has fully confirmed his opinion, that in the poorest communities there is a perfectly safe basis of security in the honesty and industry of its members.  This security is not valuable to the ordinary commercial lender, such as the local joint stock bank.  Even if such lenders had the intimate knowledge possessed by the committee of one of these associations as to the character and capacity of the borrower, they would not be able to satisfy themselves that the loan was required for a really productive purpose, nor would they be able to see that it was properly applied to the stipulated object.  One of the rules of the co-operative banks provides for the expulsion of a member who does not apply the money to the agreed productive purpose.  But although these “Banks” are almost invariably situated in very poor districts, there has been no necessity to put this rule in force in a single instance.  Social influences seem to be quite sufficient to secure obedience to the association’s laws.

Another advantage conferred by the association is that the term for which money is advanced is a matter of agreement between the borrower and the bank.  The hard and fast term of three months which prevails in Ireland for small loans is unsuited to the requirements of the agricultural industry—­as for instance, when a man borrows money to sow a crop, and has to repay it before harvest.  The society borrows at four or five per cent, and lends at five or six per cent.  In some cases the Congested Districts Board or the Department of Agriculture have made loans to these banks at three per cent.  This enables the societies to lend at the popular rate of one penny for the use of one pound for a month.  The expenses of administration are very small.  As the credit of these associations develops, they will become a depository for the savings of the community, to the great advantage of both lender and borrower.  The latter generally makes an enormous profit out of these loans, which have accordingly gained the name of ‘the lucky money,’ and we find, in practice, that he always repays the association and almost invariably with punctuality.

The sketch I have given of the agricultural banks will, perhaps, be sufficient to show what an immense educational and economic benefit they are likely to confer when they are widely extended throughout Ireland, as I hope they will be in the near future.  Under this system, which, to quote the report of the Indian Famine Commission, 1901, ’separates the working bees from the drones,’ the industrious men of the community who had no clear idea before of the meaning or functions of capital or credit, and who were generally unable to get capital into their industry except at exorbitant rates of interest and upon unsuitable terms, are now able to get, not always, indeed, all the money they want, but all the money they can well employ for the improvement of their industry.