The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1914-01-15

Ihe recommendations regarding
rural credit unions are as follows:
"A careful examination Of these
credit unions shows that it is scarcely
the junction of the national govern
ment to provide for such institutions.
But these institutions are necessary.
The members Of the commission are
unanimously of the belief hat no ma
t1oRal legislation at the present time
would be proper for this field, al
though at a later time it might prove
advantageous to provide it. We are
also Of the belief that the different
states should take up this subject at
the earliest possible date, and pro-
vid such laws as are necessary to
authorize the formation of credit
unions. Indeed, various states have
already taken this matter up and
several very creditable laws have al
ready been passed, such as the laws
of Massachusetts,. Wisconsin n New
York.
Most European countries have rec
ognized the different financial needs of
different classes of people," says the
report, and different institutions ex-
list to serve the different classes, but
often one type Of institution serves
the different classes, thus demonstrate
ing that separate institutions are not
essential.
peoples Banks" Founded,
The most important type of agricul-
tural institution is known as the peo-
pies bank, the best examples being
found in Germany, Austria, and Italy.
This institution developed in Germany
Is known as the Schulze Delitzsch, re-
sembling the small private, state, and
national banks in parts of the United
States. Slight changes in our national
banking laws would permit small ma
tional banks to serve the same pur-
| pose.
1T would be wise," the report con-
tinues, ito authorize the establishment
Of national banks of the popular type.
No changes would be necessary in the
system Of Inspection or in the law
pertaining to the business activities.
1t is common in Europe to provide
that these popular banks can loan
only to members, but this is not es-
s~ential." :
1t is explained that the credit union
is a cooperative organization among
farmers in a community, loaning small
amounts. of money CASUALLY less than
5000 for short time, to members to
help them improve and maintain their
farms, keep up their stock, and for
similar purposes. Chattel mortgages
or real estate mortgages are given as
security, a specific purpose for the use
of the money often being named in
the contract. n payments being
made in instruments. The credit
union acts between the land bank and
the individual in small transactions.
10000 Unions in Germany.
In Germany there are 1900 Of these
credit unions, callen Raiffeisen, where
as twenty years ago there were only
100. The total capital of each is less
than 1000 marks, as a rule, (about
$4,000, and surplus about $1,000 each,
but they handle a local business ag-
~gregating 1000, 600, 900 marks (about
$500, 000, 000) deposits. In Austria there
are 5000, In Italy 1000. and many in
Russia, Belgium, Denmark, and HoI-
land.
In Germany, says the report, where
this type was first developed, there
are 1.O51 Of the schulze-Delitzsch
banks, with an average membership CT
639-about one-seVenth the number OF
national banks in the United States,
but many times the number of stock
holders in the banks of the United
bership is of farmers and over 2 per
cent additional farm laborers.
In Austria there were in 1912 some
$500, such banks, with an average
membership Of about 600. In Italy they
are called Luzatti banks, for the leader
who adopted them to Italian needs. At
last report there were $50 Of them with
an average membership of 725, most Of
them Of the lower middle class, % per
cent artisans or small shopkeepers, %
per cent small farmers and 1T per cent
clerks and professionals. |
Capital Secured Through Shares. |
Capital for these banks Is secured |
by the issue Of shares owned by mem
bers, the value averaging about 500
marks of $75 a share in Germany, paid
for in installments If preferred, all
the shares until fully paid up.
Mutually being the fundamental
principle of the banks, the members
individually at first assumed unlimited
sources for the accounts or the insti-
tuition. This prevails yet in more than
half Of the banks, there being In the
others a certain degree of limitation
owing to the large number of members
and their diversified occupations.
The average working capital of the
German popular banks is about $780,
900. nearly three times what 1t was
twenty years ago. three-fourths Of his
representing private deposits on which
reasonable interest Is paid. In con
capital of the Austrian bank is about
$50, 900 crowns, or about $3.50, 600, with
a reserve of about $4,000 crowns. In
italy the average working capital is
about 100000 francs. "A
Loans Limited to Members.
Loans, so rar as possible, are strictly
limited to members, which accounts for.
the large membership. but 1t is often
necessary to borrow from outside
sources. Reserve funds are Invested
outside. Loans to members are called
~"loans' while 1oans to outsiders are
called Investments. Nearly s3 per
cent of these loans are to members,
most Of which are loans on current ac-
count. A guaranty is usually demand
ed on loans for fixed periods. Members
! become accustomed to paying their OBJ
legations In fixed instalments and are
usually punctual in their payments.
.Loans on current account refer to
loans to members who have secured q
maximum credit at the bank and are
granted accommodation when they
want it, up to this aggregate amount.
Good profits are realized by the mem
bers of the banks, the German banks
producing about 10000, 900 marks gross
profit in 1911, Of which but so, 100000
was required In payment Of interest,
about $40 per cent net profit being
realized in the share capital Not all
of this is distributed in dividends,
about one-fourth being put into re-
serve, a large part into advertising,
large part donated for works OF public
utility and a large amount in bonuses
to employees. About so per cent OF
the net pronrs are distributed in divi-
dends, s and Z percent dividends being
common. To get these dividends many
people become members with no in
%tention Of borrowing.
Would Aid u. 8. liz Relief.
@ EA-a - -& - Il 49, u AI