The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-06-02
THE PEOPLES BANKS OF GKRMANY.
The Admirable System That Might SO Wen
he Tried Over Here.

tons called peoples banks 1t IL worth while
to mark some Of the features Of the latter or
ganizations. and to point out their surprising
results. for we can see no reason why the sys-
tenn should not be reproduced with signal adj
vantage in other countries Its fundamental
principle. indeed. has already been adopted In
New Jersey by what are known as Loan Asso-
Citations.
Without credit. individual activity is cramped
or paralyzed; but how IL the poor man to bor-
row money? 1t is certain that the pawnbroker's
shop, rs IT il managed in England and the
United States, Is a poor substitute for banks OF
discount. and even the system OF lending upon
pledge. which II carried out by mOids de piet5
in Continental Europe. offers but feeble re-
source. 1t Is true that some Scottish banks
nominay undertake to discount the paper Of
any honest workngman who can find two
surotes known to the institution. But the con-
diton is not easy to fulfill and II matter Of fact
the amount Of personal credit thus opened to
working people has proved insignificant. 1t is
plain that in order to solve the problem an es-
adjustment must be created whore the artisan.
the farm laborcr tho small shopkeeper. may
find pecuninry accommodation with the Same
facility the same certainty. and upon az easy
terms rs can the capitalist and the manufac-
turer. Now there Is nothing but the combine
ton Of a multitude Of men OF small means which
can satisfy these conditions. Not only does u
considerable fund result from such accumula-
tons. but weghty moral capital IL constituted
The corporate guarantee which such an asso-
citation throws over one Of its members is. per-
haps. worth as much MS that OF great capitalist.
since an isolated individual. however powerful.
is exposed to more risks than an extensive
group Of men. A bank recruited by the
petty but constant deposits OF its sharehold-
hv tho Of tho fnru1ar unI a
artisan. and by their accumulated interest.
would in n short time DO able TO advance sums
To- those members who were in temporary need.
Nor is this all-foreign capital. which has hith-
erto Stunned tho working classes. might bo
placed at their disposition through the agency
ofpeope's banks and the problem OF credit for
the poor man would accordingly be solved.
There is nothing visionary in this solution-it
II an ndisputable fact. II Is now twenty-tour
years since the first people bank was founded
in tho German empire. Within that period.
brief enough for the accomplishment Of such
an innovation. and notwithstanding the shocks
Of commercial crises. and the dangers result
ing from incxporience and ill-will. those inst-
tutons have attained the prodigious develop
ment which we ara about TO indicate.
when the first bank which undertook to adj
vance money tn workingmeu was organized by
Schultz Dctsch. in small German town.
the precise type " the institution was not yet
definitely fixed. and 10 this day details vary ac-
cordingt - local circumstances and the specific
wants Of diiferent societies. But the principle
Is everywhere the same. This consists in the
ass ISOLATION Of tho laboring class. in a given
town or rural district with the object Of pro-
viding money forthose members who have need
Of H. There is no systematic exclusion Of rich
men. but tho bulk Of the deposits ia furnished
lt...rt a.
Germany are called small folks-dp Kiebien
Leide. To become member. 1t il merely
requisite TO pay in fee for admittance
the sum Of ~ cents. then an annual due Of G
cents and a monthly due Of ) cents. These
contributions. which obviously are within the
power of the most straitened. may be aug
mented Mt will in order TO make up the sooner
the so-cAlled boni. or share which constitutes
it's owner a stakeholder. Up TO that time. the
institution acts rs a savings bank forthc deposit
tor. but the bOni Of 10 thnlers or sl2 once
reached the member receives dividends. or. II
he choose. leaves them In the bank T. enlarge
his interest From tho moment II admiss ion
however. dcposltor may borrow from the bank
sum whose minimum is IL. and whose
maximum is $3.50. The loan is euarunteod.hy
the signature Of one other member. and interest
is charged at the rate oi five per cent. per an
mum. while you pay quarter ~ one per cent
Tor an insurance fund. The loan T. for three
months. but renewable every quarter with the
! consent OF the cndOrser in which case the lust
named charge 10 again collected. thus raising
t. six per cent. the whole annual gain from the
sum lent From this revenue are payable the
expenses of ADMINISTRATION. dividends Ia mem-
ber-. and interest on capital borrowed from out
sid" parties. white a certain share is deN otcd 10
reserve fund. We should add thnt no en-
dol-sr il required in case the sum loaned 10 IS
not exceed the borrowers interest in the bank.
The regular deposits II members are If
course too small 10 permit a peoples bank to
make from the outset considerable advances.
For that reason it has recourse To outside capi-
tai. which it easily secures at three or four per
cont upon the corporate guarantee Of It's mem
hers. No doubt this facility has proved source
Of peril To some Of these Institutions, which for
got 10 maintain due proportion between their
| borrowed funds aud their reserve, and several
cases of bankruptcy occurred after the Austrian
| financial crisis OF 1879. Since then rule has
been laid down that the amount borrowed by
these establishments shall not exceed the double
Of their reserve. Al once to facilitate and regu-
late the inflow Of outside capital a Central Bank
Of Credit for Labor WAS founded in 1863. The
| capital stock, which was originally 100000,
has been since raised to s2.350 600. and all the
shares nave bech taken 10y Tue lOchI institutions.
| BY the side Of this central bank there is also a
general agency. Of which Schultze- Dclitsch s
/ President. and whose mission is 10 start new
associations, whilo It knits moro closely those
| that exist. TO serve as their legal exponent
| toward the State and private persons and 10
publish their annual statistics. So far two
! thirds OF the popular banking societies have
prohted 10y tho advantage accruing from this
species of common action. which in no way
trammels their sclf-government, but only binds
them TO forward yearly statement Of ac-
count. Tho willingness OF these instltu-
tions TO recognize the benefits Of con-
certcd operations is likewise manifest
in the grouping Of banks belonging to a
single State or district there being no less than
thirty-one Of these provincial clusters. But
there Is nothing dogmatic or arbitrary in then
Capitalization, the common tic acquiring tenac-
ity in the ratio OF their development and me-
cessities. In word, the Peoples Bank Of Cor
many Is not, like so many nbortive French
schemes. the work OF theorists but n sturdy
outgrowth Of the national soil. and, unlike the
| elaborate projects which miscarry in practice