Report of Missouri Farmers' Week. 351 



of the conditions that are rapidly growing upon us. Perhaps the 

 best posted man on these questions is Embassador Myron T. 

 Herrick, who is at the present time giving exhaustive research to 

 these problems in Europe, as they have been solved there. 



Fundamentally, no business can thrive to the best advantage 

 if insufficiently capitalized, or if that capital that is being used is 

 burdened with too high rate of interest. This condition made 

 necessary the establishment of means whereby cheaper money and 

 on easier conditions could be obtained by the farming people. This 

 had its origin in Germany, but did not begin until the people were 

 reduced to an abject condition that in many cases was pitiful in 

 the extreme. Perhaps as much credit is due to Mr. Raiffeisen for 

 the beginning of this work as to any other man. He found that 

 by a system of co-operation by a small number of people each work- 

 ing to the common good and making each one liable to the full 

 extent of his means for the accounts of the organization, that great 

 benefits could be secured in the way of personal credits. These 

 societies or organizations in Germany are known as the Raiffeisen 

 banks. They started as rather independent organizations, but at 

 the present time they are largely co-operative throughout the 

 Empire. They work on the general central bank plan, a central 

 bank being merely a receiving and distributing point for funds of 

 the various outlying banks. Laws have been passed, also, provid- 

 ing for rigid inspection of these institutions and they have taken, 

 such measures as render the money that people may deposit with 

 them absolutely safe. Instead of working an injury to the com- 

 mercial banks they have done the very reverse and become feeders 

 for these institutions. It was thought by a great many banks in 

 this country that the postal savings banks would work them harm, 

 but time has demonstrated the exact reverse by bringing money out 

 of hiding and putting it into circulation. 



No man who is not of a high moral character can become a 

 member of the organization and the credit that is extended to him 

 is always for specific purposes which are known by the committee 

 having the loans in charge. The money that he uses is handled 

 much like the overdraft in our banking system, and he is simply 

 charged interest on this overdraft, as we might call it, until the 

 overdraft reaches the limit that the society guarantees his credit. 

 Whenever a dollar is in use he is paying interest on it, but as soon 

 as he can replace the dollar that interest stops. In other words, it 

 is working on the principle as lending him only such dollars as will 

 be active. Under the present system he is having to pay interest 



