M. Alphonse Desjardins, a public spirited French-Canadian gentleman of Levis, P.Q., founded in December, 1900, a co-operative bank. At that time there was no law providing for such an institution, and until the passing in 1906 of the Quebec Syndicates Act, it remained simply a voluntary association, kept together and managed by its founder. During those six early years only two similar banks were founded. The Quebec Act was designated to regularize the formation of cooperative societies, in the form of production, consumption and credit associations; the territory within which such an association was empowered to operate being the limits of a provincial electoral district. The responsibility of members is limited. to the amount of their respective shares, and only persons within the electoral area can become members. All efforts to pass a similar bill to apply to the whole Dominion have failed, in spite of favour from high quarters.

The system has certainly flourished, and at the end of 1913 no less than 141 banks had been established in Canada, of which 122 were in the Province of Quebec, and 19 in Ontario, with 65,700 members. The movement has also spread to the United States and there are 23 such banks in Massachusetts and New Hampshire organized by M. Desjar

dins.

These banks are, of course, comparatively small affairs and yet the volume of business done is a striking one. A conservative estimate of the amount of loans made yearly would be over $3,560,000; the general turnover has now reached $8,700,000 per annum, and since the inception of the scheme, 15,000 loans have been made.

The Levis Bank, after an existence of thirteen years had on November 15th, 1913, a general turnover of $1,830,211, with a total asset of $242,055. It had loaned out during the course of its existence a total sum of $1,197,049 in 6,200 loans, without one single cent of loss, nor has any other of the banks. lost anything to date, a very remarkable fact.

The system on which the Desjardins banks are worked marks a further evolution of the type created in the first instance by Schulze in the town of Delitsch. Schulze's system was founded, like Raiffeisen's, on unlimited liability of all members; Luzzatti, who founded the wonderfully successful

"Banche Popolori" in Italy, limited the liability; while M. Desjardins has gone another step forward in practically abolishing any form of liability at all, and adopting what is known in France as the "capital variable," which is withdrawable almost at will, with 30 days notice. This is practically the counterpart of the system in vogue in the uncapitalized savings banks of the New England States, where it has been eminently successful for three-quarters of a century. M. Desjardins states that he was forced to adopt that system as the people in Quebec would never have accepted the unlimited liability nor even the limited liability of Luzzatti.

M. Desjardins in the evidence he gave before the Committee appointed to inquire into the Bill before the House of Commons in 1907 has described his system." Put briefly, his banks aim at lending small sums to members on personal security and the honesty of the borrower is considered, not his holding in the bank. The banks work within a very small area where everyone is known to all the shareholders and where every shareholder is interested in the repayment of the loans. The average rate of interest works out at about 65%%.

The banks are never connected with any other Co-operative Society as, in M. Desjardins' view there is a great danger of the banks getting under the control of a few individuals, while control of the whole body through their nominees is, of course, the very essence of the system.

Each association is carried on by three committees, the Council of Administration with from five to nine members; the Credit Committee of three members; and the Supervisory Committee of three; all these committees are appointed by the vote of the shareholders and hold office for two years. The Council of Administration controls the admission of new members, transference or withdrawal of stock, and sees to the general running of the business. By them is chosen the manager-the only salaried official of the concern.

11 Appendix to the Journals of the House of Commons, Vol. XLII, 1906-7. Part I, appendix 3. The evidence of Prof. Shortt is also most interesting, as is also the evidence of Mr. E. M. Trowern, Dominion Secretary to the Retail Merchants' Association of Canada, as showing the point of view of the retail storekeeper.

The Credit Committee determine the credit to be allowed to each member and pass on all applications for loans, although the right of appeal to the Council of Administration is granted to the applicant.12

Th Committee of Supervision, elected by the shareholders, forms a permanent board of supervision and audit, and if necessary, they have the right of suspending the operations of the association until the situation is revised by a general meeting of shareholders.

The capital of each association varies in amount and is raised by selling shares and by receiving deposits. The shares of $5 each may be paid for by small instalments. Every applicant for membership must come before the Council of Administration, and in the words of the association's by-laws, every applicant, "must be honest, punctual in his payments, sober, of good habits, industrious and laborious." Bankruptcy or abuse of the privileges of the society renders a member liable to expulsion. Savings are received, and the general rate of savings bank interest is given.

Twenty per cent. of the net profits of each year, as well as ten cents on each share paid as an entrance fee, is put in the reserve fund, and each association has a Providence Fund raised by means of a ten per cent. assessment on the yearly profits, until the fund attains a maximum of one-half the yearly profits distributed on the paid-up stock. This fund is formed as an outer bulwark to the reserve, and is designed to meet the first onslaught of any disaster which might threaten the stability of the Credit Union.

There are several exceedingly interesting and significant points to be noticed about the working of the Caisses Populaires.

First, the success of the whole project has been brought about solely through the devotion and public spirit of M. Desjardins. It is not too much to say that without him they would never have existed at all. Just as Raiffeisen and Schulze carried through their schemes almost unaided, and in the face of opposition, M. Desjardins by his own enthusiasm,

12The Board of Credit must be unanimous in granting any loan, and they are themselves precluded from borrowing.

faith, administrative ability and faculty for inspiring confidence has carried it through on his own shoulders. And it would seem that this must always be so. Where the great state-aided credit institutions of France went to ruin, the tiny spark lit by one man's faith in Germany has never been extinguished and has indeed revolutionized rural life in that country. It seems to be a natural law that such projects flourish under private guidance, and languish and die under state patronage. Where all the remedial measures of successive British Governments for forty-five years have failed to satisfy Ireland, the wonderful success of Sir Horace Plunkett and the Irish Agricultural Organization Society has transformed many districts. Such a reflection is very pertinent when considering such a scheme as has been advocated in

Saskatchewan.

Second, the Banks work within a purposely constricted area, and among a very humble clientele, eighty per cent. farmers and twenty per cent. wage earners, the average loan being between $40 and $100, although, of course, larger loans are made.

Third, the Banks are doing missionary work in teaching the people the very rudiments of banking. Distrusting banks and banking, the French-Canadian kept his money in his stocking. The Caisses are rapidly changing that, and the people are beginning to deposit their little hoards in the bank. Instances are known where old people have brought in a thousand dollars in notes, the savings of a life-time, to deposit in the bank, this experience being closely similar to that found in Germany. The comparison between such conditions and the widespread banking facilities and activities in the hoards in the western provinces is a striking one. It is interesting to note that M. Desjardins has never met any opposition from any of the chartered banks, but on the contrary help and sympathetic regard. Nor have the chartered banks lost ground, but instead have benefitted through the educative influence of the Caisses, breaking down prejudice against banking in general.

Fourth, the Banks of the Caisses Populaires type have been of the greatest assistance to the farming community. In the Levis district several long standing mortgages have

been paid off by loans from the Caisse, which loans bear a lower rate of interest than was formerly paid by the mortgagees.

Fifth, it must not be forgotten that the stability of the population is very great. Families live in the same village, often in the same house for generations, a very different state of affairs to the fluid, shifting population of the Provinces farther west.

A significant point to notice is M. Desjardins' declaration that state assistance in any shape or form other than the protection the law provides is utterly repugnant to his organization. To quote his own words, "I do not believe in State spoon-feeding; there is nothing to be gained from such a weakening regime, except that it tends to kill that all powerful stimulus of self-help, so strong an educator in a young democracy such as ours. The movement has never and will never receive, while I am living and enjoy any influence, one solitary cent of either direct or indirect help from any Government or public authority."

And lastly may be mentioned a point which M. Desjardins regards as a very satisfactory achievement, namely, that the Caisses Populaires have almost entirely broken up the easy payment system of buying goods, and introduced an era of "spot cash" dealing with the stores.13

Such are, very briefly, the main outlines of perhaps the most interesting and successful experiment in co-operation on the American continent.14

STATE GOVERNMENT LOANS IN AUSTRALIA.15

There can be no question that in every country this

13Cf. Mr. W. L. Smith's statement with regard to the Grange cooperation.

14M. Desjardins, unlike so many would-be co-operators, has preferred to expend his energies on organization instead of advertisement. Little has been written about it, the best a small pamphlet by M. Desjardins himself, "La Caisse Populaire," published by L'Ecole Sociale Populaire, 1075 Rue Rachel, Montreal; price 20 cents.

15Cf. Official Year Book of the Commonwealth of Australia, 1913, pp. 416-525. Also report of Canadian Trade Commissioner to Australia, Mr. D. H. Ross, published in No. 49 of the weekly Reports of the Dept. of Trade and Commerce.