The Donaldsonville chief., 1913-05-10
COOPERATION LOWERS LOAN
RaIffelsen Banks Of Germany Are
Merely Groups of Farm Neigh
bors-Expianation of System.

bors-Expianation of System.
Interest In the cooperative farm
loan systems Of Europe is sometimes
lessened by the belief that the sub
1ect is technical one, difficult to
understand. The fact of the matter is
that the systems abroad, which con-
gress ls Investigating and about
which SO much Is being written, are
so simple as to be easily understood
by all, says the Iowa Homestead. The
Raiffeisen banks of Germany are moth
ing more nor less than gioups of farm
neighbors who get together, agree to
pool their credit resoukces without
limit and SO jointly borrow money
Wnlcn the association in kurn lends to
It's members as they ned it. A sim
pie and more concise exclamation of
the workings of this s3stem, which
the American farmers isl too inclined
10 believe is complicated, is given
| by 3 writer in recentI number of
l-earst's Magazine, as. vs.:
Each member of 800 lkfng
company signs pledga entire
resources for the banke ELS when
he subscribes for his es. Under
German laws they must lave a mini
mum share capital of ten marks
! ($2.3S) per member. 1he average
for all Germany is nehrly twenty
marks per member, and dRthat is the
amount our WestphalianI farmers put
in, each an equal share Until the 80 of
them-all the farmers in this particu
lar valley-have contributed s4.76
each to make a total banking capital
of s4.38.
They file their articles of incorpora-
tion-a simple and inexpensive legal
process-and in few days their char
| ter is issued. Now they are full
fiedged bankers, entitled to deal in
credit just like the bankers in the
cities-with these exceptions: They
may lend only to their own members,
who must be their own neighbors, and
they may lend only for productive pur-
poses, which must be stated in the ap-
plication for each loan.
They elect officers, all from their
own membership, and all without sal
aries except the cashier For that Of
fee they pick one whose farm is near
the center of the district, for there Is
no banking house to be built or rent
ed-a back room in the cashiers
! house Is the banking Office, and his
/ salary of ten or twelve marks month
covers the rent.
Now the applications for loans come
in-many times the amount Of the
new banks capital. Where is the
money to come from? Out Of hiding,
some of it, for as soon as the new
bank-their own banks open for
business, the thriftier members un-
cover their little boards and deposit
them to draw interest and be loaned
to their neighbors. But even these de-
/ posits do not provide funds for all the
Would-be borrowers. Very well, the
new Raiffeisen bank gessaa-she rest OF
the money It needs In the open money
market; right at the bank, the best
and the biggest bank in the nearest
town or in any town in Germany. Is
there a bank or banker anywhere
in the world who wouldn't lend, to
the limit of possible demands, on the
security of note backed by the COM
bined guarantee of the farmers Of an
entire agricultural community, every
one of them pledging all his Individual
resources for the debts of the group?
| Cooperation is the foundation on
which the Raiffeisen banks are based
President Wilson proposes a thorough
( Investigation to see if the system can
bN BE- Tf,racticed as successfully here as
in Europe. In Germany the Raiffeisen
banks average only about $440 OF
paid-up capital and 80 members each
but the 1851 of them existing in 1910
had over s50O,00O,0o0 of working capi.
tai With which they made S1,50O,00O,
900 loans, the average rate of interest
being "A per cent. as against S.5 pei
cent. which the average American
farmer pays on his loans. Once 1t is
understood that the system is simple
much of the objection heretofore
urged against the adoption Of the plan
in America will disappear.
AHAhy hnUAMThGEc rE IA Sll 4