EUROPEAN AGRICULTURE 253 



The relation of the governments in furnishing agricultural credit 

 has varied greatly. In France the rural banks have been established 

 for the most part on funds advanced by the government without in- 

 terest. This policy was begun in 1894 and in 1910 the working capital 

 at the disposal of the rural banks which had state aid amounted to 

 71 million francs (between 14 and 15 million dollars), of which 40 

 million francs had been advanced by the government. In Austria the 

 provincial governments have actively assisted in the establishment of 

 rural banks to furnish credit for farmers and have advanced loans 

 without interest to them. In Germany the government has indirectly 

 aided the rural banks by establishing central banks founded on capital 

 advanced by the government, in most cases at 3 per cent, interest. The 

 central banks in turn furnish credit to the rural banks and the rural 

 banks to the farmer. The Prussian Central Bank at Berlin now has 

 a capital of 75,000,000 marks from the Prussian government. How- 

 ever, its business is not confined to agricultural banks, but is open to 

 all kinds of industrial cooperative associations. It receives deposits 

 and makes loans to the cooperative banks throughout the kingdom of 

 Prussia, and serves as a compensating medium between the different 

 cooperative institutions. For example, if a rural bank has large 

 deposits and a surplus of funds, it deposits them in a central bank to 

 be loaned to some other bank in need of funds. 



The desirability of government subvention is a disputed point, and 

 in Germany which has the best developed system of agricultural credit 

 in the world, many are opposed to it as being entirely unnecessary and 

 think that a better system can be developed without it. 



The second source of capital, savings and deposits of the farmers 

 and rural population, is the most important. It has the advantage of 

 developing the habit of saving among all classes in the country and it 

 keeps the money in the rural districts in which it is earned. In Ger- 

 many alone there are over 16,000 rural savings and loan banks with 

 one and one half million members and deposits of over $250,000,000. 

 Instead of being deposited in savings banks to be loaned out in the 

 cities, as is the case in America, or deposited in postoffice savings banks 

 to be loaned to city banks, the money is kept in the rural districts and 

 loaned out at a rate of interest that the farmer can use it to advantage. 



The third source of capital, obtained by the sale of bonds secured 

 by mortgages on farm lands, was the first form of cooperative agricul- 

 tural credit established in Europe and was begun in Germany in 1770. 

 Its most rapid development, however, has been within the last thirty 

 years, and at the present time the German farmers have over $1,000,- 

 000,000 borrowed in this way, none of it costing them more than 4 per 

 cent, interest and in some cases it is as low as 3 per cent. 



