732 



Agricultural Credit in Germany, [march, 



The Prussian Central State Bank. — It now only remains to 

 notice the action taken by the Prussian Government for the 

 assistance of co-operative banking by the foundation in 1895 

 of the Prussian Central State Bank. The funds placed at its 

 disposal were at first ,£250,000, which was increased in 1896 

 to £1,000,000, and in 1898 to £2,500,000. Dr. Heiligenstadt, 

 the president of the bank, in a memorandum on the subject, 

 thus explains the view taken by its promoters : " When dealing 

 with co-operative organisations, even by the comparatively easy 

 method of current accounts, the great banking institutions of 

 the country obviously cannot forego the condition of demanding 

 adequate bankable security. Bankable security, however, is just 

 what co-operative institutions are rarely in a position to supply 

 to any considerable amount, because in co-operative institutions 

 the formation of capital or pledgeable assets is by the very 

 nature of things slow, and need is sure to be greatest where 

 such formation is least developed. And this hindrance may 

 be said to hamper even societies of old standing, in which the 

 creation of capital has been in progress for some time, and 

 which have as a rule succeeded in some measure in adapting 

 themselves to the requirements of the banking market. In 

 more recently-formed societies, more particularly in agricultural 

 districts, the obstacle is painfully in evidence. Such societies 

 are only very rarely in a position to satisfy bankers' require- 

 ments at all. The Prussian Central State Bank was formed to 

 bridge over the existing chasm and bring demand and supply 

 together by interposing between them a powerful institution 

 which, having no selfish interest of gain or profit to study, 

 might be employed to satisfy the needs of personal credit on 

 reasonable conditions in the case of the lower and middle classes 

 when combined for productive purposes in co-operative societies." 



The State Bank only advances money, except on tangible 

 security, to unions of co-operative societies, such as central 

 banks, &c, and not to individual societies. In the case of un- 

 limited liability societies the advances are limited to 10 per 

 cent, of the total value of the property involved, and in the 

 case of limited liability to something less than the actual sum 

 guaranteed. 



At the close of March, 1904, the bank had business relations 



