214 ANNUAL REPORT OF THE Off. Doc. 



THE CO-OPERATIVE CREDIT COMPANIES 



The question naturally arises, where shall the average farmer 

 of to-day get the money to introduce all these new Ideas and how 

 will the 3'oung farmer of the future be able to begin operations 

 when he will be obliged, in order to compete with his neighbor, 

 to introduce one or the other of these manufacturing plants or be- 

 come a partner in one to enjoy the privileges it confers, 'where will 

 he get the money? These and similar questions, when land values 

 increased in Germany, confronted the German farmer and had to 

 be solved. This condition brought into existence "The German Co- 

 operative Credit Companies." These companies are formed by a 

 number of farmers who get together, take a careful inventory of the 

 property of each and determine how much credit each is entitled to 

 and then they assume joint responsibility for the amount. They get 

 a charter and elect officers and they are ready to begin business. 

 When the members of the organization wish to avail themselves of 

 this credit to go into a joint enterprise they go to the cashier, make 

 themselves responsible for the amount of credit each is entitled to, 

 when the cashier issues them a note or bond which they offer for 

 sale in the market. These long time notes or bonds, ranging from 

 twenty to forty years, have proven so secure an investment that the 

 demand is greater than the supply. The rate of interest is from 

 three to four per cent, or rather it ranges very closely with the 

 protits of the farming business. When a member of the company 

 has money to spare he deposits it with the cashier and receives a 

 certificate of deposit wliich entitles him to a rate of interest equal 

 to that which he would be obliged to pay were he borrowing money, 

 and in this way the company becomes a Savings and a Loan Asso- 

 ciation. When a member buvs an addition to his farm, his credit 

 is expanded to a i)rescribed proportion of the value of the land 

 bought, and if he demands it the credit of the company is given him 

 in the form of a bond which he is allov/ed to sell. This credit is 

 usually on a forty-year term. A small annual payment, sufficient 

 to pay the debt in forty years, accompanying the interest, is de- 

 manded. Some of these Credit Companies are over a century old 

 and have flourished throughout this interval of time, and have been 

 the agencies tliroiigh which seven-eighths of the agricultural land of 

 Germany has been retained by or acquired by the men who till it, 

 a condition that does not exist in any country in the world so far as 

 1 can discover. If in Germany, where land values are high and 

 taxes enormous, these companies can , do such service what would 

 not be the possibility of such an organization in America? It will 

 raise the farmer at once into the domain of business. He will at 

 once see and feel the effects of legislation. Transportation in all 

 its xjhases by ocean steamer, through internal waterways, hy steam 

 and electricity, and even through the air, will appeal to him and 

 enlist his interest. Making the farmer a manufacturer will miti- 

 gate cit}^ congestion and at least some of the evils of congestion will 

 disappear. It will bring the producer and consumer closer to- 

 gether and, as already indicated, it will reduce to the minimum the 

 cost of transportation. But what is still of more value, the forma- 

 tion of a co-operative credit association will create a community of 

 financial interests and it cannot help but make a closer social union 

 of the farmers in such communities. 



