CO-OPERATIVE CREDIT ASSOCIATIONS. 131 



CO-OPERATIVE CREDIT ASSOCIATIONS. 



The organisation of Co-operative Credit Associations in the rural districts 

 of the south and west of Ireland was inaugurated in February of the year 

 1 894, by the establishment of a " bank " at Doneraile, Co. Cork. The 

 success of this trial institution, which was founded on what is known as the 

 Raiffeisen system, naturally led to the creation of similar institutions in 

 various parts of the country, and at the end of the year 1901 there were as 

 many as one hundred and three of these rural " banks " registered. Herr 

 F. W. Raiffeisen, the creator of the " loan bank " system which bears his 

 name, was born in the year 1818, at Haum in Westphalia. Brought mto 

 sharp touch with the misery of the poor peasant cultivators of the Rhine- 

 land, through his official position as Burgomaster of several districts in the 

 Westerwald, Raiffeisen determined to see if he could not alleviate their 

 chronic suffering and poverty by the application of the principle of co- 

 operation to their several needs. His first venture was a co-operative 

 bakery, which was quickly followed by a co-operative cattle-purchase asso- 

 ciation. But successful as these experiments immediately proved — and 

 such associations can now be counted by the hundred on the Continent — 

 the lack of capital remained as a fatal flaw in the economy of the Wester- 

 wald peasantry. To supply this Raiffeisen started at Hammersfield, in the 

 year 1849, his first co-operative credit association. Not till five years later 

 was a second " bank " started, and again Raiffeisen himself was the founder. 

 In 1862 a third was formed; in 1868 a fourth. In 1896 no fewer than 

 2,169 Raiffeisen "banks" were at work in Germany alone. Their founder 

 had then been dead for eight years, but the associations which " Father 

 Raiffeisen "—as he is affectionately spoken of by his own countrymen — 

 had originated, grew and are growing apace in every European country.* 



The practical problem which faced Raiffeisen in the Westerwald was to 

 supply a very poor agricultural people, who had two of the requisites of 

 production — land and labour — with a third, to wit, capital. This he did by 

 uniting the peasants as shareholders in loan associations, regulated on the 

 principle of unhmited liability. In these societies every member is equally, 

 jointly, and severally hable with every other member for the debts of the 

 association. This was the first safeguard of the " bank " — it secured care 

 and caution in the admission of members, and constant supervision m the 

 application of a loan. The second safeguard was afforded by the invariable 

 rule that loans were made for a productive purpose only — a matter to be 

 decided by the committee of the association — that is to say, by men inti- 

 mately acquainted with the character and circumstances of the appHcant for 

 a loan, and each, individually, liable to be mulcted in case of his default. 

 Raiffeisen was emphatic as to the necessity for restricting the operations of 

 each association to a particular area — a village, a parish, a townland — and 



* See " People's Banks," by Henry W. Wolff. London : P. S. King & Son. 



