Audubon Republican. [volume] (Audubon, Iowa) 1894-1925, 1916-11-02
Washington, d. c., Sept. 80, 1916.

Washington, d. c., Sept. 80, 1916.
Dear Cousin Ned
Hurrah for your Cooperative Fruit
Selling Society! Your cooperative
canning factory and creamery, too,
are doing great work. Those reports
sent me about your success in market
ing your berries by the carload and
forcing the buyers to bid against each
other and so bid up the price made
me laugh cut loud. 1t bears out just
what you and argued six years ago
when we were coaxing the neighbors
to join the cooperative society. I
tell you, Ned, the more know of the
foolishness of individuals, the more
pond. They do work hard and are in
dependent, but Dan Patch could have
beaten their speed.
You farmers have already demon
started the power of cooperation in
your fruit selling cooperative organ
izatiOns; also in your creameries,
cheese factories and livestock coop
erative organizations. Just extend
that principle now to collective cred
its organizations. OF course, you will
have to recognize the necessity of for
getting prejudices against your neigh
bors, and when you consider credit,
leave out all other qualities of the
borrower and think only ofsthe prob
ability of payment. Since character
enters into personal credits, you must
have a reliable committee to pass on
the character of every man you ad-
NIT into your local credit union. The
committee must be broad-minded,
impartial, but it must also be firm in
ruling out farmers whose word can
not be trusted or who are visionary
in their plans.
| Assuming that this is done with
fair conservatism and caution, then
you can go ahead and organize into
a local credit union all the farmers in
your neighborbood who want to Dor
row. Suppose you have 25 farmers
as the minimum. You decide that
your locality is well adapted to rails
ing hogs, for example, and you 25
or more farmers agree amongst your
selves all to raise the same kind of
hogs and to follow the directions
which your secretary will get through
the county agent or the professor
from the Agricultural College. Now.
suppose each of you wants to borrow
500 with which to buy hogs. Some
of you could go to the bank and get
it without mortgaging your farms,
but many of you could not. If, how
ever, you say to the banker. you will
mutually endorse the entire loan of
$4,000, the banker will at once recog-
nize that, while perhaps one or two
farmers might be risky. the whole 25
will not fall down in the payment Of
the note, and so the collective credit
of the union enables you all to obtain
your money. The bank gladly lends
its money to the union, not to the in
dividual. and the union lends in turn
to the individual members.
| But now, how will the union pro-
tect itself against loss by the individ-
ual member? Some, perhaps, might
become sick or die, or they might not
live up to their reputation for hon
esty. That problem is fully solved
in fifty of the cities of the United
States, through a comparatively new
system of banks for lending on per-
sonal credit exclusively, to city wage
earners and small merchants whose
credit is not strong enough to inter-
est a national bank. This new sys-
TEN of banks never takes tangible
security 1t requires that the indi-
vidual note be signed not only by the
borrower. but by two of his friends
as endorsers. Then the borrower
must make fifty weekly installment
payments so that the entire debt is
paid off by the end of the year. Each
installment is very small. but If any
installment is delayed the bank at
once notifies the endorsers and they
are called upon to pay the install
ment. Now, can you imagine what a
mean, small character a man must
be, without good cause, would shirk
his installment and force his friends
who have endorsed his note to carry
| his installment amounting to, say,
| 50 a week on a hundred dollar loan.
/ think ] hear you say tina: 'he
scheme wouldn't work at all on the
farm because farmers dom. got ticir
money in weekly installments. but
the answer is that the same principle
can easily be adapted to farm condi-
Itions 10 make the installments mcntn-
~ instead of weekly, and the farmer
can meet these monthly installments
if he is enterprising enough to divers
ify his interests by having cows or
poultry. or truck If he isn't that
much alive you had better keep him
out of your organization, because this
proposed system is not intended 20
finance grain raising or cotton rails
ing or any of the great staple pro-
ducts. 1t is to help the individual
diversity his interests and get on his
feet.
Now, just to illustrate the strength
Of this plan: In a city that / know of,
one such bank, which in the last four
wears has loaned more than $4,000
600 without any security except the
personal character back of its notes
has lost less than $500 of the $2.0O,-
900. | know of other institutions