Essex County herald. [volume] (Guildhall, Vt.) 1873-1964, 1914-06-05

The general concensus OF German
opinion seems to have been that two
causes contributed to the failure; first.
state aid. which seldom really helps
a cooperative society, ruined these
projects by encouraging the construo
ton OF warehouses which were either
not needed or which were bigger than
needed; second. the members sought
to make money out of them instead of
using them simply to prevent waste
in shipping.
Bank at Nieder Mabau.
In 1874 at German village of some
go inhabitants local tradesmen
formed loan and savings bank. From
the very first they forgot that cooper
alive credit banks are primarily
formed to lend money only to those 10
cal members who win use 1t for 10
cal purposes. They were too anxious
to get rich quick. BY promise Of ex.
ceedingly high rates of interest they
attracted patrons from the most re-
mote points until there was on de-
post in this little village cooperative
bank almost 100000. Such an
amount of money was of course far in
excess of any needs which the mem
bers themselves might have as Dor
rowers. Consequently the bank be-
gan to do business with outsiders.
Funds were so plentiful and the de-
mands relatively so small that 1t grant
ed to its debtors extensive credits. It
became known that credit could easily
be obtained at that village bank and
spectators far and near flocked to it
1t risked its money in financial
schemes outside the limits of the vii
lage
The cashier, who had no particular
| fitness for the position, also had charge
of church funds and other public
| funds. Besides this, he was conduct
ing a large business in hotel. There
seems to have been no one on the
board of managers of any particular
business judgment or ability. Even
integrity was not present, for the cash.
| Ter ended his year with forgery and
was sent to prison. 1t was not sur.
prising, therefore, that in December,
1911, the Nieder Mabau Loans and
Savings bank was declared insolvent-
the natural results Of undue greed, OF
the spirit of speculation, of incompe-
tence, and of dishonesty.
Cooperative Bank at Darmsted.
More recently the cooperative ag
ricultural bank at Darmsted, formed
in 1882, reached a point where 1t was
unable to meet its obligations. Its
situation was almost the same as
that of the Nieder Mabau bank, al
though it operated upon much larger
scale. In connection with this bank
there was also either gross incompe
tency or dishonesty. In one case, fol
example, over million dollars was
invested in mine that could not be
worked. Other equally hazardous en-
terprises we're financed by this con
Germ contrary to all principles of CO
operative credit and equally contrary
to all rules Of sound finance. go
operative banks are not foolproof,
and Of course the cooperative banl
at Darmsted failed.
Cooperation may fail even in Den
mark, the country in all Europe mos
completely organized for rural bust
ness. There a brilliant public maj
got in the good graces of those inter
ested in cooperation and promoted ;
scheme for uniting many cooperative
societies in one big concern. Here
there was not so much incompetence
as dishonesty, and the venture endeC
in financial failure for the members
and in Imprisonment for the dishon
est promoter.
Causes of Failures in America.
Cooperative failures so far as Amer
lea is concerned are traceable large
ly to these causes:
In the first place it has always beef
difficult for the American to compre
bend the fact that cooperative con
Germs are not money making, div
dend declaring, profit producing con
Germs. They do not seem to realiz
that the sole excuse for the existenc
Of the cooperative organization as
middleman Is in order that a middle
mans function may be performe'
: without waste and without profit.
In the second place the spirit O
: the American farmer is not sufficient
ly unselfish. He has been operating
for SO long on the competitive basi
that 1t is difficult for him to acquir
: spirit of unselfish loyalty to tn
: spirit of the organization to which b
belongs. If an opportunity presents II
self under which he can net a prof
by abandoning the cooperative soc!
ETY. and dealing with a private dealer
he embraces it at once, without reali7
ing that in the end this will ruin hi
cooperative concern and leave hin
in the hands Of the privately owne
dealer who has been for generation
working him for large profits
| tho third plooo al