Maryland independent. [volume] (Port Tobacco, Md.) 1874-current, 1916-01-14
SHORT TERM LOANS
FOR THE FARMER
Rural Credit Associations Provide
Working Capital For German Farm.
ers At Low Rates OF interest.
F. b. BOMBERGER,
Maryland Agricultural College.

Just as the Landschaften or Land
Mortgage Associations are designed TO
provide for the German land owners
longtime loans of capital upon the Sc.
curity of their land, so the Raiffeisen
or Rural Credit Associations or Banks
are designed to provide short term
loans Of working capital to enable the
German farmers to plant. cultivate,
harvest and market their crops. These
institutions derive their name from
William Raiffeisen who established in
1852 at Anhausen cooperative union
or association of farmers for the pur.
pose of commanding credit for the in
dividual members upon their combined
credit In 1890 the number of Rural
Banks in Germany was 1.72e; in 1900,
they had increased to 9,793 while in
1910 they numbered 1851 Moreover
they have spread over the whole Con
.tinental Europe and are in operation
in Asia, Australia, South America and
even in Canada.
Is A NelGhborhood Bank.
The Raiffeisen type Of Rural Credit
Bank is a very unimposing affair Its
operations are confined TO a very lin
tied area usually district in which
the members are personally known to
the others, the average membership in
the province Of Saxony being ninety
two per bank. Usually the only paid
officer is treasurer, while the office
may be a centrally located farmhouse,
a postoff1ce, store or often the resi-.
dence Of the parish priest. The aver
age cost of management is only one
fifth Of one per cent.
The management of the bank is in
the hands of a committee Of Eve. will
another committee of five to audit the
accounts. both committees being elect.
ed by the members Of the association
at its annual meeting in which every
member has a vote Loans which are
made only to members are usually
small. averaging about $500 and are
always secured for some specific pro.
ductive purpose, specified in the ap,
plication. To secure loan the Dor.
rover must give his note to the asso-
citation. endorsed by a fellow member
or supported by collateral of APPROX
ed type. The advisability of making
the loan in each case is passed upon
by the managing committee, and the
use to which the proceeds Of the lean
are put is under the scrutiny of the
members Of the association who are
the neighbors of the borrower.
Low Interest Rates.
. The terms for which loans are made
} range from six months to three years,
the average being about one year In
: case of failure of crop, in bad sea.
sons, the loans are extended for add.
tional periods. A very common form
of loan is that made on current ac-
, count. In this case the loan is ap.
proved up to a certain amount, but
1fi,s money is drawn out only as need
ed intsTssi charged only on the
amount used If the M pss is iil'suse'
the loan can be called at an .1a'...sl ss,'.s, =
Funds for the use of membefsN
derived from the sale of capital seGR
one-half per cent; from resert f'nds
accumulated from previopeSs ears, 26
per cent; from sr.---ss deposits and
current accoupts' 20 per cent; from
central assocA hons, referred to later
11.2 per css.1 Deposits are accepted
fre... anyone. tbut only members are
allowed to keep current accounts.
The rates at which loans are made
to members are very low, averaging
from IL TO l-2 per cent. This con.
dition is made possible from the fact
that these banks are cooperative in
fact as well as in name. Usually nn
dividends are paid on capital stock.
all earnings being carried to the re-.
serve funds. The more successful tbe
bank the lower are the rates of inter.
est charged to members. The profit
sharing-policy, together with the ex.
| ceedingly low cost of administration
| gives to the farmer exactly what he
needs, abundant working capital. AT a
very low rate of interest, for periods
of time that will enable him to plant
crop and await its maturity before
being called upon to repay the loan.
A National System.
Each of these local Rural Banks is
combined into a provincial union. al
the head Of which is the provincial
bank which serves as a clearing house
for the local banks. These provincial
banks tend to eQualize the surplus
funds of the several banks and furnish
capital to the local banks for loans
to their members at a cost of about
one-half per cent more than is paid on
deposits. The provincial banks are in |
turn united with the National Feder-
alton of Darmstadt which is an asso. |
citation Of practically all of the agri- |
cultural cooperative societies of Ger
many.
The Rural Banks Of each province |
are united to form a Central Cooper
ative Association for the purchase and
sale for members Of agricultural prod
ucts on wholesale basis or for carry
ing on cooperative enterprises of any
kind
Thus the RaiGeisen Rural Credit
Banks provide their members with
abundant capital at low rates of inter
est for periods suited to their needs
and enable them to cooperate on
scale scarcely dreamed of in America.
They enable the German farmers to
cultivate better, fertilize better. take
better care of their land and harvest
and market their crops to better ad.
vantage. Above all they furnish the
machinery for effective and efficient
cooperation.
Children Cry
r0n rHAurU1e