St. Johnsbury Caledonian. [volume] (St. Johnsbury, Vt.) 1867-1919, 1914-05-06

glow. saws: "A credit society in Dun
glow was organized and established In
October, 1908, by the Irish Agricul-
turaI Organization society and has
been regularly audited and inspected
by that body ever since Although
we had at first only ego Of working
capital, we have now a reserve Of
s26, les. The members are equally
responsible for the success or failure
of the society. Each man has one
vote no matter how much or how
little his investment in the concern Is.
They take such keen interest in it
that during its nine years working
there has not been an over due loan at
the end of the year. The society is
undoubtedly of great assistance to the
people in the district. We want the
time to come when every man can
walk up the street in Dunglow and
say he owes nothing"
capitalizing Character.
These cooperative banks have, as
it were, capitalized character. The
early organizers of cooperative credit
associations held, and experience has
confirmed the opinion, that IN 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 a 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 loan shall be made for a PRO
ductive purpose" only. That is, the
borrowed money must be used for a
purpose which, in the judgment OF
the committee, VIII 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 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 a 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 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 1t up to year. And a 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
borIy helpfulness and they say no
| RosT he
| get no sureties.
. Neither the association nor its mem
bers have any considerable capital.
When they organize they begin by Dor
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 horrows 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.
It 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 either 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, wen recognized that any
dealer who extends credit not only
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