Iowa state bystander. [volume] (Des Moines, Iowa) 1894-1916, 1912-11-22
MAKE CHEAP LOANS
German Co. Operative Credit Sys-
tenn for Workers and
Farmers.
United states Ambassador Rsports on
system Of Banks Which Serves
= the Artisan, the Workman,
and the Small euss-
mess Man.

vided himself with financial machin-
cry to assist him in the conduct Of
his business. As with the farmer, Co
operation 10 the basis OF his banking
scheme-cheap credit and quick credit
IL obtained for him by Offering . col.
lective guaranty. What he could not
secure alone he finds readily obtain.
able when he combines his limited 70
sources with those Of his fellow.
workmen.
The system Of banks which serves
the artisan, the workman. and the
small business man Of the towns Of
Germany Is known AZ the .Schulze-
Delitssch system. Az the membership
of these banks includes high per-
centage OF agriculturists and their op-
erations have an important bearing
upon the question Of financing the
farmers. Ambassador Leishman has
included this system in the investiga-
ton which he 10 making In connection
with President Taft's effort to estab-
lish cooperative credit in this country
for the benefit Of the American far
mer.
Al the social structure Of the town
10 more complex than that Of the farm.
ing community, 80 the structure OF the
echu1xe- Delitzsch or urban co-opera-
tive banks 10 more complex than that
OF the rural banks OF the Raineisen
type. Their membership includes men
from many walks Of life and Of vary.
ing degrees of financial standing. It
has been found necessary. therefore.
to supply these banks with larger
foundation capital than 10 the case
With the farmers banks Of the Raihei.
sen type.
The collective guaranty offered by
the farmers 10. indirectly. land guar
anty. The guaranty Of town residents
10 not 20 we'll defined. Therefore. the
members of the urban banks arc re-
quired to subscribe . comparatively
large amount for capital stock, and
the banks operate upon this cash ba'
sis more in the manner of other banks
than 10 the case with the Raiffeisen
hanks, which operate almost entirely
upon the guarantees given by the
members and with only . practically
nominal capital.
Also the urban banks do more Of q
general banking business. Their lars.
or cash capital makes this possible
for them. They do not depend fol-
~ nS~ A,,~Aa ,,oon. oooteol no-nnoratfve
banks, but receive loans from outside
banks. They maintain and seek to
pay dividends upon their capital stock
This dividend runs generally from
to Z per cent, but few of the
schulze-Delitzsch banks Of Germany
pay as high as 10 per cent. and q
dividend Of rs per cent Is not I'M
known.
The primary object Of the urban
banks is to furnish their member
with cheap, quick money. They lend
in two forms-loans on current &C
count and loans for fixed periods
Loans on current account comprise
something over 40 per cent. Of thu
banks business. Loans for fixed pc
RODS are made on pledge or by dis
counting bills of exchange. Also loan,
on mortgage form about 10 per cent
Of their total loans. A small number
of loans are granted without guarant!
Of any sort.
CAPITAL shares In the Schultze
Dolitzsch banks average a little ovel
$50. The liability Of shareholder II
generally limited. The rate Of inter
est paid for their money by thes'
banks averages about 3X per cent O
the total working capital, while tn
gross profits average about 6A Pc
cent. Of the working capital. Deduct
ing from this margin the cost OF op
Grating the banks and other expense'
there is still left a net profit for dis
tribution averaging about 81 pc
cent. of the share capital. A portion
| Of this net profit Is carried over q
reserve and the remainder distributed
a. dividends.
Surplus funds not needed by tn,
banks in making loans to member
are deposited with outside banks o
are invested In firstclass securities
The urban banks in three province
in Germany have organized centra
banks, but for the most part tn
banks are able to obtain money sal
isfactorily from outside banks, an
the three provincial central bank
are not of much importance. TIL
urban banks do. however, maintain
current accounts with the Dresdel
Bank, . private bank, in order to ia
cilitate the movement Of their fund
and to eQualize their debts and cred