The Richmond Virginian. (Richmond, Va.) 1910-1920, 1912-12-08

tors In default, which American far
mers perhaps would not tolerate
Lenders also might not easily become
accustomed to the form debentures
or mortgage bonds issued by these
institutions, although In Europe they
are the most popular investments for
the savings OF the poor
These Instruments may be made
payable to bearer. They have no
fixed time for maturiay, but are re-
deemab.e at the will Of their max
efs which Is usually done by lot with
premiums or prizes in some Of tht
countries. So there is no land mort
gage system on the European CONT
nent which could be transpianted
bodily into the United States. We
should have to take the best princt-
PIES, such as the associated guaranty
Of the La ndschaften the government
supervision and amortization methods.
and construct new machinery adapted
to American needs and business
habits.
So much for European land credit
II has attracted money in abundance
to real estate owners for over a cen
tpry and lowered the interest rate to
present minimum Of three per ceht
from "a maximum Of twelve per cen
at the start. This was done by Great
ing safe, convenient and negotiable
securities for the savings of the poo
as well as for the surplus capital OF
the wealthy.
Would Need RcmodclIng.
But although, in my opinion, the
land credit systems would have to
undergo material modification before
aeclimatization here, | believe that
the personal credit system for short
time loans such as has become the
! almost exclusive means for discount
, nd m
would require, but a very few changes
in order to adapt II for the uses or
farmers In many parts of the United
States The way II has covered GER
many, and is spreading over Europe
mekes one of the most remarkable
chapters in the history Of finance.
AS we all know, these agricultural
banks are simply cooperative socie-
. ties, the credit Of which Is establish
, eis upon the solidarity Of their mem
. bers This solidarity may render the
members individually liable, with or
, without limit, for all the debts OF
their association according to the
laws or the articles of agreement I'M
der which 1t is formed The tendency
= everywhere is towards the unlimited
t liability, for IL inspires confidence. and
8 expands the borrowing power up to
0 the full credit value of the combined
= responsibility of the adhering mem
= bers,
q The obligation to stand good for
9 neighbor has been the stumbling
: block to the Introduction of co-opera-
: tive credit in all countries. but the
@ fear on that ground is not justified
Y The affairs Of a few cooperative SO
@ cieties have been wound up on ac-
g count of financial difficulties or lack
r of business but no failure has ever
a oocasioned loss to depostors or cred
- tors, on burdensome assessment on
It members. Their solidity is so VIDE
= iy recognized in Germany that IN
~ panics deposits withdrawn from 9TH
y er banks have been offered to these SO
! cieties During the wars of 1856 ana
/. 1870 deposits without interest, were
s offered in such volumes that they had
!. to be refused.
: The COOPERATIVE Bank.
= The inherent strength o q co-opera-
- tive bank becomes easily understood
!, upon studying the principles when
cavern il. The liability is the only
. thing about it which may be uniimit-
y ed. All else is carefully and vlgor-
. ousIy limited.
ID The territory OF operations Is linn
~ tied The amount and kind OF social
> enga gements are limited. No specuia-
y tive or risky Investments are tolerated
! The total amount of the loans allowed
Ia limited The maximum for indi-
vidual loans Is fixed. The rate of IN
- terest Is fixed. The term OF the loan
- is fixed, and usually can run no Ion
. ger. with renewals. than from mar
. vest to harvest. II not then paid by the
ID farmer his guarantors become liable
Tbev must be members. Money ad-
: yanced can be used only for pro-
u ductive purpose, and In the way es-
y pecialiy agreed upon, and should the
y claim be fought or the contract DC
u wilfully violated the borrower Is ex'
;, PEELED from the society ana become
- an outcast In his community.
> No loophoIe has been left. In theory
and practice these cooperative socle-
. ties are admitted to be admirably
: adapted to accomplish the object. fof
o which they were devised In SONS
e provinces of Germany there is oanH
n in walking distance OF every farm, FOR
Al every 1000 Of inhabitants. composed
! maybe, of only dozen or more neigh
. bors, and having but few hundred
n dollars OF assets. The very small
10 ness rebounds to its strength, as u
~ permits the farmers to watch and
- encourage each other and prevent I'M
y: proyident borrowing, or the misuse
u OF a loan. while the proximity fur
y nishes the indispensable requisite fol
ie all banking which strives TO collect
l. small savings and handle numerous
transactions.
J. The Credit Societies.
N The cooperative credit societies
Sc have lowered the interest rate to
)r per cent or per cent. But cheaI
money is not the only good they DO
m Organized and managed as intelligent
Is ly as in Germany, cooperative cfea1l
he would place the money American far'
Is mers make under their own controi
t. and keep it in circulation for agrieui'
ln tural purposes. 1t would enable asr''
le culture TO finance itself. and reach the
j. high stage of industrialization now re-
) CURED by modern conditions.
1t Our present financial system Is
st adapted especially to commerce ana
~ industry. Those who live In cities
n are easily able TO combine ana pro-
If test their mutual interests by daily
contact. The existing system fs the
outgrowth Of human forces acting
ie in an entirely natural manner the
70 European farmer emerged not many
1t generations ago from serfdom ana
he was ignorant and uneducated and II
n, became necessary for the govern
"a I Y-ap+ ,o father him and TO think for