potism, Schulze made a speech, long afterwards remembered against him, in which he said that, while he would never have thought of raising a purely verbal question of that character, yet once it was raised he was bound to say that the business of the new constitutional monarchy ought not to be carried on under the name of the old bankrupt firm of absolutism. And when the assembly itself was dispersed by military intervention, on the 10th of November, it was on the motion of Schulze-Delitzsch that a resolution was carried declaring it to be unjustifiable to levy taxes from the people as long as their representatives were not allowed freedom to deliberate. For this motion he was tried on a charge of high treason on 8th February, 1850, and after a spirited and manly defence conducted by himself, was unanimously acquitted, and welcomed home to Delitzsch with torchlight processions, cavalcades, and every demonstration of enthusiastic admiration. After dispersing the assembly the King took the matter of the constitution into his own hands, and decreed one based, not on universal suffrage as was proposed, but on the three-class system, which divided the people according to their property, and gave the few rich as much power as the many poor. This was resented by Liberals of all types. They refused to serve under the new constitution, either as electors or deputies, and for the next ten years reaction had all its own way. But in the case of SchulzeDelitzsch, those ten years of retirement from parliamentary life were the most fruitful of lasting public benefit in his whole career.

They began, however, in a severe private trial. The office of patrimonial judge having been abolished in 1849, Schulze had reentered the service of the Crown at the moment when his parliamentary speeches had incurred ministerial displeasure, and, to be out of the way of Delitzsch, he was sent to a post at Wreschen, in Posen, among Polish Jews, who were supposed to be insensible to German aspirations. He accepted the post, and married. After a year's unusually hard work he asked a short leave, and was at first refused, but was eventually permitted, on the express condition that he would not visit Delitzsch while away. He accepted the leave, but ignored the condition, feeling that no government had a right to prohibit a man from visiting his father and his early friends. The Minister of Justice punished this offence by the deduction of a month's salary, and Schulze, rather than accept the punishment, surrendered his career,

returning to Delitzsch, where he began to practise as a lawyer, and soon made an income equal to the salary he resigned. He returned, not to plot revolution, but to plant institutions that are the best bulwarks against it, and perhaps but for his return to Delitzsch at this juncture we should not now have had the people's banks. The Jews of Wreschen might possibly have taken up his ideas after a time, but in Delitzsch he already had the ear of the people, and a thorough acquaintance with their wants and character. He had indeed, while formerly in Delitzsch, started some co-operative societies, a sick and burial fund, a shoemakers' society for the supply of stock in trade; a loan society; but when he came back now he found these societies on the point of perishing. They had been founded, he saw, on a wrong principle. Their original funds had been contributed as donations by philanthropic persons outside, who looked for no interest, nor perhaps for repayment of the principal, and funds given as a charity are administered as a charity. No sufficient examination is made into the solvency or personal character of the borrower, while he, in turn, feeling safe from compulsory measures for repayment, makes no haste to meet his obligations; the capital costs nobody anything, and nobody is careful in using it. Schulze at once perceived that societies cannot be expected to prosper on such a system, and that the only sound principle was the principle of nothing for nothing. He accordingly determined to found a new form of society, which should renounce all gratuitous help, whether from the State or from individuals, and should begin in a humbler but surer way, by basing its operations on the contributions of its own members, and on loans which should be acquired in the open market on the members' joint liability, and under promise of adequate interest. Self-help, and nothing but self-help, was his motto. Nobody knew or would believe in its resources before it was tried; when it succeeded people thought the thing so simple that they called it a second egg of Columbus. The principles on which the new loan society was founded were: 1st. The creation of its capital, at least in part, by its own members, because all credit should have a certain real basis. No difficulty was found in getting this share capital paid up, because the shareholders were to receive credit as well as dividends in proportion to their shares. Delitzsch the money was subscribed in monthly instalments of sixpence, in other places of a shilling. And nothing could

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exceed the surprise shown by the labourers when they found what a power for their own ease and comfort they were creating by the little savings that seemed so insignificant. 2nd. The acquisition of loan capital on the principle of joint liability. A single labourer, however honest and capable, has no monetary credit, because he may fall sick or die, but join ten such labourers together and make them answerable for one another's obligations, and you practically destroy that risk, and create for them a credit that will be recognised in the ordinary money market. This joint liability was at first unlimited, and Schulze thought it essential that it should be so; but when the banks became established, he adopted the principle of limited liability, which has been found in practice to afford quite sufficient security to creditors. Depositors were paid per cent. interest above the rate paid in the savings' banks of the district, but then they were obliged to leave their money for a fixed period, and could not withdraw it when they liked as from the savings' bank. However, this additional penny in the pound of interest was enough to bring to the people's bank most of the

small savings of the district. At first 90 per cent. of the working capital of the banks consisted of these deposits, but the proportion of share capital has been gradually rising, and not more than 75 per cent. is now made up by deposits and loans. 3rd. As a rule business is restricted to members, although since the institution has become a financial success, some of the societies open credit accounts with persons outside, and others have become mere joint-stock companies of the ordinary kind. The maximum loan granted to individuals differs in different places. At Delitzsch it was at first only £8, but in 1867 it had risen with the rise in the resources of the bank to £350, and in some places it is as high as £1,700. The usual term is three months, but the loan may be renewed a second or third time, in some places indefinitely. A very high interest was charged at first, 14 per cent. per annum, but now the rate is 5 per cent., with per cent. fixed commission on each loan, bringing the whole up to about 7 per cent. per annum. This will be considered a very high rate here, but in Germany it seems moderate because of the usurious charges of private lenders.

Each bank is managed by a skilled clerk and a board chosen from the members, and though occasional losses are incurred, the trade done is an unusually safe one, the credit being given for short terms only and to persons well known to the board. The report for 1877 happens to lie before me, and in that year the total losses suffered by the people's banks of all Germany did not come to £1 per £1,000. The trade is not only safe, but most profitable. The rate of profit varies very much. In 1877 one of the banks declared a dividend of 50 per cent., while another declared only 1 per cent., but all declared something, very few indeed less than 5 per cent., a large number over 10 per cent., and not a few over 20. The average dividend of the whole nine hundred and twenty-six banks was 83 per cent., and it must be remembered that this dividend represented only two-thirds of the profits actually made by the banks in the course of the year, because one-third was set apart to be added to the reserve fund, and a sum of £1,200 was, according to the laudable custom of the banks, voted as subscriptions to charities or public causes unconnected with their own immediate objects. The shares of the people's banks constitute, therefore, an excellent investment, independently altogether of the special advantages which the banks have been called into existence to confer on their shareholders-the advantages of credit. The normal or par value of a share is different in different banks. In Delitzsch it is at present £15; in Ermsleben, where the 50 per cent. dividend was declared, it is £7 10s.; in other places it is lower still, or, on the other hand, higher than at Delitzsch. But let us suppose a small tradesman holding a Delitzsch share. His £15 bring him a profit, at 84 per cent., of 25s., and at the same time entitle him to obtain on his own personal security (unless the board has reason to doubt his integrity or solvency), a loan of £30 at 7 per cent., and on additional approved securities, material or other, a further loan of as much as £350, for use in his business. By means of an investment which already yields him a return most stockholders would envy, he is transformed into a considerable capitalist, free to turn his abilities and opportunities to the best account. Such is the magic of creating capital out of character.

The example of Delitzsch was soon followed in the other towns of the neighbourhood, under the zealous and ungrudging guidance of Schulze, who felt that a great

movement had begun, and therefore set on foot a direct propaganda in the press, first by means of various pamphlets on the subject of co-operation, then by a weekly column of news on the subject, which he contributed without remuneration to a Leipzig journal, and, finally, by a special newspaper edited by himself. By 1860, there were already 210 people's banks, mainly in Central Germany, and in the following year, at a congress held at Halle, it was resolved to unite them all in one organization, with a paid manager, adviser, and promoter, whose salary was to consist of a certain percentage on the profits of such of the banks as were already paying dividends. Schulze-Delitzsch was asked to accept this post, and for love of the movement did so, though the salary was not more than a fourth of that of a legal functionary in a middle-class German town. Of course as the movement grew the salary grew along with it, but Schulze himself then proposed a new arrangement, by which the salary was fixed at £300 a year with £180 for office expenses, and again when business continued to increase, a third arrangement which made the salary £375 a year with £420 for office expenses. In 1864 the organization was further consolidated by the creation of provincial federations, under separate managers, though subordinate to Schulze, the manager of the whole; and in 1865 by the foundation of a co-operative bank in Berlin, for the purpose of providing individual societies with their borrowed capital on favourable terms, and of transacting their larger banking business. This bank has now a capital of about half a million sterling.

The success of the people's banks in Germany and Austria has no doubt been accelerated by the fact that the peasant proprietors in those countries already made large use of credit, but paid very exorbitant rates for the accommodation. But peasant proprietors, after all, form but a small proportion of the members of these credit societies. Only 23 per cent. are cultivators, 31 per cent. are small handicraftsmen, 10 per cent. are wage-labourers, 9 per cent. are shopkeepers, and 17 per cent. are manufacturers or professional men. These banks do nothing for the factory operatives, who need no credit for productive purposes the trade union and the store are the hope of these classes-and they do nothing for the strata of unskilled labourers below, whose hope has not yet been discovered; but for a large class in every country they are effectual means of comfort and success. They would in our own country greatly soften