RURAL CREDITS 767 



on the other hand, allows a distribution of dividend on the shares, 

 which, however, must not exceed the maximum rate of interest 

 charged to borrowers. 



In 1909 the net profit realized by the rural banks was more than 

 7,000,000 marks. This is sufficient evidence of the flourishing con- 

 dition of these institutions. Of this enormous profit only a small 

 fraction was distributed as dividend. In this manner the banks are 

 continually strengthening their financial position. This is demon- 

 strated by the steady increase of the reserve funds. In a single year, 

 from 1908 to 1909, the aggregate reserve fund was increased by 

 7,000,000 marks, while the profits realized at the end of 1908 were 

 about 8,000,000 marks. Thus seven-eighths of the profits made in 

 that year were carried to the reserve. 



Agricultural credit is furnished in Germany by the Schulze- 

 Delitzsch co-operative banks, usually spoken of as the "popular" or 

 "urban" banks, as well as by the purely rural banks under the 

 Raiffeisen system. Notwithstanding the great development of the 

 rural banks, many farmers still utilize the Schulze-Delitzsch banks. 

 In fact, about 28 per cent of the membership of these banks is com- 

 posed of farmers and farm laborers. 



The Schulze-Delitzsch banks have, therefore, unlike the rural 

 banks, a large range of business in an extended area of operations; 

 they accumulate a considerable quantity of capital and they distribute 

 fairly high dividends. They do not follow the principle of unpaid 

 management; on the contrary, their management is rather costly and 

 is conducted on strict business lines. They are very often based on 

 limited liability, and they carry on a series of banking operations 

 which the rural banks seldom undertake. Their business is modeled, 

 more closely than the rural banks, upon the plan of banks doing a 

 purely commercial banking business. 



In addition to the co-operative banks under the Raiffeisen and 

 Schulze-Delitzsch systems, Germany has another very characteristic 

 form of co-operative credit, commonly spoken of as the landschaften, 

 usually organized for a whole Province. There are about 25 institu- 

 tions now existing under this system, principally in Prussia. Their 

 object is to obtain for their members the credit required for land 

 improvements by means of bonds guaranteed by the landowners of 

 the province collectively. The landschaften societies furnished 

 German agriculture in 1909 with more than $840,000,000 of loans on 

 mortgages at rates of interest not exceeding 4 per cent. 



