The Springfield herald., 1913-04-25
COOPERATION LOWERS LOAN
RaIffeIsen Banks Of Germany Are
Merely Groups Of Farm Neigh.
bors-Expianatlon Of System.

Interest In the cooperative farm
loan systems of Europe is sometimes
lessened by the belief that the sub
ject is a technical one. dificult to
understand. The fact Of the matter Is
that the systems abroad. which con-
sress is Investigating and about
which so much 10 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 groups of farm
neighbors who get together. agree to
pool their credit resources without
limit and 30 jointly borrow money
which the association In turn lends to
its members as they need 1t. A sim
pie and more concise explanation of
the workings of this system, which
the American farmers is too inclined
to believe is complicated. is given
by writer In recent number of
Hearst's Magazine. as follows:
Each member Of the new banking
company signs a pledge of his entire
resources for the banks debts when
he subscribes for his shares. Under
German laws they must have a mini
mum share capital Of ten marks
($2.38) per member. The average
for all Germany is nearly twenty
marks per member, and that is the
amount our Westphalian farmers put
In. each an equal share until the 80 of
them-all the farmers in this particu-
lar valley-have contributed $4.76
each to make = total banking capital
of S4.38.
They file their articles of incorpora-
tion-a simple and inexpensive legal
process-and In a few days their char
ter is issued. Now they are full
f1edged 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 a month
covers the rent.
Now the applications for loans come
ln-many times the amount of the
new banks capital. Where is the
money to come from? Out of hiding.
some of 1t. for as soon as the new
nh ho NJ for
bus1ness,, 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 gets the rest Of
the money 1t 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 a banker anywhere
in the world WHO wouldn't lend, to
the limit of possible demands, on the
security of a 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 thorough
investigation to see II the system can
be practiced as successfully here as
in Europe. In Germany the Raiffeisen
banks average only about $440 of
paid-up capital and 80 members each.
hut the 15617 of Them exiatin9 in 1910
had over $500.000.000 of working capl-
tai With which they made $1.500,000,-
900 loans, the average rate of interest
being A per cent. az against S.5 per
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.