Such pledge, if it have to be seized, may become a white
elephant, and will certainly for a time lock up money. If such
security is given at all, it should be distinctly made only
collateral. " What I particularly like about co-operative banks,"
so said Leon Say, "is that they deal in personal credit."
Personal credit, properly secured, is indeed the most convenient
form of credit for the bank, and the most educating for the
borrower. Real credit, since it may lock up money, ought to
be peculiarly objectionable to a co-operative bank, as such
institution in any case operates with only very limited capital
and, it may be, with none at all. There is also no occasion
for real credit, because the entire business of a co-operative
bank is based upon mutual knowledge among members, of
their several persons, their qualities, their positions, their busi-
ness. It is, in truth, such knowledge, the vigilance exercised,
the close touch maintained, which makes the co-operative bank
at all possible and its business successful. Personal credit,
therefore, will have to be the form of credit upon which co-opera-
tive banking will, in the main, have to be built up. In diffus-
ing personal credit, in educating up to its use, making it more
generally understood, more secure by the additional safeguards
which, within its own modestly endowed sphere, it must of



38 CO-OPERATIVE BANKING

necessity impose, co-operative banking will be found to be
rendering to the community at large an even greater service
still than that with which it has benefited Germany, by intro-
ducing the cheque and the clearing-house; and Italy, by reform-
ing its banking methods. The extension of personal credit is
bound to set free springs of productive power which, not being
dependent upon the weight of real security, are the more widely
applicable and resilient, although thereby sacrificing nothing, as
experience has shown, in respect of safety.
