MANAGEMENT 



279 



among the smaller peasant farmers, it has played a great part 

 in recent years. Three distinct types of cooperative banks have 

 been developed. The first is known under the name of the 

 Rai Teisen system, the second is known as the Schulze-Delitzsch 

 system, and the third is not known by any special name, but 

 consists of a group of men joined together for the purpose of 

 borrowing a considerable sum on their joint security, each one 

 securing his own share of the sum borrowed, and assuming his 

 equal responsibility for the payment of the whole sum. This 

 system does not require any special organization of credit nor 

 does it require an institution known as a bank to carry it into 

 operation. Any group of farmers, say ten, who wanted to borrow 

 $1000 each for a period of five years could sign a joint note for 

 $ i c,ooo. By this means they could borrow at a lower rate of 

 interest than any one of them could. Inasmuch, however, as 

 there is joint responsibility, this method could be adopted only 

 by a group of men who knew one another thoroughly and had 

 confidence in one another's honor and solvency. 



The Raiffeisen system. The Raiffeisen system, named after 

 Herr F. W. Raiffeisen, its founder, originated in Germany after 

 the famine years of 1846 and 1847. Herr Raiffeisen had wit- 

 nessed the sufferings of the peasantry under the hard conditions 

 imposed by the money lenders. After several attempts he suc- 

 ceeded, in 1849, in establishing at Flammersfeld, a coopera- 

 tive loan bank. The object of this bank was to loan money at 

 a low rate of interest, for productive agricultural purposes only, 

 to such peasants as would comply with the rules laid down in 

 advance. The plan succeeded, and other banks were subse- 

 quently formed in different sections. The principles on which 

 these banks were organized are as follows : first, every individual 

 that goes into the scheme becomes responsible for all the capi- 

 tal borrowed, that is, there is unlimited liability ; second, money 

 is loaned to a peasant for an agricultural purpose only, and the 



