The Richfield recorder. (Richfield, Idaho) 1909-1931, 1914-01-29


associations held. and experience has
confirmed the opinion, that n the
poorest communities there is a per-
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
ductive purpose" only. That is, tae
borrowed money must be used for a
purpose which, in the judgment OF
the committee, will enable the Dor.
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 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 a member
who does not apply the money to the
agreed purpose. 1t is said however. /
to the credit of the Irish members of I
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.
1t costs money for the borrower to go
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 a year. And a 90-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 helpfulness and they say no
honest man ever fails because he can
get no sureties.
Neither the association nor its mem
bers have any considerable capital.
When they organize they begin by bor-
rowing a sum of money on the joint
md several liability of the members.
Deposits are received from both mem
)ers and non-members. The society
Usually borrows at four or five per
,ent. and lends at five or six per cent.
n some cases government funds have
,een loaned to them at three per cent,
hus enabling them to make a very
ow loan to their members. The ex-
,ense of administration is almost moth
ng.
Lesson for Rural America.
1t is such societies as these that are
utting the gombeen men out of bust
ess in Ireland. We have in rural
.merjca gombeen men. They are not
o called, but American loan sharks
nd credit men are first cousins to the
rish gombeen men.
The question we Americans are try
lg to answer is this: Have Irish rural
redit methods a lesson for the rural "
sctions in our own land? Can our 1
'an shark, whether in city or country,
g fought and conquered by similar 4
merican cooperative societies? 4
There are hundreds of poor farmers j
no must ask credit either of mer-
lants and dealers or must secure
ans from some source. Most of them
It credit of the local merchant. 1t is,
course we'll recognized that any =
saler who extends credit not only
larges interest but charges a higher 4
ice than when he gets cash payment. 4
Why cannot the American farmer
It a loan at a nearby banking insti-
ton for six months or ten months or
year instead of for 80 days? Why 4
mot he capitalize his character as A
es the Irishman? In some states
ere are under existing laws plenty
small joint stock banks throughout
e smaller towns and villages which
e accessible. The directors and Of
ers know the farmers needs. They
> 80 intimately acquainted with
ose who might become borrowers
At they could do as the Irish credit
nks do and arrange for capitalizing
aracter. But they don't do it