766 AGRICULTURAL ECONOMICS 



The .Darmstadt federation allows the committeemen to be paid for 

 their services when the business of the bank is fairly large. 



In. 1909, for instance, the expenses of management amounted, on 

 an average, to the modest sum of 638 marks (about $153 .12) per bank. 



The capital which the rural banks have at their disposal for making 

 loans to members is composed of the shares paid up by the members, 

 the reserve fund accumulated in previous years, the savings deposits, 

 and deposits on current account, and the sums which they procure 

 by means of loans from the central co-operative banks, other banks, 

 or private individuals. Current accounts and savings deposits fur- 

 nish 85 per cent of the total working capital, while about n per cent 

 is drawn from the outside sources, such as the central co-operative 

 banks, other banking institutions, and the general public. 



Savings deposits may be made either by members or by non- 

 members, but deposits on current account can only be made by 

 members. 



Making advances to members is the principal business of the rural 

 banks. Surplus money is deposited with the central banks or invested 

 in banking operations with third parties. Loans consist of two kinds: 

 first, loans on current account; and second, loans for fixed periods. 

 The loans on current account compose about a third of the total loans of 

 the German rural banks, and there is a tendency to extend the practice. 



The members guarantee the fulfilment of their obligations to the 

 bank by finding sureties, by the deposit of valuables such as share 

 certificates, etc. by giving a mortgage, or by their mere promise. 

 The finding of sureties is the form of security usually preferred. The 

 period of loans varies from six months to two years or three years, 

 and even more in exceptional cases. 



The principal safeguard for the success of the rural banks lies in 

 their very constitution. The limited area of operations and the 

 nature of rural life make it possible for each member to keep an eye 

 upon the affairs of his fellow-members in which, moreover, he is 

 directly interested, so that he can easily judge at any moment of their 

 solvency and of the manner in which they are utilizing the money 

 obtained from the bank. 



The object of the rural banks is to give credit to the members on 

 favorable terms and not l<> make a commercial profit. The Raiffeisen 

 system, accordingly, does not admit of any distribution of dividend, 

 all the profits realized being carried to the reserve fund or to the 

 creation of institutions of public utility. The Darmstadt federation, 



