Bryan daily eagle and pilot. [volume] (Bryan, Tex.) 1909-1918, 1915-04-10

loans being sso,iss. This is the sim.
plest OF the three methods. It con.
slsts essentially In permitting the
lender 10 say how the money he loans
shall be spent Under such circum,
stances he naturally feels more Sc.
cure, and the rate OF interest lessons
with the risk.
IN regions where for various rea.
sons this plan has not proved posi-
bic, another method Is 10 have the
farmers collectively assume a certain
guarantee for The notes given by IN.
dlyiduals. In Southern Montana, for
example, nineteen farmers organized
an association and appointed trustees
TO represent II In negotiations with a
local bank The trustees were
authorized 10 guarantee limited
amount 10 the bank on tho Joint and
several liability OF the association
members With this additional Sc
ourity the bank agreed 10 advance
$1,000 10 the association at per cent
when the general bank rate was 10
and y per cent The delegates from
The association purchased with the
money two carloads OF helfers which
we're distributed among the members,
each animal being charged with a
proportlonate share for oil the Incl.
dental expenses connected with the
transaction. Each purchaser pledged
himself to care for and breed the
cattle by methods approved by the
trustees.
In the third plan the guarantee Is
furnished not by the farmers them.
selves. but by an outside interest.
As the plan was developed IN Wis.
consin and Minnesota, this outside
interest consisted OF local business
men who were IN their way as much
concerned as the farmers with the
general improvement Of agricultural
conditions in their regions. Under
this plan the business men subscribed
a certain percentage Of the funds
loaned with the understanding that
this was TO constitute n guarantee
fund to protect the bankers. Other.
wise the plan was in its essential
principles like that adopted in Mon
tana..
None Of these methods require
more than a temporary organization.
A permanent cooperative credit asso-
citation Is, OF course. a different mat
ter, which has. however many ad.
vantages. Such associations enc0ur.
age habits OF saving, afford training
in business methods and may estab-
fish a collective fund for common
agricultural purposes as well as pro-
viding loans to their members OF
more reasonable terms than they
could obtain Individually The funda.
mental principle OF their management
Is that no loan must be granted un.
less the committee In charge believes
that the member and the association
will both be benefited. The funds for
the loans may be secured through
payments on shares. through deposits
and by borrowing from outside
sources. Associations doing business
Of this sort. however, are subject to
statutory regulations and 1t is. OF
course. important that these regula-
tIons be understood and observed by
the management.
A cooperative credit association
must not be considered as in any way
a substitute for other banking insti-
tutions, but rather as an ally to them.
The deposits in such associations are
frequently in such small amounts
that It is unlikely that they would be
placed In a regular bank. On the
other hand, the total of these small
sums is frequently considerable and
such part OF 1t as is not loaned to
members OF tho association is usually
placed on deposit In the local banks
In addition to the service which the
association can render to its indi-
vidual members both by aiding them
to obtain proper loans and by discour.
aging them from making unwise ones,
the association can also be OF service
to the community in a number OF
ways, among which collective pur-
chasing is perhaps the most promi-
nent.