The Celina Democrat. (Celina, O. [Ohio]) 1895-1921, 1914-02-13

fectly safe basis OF security In the
honesty and industry OF its members
! This security is not valuable In the
ordinary commercial sense. The or
binary banker has no intimate knowl-
edge OF the character OF those who
apply for loan. Neither has he any
way of testing whether or not those
who borrow for productive purposes"
actually apply the loan TO such pur-
| poses. The borrower must bring two
sureties. who like the borrower him.
self. must be men OF approved char
acter and capacity. The character OF
these three men is the sole basis of
| credit.
The rules provide-and this is the
characteristic feature Of the system
that a loan shall be made for pro
ductive purpose" only. That is, the
borrowed money must be used for a
purpose which. in the Judgment OF
the committee, will enable the bor-
rover to repay the loan out OF the
results of the use made of the money.
The farmer buys a SOW to raise pigs;
he must have fertilizers; he needs
some high-grade seeds; he wants to
build better shelter for his cow-all
these are productive purposes. In one
case money TO send the borrowers
boy TO school for eight months so as
to increase his earning capacity was
considered a productive purpose justi-
flying a loan, as It proved to be when
the boy himself repaid the loan The
rules Of the cooperative society pro-
vide for the expulsion of member
who does not apply the money TO the
agreed purpose. II is said, however.
to the credit of the Irish members OF
these societies, that there has never
been the necessity OF putting this rule
in force in a single instance anywhere
throughout the entire island Social
and moral influences seem to be quite
sufficient to secure obedience to the
rules and regulations Of the society.
Cooperative Credit Is Good,
There are other advantages. The
regular bank is generally miles away.
and take his sureties, paying car fare,
meals and maybe drinks, while the CO.
operative association is right at hand.
The bank will loan for only 80 days,
while the cooperative society will
make it up TO year. And 9O-day
loan gives the farmer no chance to
realize on seed or fertilizer or stock
bought with the money borrowed. But
here in the local credit bank If man
is honest he can get the loan he needs.
He must bring two sureties. but CO.
operation breeds and develops neigh
borly hGpfulness and they say no
honest man ever fails because he can
get no sureties.
Neither the association nor its men,
bers have any considerable capital.
When they organize they begin by bor-
rowing a sum of money on the Joint
and several liability of the members. |
Deposits are received from both mem |
bers and non-members. The society |
usually borrows at four or five per |
cent. and lends at five or six per cent.
In some cases government funds have |
been loaned to them at three per cent, |
thus enabling them to make a very |
low loan to their members. The eX- |
pense Of administration is almost moth |
ing.
Lesson for Rural America.
1t is such societies as these that are
putting the gombeen men out Of bust
ness in ireland. We have in rural
America gombeen men. They are not |
so called, but American loan sharks
and credit men are first cousins to the
Irish gombeen men.
The question we Americans are try.
ing to answer is this Have Irish rural
credit methods a lesson for the rural
sections in our own land? Can our
loan shark, whether in city or country
be fought and conquered by similar
American cooperative societies?
There are hundreds Of poor farmers
who must ask credit eitl.er Of mer.
chants and dealers or must secure
loans from some source. Most of them
get credit of the local merchant. 1t is,
of course, we'll recognized that any
dealer who extends credit not only
charges interest but charges higher
price than when he gets cash payment.
Why cannot the American farmer
get loan at a nearby banking insti'
tuition for six months or ten months or
a year instead of for 80 days? Why
cannot he capitalize his character as
does the Irishman? In some states
there are under existing laws plenty
of small joint stock banks throughout
the smaller towns and villages which
are accessible. The directors and Of
fcers know the farmers needs. They
are so intimately acquainted with
those who might become borrowers
that they could do as the Irish credit
banks do and arrange for capitalizing
character. But they don't do it.
Copyright 1914. Western Newspaper UnIon-)
Fast Travelling 100 Years Ago.
One hundred years ago the citizens