Northern Wisconsin advertiser. [volume] (Wabeno, Wis.) 1898-1925, 1912-11-22
MAKE CHEAP LOANS
German Co. Operative Credit Sys-
tenn for Workers and
Farmers.
United States Ambassador Reports on
System of Banks Which Serves
the Artisan, the Workman,
and the Small Busi-
ness Man.

Washington-The German artisan,
as well as the German farmer. has pro-
vided himself with financial machin-
cry 10 assist him in the conduct of
his business. As with the farmer, CO.
operation Is the basis Of his banking
scheme-cheap credit and quick credit
is obtained for him by Offering a col
lective guaranty. What he could not
secure alone he finds readily obtain
able when he combines his limited re-
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 as the. SchulZe-
Delitzsch system. AS the membership
of these banks includes a 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 is making in connection
with President Taft's effort to estab-
lish cooperative credit in this country
for the benefit OF the American far
mer.
AS the social structure of the town
ls more complex than that of the farm
ing community, so the structure of the
Schulze-DelitZsch or urban co-opera-
tive banks Is more complex than that
of the rural banks of the Raiffeisen
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 q larger
foundation capital than Is the case
with the farmers banks Of the Raiffei-
sen type.
The collective guaranty offered by
the farmers is. indirectly. land guar
anty. The guaranty Of town residents
Is not so we'll defined. Therefore. the
members of the urban banks are re-
CURED to subscribe a comparatively
large amount for capital stock, and
the banks operate upon this cash ba-
sis more in the manner of other banks
than is the case with the Raiffeisen
banks, which operate almost entirely
gpon the guarantees given by the
members and with only a practically
nominal capital
Also the urban banks do more of a
general banking business. Their larg-
er cash capital makes this possible
for them. They do not depend for
their funds upon central cooperative
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 a
dividend of % per cent. Is not IN
known
The primary object of the urban
banks is to furnish their members
with cheap, quick money. They lend
In two forms-loans on current &C
Loans on current account comprise
something over 40 per cent. of the
banks business. Loans for fixed pc
RODS are made on pledge or by dis
counting bills of exchange. Also loans
" ~'artgage form about 10 per cent.
Of their total loans. A small number
Of loans are granted without guaranty
Of any sort.
Capital shares in the SchuitZe-
pclitzsch banks average little over
800. The liability Of a shareholde- Is
generally limited. The rate of inter
est paid for their money by these
banks averages about 3A per cent of
the total working capital, while the
gross profits average about 5A per
cent. of the working capital. Deduct
Ing from this margin the cost of op-
Grating the banks and other expenses
there Is still left a net profit for dis
tribution averaging about SIS per
cent. Of the share capital. A portion
Of this net profit is carried over as
reserve and the remainder distributed
rs dividends
Surplus funds not needed by the
banks In making loans to members
are deposited with outside banks or
are invested in first-class securities.
The urban banks In three provinces
In Germany have organized central
banks, but for the most part the
banks are able to obtain money sat
] isfactorily from outside banks. and
the three provincial central banks
are not of much importance. The
Urban banks do, however. maintain
current accounts with the Dresden
Bank, private bank, In order to IA
cilitate the movement of their funds
and to equalize their debts and cred
t..