Lower coast gazette., 1913-06-28

OpCN lOlul III SCI ANA
have carried the plan even O. step
further and have organized two cen
trail banks so that the rural credit sys-
TEN of that country is now shaped like
a wedge with its apex driven into the
heart of the German money market al
Berlin, and it's base broad enough to
reach nearly every farmer in Ger
lmany. However, there is this differ
ence between the German system and
any system that might be started IN
the United States. In Germany the
movement was a matter of natural
growth. In the United States a sys.
tenn, though the initiative must be un.
dertaken by individual farmers, can be
built according to the German specl-
fications with such notifications as
the difference in conditions between
the two countries would seem to war.
rant.
There always has been opposition to
the idea of a central bank In the
United States, but it should be under
3 stood at once that such central banks
4 as are included in the cooperative
credit systems have none OF the OBJ
t jectionable features supposed to be
/ inherent in a commercial central bank
or a bank of issue. The objection to
the latter form of central bank is that
t it might place too much power in the
e hands of a few men or at least in the
e hands of the bankers, whereas the ma
e tional banking system and the other
n commercial institutions are not the
banks of the bankers but the banks OF
Y the people. Whatever the merits OF
that question may be, none of these OBJ
n. %iections can be applied to the cooper
alive central banks, for they are the
children of the local societies as we
is shall see, and their control remains
u. in the hands of the farmers. more"
lie. over, the cooperative credit system
system and no one could object to
having a farmers system controlled
ly by farmers.
The German central cooperative
banks are cooperative institutions
S. with the exception Of the two CEN
trail banks. The character Of these
ss three institutions will be considered
ne later. The central banks are organ
ew lied by the cooperative societies with
de- in a given area, generally a province,
ov- which subscribe to shares Of stock in
ole the central bank. The price OF these
cy, shares varies a great deal. The reason
If for this seems to be that the various
ler central banks were organized at oil
ems ferent times and under very different
Il a conditions. But let us say that the
nts shares of a central bank are to cos'
)07. $1,000. Each local cooperative socie
low ty must purchase at least one snare
sys- at this price. Interest Of a fair ratt
ent is paid by the central bank on tht
this money paid for the share, so that tn
con- expense is not really a burden to tn
per- local society but a good investment
tied OF course the shares need not be he'll
for at 81, 900. A tenth of that would serv
quite as we'll, although the larger tn
for share capital me move credit can D
we extended to che societies, so that ID
8 of shares ought to be as large as the !
the cal societies can afford. Also 1t Woul
first, he wise to limit the liabilities that ma
| So. he undertaken by the central BANK
in to ten times the amount OF the shal
for capital. Each society assumes a ce
cans tain portion of the liability for u
Is as debts of the central bank, which
t of based upon the number OF snar
two bought by the local society. No OF
the society can purchase more than fx'
one number of shares Of a central bank.
GER Each local society subscribing
face stock in a central bank and enjoyil
would its advantages must bind itself not
sur carry on any transactions with a
8 and other bank, since double accouI
It is would seriously j%eopardize the SAFE
tenn of the entire system. Interest is ps
it is on deposits from local societies, ant
usage higher rates is charged for loans
tended. The difference is the PFC
socie. made by the central bank. Howev
vork tho cntral banks ar not proft-seek1
hough institutions, and whatever proht II
turn make is carried over into a resel
,mand fund, except for the small DIVIDE
IS M maid to the local societies on IN
essive share of stock. One practice follow
me Of is to first place twenty per cent OF
after profts in the reserve fund. Il I
been does not exhaust the profit fund, a
very idend not greater than the rate OIL
,ds to ~terest allowed on deposits from IL
%. the societies is paid to local societies
the their share holdings. Whatever Pre-
3 time remain are carried over as reserve
,alized til that reaches a certain percentag
idea a the liabilities assumed when Ger
cieties other dispositions may be mace
which them. The loans to the local sc
easons ties are made generally through o
Il and drafts. Each society is given q