Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1914-02-11

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 Tor productive. purposes
actually apply the loan to such pur-.
| poses The borrower must bring two
tsureties, 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, "A "a N ~ &.
characteristic feature OF the eystem-
that loan shall be made for a PRO
ductive purpose" only. That is, tAe,
borrowed money must be used for o
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 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 %
to increase his earning capacity was.
considered a productive purpose justi-
flying loan. as it proved to be whom
the boy himself repaid the loan. The
rules of the cooperative society pros
vide for the expulsion Of q member
who does not apply the money to the
agreed purpose. 1t 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 quito
sufficient to secure obedience to the
rules and regulations Of the society.
Cooperative Credit 10 Good.
There are other advantages. The.
regular bank is generally miles away
1t costs money for the borrower to goss
and take his sureties. paying car fare.a
meals and maybe drinks, while the Coz
operative association Is right at hand.N
The bank will loan for only 80 days,
while the cooperative society will
make it up to year. And q 90-day5s
loan gives the farmer no chance TOT
realize on seed or fertilizer or stock
bought with the money borrowed. Butt
here In the local credit bank II q man
is honest he can get the loan he needs.t
He must bring two sureties. but Coz.
operation breeds and develops neigh
borly helpfulness and they say no.
honest man ever fails because he cam
get no sureties. 555 5,s55
Neither the association nor Its menu
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 i've or SIX per cent.
In some cases government funds have
been loaned to them at three per cent.
thus enabling them to make g very
low loan to their members. The exc
,pense of administration is almost noth-
ing. & ssi. t5
Lesson for Rural America.
1t is such societies as these that areiS
putting the gombeen men out of busi-t
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. "a, N n
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 either Of mert
chants and dealers or must secure
loans from some source. Most Of them
get credit OF the local merchant. It To-,
OF course. well recognized that any.
dealer who extends credit not only .
charges interest but charges q higher
price than when he gets cash payment.
Why cannot the American farmer
get loan at nearby banking tnstt-
tuition for six months or ten months Or
year instead OF for 80 days? Why 81
cannot he capitalize his character 20 h
does the Irishman? In some states
there are under existing laws plenty
OF small joint stock banks throughout y
the smaller towns and villages which
are accessible. The directors and Of
ficers 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 capitalizinE
character. But they don'tSdo It. l83s
Copyright, 1914. Western Newspaper Union.)