a Ae (@ HDit¢0. €3 G72 ‘ornell University Library gricultural credit and cooperation in ae 63p ConGRESS ‘ DocumENT 1st Session } ¥ SENATE { No. 17 AGRICULTURAL CREDIT AND | COOPERATION IN GERMANY REPORT TO’. THE BRITISH BOARD OF ~ AGRICULTURE AND FISHERIES OF AN INQUIRY INTO AGRICULTURAL CREDIT AND - AGRICULTURAL COOPERATION IN GERMANY WITH SOME NOTES ON GERMAN LIVE-STOCK INSURANCE BY J. R. CAHILL 1S NSa:e” WASHINGTON GOVERNMENT PRINTING OFFICE 1913 63p ConGRrEss } DocumMENtT 1st Session . SENATE { No. 17 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY REPORT TO THE BRITISH BOARD OF AGRICULTURE AND FISHERIES OF AN INQUIRY INTO-AGRICULTURAL CREDIT AND AGRICULTURAL COOPERATION IN GERMANY WITH SOME NOTES ON GERMAN ' LIVE-STOCK INSURANCE BY J. R. CAHILL . WASHINGTON GOVERNMENT PRINTING OFFICE 1913 SouTHERN CoMMERCIAL CONGRESS, Washington, D. C., April 15, 1913. Hon. Dunoan U. FLETCHER, Senate Office Building, Washington, D. C. Dear Senator Fietcuer: The Southern Commercial Congress has received, with the com- pliments of Hon. Myron T. Herrick, United States ambassador to France, the report by J. R. Cahill, addressed to the Board of Agriculture and Fisheries of-Great Britain, dealing with the subject of agricultural credit and agricultural cooperation in Germany. This document was presented to both Houses of Parliament by command of His Majesty, the King of England. To-day I consulted with officials of the British Embassy and received the assur- ance that it would be thoroughly agreeable for the report to be published by the United States Gov- ernment for the information of the people of the United States. I am therefore transmitting the report to you and urge that it be presented to the Senate of the United States for publication. ~ Respectfully, CLARENCE J. OWENS, Managing Director. In THE SENATE OF THE UNITED STATES, April 24, 1913. Resolved, That the report to the British Board of Agriculture and Fisheries of an inquiry into agricultural credit and agricultural cooperation in Germany, with some notes on German live-stock insurance, by J. R. Cahill, which was presented to both Houses of Parliament of Great Britain, be printed as a Senate document (S. Doc. 17), together with the accompanying illustrations and letter. Attest: James M. Baker, ‘Secretary. gor 14139 REPORT TO THER BOARD OF AGRICULTURE AND FISHERIES OF AN INQUIRY INTO AGRICULTURAL CREDIT AND AGRICULTURAL CO-OPERATION IN GERMANY; WITH SOME NOTES ON GERMAN LIVE STOCK INSURANCE. BY J. R. CAHILL. Presented to both Kouses of Parliament by Gommand of His Majesty. [sHaL OF THE UNITED KINGDOM OMITTED IN THIS PRINT. J LONDON: PUBLISHED BY HIS MAJESTY’S STATIONERY OFFICE. PRINTED BY DARLING anp SON, Lrp., Bacon STREET, E, 1918. PREFATORY NOTE. To the SrcRETARY OF THE Boarp or AGRICULTURE AND FISHERIES. Sir: The report which I have the honor to present herewith contains the results of the investi- gation which I was commissioned by the board of agriculture and fisheries to undertake in order to obtain full information in regard to the organization and actual working of the systems of agri- cultural credit, agricultural cooperation, and live-stock insurance in Germany. In no modern State does organized effort for safeguarding and promoting the economic interests of agriculture appear to have been so persistent and so successful as in Germany, more especially in the direction of providing the farmer with facilities for obtaining credit, for acquiring the instruments of production, and for disposing of his produce on the most favorable terms. In the present report I have endeavored to set out in considerable detail the principles and practice, together with the results of the working, of the three groups of organizations that owe their existence to this organized effort in German agriculture. The report is based essentially upon knowledge obtained by personal inquiry and upon the study of original documents. With the view of obtaining first-hand acquaint- ance with each of these subjects, I not only visited the managers of the most representative organi- zations of each kind and discussed the principles and methods of working, but I also made use of the facilities so generously afforded of obtaining an insight into matters of ordinary business routine by attending general or committee meetings of societies, being present at their auditing, etc. Throughout the report will be found detailed descriptions of typical institutions; and these accounts, based upon the notes made at the time of visit, will, it is hoped, help to present their outstanding features with more vividness than is possible in a general exposition. It should perhaps be mentioned that, as regards nonmortgage credit, I have limited myself to reporting upon local and central cooperative banks. Commercial sources of credit are as numerous as in the United Kingdom, and, despite the growth and increasing concentration of German great banks, are still far less highly centralized; but, apart from the vastness and intricacy of the subject, I have conceived my mission to be rather to give an account of what German farmers had evolved for themselves, to their own great advantage, than to draw comparisons between two banking sys- tems which have grown up to suit the needs of commerce and industry in their respective countries. In Germany landowners can obtain mortgage loans through a variety of special institutions for mortgage credit. At the present time the total outstanding loans obtained through such agencies may be estimated at approximately £400,000,000. The organization of institutional mortgage credit in that country has been greatly facilitated by its complete system of registration of title and by the clearness of its mortgage law. Compulsory registration of title, as it exists in Germany, Austria, Hungary, and Russia, or, at least, compulsory registration of deeds (as in France, Belgium, Holland, and other European countries as well as in America and British India), appears an indispensable prerequisite for the foundation of a system under which landowners may obtain mortgage credit on suitable terms by the creation of land bonds which would rank as first-class securities in the general market. Herr von Miquel, the late distinguished minister of finance in Prussia, declared some 17 years ago in Parliament: This must be our goal—to have a cooperative loan bank in practically every parish of the whole Monarchy. That goal has now been hearly reached. There are in Germany 17,000 agricultural cooperative banks, with a total membership of over one and a half millions. In 1910 the total turnover of 14,729 such banks amounted to £261,665,000; at the end of that year the loans outstanding for fixed periods, together with overdrafts, amounted to £93,034,000, while the savings deposits totaled £92,429,000 andthe deposits on current account £10, 365, 000. The success and sound management of these societies are evidenced by the fact that in the 16 years 1895 to 1910 only 19 rural credit societies were involved in bankruptcy—a remarkable record when it is recollected that since 1901 there have 7 8 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. been over 10,000 (and since 1909 over 15,000) societies of this kind in Germany. Comparing them with other banking and credit undertakings, one German writer of authority has computed that the frequency of bankruptcy per 10,000 such undertakings over the period 1895-1905 was 55 times more frequent than with the credit societies. . About 90 per cent of these Raiffeisen banks are affiliated to central banks, which are organized according to Provinces or States. At the end of 1911 there were affiliated to 37 central banks 17,668 societies ol all kinds, of which 14,508 were credit societies; and the total turnover of these wentral banks in that year amounted to £410,391,000. Since 1895 there has been in Prussia a central bank for the central banks, namely, the Prussian State Cooperative Central Bank. The State has endowed this bank with a total capital of £3,750,000. The great system of German rural cooperative credit as we now see it has not been created in a day, and it is hardly to be expected that the work of establishing a similar system would progress more rapidly in England. On the other hand, there seems to be no reason why it should progress more slowly in this country than in Germany, especially if a similar intensive and penetrating propaganda could be set in operation. Only through such local organizations would it seem possible to establish the close contact that must exist between lender and borrower if small farmers are to be in a position to obtain credit on suitavle terms. Considerable time and trouble have been devoted to endeavoring to make the appendixes of practical value. Ihave translated the most important laws relevant to the matter in hand: The articles of association, company agreements, and statutes of representative organizations; business rules, audit regulations, specimen audit report, model balance sheets and forms of various kinds, and other docu- ments likely to be of use to cooperators in this country. On the first of the two maps, which have been prepared in accordance with the data furnished by me, will be seen, for each Prussian Province and German State, the proportion of the cultivable area which is owned by its cultivators, and in the second the percentage of land occupied by holdings not exceeding 50 acres. On both maps are inserted the names of all places where mortgage credit associations, joint-stock mortgage banks, cooperative unions, central cooperative banks, and trading societies, have their headquarters. For official introductions and other help I wish to express my thanks to the foreign office and His Majesty’s diplomatic and consular representatives in Germany. I have also to acknowledge the ready assistance given to me by the Prussian ministry of agriculture and by the ministries in other States which have charge of agricultural affairs, especially at Karlsruhe, Dresden, Munich, and Stutt- gart. Dr. Heiligenstadt, the president of the Prussian State Cooperative Bank, was good enough to receive me on two occasions and to devote a considerable time to explaining to me the whole organiza- tion and methods of that remarkable institution. I wish to express my indebtedness to the directors of those land mortgage credit associations, State, provincial, and district mortgage banks, joint-stock mortgage banks, savings banks, institutions for land improvement credit, and other mortg ge credit organizations visited, all of aoa were good enough to afford me every assistance I desired; and in particular to Dr. R. Leweck, of the East Prus- sian Landschaft, Konigsberg; to Herr von Klitzing, president of the Prussian Garkcal Land Credit Co., Berlin; to Dr. F. Schulte, of the Bavarian Handelsbank, Munich; and to Herr Gétting, sec- retary of the Federation of Savings Banks. To the directors of the chambers of agriculture in all the Prussian Provinces and similar bodies in other Federal States I am greatly indebted for a great mass of information respecting the agricultural condition generally of their areas, as well as for informa- tion concerning cooperation and live stock imsurance. As regards agricultural cooperation, my sincere thanks are due to Herr Haas, general director of the Imperial Federation, who afforded me the greatest facilities, and to Dr. Grabein, the general secre- tary of. the Imperial Federation; to Herr Dietrich, general director, and to Herr Buchrucker, general secretary of the Raiffeisen Federation. Dr. H. Criger also kindly discussed matters with me. I wish also tc express my gratitude for the kindness I received from every union visited, but especially to Herr Johannsen, Herr Bussen, and Herr Ocker, of the Hanover Union; to Dr. Rabe and Dr. Pietsch, of the Halle Union; to Herr von Brockhausen, Dr. Hoffmann, and Herr Sparr, of the Pomeranian Union; to Herr von Kries and Herr Krause at Dantzig; to Herr Bach at Dresden; to Dr. Biernatzki, of Kiel; to Herr Quabeck at Munster; to Herr Rexerodt and Herr Mahnke at Cassel; to Herr Bunz and Dr. Riehm at Karlsruhe; to Herr Baier at Stuttgart; to Graf von Andlau and Herr Petri at Strassburg; to Dr. Nolden and Herr Kaulen at Ludwigshafen; to Herr Katholy at Landau; and to Baron von AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. ; 9 Sodon, Baron von Cetto, Herr Hohenegg, and Herr Stern at Munich. To the Imperial Federation, the Raiffeisen Federation, and the Schulze-Delitzsch Federation, as well as to the Bavarian National Union, the Hanover Union, the Pomeranian Union, and the Halle Union I am indebted for permission to publish various documents framed and issued by them. I wish to thank Mr. H. W. Wolff, to. whose writings and efforts agricultural cooperation in this country is so deeply indebted, for giving me several useful letters of introduction; and also Mr. Nugent Harris, of the Agricultural Organization Society. I,desire in an especial manner to thank Mr. A. A. Wotzel for reading a great portion of the proof sheets. In conclusion, I would express the hope that the present volume may prove to be a source from which those interested in schemes for building up the economic and social structure of rural life in this country may, without too much trouble, be able to obtain an abundant supply of serviceable material. I have the honor to be, sir, your obedient servant, ; J. R. Canwiy. GENERAL REPORT. AGRICULTURAL CREDIT. 1. Morteace (LOnG-TERM) CREDIT. In the number and variety of the agencies through which they can obtain long-term mortgage credit on relatively easy conditions, landowners in Germany, both large and small, enjoy signal ad- vantages as compared with the corresponding classes in this country. Setting aside for the moment the joint-stock mortgage banks, the whole of these agencies are in the nature of governmental, non- profit-seeking institutions—using the word “governmental” in a sense that would comprise the State, provincial, district, municipal (or communal) authority as well as those corporations of landowners which rank as public bodies. The various agencies may be divided into three main classes according to the purposes for which their loans are granted. In the first class there are four groups of institutions, namely, the land-mortgage credit associations (landschaften), the State, provincial, and district mort- gage-credit banks, the joint-stock mortgage banks, and the savings banks, all of which grant mortgage credit without requiring, in ordinary circumstances, any declaration as to the purpose of theloan. The second group comprises the land improvement funds, the land improvement annuity banks, the pro- vincial aid banks, and the imperial insurance institutions, all of which grant loans, mainly for specific land eriproveniat or building undertakings. The third group is that of the rent-charge banks, which are concerned with loan’ in connection with the creation and equipment of small holdings. By far the most important class is the first: At the present time the total value of the outstanding loans granted on landed properties by the institutions comprised in it approaches £400,000,000. The land mortgage credit associations and the savings banks are represented in this total by about £170,000,000 each. With the exception of the savings banks and of the relatively unimportant Prussian land improvement funds, all these mortgage credit organizations obtain funds mainly (when not exclusively) by the issue of land mortgage bonds. Thus the German landowner, by virtue of his institutional mortgage credit, is enabled to mobilize, as it were, a high proportion of the value of his landed property by the ‘creation of bonds that flow into the general system of securities, so that instead of only being able, like the English landowner, to provide an individual mortgage security of very limited currency, he possesses facilities for converting a mortgage charge into a security realizable at any time in the general market. The land mortgage credit associations, 23 in number, of which 6 were founded in the period 1770-1790, and the remainder between 1825 and 1896, are associations of borrowers for the purpose of procuring loans by the issue of bonds secured by the collective mortgage charges registered against their landed properties. These bonds are not secured by specific mortgage charges, but by the body of mortgage charges of each particular association, supplemented by its reserves and the accumulated sinking-fund payments of mortgagors. They are nonprofit-seeking organizations, and, except in two cases, they possess no share capital. The Prussian associations limit their operations to a single Province, extending them occasionally over portions of an adjoining Province or State; the areas of the non-Prussian associations coincide with those of their respective States. These associations rank as public corporations (in Prussia their officials have a status similar to those employed by provincial authorities); they are subject to State supervision through a royal commissioner, and their articles of association and regulations require the sanction of the Crown or the minister of agriculture. They possess certain special privileges, such as the authority to distrain without having recourse to the ordinary civil procedure. They are administered by a central board, which includes at least one permanent salaried official who has passed the State examination qualifying for the office of judge. Thisboard is subject to the control of a committee or council of administration, and of a general assembly, both elective bodies. Directors are also elected for the chief divisions of the areas of the associations, and a further decentralization is secured by the district committees. A landowner becomes a member of an association when such an association acquires a mortgage on his land; membership ceases with the cancellation of the mortgage. Landowners living within the . ll > 12 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. area covered by an association, and fulfilling the conditions imposed by its articles of association, may not be refused loans; and they may claim them up to the amount for which their estates after valuation furnish the security required by the particular regulations. The earliest associations admitted to membership only large owners holding under specific tenures, but, especially within the last generation, and particularly as a result of the great Agrarian Conference of 1894, and the subsequent action of the Prussian Government, which urged the individual associations to devote more attention to the needs of the smaller proprietors, small landowners have been brought within the range of eligibility. That quite small owners may now obtain loans is evidenced by the fact that one association, lending up to half the value of estates on first mortgage, fixes the minimum loan at £15, some others fixing it at £25; at the end of 1911 one association had loans outstanding upon 284 properties of under 1214 acres; another granted (in 1911) 34 loans upon properties of less than 214 acres, and 1,480 loans on properties of over 214 acres, but not exceeding 25 acres. The maximum limit to the amount to be loaned upon estates is fixed by most Prussian associations at three-fifths or two-thirds of their value as a first- mortgage charge; in the non-Prussian associations one-half is the usual limit. ‘The loans are, as a rule, made not in cash, but in bonds, which the borrower either realizes independ- ently or takes to the loan bank of his association (if such a bank has been established), the latter selling them on his behalf or making him an advance on their security. Intending borrowers may choose the rate of interest to be paid, the rates most usually open to their choice being 3, 34, 4, and 44 per cent; at the present time bonds in circulation carry predominantly 34 and 4 per cent. Bonds of various denominations are issued; there are bonds of £3 15s., £5, £7 10s., £10, £15, £20, £25, and up to £150, some associations issuing those of £250, and the central association those up to £500. These bonds, which are not redeemable by. holders, have consistently maintained a strong position in the market; thus at the time of the Napoleonic wars, when Prussian 4 per cent stock sank to 20, Silesian land bonds never fell below 50. The loans granted by these associations are not subject to recall; the rate of interest is as moderate as possible, being closely related to the prevailing market rates for money, and can not be raised; and while annual payments are required until at least a certain percentage of the capital debt has been accumulated in a sinking fund, repayment may be made by additional installments at the mort- gagors’ convenience. Costs arising in connection with valuation and other preliminary expenses are kept as low as possible; and are often waived by the well-established associations; the necessary con- tributions toward the cost of administration of the associations are, moreover, ‘relatively inconsid- erable, as the officeholders, apart from the syndics, usually give their services gratuitously. Proper consideration of loan applications is secured by the fact that these organizations are thoroughly con- versant with agricultural conditions, and are in a position to appraise the value of estates and the business capacity of owners through their local representatives, who are themselves agriculturists and members. Through these local representatives, who as members are directly interested in the good management of their association, the associations are also enabled to secure continuous supervision of the mortgaged security without incurring expense. Of the 16 mortgage credit banks, which have been established for the whole of a State, Province, of district within a Province, and whose liabilities are guaranteed by the public authority of such areas, only one, namely, that at Hanover, restricts its mortgage loans to those on rural'property. The original purpose of many of these institutions was to assist medium and small landowners, by loans on reducible mortgages, to redeem burdens or servitudes which still attached to the possession of their holdings at the time when the emancipatory legislation declared such charges to be commutable. They have lost this special character, and have all developed into institutions for mortgage and com- munal credit. The total of their outstanding loans amounts to about £100,000,000, of which half has been lent on mortgage security. Funds are mainly obtained by the issue of bonds, which are recognized as trustee securities, but working capital is also provided by deposits, payments by bor- rowers into sinking-fund accounts, accumulated funds, and grants or loans from the State or other authority concerned. The bonds of these banks are, in most cases, redeemable by the banks them- selves (but not by the holders) by drawings, but as a rule a certain period must elapse after the issue of bonds before a bank may include them in a drawing. Most banks pay their loans in cash, not in bonds, as in the case of the Landschaften. These banks have served in an especial manner the needs of medium and small landowners, and afforded them facilities for obtaining loans at moderate rates of interest, not subject to recall, and repayable in small, fixed annual installments (with power to make additional repayments on giving notice of from these to six months). Sums as low as £15 are lent by at least six of these banks, and AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 13 one bank grants loans as small as £2 10s. The rates of interest usually range at the present time from 34 to 4 per cent, and there is in addition an annual charge for cost of administration (usually one-fourth to one-half per cent). Sinking-fund payments are compulsory in most cases, and the minimum amounts are variously fixed at one-half, three-fourths, or 1 per cent. Repayment may be made by the presentation to a bank of its bonds bearing the same rate of interest and the same nominal value as bonds issued to the mortgagor in respect of a loan. These mortgage credit banks are usually exempted from. stamp duties and court fees. They have also the advantage of the cooperation of the local revenue authorities or other public officials (e. g., officials of public savings banks). Some banks appoint private persons resident in different parts of their areas as their agents, in order to be in a position to obtain further information with respect to borrowers. They are thus enabled not only.to secure the necessary local information and supervision, but can also bring credit facilities within the convenient reach of farmers throughout their areas. It is worthy of notice that these banks do not hesitate to endeavor to attract clients, whether borrowers or depositors, by advertisements in daily and other papers. There are in Germany 37 joint-stock mortgage banks (excluding the Hessian State Joint-Stock Mortgage Bank), which are commercial undertakings, constituted in accordance with the imperial mort- gage bank act of 1899, for the purpose of lending money on mortgage security. Instead of being associations of borrowers, like the Landschaften, they are associations of lenders, which were largely modeled upon the Crédit Foncier of France. The last named was founded in 1852. Of the 37 German banks, one was established in 1858, 27 in the period 1862-1873, and 8 in the period 1894-1896. But, unlike the Crédit Foneier, which possesses a monopoly for the whole of France, the German mortgage banks represent a decentralized system, in which,any of the banks is free to extend its business over the Empire. Their business has greatly developed; thus, in 1880 the total of their outstanding loans covered by mortgages on urban and rural property amounted to £77,385,000, in 1900 to £337,882,000, and in 1911 to £554,870,000. They fall into two classes—‘‘pure’”’ and ‘‘mixed’”’ mortgage banks. The former, 29 in number, restrict their business to the following: Loans on mortgage and issue of mortgage bonds; the acquisi- tion and sale of and lending on mortgage security; the grant of loans to public bodies and to light railway undertakings; the purchase on commission of stocks and shares; the collection of bills and_ checks; safe-deposit business; and the acceptance of deposits at interest. The ‘“‘mixed” banks engage in ordinary business, but speculative business is prohibited. All joint-stock mortgage banks require the special authorization of the State, and are subject to State supervision in every branch of their business, each bank being assigned a commissioner who, before any bond is issued, has to certify that it is duly covered, and who, jointly with the bank, has the custody of all its honks: documents, and cash in hand. Only about 6 per cent (£34,000,000) of the total mortgage loans outstanding at the end of 1911 were secured by mortgages on rural estates, and in 1909, 91 per cent of the total loans outstanding on rural mortgages had been granted by one Prussian and seven Bavarian banks. The act requires’ that, in so far as bonds are issued upon the security of rural mortgages, half of the total amount of this class of loans, which are advanced by any bank, must be made subject to annual sinking-fund payments of at least one-fourth per cent. The majority of banks require such payments in respect of all their rural loans, and fix the minimum at one-half per cent. Rural mortgagors must be accorded ‘the right to repay loans in whole or part before the stipulated period under the smking-fund scheme, and may only waive such right for a period not exceeding 10 years from the date of loan. Moreover, although the annual payments on account of interest remain unchanged, regardless of the progressive .diminution of the capital debt by payments to sinking fund, yet the interest falling upon the amounts ' credited to sinking funds is annually applicable to that fund. No agreement permitting a bank to call in a loan is valid. Minimum loans are fixed by some banks—the bank showing at present the largest total of rural loans fixes it-at £50, and the maximum loans may not exceed three-fifths of the ascer- tained value on first mortgage, or, with the concurrence of the State concerned, two-thirds of such value. Loans must be paid in cash as a rule; payment in bonds is only permissible if the articles of the bank expressly permit it, and the borrower gives his assent. In the latter event specific authoriza- tion must be entered in the contract for the borrower to repay in cash or in bonds of the bank, at his discretion. Bonds of various denominations are issued; the minimum nominal value appears to be £5 and the maximum £250. In 1909, 58.48 per cent of the value of the bonds bore 4 per cent and 39.65 per cent 34 per cent; since that date bonds have been issued mainly at 4 per cent. Except in the case of six Bavarian mortgage banks, these bonds are not recognized as trustee investments, but 14 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. almost without exception they are accepted as first-class security by the Imperial Bank. Mortgage bonds may not be issued to an unlimited extent; pure mortgage banks may issue only up to 15 times the amount of their paid-up capital and reserves, unless previous to 1900 a bank held the right to issue in excess of that multiple when a maximum multiple of 20 is fixed. Mixed mortgage banks are limited to a lower multiple. Adequate publicity is secured by statutory provision, every mortgage bank being obliged to publish, not later than in February and August of every calendar year in the Official Gazette and in the newspapers selected for its regular advertisements detailed statements showing its position. German savings banks are mortgage credit institutions of very great importance for farmers. In 1910 their total investments in rural mortgages may be estimated at £170,000,000. At that date Prussian savings banks alone, out of the total of their invested funds, which amounted to £579,000,000, had £115,000,000 outstanding on the security of rural property. They are preeminently, especially in western Gernamy, the sources of mortgage credit for small and medium farmers, whom they accom- modated also at a time when no other mortgage institutions were open to them, and they now provide, in effect, nearly every district with a public mortgage credit institution. There are no post-office savings banks in Germany. The great majority of public savings banks are institutions established, managed, or supervised and guaranteed by the communal, district, or urban authorities, apart from whom they do not exist as legal entities. At the end of 1910 there were 2,844 public savings banks in Germany (excluding Brunswick) with 7,404 branches or agencies, and 228 other savings banks with 294 branches. The total deposits of all these banks reached the sub- stantial sum of £840,000,000; in 1890 and 1900 the corresponding figures were £257,000,000 and £442,000,000. It may be noted in passing that the deposits of English savings banks, post office and other, did not amount in 1909 to 30 per cent of the German total. While German public savings banks do not usually accept deposits of less than 1 shilling, the maximum deposits receivable in re- spect of any one account often reach a very high figure. Jn Prussia in 1909 there were 395 out of 1,506 public savings banks which fixed no limit, and for 291 banks the limit ranged from £500 to £2,500. As a result, these banks tend to be used as deposit banks by the well-to-do classes. Their attractiveness consists not only in the security afforded, but in the relatively high rate of interest paid. Being institutions independent of a central authority they are not obliged to accord a rate of interest fixed for all savings banks, but can fix and vary their rates according to the local circum- stances. Thus, some find it necessary and profitable to pay 32 or 4 per cent, while others obtain ample deposits at 3 and 3} per cent. The magnitude of German savings bank deposits is also to be explained on other grounds. Although private banks, both large and small, are very numerous in Germany, great joint-stock deposit banks have not as yet attained the same development as in the United Kingdom where, at the end of 1910, the number of branch banks amounted to 7,151, whereas the total of branches, agencies, and deposit offices of large banks in Germany in 1911 amounted to about 1,200. Investment by small capitalists in the shares of joint-stock and limited liability com- panies being less easy owing to the fact that shares of the former may not be less than £50 or of the latter £25, their money is deflected to savings banks. Private insurance, so common as a form of investment of savings in England, does not appear to’have developed to the same extent in Germany. The spread of communal and district banks, which serve more particularly the rural population, has been promoted by the central authorities, especially those responsible for agricultural matters, who have also constantly urged these banks to adapt their conditions of loan to suit the farming class. The special advantage of these banks is that they provide farmers with a public mortgage credit insti- tution in their immediate vicinity and facilitate personal relations between borrower and lender. As a consequence of its local knowledge a savings bank may generally dispense with a special valua- tion and its attendant costs, which, for a central credit institution, might be out of proportion to the amount of loan. The cost of supervision is also saved. For the small farmer the procedure proves far simpler than when bonds have to be obtained and marketed and other formalities satisfied, as in the case of the Landschaften. Their disadvantages consist in a higher rate of interest, liability to uw rise in the rate or to the recall of the loan, and the limited facilities for reducible mortgages. As to the rate of interest: In 1909 the predominant rate of interest payable on the bonds of the Land- schaften was 34 per cent, on those of the State and provincial mortgage credit banks 34 and 4 per vent, and on those of the joint-stock mortgage banks 4 and 34, whereas in the same year 35.5 per cent of the mortgage loans made by the savings banks were at 4 per cent, and 55.09 per cent at over 4 but not exceeding 5 per cent. Loans are liable to be recalled owing to the circumstance that savings banks must be in a position to realize their assets if necessary at short notice; and they reserve the AGRICULTURAL ‘CREDIT AND COOPERATION IN GERMANY. 15 right to raise the rate of interest in order not to be losers in the event of an increase in the rates paid for deposits rendering unremunerative a former rate fixed at a time when the deposit rate’was lower. With respect to reducible mortgages there occurs the same difficulty of lending money for a longer period than that for which the lender has received it; but in recent years there has been a consider- able increase in the volume of rural mortgage loans granted subject to sinking-fund payments. In 1909 nearly 25 per cent of the outstanding rural mortgage loans granted by Prussian savings banks were granted on these conditions. Most savings banks restrict their mortgage investments to property situate in their own or neigh- boring districts or lend less upon a property not within such limits, and a Prussian ministerial order enjoined that the lending of money on mortgage security outside the area of the bank should only be admissible when a fixed period of redemption is stipulated and when such mortgages do not exceed the fourth part of its total mortgage investments. Under present circumstances the greater part of the money collected within the particular areas is thus devoted to investment within the same areas. Savings banks usually fix the limit of mortgage loans at from one-half up to two-thirds of the ascertained value of the property. Many banks, however; with a view to encouraging the crea- tion of small holdings and allotments, are prepared to lend up to three-fourths or even five-sixths of the value of newly purchased holdings situated within their district, provided that at least one-half per cent of the capital is to be repaid annually; in special circumstances this sinking-fund payment may be waived for a period of two years. In’ most Prussian Provinces there are land-improvement funds or land-improvement annuity banks, which form in fact branches of the provincial administration. They were founded as a result of the demand by agricultural organizations for the provision of credit for land improvement which should: be adequate in amount, not subject to recall, amortizable, and bearing moderate interest. In Saxony, Bavaria, Hesse, and Oldenburg land-improvement annuity banks also exist. But these institutions have not developed any great volume of business, nor have loans been usually made to individuals, except in Prussia, where, down to the end of 1908, £250,000 out of £565,000 lent had been granted to large landowners holding under family or other special settlements, and an additional £20,000 to other landowners within the same period. In Bavaria and Saxony, where these banks show greater activity, the great bulk of the loans have gone to communal authorities for water supply and for local schemes of drainage~-and road construction. The Bavarian Legislature has recently (1908) extended the scope of the Bavarian Bank to the loan of money for promoting the production ‘and supply of electric light and power, especially in country districts, as well as the erection of dwellings for rural and other workpeople and the settlement on the land of agricultural laborers; and at the same time the limit of value of bonds (for which the State is guarantor) in circulation was raised from £1,500,000 to £2,500,000. The Prussian provincial aid banks grant credit mainly to bodies of a public or semipublic char- acter—to communes, unions of communes (Kreise), school and ecclesiastical organizations, and coop- erative societies, especially those for land improvement. In two or three provinces, however, loans on mortgage security are made rather extensively to individual owners. Like the Prussian land- improvement banks, they are conducted as a department of the provincial government. Under a Prussian act of 1850 seven rent-charge banks were created, each to serve one or more provinces, and authorized to issue bonds to landowners in settlement of charges and servitudes due to them (but declared by an act of the same year to be commutable), and to collect from landholders thus relieved annuities composed of interest and sinking-fund payments. The special duties thus assigned to them appear to have lapsed with the redemption of the liabilities involved, and the banks were suspended in 1881. Ten years later they were reestablished for the special purposes of the new policy of settling small and medium holders on the land. Their present functions are: (1) To issue bonds on certain conditions to vendors upon the sale of their property for conversion into small holdings up to three-fourths of the selling price and to collect the annuities due thereon; (2) to make advances in connection with the creation of small holdings (for paying off charges, erecting dwellings and farm buildings, etc.); and (3) under certain conditions to settle by cash payments with coheirs to properties coming under the small-holdings acts. These banks are, in effect, the financial departments of the State organizations, known as the general commissions, in connection with the creation of small holdings. The small-holdings acts, by virtue of which State credit (that is, through these banks) is granted, allow any person or body to undertake the division and settlement of a property, but require, before State credit is granted, that plans for division, equipment, settlement, etc., must be approved by the general commission having 16 “ AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. jurisdiction. It should be observed, however, that these banks, which from 1891 to 1909 had issued bonds of the total value of £5,600,000 in respect of small holdings, do not represent the entire extent of State action in Prussia as regards land division and settlement. In the Provinces of west Prussia and Posen, where these banks do not operate, the settlement commission—a State organization with some 600 officials which was created in 1886 and has been amply endowed with funds—stated at £30,000,000 down to 1911—purchases, divides, and distributes estates, and undertakes all the neces- sary financial transactions connected therewith. . Finally, under the imperial invalidity insurance act there exist 31 insurance institutions, each with an independent legal status and operating within a particular State, groups of States, Province, or district. These institutions receive the contributions of and pay the benefits to all persons insured under the act against invalidity and old age. The act authorizes a certain proportion of the funds to be invested for purposes of general social welfare within the districts of the various institutions; in 1909 £14,025,000 was invested in loans for the housing of the working classes and £5,143,600 in loans for agricultural purposes. Under the latter heading are included loans for light railways in rural districts, for land improvement, and ‘for the improvement and construction of roads. Loans are usually made to or through nonprofit-seeking cooperative societies, employers, or to communes; seldom to individuals. Mortgage security is generally required, loans are subject to recall at three or six months’ notice, and sinking-fund payments are obligatory, while facilities for additional repay- ments of debt appeared to be allowed. The predominant ratestof interest now charged range from 3 to 3} per cent. Insurance companies have invested nearly three-quarters of their funds in mortgages, but only an insignificant proportion in rural mortgages; in 1907 only 790 loans of the total value of £2,435,000 were outstanding on rural mortgages, as against £162,710,000 on urban mortgages. Even this small total of transactions is decreasing. Such companies are legally permitted to make loans up to three- fifths or two-thirds of the valuation, but special rules prescribe that they must not, as a rule, lend over £10,000, and in the case of loans of over £5,000 special valuations must be made. From the foregoing summary of the organization of German mortgage credit it will be seen that German landowners, both large and small, are amply provided with credit agencies which, mainly of a public character and nonprofit seeking, grant loans up to one-half or two-thirds of the valuation on first mortgage at moderate and unchangeable rates of interest, not subject to recall, and repayable by small annual installments to sinking funds, with facilities to make additional repayments on giv- . ing short notice. The joint-stock mortgage banks form an exception in respect of profit seeking, but the mortgage-bank act secures certain important advantages for landowners; and the savings banks, although in theory they are debarred from granting loans not subject to recall, do in fact lend a con- siderable amount against reducible mortgages (which are not subject to recall), and, as regards the balance, are seldom forced to exercise their right of recall. Although not aiming at profits, these organizations are able to realize surpluses, the State and other provincial or district institutions, as well as the savings banks, contributing considerable sums annually to their guaranteeing authority for public purposes, while the Landschaften, especially as a result of ancillary business (e. g., their loan banks), are able to apply substantial sums to the relief of the indebtedness of their members. The organization of German mortgage credit presents the further important feature of decentral- ization. The savings banks provide nearly every district with a public mortgage credit institution, and the special organization ‘or organizations for mortgage credit in each Prussian Province or in each State bring their services within the convenient reach of farmers throughout their areas by their system of local representatives. Except in the case of the savings banks, capital is mainly obtained by the issue and sale of land mortgage bonds, for whose interest and capital the particular institution undertakes the responsi- bility. The Landschaften alone appear to leave to the borrower the realization of these bonds, facili- tating this, however, through their loan banks; the other institutions pay the borrower in cash at a rate slightly below the current market rate, realizing the bonds on their own account at the.same time or at some suitable future date. The borrower has usually to pay from one-fourth to one-half per cent as commission for this service. Loans by the issue of bonds are advantageous as not being subject to recall or to an increase in the rate of interest on the part of the lender, and as allowing the borrower to repay his debt by the purchase and_presentation of bonds of the same class and issued by the same institution when such bonds are low in price. Their principal disadvantage consists in the possible depreciation in value at the time of loan, although the borrower is liable to pay interest on and to redeem the loan at the amount of the nominal value of the bonds (or must purchase and present such bonds when higher prices prevail). * AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 17 The organization of institutional mortgage credit in Germany has been immensely facilitated by the complete system of registration of title in that country. The uniform system, based on the Prussian model and introduced for the Empire in 1900, provides for obligatory registration of title, prior- ity of each registered charge in the order of its registration, and freedom of inspection of the registers. These registers, drawn up for small areas and maintained by them, describe each estate and recite all personal charges (e. g., usufructuary rights) and other charges; and, in general, no claims against such estates not duly registered are valid in a court of law. It may be added that the total costs in connection with the registration or cancellation of morgtages are moderate. The registration of a mortgage charge for £500 in Prussia costs £2, and its cancellation half that amount, including in each case the notarial and court fees. Compulsory registration of title as it exists in Germany, Austria- Hungary, and Russia, or at least compulsory registration of deeds (as in France, Belgium, Holland, North America, and elsewhere), appears an indispensable prerequisite for the foundation of a system under which landowners may obtain mortgage credit on suitable terms by the creation of land bonds which would take their place as first-class securities in the open market. In Ireland registration of deeds has been in force since the eighteenth century, and by reason of the transactions under the land acts, registration of title has taken place with regard to a great portion of the country; in Scotland there is registration of deeds; but in England the system of registration of deeds appears to be in operation only for Middlesex and Yorkshire, and of registration of title only for London. PrrsonaL (SHorT-TERM) CREDIT. Under this heading is considered credit based mainly on the security of the general standing of the borrower, or of the borrower and his surety, as well as on an implicit estimate of his or their assets in the event of ultimate default, as distinct from credit based on the definitely assigned security of real property. The former credit tends to have the further distinction of being sought and granted for relatively short terms. For the provision of this form of credit in adequate amount and on suitable conditions as to interest and repayment farmers, especially medium and small farmers, require a different credit organization from that which has been evolved for merchants and manufacturers; and for certain rather obvious reasons. The outstanding feature of the agricultural industry is the length of period of production. Within limits the manufacturer can hasten at will the process of production, and repeat his products, or the trader can restock his store several times within the year; for the farmer the time of beginning and the time of finishing production are fixed by nature. Although the duration of the period of production may be shortened to some extent, artificial hastening processes are not applicable in most cases, and lack the effectiveness of the machine in industry. In certain important branches of agriculture the period of production may extend over several years: Thus a foal requires three or four years, and a calf two or three years before becoming utilizable or marketable. And the returns of agricultural production are more uncertain than those of commerce and industry owing to accidents of harvest, risk of disease, perishability of produce, and other causes. Another peculiarity—making due allowance for depressions and for numerous seasonal trades outside agriculture—is the irregularity of monetary returns trom year to year or their tendency to fall in certain months er periods in each year. Unless his farming is mixed the farmer obtains his main receipts in autumn when he sells his crops. Under these circumstances a banking system which aims at a rapid turnover of funds and grants credits of three and four months, with one or two renewals for like periods, is of very little advantage. Urban bankers, being naturally more conversant with commercial or industrial undertakings, are less capable of judging the standing of a farmer and his business capacity. Credit implies con- fidence and facility of supervision; but the banker is unacquainted with farming, and farms are com- paratively isolated units, usually more or less remote from the banking office. Ordinary commercial tests are not often applicable, especially where smaller farmers, whose bookkeeping is apt to be very incomplete and unmethodical, are concerned. The same difficulty presents itself as to any proposed sureties, who are also likely to be farmers. Other banking security is often out of the question; and the procuring and bringing of sureties to the bank involves great possible loss of time and expense. The world in which the banker or bank manager moves is not that of the farmer, so that personal knowledge is infrequent. The whole situation is rendered even more unfavorable by the supplanting of small country bankers by branches of great banks, which are directed on fixed lines from headquarters, and whose managers are frequently changed. Commercial banks can not, ‘moreover, be brought nearer than small towns; even a branch office (as distinct from a mere depositing office) entails 95273°—S. Doc. 17, 63-1——2 18 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. minimum expenditure for salaries and office of from £300 to £400 per annum. The smaller farmers offer also little attraction to the ordinary commercial banks as borrowers, and, apart from other dis- advantages, pay for the small loans they require an unduly high percentage as interest and com- mission. As a result farmers can not obtain from banks organized mainly to serve industry and commerce credit in suitable amount, at reasonable interest, and on the security which they can usually provide. : Yet while commercial banks have become less satisfactory from the standpoint of the farmer, his need for working capital has greatly increased. More scientific and intensive farming, made necessary by competition which has been facilitated by improved and cheapened transport, refrigeratory proc- esses, and other causes, requires more capital expenditure on labor, fertilizers, feeding stuffs, and machinery; payment in kind is being gradually entirely superseded by payment in currency, while money wages are higher; and other expenditure, including cash payments to the State and other public authorities has increased. : German farmers have advanced very far toward the solution of the problem of obtaining adequate credit at moderate rates of interest and on convenient terms of repayment by means of the 17,000 local cooperative banks established and conducted by themselves, such banks being further organized in central cooperative banks. The membership of 14,993 local banks existing on January 1, 1910, totaled 1,447,766 persons, a figure which represented one-sixth of the agriculturally occupied popula- tion of Germany in 1907. The total turnover in 1910 of 14,729 societies amounted to £261,665,000, and at the end of that year the loans outstanding for fixed periods, together with overdrafts, to £93,034,000, while at the same date the savings deposits totaled £92,429,000, and the deposits on current account £10,865,000. At the end of 1911 there were affiliated to 37 central banks (omitting the Prussian State Cooperative Bank) 17,668 societies of all kinds, of which 14,508 were credit societies; and the total turnover of these central banks in that year amounted to £410,391,000. Different German cooperators employed the same phrase in giving to the writer the reason for the growth of rural credit societies: ‘‘They are the children of necessity (die kinder der not).”” Individual small farmers must, in fact, rope themselves together with more or less stable bonds in order to be able to present to lenders and depositors a security which the latter can accept as a guarantee that their money will be repaid in the ordinary way and without the exercise of legal pressure. And such local associations can lend money to persons not providing ‘‘ banking security,” as they know their trust- worthiness and can judge their business capacity, while supervision is automatically brought into play within their restricted areas of operation. In ordinary commercial banking facilities it is probable that German farmers of the present day are better off than British farmers. As in England the great German joint-stock banks tend to become greater and their branches or agencies more numerous, but banks working only in one locality, one district, or one province are far more numerous in Germany. There are over 200 small joint-stock banks, besides the urban cooperative banks, about 1,200 in num- ber, and private bankers are estimated by leading writers on German banking to number from 4,000 to 6,000. In nearly every country town in Germany may still be found one or more substantial bank- ing firms; and from these, if only by reason of proximity, freedom of action of managers, relatively good knowledge of agricultural matters and persons (as being often established in country district centers) and of competition among themselves, it might have been expected that farmers could have obtained credit on suitable terms. Despite this multitude of Raiffeisen banks, their large membership and business, Prof. Riesser, the most eminent authority on German commercial and industrial banking, writing in 1912, observed that much still remained to be done and must be done in this direction, as “agriculture requires a credit system adapted to the special nature of the conditions of its production.” And a distinguished Prussian minister of finance, in the course of a parliamentary debate on the budget of the Prussian State Central Cooperative Bank, for whose foundation he was directly 1esponsible, declared: ‘This must be our goal—to have a cooperative loan bank in practically every parish of the whole monarchy.” Raiffeisen (1818-1888), with whose name rural cooperative banks have become associated, began his cooperative career in the winter of 1847-48 with the foundation in a small village of a benevolent society for obtaining corn and potatoes and selling them at low prices to the poorer inhabitants; this society was one of many of the same type founded in Germany about this time, when very serious dis- tress prevailed. Two years later he founded, in another village, a society which at first bought cattle and sold them to poorer landholders, but which later lent money on surety directly to the latter for this purpose. Upon his transference as burgomaster to Heddesdorf, near Neuwied on the Rhine, he founded AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 19 a third benevolent society with various objects, but especially for the procuring of cattle for and the granting of credit to poorer farmers. This society, which gradually became merely a loan society, was composed of well-to-do inhabitants living in or near the village of Heddesdorf, who lent to less for- tunate inhabitants of the area, obtaining capital on the security of their collective unlimited liability. The assisted persons had nothing to do with the society, whose members acted as guaranteeing inter- mediaries between the capitalist and themselves. The first association founded by Raiffeisen, in which the fundamental cooperative idea of the collective liability of the borrowers themselves appears, was that of Anhausen (1862). There were already in existence cooperative societies with unlimited collective liability, which had been created by Schulze, of Delitzsch, a small town in the Province of Saxony, for the purpose of procuring credit for their members, who were mainly artisans, small employers of labor, and small shopkeepers. But Raiffeisen had in view the needs of agriculturists. At the present time the majority of Raiffeisen banks in Germany may be said to present the follow- ing features: Limitation of area, so as to secure mutual personal knowledge on the part of members. . Low shares. Permanent indivisible reserve fund. Unlimited lability of the members. Loans only for productive or provident purposes. Loans only to members. ; Credit for relatively long periods with facilities for repayment by installments. The determination every year by the members of each society of the maximum credit that may be held by individual members at any time as well as of the maximum total of saving deposits receivable and of loans that may be taken up by the society. Absence of profit seeking, dividends if paid being usually limited, as a maximum, to the rate of interest paid by the borrowers for loans. Office holders, with the exception of the secretary, not paid for their services. Promotion of the moral as well as the material advancement of members, and in particular the purchase of agricultural requisites for sale to members and often the procuring of agricultural machines and implements for letting on hire to members. Compared with the ordinary urban credit societies of the Schulze-Delitzsch type, which were originally organized for the special purpose of furnishing credit to small traders, employers, and arti- sans in towns, many important differences appear. The areas of the banks of the latter kind are not narrowly limited; shares are high, being rarely less than £15, and sometimes reaching £75 and £100; there is no indivisible reserve; loans are usually made only for terms of three months, when they are subject to renewal, and are repayable in a lump sum; dividends, sometimes very high dividends, are paid; regular banking offices are maintained with at least two permanent paid officials, who form the committee of management, while the members of the board of supervision receive remuneration; the banks confine themselves to pure banking business; and their offices are usually in towns. At the beginning of 1912, out of a total membership of 641,429 members in 1,002 credit societies, 26.61 per cent were returned as ‘‘independent farmers, gardeners, foresters, and fishermen.”’ In certain districts farmers are attached in large numbers to these societies, which had spread, notably in the smaller towns of the eastern Provinces of Prussia, before the Raiffeisen movement was introduced in those parts. Thus for 85 Schulze-Delitzsch societies in east and west Prussia, having at that date a total membership of 60,391, 29,278 were returned as belonging to the four classes just mentioned; for 34 in Posen 11,136 out of a total of 22,233; and for 80 in Silesia 18,451 out of a total of 59,039. In many cases where a noteworthy percentage of such members is returned, they are to a great extent large farmers, the particular society meets the special needs of landowners by making loans for longer terms than the majority of Schulze-Delitzsch banks do, allows easy terms of repayment,’ and in other ways adopts the usual principles of the Raiffeisen societies. There is also a certain number who become members, not with a view to borrowing, but merely for the sake of investment of savings, either as shares or as deposits, at a high rate of interest—shares are frequently as high as £75, and dividends at 6 or 7 per cent not uncommon—this is probably especially true of a large proportion of the women members returned as belonging to this group and who numbered 13,203 out of a total of 170,673, or 7.7 per cent in 1911. As it is a principle of the Schulze-Delitzsch system that the area chosen should be of a kind to allow of the development of a regular banking business capable of supporting a salaried staff of at least 20 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. two persons and of yielding substantial dividends on shares, these societies are established in towns or must cover fairly wide areas. The feasibility of the minute supervision of their credits is thus dimin- ished and their usefulness to smaller farmers seriously impaired. Their large membership renders impossible personal relations between members. In 1911 the average membership was 623, and there were societies with 11,650 members, 8,987 members, and several with from 2,000 to 5,000. Their business attains sometimes immense proportions; some banks visited by the writer showed annual turnovers of £21,000,000, £10,700,000, £6,700,000, and £3,600,000. Their credit is dearer and for shorter periods than that granted by the Raiffeisen banks. They represent in a !arge measure com- mercial, profit-seeking undertakings, being rather companies of lenders having as their primary object the earning of dividends rather than the provision of cheap credit. Many have developed into ordi-. nary commercial banks, others have been absorbed or converted into branches of large joint-stock banks. The smaller societies tend, however, by reason of their being localized institutions with organs of administration composed of many persons representative of the various producing classes of mem- bers, to be in a better position than proprietary or joint-stock banks to judge the character and stand- ing of such persons, and thus aid small men unable to furnish ordinary banking security. The gen- eral unsuitability of this type of society for German farmers is shown by the circumstance that, while they have made no progress in country districts the Raiffeisen type continues to spread in these districts. The principal functions of Raiffeisen banks are: (1) To meet the needs of their members for supplementary personal credit or current working capital, (2) to promote thrift among the rural popu- lation by receiving their savings as well as the savings of nonmembers and paying interest thereon, and (3) to act in general as the village banker. They are not meant to supply members with their entire working capital, but to supplement it; and, speaking generally, they supply such credit mainly on personal security and for productive or provident purposes. Loans are also frequently granted for part or full payment for holdings in those parts of Germany where small holdings predominate; and a certain number of credit societies have carried out, with good results, the purchase -nd break- ing up of fairly large properties. German rural societies, nearly all of which bear the double title of savings and loan banks, derive the greatest part of their working capital, in fact, over 90 per cent, from the deposits of members and of nonmembers resident within their own areas. Among the advantages they offer to the rural popu- lation as savings banks are almost absolute security, attractive interest, and proximity. The security of depositors’ money is safeguarded in ordinary circumstances by the fact that the rural society con- fines its business to a small area and to simple, well-secured transactions; by the regular examina- tion of the state of its business by the board of supervision (whose members bear a special responsi- bility under the act); by the general knowledge of the affairs of the society being common to the bulk of the members; by regular outside audits; and if all these should fail, through the joint and several liability incurred by members. This liability is unlimited in the case of 92 per cent of the societies. The legal provision that the total amount of the savings deposits that may be accepted, and of the loans that may be contracted by a society, as well as the provision that the limits of the advances that may be made to individual members, must be annually fixed by the general meeting of members, prevent the extension of business beyond the collective solvency of the members comprising the society. The history of German rural credit societies has demonstrated the excellence of the security offered; it is affirmed that depositors have never suffered loss. And in the 16 years 1895 to 1910 only 19 rural credit societies were involved in bankruptcy proceedings, a striking record when it is considered that since 1901 there have been over 10,000 societies and since 1909 over 15,000 societies of this kind in Germany. Compared with other banking and credit undertakings—one German writer has com- puted the frequency of bankruptcy per 10,000 undertakings over the period 1895-1905 as being 55 times more frequent with them than with the credit societies. These societies pay from 3 to 4 per cent—at least 70 per cent appear to pay 3} per cent and over— on deposits; and they endeavor to obtain deposits not only from members, but from nonmembers of every age and class. Savings boxes are distributed, savings stamps and savings cards of various values are sold, and every suitable means taken to collect the uninvested money of the community. As a result of their success in this respect the savings of rural communities are utilized for the purpose of further wealth production-in the same area. Local societies are able to grant loans to their members at from 4 to 5 per cent; rates not exceed- ing 43 per cent predominate, except in the eastern Provinces of Prussia, where, the population being thinner and less prosperous, deposits are less abundant and higher interest has to be paid on them, AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 21 while the credit of the central banks has to be more frequently invoked. The central banks lend money to credit societies at rates which vary according to market conditions, but the normal rates of interest for advances within the ordinary credit, as allotted periodically to each society, range from 4} to 5 per cent. A small commission of one-tenth or one-twentieth per cent is also usually charged yearly or half-yearly on the amount of credit taken up. The local societies generally levy a single commission of one-tenth to one-half per cent (most usually one-tenth) on the majority of loans; on advances for property purchase or settlement with coheirs a higher commission is usual. The cheapness of this credit appears more striking when it is recollected that ordinary commercial credit in Germany is dearer than in England. Loans are secured for the most part on personal bonds backed by sureties, but mortgage security is not uncommon in certain districts. The committee usually asks the purpose of the loan, and usually enters this in the minutes of the transaction. Many of the more Rey angel societies do not ask the question, being only concerned with the standing of the borrower and of his sureties. Although rural societies are developing their loan business on current account, the majority of loans are still granted for definite periods; at the end of 1910 loans outstanding on current accounts granted by 82 per cent of all rural credit societies amounted in value to about 28 per cent of their total loans then outstanding. Current-account loans are especially prominent in the two Provinces of Saxony and Pomerania, where the majority of societies have adopted limited liability as well in the societies with unlimited liability in Silesia and Brandenburg. Care is exercised that loans on current account do not become, in fact, standing loans. Most societies insist that there shall be a real movement in these accounts by requiring a certain percentage at least of the overdrafts to be repaid into the account within each half year or year; otherwise they call in the whole amount at once, or reduce the credit, or raise the interest. As to the loans for definite periods, such periods are determined as far as possible in accordance with the desire and position of borrowers; they are granted usually for at least a year, when they are generally renewed on application; they may run for two, three, four, or five years, but those for longer periods are far from rare. Societies reserve the right to recall loans on notice of from one to three months. Easy terms of repayment are a marked feature of Raiffeisen societies. When arrang- ing for loans borrowers submit to the committee the length of time for which they require accom- modation and their proposed method of repayment, and they are usually allowed to repay in install- ments of equal amounts spread over a period of years. It is a not unusual plan to fix installments according to the number of years for which the loan is granted; thus where a loan is granted for two, four, or five years there is due each year from the borrower 50, 25, and 20 per cent of the loan, respec- tively. Borrowers are always allowed to make additional repayments on giving notice—usually one to three months’ notice is required—to the society of such intention. Repayments of loans appear to be maintained in satisfactory relationship to fresh loans. In 1909 and 1910 the societies in the Imperial Federation (to which over 80 per cent of all rural credit societies are affiliated) granted fresh loans of the value of £15,075,000 and £16,910,000, respectively, while the repayments on outstanding loans amounted, respectively, to £9,270,000 and £10,990,000. In the same years the amounts paid in by members on current accounts amounted to £29,878,000 and £33,518,000, while the amounts paid out to members on the same accounts amounted to £30,683,000 and £34,130,000, respectively. But it may be asked, What course is taken when deposits are insufficient (or even nonexistent, as upon the establishment of a society) or when they are overabundant? As a rule credit is obtained, or any excess of deposits over current needs lodged, at a central cooperative bank. From the begin- ning Raiffeisen recognized the necessity for combination among rural credit societies so as to provide them with a permanent center at which depositing and borrowing might be advantageously trans- acted by nonprofit-seeking organizations which at once understood and took account of the special financial structure of cooperative societies and of the conditions of their business. At the present time over 90 per cent of the rural credit societies are shareholders or members of cooperative central banks, of which there are nearly 50 (including as separate banks the 12 branches of the Raiffeisen Central Loan Bank) in Germany. These central banks are organized according to Provinces or States. The German Agricultural Central Loan Bank, founded by Raiffeisen in 1876, extends its operations over the whole of Ger- many, but it has decentralized its business by the creation of t2 branches, which limit their operations to fixed areas coextensive with a Province, part of a Province, or adjoining Provinces, a State, or congeries of small States, and which form in fact provincial banks. The other central banks in Prussia are attached to the Prussian State Central Cooperative Bank, which occupies in regard to them in . 22. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. some respects the same position as the Raiffeisen Bank occupies in regard to its branches. The scheme of organization for Prussian societies is, therefore: (1) Local societies, balancing as far as possible monetary supply and demand among their members; (2) provincial banks, adjusting simi- larly the needs of their constituent local societies; and (3) larger organizations at Berlin (namely, the State Bank and the Raiffeisen Central Loan Bank), balancing supply and demand among the central banks, obtaining necessary credit, and making necessary investments on the money market for them. Outside Prussia no State central cooperative bank has been established, but in all the larger States the central banks are in receipt of State advances or credit to assist them when the monetary demands of the local societies are in excess of the deposits of the latter and of other available capital. Commercial banks urge that the granting of loans for the long periods required by agriculturists would not be advisable, as their capital would be unduly tied up. Such banks naturally wish to realize profits by the frequent turnover of their capital; they often operate on small margins; and the bulk of their customers, who are traders and manufacturers, do not as a rule leave money for long periods on deposit with them. Rural cooperative societies are not profit-seeking speculative undertakings; and German rural societies have found that the capital on which they mainly depend, namely, savings deposits of members and nonmembers, tends to remain with them for long periods. Should a sudden call come which they are unable to meet out of their immediate resources, their solvency is practically assured through their central bank; in the last resort only would they be obliged to exercise the right, which they reserve, to call in loans. No English agricultural credit society established under the friendly societies act—the small num- ber existing have all been established under this act—may grant on loan to any member, to be held at any one time, a total exceeding £50. German registered credit societies are only restricted to the extent that every society must fix for each year by resolution of a general meeting of members the maximum of the total advances that individuals may hold at any one time. Some societies fix this maximum at a very high figure—occasionally up to £5,000 and more; a large number of societies do not allow the committee alone to grant the maximum thus authorized, but require the additional assent of the board of supervision, and often fix a lower figure for the committee alone. The advan- tage of this facility is that societies are enabled to adapt their credit business to the needs of their members and to the state of development of their own resources. The actual amount of credit ex- ‘tended to individuals is, of course, dependent on the standing, character, and other security fur- nished by each applicant; and the bulk of the loans granted by rural societies are for sums not exceed- ing £50. Taking as fairly representative of German rural credit societies the 4,000 societies now attached to the federation founded by Raiffeisen, it is found that in the years 1908, 1909, and 1910, about 45 per cent of their loans outstanding, which totaled 360,000 to 376,000 (1910), were for sums up to £15, a further 16 per cent for sums over £15 up to £25, and a further 17 per cent for sums over £25 up to £50. Ten per cent of the total were for sums of over £100. It is sometimes contended in England that, as farmers have a considerable reluctance to letting neighbors know that they require credit, they are not likely to borrow from a credit society. Prac- tically considered, such objection should carry little weight. If a small farmer borrows from a bank he must explain his position and bring usually two sureties. These sureties are generally his neighbors, and the occasion often the market day when other neighbors also travel to the particular town. And banking offices in small towns are wont to be established, not in remote streets, but hard by the market places. Further, a countryside is a small world where every farmer knows his fellow- farmer’s position or can deduce it from external evidence. In the ordinary German village bank the granting of a small loan does not imply meeting the whole committee; application is usually made to the secretary, and the transaction usually carried through without any further formalities. Absolute secresy is imposed upon the secretary and other officeholders, and, given the small area, such secresy is more easily enforced. In Germany it is rather the difficulty of the sureties which holds the chief place; many societies with limited liability now assign to members an open credit up to three-fourths of their liability without further security. And, as regards the whole matter of bor- rowing, it is one of the aims of a rural credit society to bring home to members that farmers, like other producers, require to have credit at their command, and that it is no blot on their business reputation to be borrowers. As regards the cooperative credit movement in England, the view: appears to be not uncom- monly held that the predominance of tenancy, instead of ownership, is a chief obstacle to its devel- opment; that the collective liability of a society composed of persons who are mostly tenant farmers can not offer adequate security to depositors or other suppliers of working capital, and that the security offered by the individual borrowing tenant to his society is necessarily weaker. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 23 The decisive importance of ownership in this connection may fairly be contested. To take the matter of the society: All members are liable to their society either up to a certain fixed amount under limited liability or up to the full extent of their assets under unlimited liability. In the ordi- nary course the committee and board of supervision of a society will draw up and periodically revise an estimate of the means of each member, based on the valuation of each member’s holding, on the rent paid, possibly on the income-tax assessment voluntarily furnished to them, on the stock held, or on other supplementary tests of well being; and in this way the maximum security offered by their members is ascertained. In Prussia it may be noticed this valuation, which is undertaken at regular periods (and duly rectified, if necessary, in the intervals), is submitted to the local surveyor of taxes, who is authorized to correct, if necessary, the sum total, but not the individual valuations placed opposite the name of each member. But this sum total would naturally not be taken as representing the ordinary security of the society for the purpose of credit; it suffices that a small percentage be taken. The Prussian State Cooperative Bank lends up to a maximum of 10 per cent of the assets of members as returned and checked by the local surveyors of taxes in the case of so- cieties of unlimited liability, while it grants societies with limited liability an ordinary maximum credit of 75 per cent of the collective liability of their members. The Raiffeisen Central Loan Bank grants to its societies (all with unlimited liability) in Prussia a normal credit of 10 per cent of their assets, and to those outside Prussia, where the returns are not usually checked by the surveyors of taxes, a normal credit of 5 per cent. The Saxon and Pomeranian Central Cooperative Banks fix the. maximum credit at 75 per cent of the collective liability of each of the affiliated societies; the latter have adopted a liability limited to £10 or £12 10s. per share held, and their members, speaking gen- erally, are obliged to take up one additional share for every £100 of assessed value over the first £300, so that the maximum credit rests on the security of, roughly, the tenth part of the taxable property of members. It does not appear that any appreciable risk would be involved in giving to a society & maximum credit of 5 per cent of the collective worth of its members as returned on the combined authority of the committee and board of supervision. Societies will naturally require a period of notice before resignation of membership may take effect—the German act fixes the minimum period at three months and the maximum at two years; members, though tenants, will not all be simultane- ously desirous of resigning; their leases do not all expire at the same time; and they will not be all in debt with their society or all generally insolvent. Or another basis might be adopted. When Prussian societies do not furnish a detailed statement of the assets of their members, the Prussian State Bank allots to each such society a maximum credit of from £5 to £15, at its discretion, per head for each member; and a south German bank, in estimat- ing the credits allotable to the rural credit societies in business relations with it, assesses the value of each society, in case it should be necessary to recover any claims, at the rate of £10 per member. The Prussian bank does not confine its rule to rural societies; urban societies come within its scope. It will hardly be questioned that English rural societies, even those composed entirely of tenants, offer a sounder security on such a basis than do those urban societies of small tradesmen and artisans to whom the Prussian bank finds it safe to lend money when organized in a registered cooperative society. As to the nature of the security obtainable by the society from tenant borrowers, it may be recalled that the aim of a cooperative society is to furnish supplementary working capital on personal security; that is, upon the security of the general standing of the borrower and of his business reputa- tion, supported, if necessary, by sureties, the ultimate security implicitly involved being the realizable value of the assets of the borrower or of those of both borrower and sureties. In Germany this ultimate security consists mainly in property, and in so far members are able to provide a better underlying security. But tenants have leases, and can not leave at a moment’s notice; they possess personal property, stock, machines; their business capacity and character is known in their neighbor- hood; and it is always open to them to provide sureties, who need not be members of their society. As societies do not pretend to furnish the entire or major part of members’ working capital, but merely to supplement it, the amount of credit which the members may be allowed on these bases is likely to be in keeping with their needs as well as within the limits of safety for the society. The supervi- sion automatically exercisable by reason of the narrow limits of the area of rural societies minimizes risk of loss, a risk which is further reduced by the power, to be retained by the societies, to call in their loans at short notice, when there is good evidence of their capital being endangered. It can hardly be anticipated that cooperative credit societies will increase at first with great rapid- ity in England. But English farmers are not alone in being highly conservative and distrustful of fresh projects; in Germany the success of the movement was largely the result of the intensive propa- ganda carried on continuously from many sides as well as of the effective assistance of the State. 24 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The same persistent and penetrating propaganda work will be required in England, and progress will probably be slow, asin Germany. There are now nearly 17,000 rural credit societies in that country, but 12 years after (1874) the first Raiffeisen bank was established there were only about 100 of that type in existence, and in 1890—nearly 40 years after—their total number was 1,729. Among the chief agencies which promoted the movement, apart from the State (including the Emperors William I and William II, who showed their approval by donations to the Raiffeisen Cen- tral Loan Bank, and rulers of Federal States) and the cooperative unions, which have acted in their several districts as the intelligent organizers and advisers of cooperative effort in all its branches, may be mentioned: (1) The agricultural organizations, and especially since their creation under the Prussian act of 1894, the chambers of agriculture in Prussia, and similar bodies in other States; (2) clergymen; (3) teachers and communal officials in rural districts; (4) larger landowners; and (5) various educational institutions. Raiffeisen, the mayor of a small, remote district, was first given the opportunity of putting his ideas into practice outside his own restricted area by the Agricultural Association of the Rhine Prov- ince. His book describing his system appeared in 1866, when he had already founded five credit banks, and attracted in the same year the attention of the association which was considering means for improving credit facilities for the farmers of the Province. In 1868 Raiffeisen was commis- sioned by the association to establish credit societies within its area, and within a year he founded 12 new societies. Shortly after he was placed in charge of the aid department for loan banks estab- lished by the association as a branch of its work. Similar associations throughout Germany took up gradually the active furtherance of the credit society movement. Unlike Schulze-Delitzsch, who conceived his societies as purely business organizations, Raiffeisen always laid stress upon the moral as well as the material aims of his societies, which ‘‘rest upon a Chris- tian foundation” and “aim at promoting the moral and material welfare of members.” Clergymen of all denominations in most parts of Germany have given their constant and active support to the Raiffeisen banks since their inception. At the present time large numbers of clergymen are to be found acting as chairmen or members of committees of management and of boards of supervision, and in some cases they undertake the duties of secretary. Rural teachers and communal officials have rendered great services to the Raiffeisen societies, not only by encouraging their establishment and becoming members, but also by accepting in large numbers the most responsible offices such as those of chairman of committee and of secretary. Agricultural colleges of every grade, which are more numerous in Germany than in England, usually include in their curriculum a course of lectures on agricultural cooperation, while at several universities (e. g., Berlin, Halle) special courses of lectures on cooperation by various professors are given each year. Larger landowners have also taken a considerable part in the extension of the village banks, not only by promoting their establishment and accepting office, but also to a certain extent by depositing with and borrowing from them. The chairman of the committee of management of 50 out of 305 Pomeranian societies in one year was a large landowner; in another year out of 720 Silesian societies there were 209 large owners holding this office. In the less onerous position of chairman of the board of supervision they are even more numerously represented, and they are very generally found as ordinary members of both organs of administration of a cooperative society in those parts of the country; that is, chiefly in the eastern Provinces of Prussia and in the Kingdom of Saxony, where large landowners constitute a noteworthy proportion of all landholders. ' Various reasons account for the more limited participation of large holders in the society as de- positors and borrowers. Although limited liability is regarded by many very competent authorities in Germany as most suitable in the case of societies which contain a considerable proportion of large holders, unlimited liability has not (since 1889) been a chief obstacle; the difficulty lies mainly in the dislike of a social superior to reveal his position to a committee of two or three of his smaller neighbors or to submit an application for credit to them, as well as in the difficulty for a small local society to grant credit to such members to the extent that may be required, without exhausting their own work- ing capital to the prejudice of their other members, or without risking an unduly high proportion with a single member. In Pomerania and Saxony (Province of), as well as in Silesia, a considerable number of large landholders are reported as transacting business with the local societies; in Pomerania out of 376 local societies, all with limited liability, there were 107 which fixed their maximum total loans to individuals at from over £1,000 up to £2,500, 27 at from over £2,500 up to £5,000, and 9 at from over £5,000 up to £10,000. In many cases outside Pomerania, Saxony, and Silesia large landowners obtain their agricultural requisites through the local society of which they are members, and in this AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 25 way, but seldom otherwise, they often obtain credit from cooperative credit societies. It may be conceded that local credit societies are less necessary to large than to medium and small holders; they can usually obtain credit more readily and on better terms than the latter from commercial banks, although in common with other farmers they usually require such credit for longer periods than are customary in commerce. And in Germany, at least, such bank credit is far dearer than cooperative credit, and repayable under more unfavorable conditions. That even large holders in England do not obtain all the credit they need at their banks appears clear from the considerable volume of credit which is at present extended to farmers by dealers and factors for periods of a year or more. AGRICULTURAL COOPERATION. PRINCIPAL BRANCHES. Although credit societies still constitute the backbone of the modern cooperative movement among German farmers, there are many other important and highly organized groups of cooperatite societies for production and distribution. Cooperative action for economic purposes is, of course, very old in their agricultural life, the original agricultural scheme among the Germanic peoples being based upon common ownership and common farming operations. Even after the completion of the evolutionary process from communal to private ownership, cooperative action, either of a compulsory or a voluntary kind, persisted in many important matters in village communities. As a consequence of the land reform, the emancipation of holders from feudal conditions, the introduction of absolute ownership of property, and the disappearance of the compulsory relationships by which individuals, both in town and country, were perforce united in close associations which regulated their whole activities, individualism emerged prominently in the first half of the nineteenth century. But the need for cooperation was soon felt. If the smaller farmers were to hold their own with the larger, they had to adopt modern methods of intensive farming, employ manures, feeding stuffs, modern implements . and machinery, obtain suitable breeding stock, and put their wares on the market in sufficient and graded quantities without incurring undue cost. Apart from the circumstance that many such require- ments were dear and not utilizable to their full capacity by the individual, such as large machines and good breeding stock, or were unduly expensive when bought in small quantities, all meant the command of working capital, which was scarce in the country districts and for isolated farmers hard to obtain. Accordingly a new cooperative movement, differing from the old in being voluntary, and, for the per- sons involved, only binding as regards the particular objects aimed at, came into existence. The birthplace of the new movement was in the Rhine Province, where small holdings prevail. As contem- plated by Raiffeisen, the local society was apparently to represent a cooperative organization which primarily furnished credit to its members, but which also bought their agricultural requisites, sold their produce, provided machines for common use, and even engaged in production (e. g., in dairy opera- tions); in the society were to be concentrated in effect the economic forces of the village community. Experience proved that, while especially the supply of agricultural requisites may be suitably carried on as a department of the village bank, other cooperative undertakings, involving technical skill in their management and considerable capital liabilities, are best taken in hand by societies independ- ently constituted. The two most important groups of registered agricultural cooperative societies, after that of the credit societies, are the supply and dairy societies. Among the remaining groups may be mentioned the electricity, cattle selling, and machine societies (all of which have developed with remarkable rapidity in recent years), as well as the corn selling and egg selling societies. Supply.—The value of the agricultural requisites (mainly fertilizers and feeding stuffs) supplied annually by cooperative agencies to German farmers may be estimated at about £15,000,000; in 1910 it was over £13,000,000. The total annual expenditure of Germany on such agricultural requisites is estimated at about £60,000,000. In addition to over 2,400 registered local supply societies there are about 12,000 other local societies (credit societies represent about five-sixths of this total) which supply their members with these goods; numerous unregistered farmers’ associations—the German Agricultural Society (modeled on the English Royal Agricultural Society but undertaking many business functions for its members), and the Agrarian League. Through these organizations even the smallest holder is now enabled to obtain at moderate prices goods of guaranteed quality. The local societies usually operate over areas comprising one, two, or three parishes, but in some provinces, where large landholders are numerous, considerable areas are covered. Thus, in Pomerania, which is twice the size of Yorkshire, there are 30 societies for supply; in the case of 22 of these business is extended over one or more of the 28 administratiw divisions of the Province; and in 26 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. east Prussia there are 20 supply societies, the majority of which extend over similar areas, some having depots at suitable centers within their boundaries. In Pomerania the smaller farmers obtain their supplies from these societies, not directly but through their village banks, which are members of these societies, collect the orders of their members, and transmit them on their own account to the supply society concerned. Large societies are more useful for big landholders, who require quantities in excess of what the financial strength of the small local society perhaps allows it to order with- out unduly straining its credit capacity. Large areas mean more complex business, imply the employment of a permanent paid official or officials, and probably the necessity of maintaining a warehouse, and in general involve fixed establishment charges that can be met only with difficulty unless a large and constant business is assured. They tend to place the small farmer at a disadvantage; his single orders may be so small that when goods are bought by him alone from the large society most of the advantage of combination as regards price is lost; and his credit with a society at a dis- tance is apt to be weaker, as supervision over its humbler members is less easily exercised. It is, of course, essential that the fixed area of a society should be capable of furnishing a membership able to provide orders of sufficient importance to obtain the advantages of purchasing in bulk. Local soci- eties provide-admirable agencies for bringing the people of a neighborhood into touch, and they pro- mote a knowledge of the use and relative value of the various agricultural requirements as well as a sense of community of interests. As the advantages of combination for the purchase of agricultural requisites are not fully real- izable by local societies covering small or even more extended areas, central organizations have been formed, which cover Provinces or States, to serve as their sources of supply. In many Provinces numerous large landowners are directly attached to these central societies. The latter have been fur- ther organized for the purchase of certain commodities into associations whose area of operations is coextensive with Germany. Thus the Supply Association of German Farmers, whose shareholders ’ are the central cooperative trading bodies and other large agricultural associations (e. g., the German Agricultural Society, the Agrarian League), has purchased in a single year 620,000 tons of basic slag for its members at preferential rates, and the Potash Supply Co., founded by the Imperial Federation of Agricultural Cooperative Societies, supplied its members in 1911 with 120,000 tons of purified potash salts. The sale of goods to nonmembers is permitted under the cooperative societies act to “ agricul- tural distributive societies which, not maintaining an open store, supply goods destined from their nature for the business of farming.” The majority of small local societies maintain no store; orders are collected periodically or after notice to members, and each member takes delivery of his order at the place appointed by the committee. Where a store is kept the member selected to act as store- keeper usually attends once or twice each week at fixed hours for the sale of commodities. Dairying.—The number of registered dairy societies grew from 693 in 1890 to nearly 3,500 in 1912; on January 1, 1910, the number of members in 3,193 societies was 288,699. There are in addi- tion 600 to 800 unregistered societies. The value of the sales of both groups now amounts to about £20,000,000 annually. Many direct advantages have resulted to farmers from cooperative action in this branch of their business; better utilization of the raw material, better product, better prices, with saving of time spent in marketing, saving of time on the farm, a source of regular income; and perhaps in many cases it constituted the only agency through which farmers have been able to make their cattle keeping profitable. As contrasted with the isolated production of former times, the tendency of cooperative action in dairying has been to improve and increase the milk production and to exer- cise a remarkable influence upon the breeding and maintenance of stock, especially in small holding districts. There are three principal types of dairies. About four-fifths of the total are those in which the cream is separated and butter made, but the separated milk and buttermilk in most cases are returned to the suppliers in fixed percentages of milk delivered. Those which sell the new milk, or which utilize the new milk for making butter and full and half cheeses, and the separated milk and buttermilk for making other cheeses and mast for pigs, are not numerous; they necessitate larger capital outlay and more skilled and expensive management, while the commercial side of the undertaking is more difficult. The third group, known as cream depots, and which are either independent societies or branches of a dairy, only separate the cream, which is then dispatched to a central dairy or to the towns. ~ Unless a regular supply of milk from a minimum number of 300 to 400 cows is guaranteed, coop- erative unions do not usually collaborate in founding a dairy society. Members must deliver all milk not required for their own domestic or farm use, and undertake not to make butter or sell milk. The transport of the milk to the dairy is carried out by the society or by the members. In the small cc AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 27 holding districts where members own from 2 to 10 cows the societies usually undertake the delivery, dividing their area into sections and employing members resident in the various sections for this work. One dairy visited, with a membership of 850, distributed over 14 villages, 12 of which were over 2 miles distant, employed 14 carriers, who collected the cans (left on the roadside nearest the individual farms) and returned them to the members, together with the separated milk and any butter and cheese pur- chased by the members. When the society does not undertake the delivery, members of the same localities arrange to deliver in turn to the dairy for a week, fortnight, or month; when farmers keep large numbers of cows they make their own deliveries. The predominant practice as regards payment is to pay by fat content alone or to allow a fixed payment per litre—usually less in amount than half the normal price for good milk—plus a further payment based upon its fat content. Milk deliveries of each member are regularly subjected to three or four alcoholic tests per month, and members are paid according to the average of these tests. In some districts milk-selling societies have been established. These undertakings are generally constituted by combinations of milk producers for the purpose of sending milk to a central cooling station or for the establishment of urban central sale stations. In the former case the object is to secure the production of pure milk in the individual farms and to dispatch milk of a guaranteed quality to the towns. Like the credit and supply societies, dairy societies have founded to a certain extent central organizations. A few unions composed exclusively or almost exclusively of dairy societies, exist, which, in addition to auditing and advising, organize the purchase of dairy requisites or the sale of dairy produce. There are other unions of dairy societies which occupy themselves only with the technical and commercial side of their business; they supply dairy necessaries (machines and mate- rials), inspect dairy machinery, aim at securing standard qualities in the production of butter, and undertake its sale. The number of societies attached to central organizations of this kind is small, amounting in 1910 to less than 5 per cent of the total. One of these unions, which has shops at Breslau and three others in Silesian industrial towns, does a considerable business with urban cooperative stores. Corn-selling and granary societies—State aid has been given in several German States (Prussia, Bavaria, Baden, Wurttemberg, Saxony) to promote the cooperative corn-selling or granary societies. The preamble to the Prussian act (1896) under which £150,000—another £100,000 was voted under a second act in 1897—was allotted for the construction and equipment of corn houses, expressed the advantages which it was hoped would accrue to farmers from their development as follows: (1) Improved facilities for cleaning, drying, grading, and mixing the various qualities of corn delivered so as to furnish commodities at once good, homogeneous, and easily marketable. (2) The possibility of regulating prices by only putting corn on the market according to actual demand; in other words, the reservation of supply. (3) The possibility for farmers to obtain credit on fair conditions on the security of their ware- housed corn. (4) The abolition or reduction to as great an extent as possible of the charges of middlemen and reduction of the cost of transport. In Prussia 36 granaries were built by the State between 1896 and 1906; of these, 13 were built in Pomerania, 6 in Hesse-Cassel, and 3 in the Provinces of Saxony and Westphalia. They were leased to cooperative societies at a total charge of 8 per cent of the cost spread over five years, or should profits be realized a maximum annual payment of 3 per cent was to be paid to the State. Results in Prussia showed that there had been technical defects in machinery equipment; the silos had often been built too large for local conditions; the spots for their erection had been injudiciously chosen; the areas of the societies were too large; compulsory delivery was not insisted upon; and in many cases no subsidiary branches of business, such as the sale of agricultural requirements, had been taken up. The Bavarian Government has made very considerable grants and advances, and given other substantial assistance to cooperative corn-selling societies, especially by arranging for the State departments to buy preferentially from them. Compared with Prussian warehouses those in Bavaria are upon a small scale, and each is designed to serve only a small area. Between 1895 and 1911, 166 granaries were built at a total cost of £166,000. The great majority are not conducted by special corn-selling societies; in 1911, 94 were managed by single credit societies, 20 by groups of cooperative societies, 38 by granary and by supply and sale societies, and the balance by various organizations and single persons (in two cases). 28 AGRICULTURAL CREDIT AND COOPERATION IN. GERMANY. The sale of corn has been centralized to a considerable extent. In Bavaria there is a union of 36 granaries, and the majority of the provincial central trading organizations are ready to undertake the sale of corn for their societies, whether special corn selling, credit, supply and sale, dairy or other societies, as well as for individual members forwarding quantities of sufficient bulk. Three central trading societies in eastern Prussia—at Stettin, Dantzig, and Posen—sell very large quantities of corn; in 1911 these societies showed, respectively, sales of 2,728,000, 2,145,000, and 1,033,000 hundredweight. There are few, if any, private firms or companies in Germany which reach the total of the Stettin or Dantzig societies. Cattle-selling societies Germany produces about 95 per cent of the meat consumed by its inhab- itants; and in 1907 more than 60 per cent of the cattle and more than 70 per cent of the pigs bred in Germany were held by farmers with holdings of not more than 50 acres. Despite the great effective demand for meat, it is contended that German farmers do not obtain proper prices for their stock, owing to the present market conditions, under which supplies are gathered by a series of intermediaries and dispatched to great centers, where cattle markets and slaughterhouses are combined, and a few salesmen and slaughterers command the trade and determine prices. The growth of great cities and the results of the legislation prescribing that animals intended for human food must only be killed in public slaughterhouses, have brought about that not only these great cities, but also the areas within the sphere of their economic influence, draw their supplies in a large measure from the same sources. The system is a reproduction upon a smaller scale of the American concentration for slaughter and distribution. Attempts made to bring producers and consumers into more direct contact by the establishment of cooperative slaughterhouses, after the model of the Danish slaughterhouses, have not met with success; and the present movement aims at eliminating unnecessary intermediaries by the dispatch of cattle directly to the sale and slaugnter markets, where they are handled and sold by special agents. The various chambers of agriculture and cooperative organizations have established central depots at large markets; thus the depot of the Schleswig-Holstein chamber, which is also utilized by the Hanoverian societies, is at Hamburg. The Berlin Central Cooperative Cattle-Selling Society, of which the majority of local cattle-selling societies and chambers of agriculture are members, owns a large cattle market at Berlin and has its agents at several important centers throughout Prussia. On January 1, 1910, there were 145 cattle-selling societies, with a total membership of 33,375; their present number is probably about 200. These local societies usually fix as area a political district comprising roughly a number of communes within a radius of 10 miles; in some cases two such areas are included. It is sought to secure that one full wagonload at least may be regularly dispatched every week or fortnight, so that freight and other charges may be proportionately lighter and that greater numbers being marketed more influence on prices may result. By frequent dispatches mem- bers are enabled to sell single animals when ready for market and to avoid direct loss by feeding stock beyond the period when they are ripe for slaughter. Store or breeding cattle are rarely sold by cooperative societies, which deal principally in pigs and calves. Large cattle sold by or through cooperative agencies are mostly sent by individual large landowners to the Berlin society or the Hamburg depot. Local societies find that the very great differences in size and quality of large cattle lead to great variations in price and make it no easy task to satisfy members with the prices they pay or obtain for them. The majority of the societies have adopted the method of selling on commission, the members receiving payment for their stock within the same week, but there are many important societies which purchase calves and pigs directly from the members. Practically all societies, except those in Bavaria, compel members to sell all calves and pigs only to or through their agency, although often an exception is made when animals are sold for consumption in the immediate district. All animals are insured against damage in transit and unforeseen losses by total or partial condemnation at the abattoirs by meat inspectors. The majority of societies either maintain their own insurance fund, or insure with the Berlin central society. Although the movement has been vigorously promoted only during recent years, it has already achieved great success. The value of the cattle sold by Prussian cooperative agencies increased from £1,300,000 in 1906 to £2,229,000 in 1910 and to £3,445,000 in 1911. The total sales of 94 Hanoverian societies in 1911 amounted to £1,720,000, and 12 Pomeranian societies sold cattle to the value of £363,400. In addition to the assistance given by the Prussian chambers of agriculture, the Prussian minister of agriculture has provided the funds for the appointment of two officials, one for the western and the other for the eastern provinces, whose sole duties are to further the organization of cooperative cattle selling. Egg-selling societics.—The value of the imports of eggs into England and Germany in 1911 amounted to almost the same total, namely, £8,000,000. For many years agricultural organizations have made AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 29 ‘efforts to bring home to farmers the importance of this market and pointed out that to obtain satis- factory returns from this branch of their business individual farmers must combine to bulk, grade, and send their eggs in a fresh condition to market without the interposition of superfluous agents. The number of German registered poultry and egg-selling societies is not large, 145 societies, with 13,554 members, existing on January 1, 1910, according to the official returns. There are also numerous unregistered societies of this kind, and many dairy and supply and sale societies sell eggs for their members. These societies also promote poultry breeding by selling to members suitable breeds of fowls at low prices, advising as to the introduction of fresh blood, and giving attention to suitable housing and feeding. Cooperative egg selling, like cooperative cattle selling, has flourished especially in Hanover. In 1910 there were 146 societies attached to the Hanover union, about two-thirds of which were registered under the act, and the total amount paid to members of 122 societies, after the deduc- tion of all expenses and charges, amounted to £84,690 for the sale of 27,499,124 eggs. Electricity societies —One of the most noteworthy recent developmente. 3 in German cooperation has been the rise and rapid extension of societies for providing rural districts with electric light and power. In 1900 there was not a single registered electricity society; in 1907 there were 16; at the pres- ent time their number may be estimated at between 600 and 700. The use of electric light and power is to be noticed in even quite small villages in most parts of the country, and electric motive power is considerably utilized by large owners in many of the more eastern Prussian provinces. Its use by farmers has been stimulated by the marked increase in the employment of large and small agricultural machinery; thrashing machines, hoes, cultivators, mills, milk centrifugal machines, etc., are now very commonly driven by electricity. The dearth of farm labor has been another concurrent factor. Apart from the advantage of saving or replacing the labor, whether of man or beast, electricity is advantageous for farmers through the low cost of maintenance of the electric apparatus, the absence of running expenditure when not being utilized, the rapidity with which it can be put in operation, its simplicity for handling, the facility with which the motor can be applied to the working of several machines simultaneously, its precision, its cleanliness, its freedom from danger of fire, and, under normal con- ditions, its comparative cheapness. Smaller farmers are making an increasing use of electric power. There are three principal groups of societies: (1) Those producing and distributing electricity; (2) those erecting their own conductor installation but obtaining their supplies from others; and (3) those representing merely combinations of persons for obtaining electric supplies by guaranteeing a minimum purchase of current or to obtain reduced rates therefor. The great majority of the present societies fall in the latter category. By cooperative action cheap electricity is now obtainable by small farmers, even in remote villages of Pomerania. In one small village in that province, 6 or 7 miles from a railway line, members paid 24d. per kilowatt hour for power and 44d. for light, but the charge for power was reduced as low as 14d. for large consumers. One member, a small farmer who had electric light in his house, stables, and outhouse, and worked three small machines simultaneously with one motor (54 horsepower), stated to the writer that his electric installation saved him the labor of one man and one horse. His payments for light (eight lamps) and power in August, September, October, and December in 1910 amounted to 13s., 9s. 2d., 8s. 6d., and 18s. 7d., respectively. Public authorities (provincial, district, local, as well as the State railway authorities) have materially assisted the movement to bring electricity within the reach of the inhabitants of country dis- tricts. In the province of Saxony a large number of communes and districts have become shareholders and consumers in cooperative control stations, and thereby given considerable solidity to the particular undertakings. Such participation is especially important for electrical undertakings depending largely on agricultural consumers, who require power for only a few months in the year, although they use it then to sucha considerable extent that the conducting lines and substations must be upon a considerable scale. Tn Pomerania it was decided in 1910 that the province and the interested districts should each contribute a third of the cost of establishing central electrical works, while the private persons interested were to find the remaining third. Pomerania was divided into five zones, in each of which an overland central station was to be erected (if not already existing), so that electricity could be brought within the reach of all the rural districts in the province. In other parts of Germany provinces, rural districts, and communes have erected electrical works or otherwise participated in such undertakings. Machine societies Cooperative machine societies which purchased machines for jot use by their members numbered on January 1, 1910, 571, with 12,441 members; of these 423 and 32 societies (with 10,158 and 360 members) were respectively threshing-machine and steam-plough societies. But it may be observed that a large number of credit societies, as well as numerous supply, dairy, and corn-selling societies, also purchase for hire ‘to their members various machines such as rollers, drillers, hoers, grist mills, pressing machines, and weighing machines. 30 © AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The predominance of threshing-machine societies in this group is due to the circumstance that it is not usually possible for individual small and medium landholders to procure them, owing to their high price (say, £400 to £600), as well as to their unprofitableness due to their being employed only upon a small bulk of produce, while they require skilled handling and proper shed accommodation. Ordinary small credit and other societies are also unwilling to incur liability to such an extent for objects foreign to their main object. Other societies—Vine growers’ societies (in January, 1910, 194 with 10,995 members), which, however, have little importance from an English standpoint, purchase the grapes of their members at prices fixed by the general meeting according to the classes as determined every year. In one Palatine village visited, the committee of the vine growers’ society, appointed for the purpose, divided the grapes usually into 5 or 6 classes, but in 1905, 12 classes were distinguished. In 1909 another society could only distinguish two classes. The members are then paid either in full, or, as is now more usual, receive a large proportion of the price, the societies usually borrowing the money from the local village bank. The grapes are then pressed, their juice subjected to the necessary processes, and the wine sold by the society. On the whole these societies have not achieved success. The general meetings of members tend to vote unduly high rates of payment for their grapes, so that the societies are often unable to obtain corresponding returns upon the sale of their wine. In the latter matter even greater difficulties arose owing to the organized opposition of the wine trade and the inferior commercial capacity of the society, both as regards internal and external organization as well as in the presenta- tion and variety of their wares. Larger landholders, especially those in eastern Prussia, have established distilling societies for the construction of distilleries to manufacture spirit from potatoes, which, produced in great quantities, are often hard to sell at remunerative prices. These local societies, the owners of private distilleries, and the organization of spirit producers have united to form the Sale Union of German Spirit Pro- ducers. A group of societies which have recently been created, and are likely to attain importance are the potato-drying societies. It is estimated that about 10 per cent of the total German pro- duction of potatoes is lost, especially through decay; and as the potato supply can not be entirely utilized in its natural state for human and animal food, or for producing spirits or starch, these societies aim at making a durable feeding-stuff out of them. In 1909-10 there were reported to be 254 potato- drying establishments of all kinds which handled 333,000 tons of potatoes, and produced 87,500 tons, of which 69,800 tons were potato flakes. Nearly 90 per cent of the potatoes were dried for return to the farmers supplying them. _ There are only one or two registered cooperative beet-sugar factories in Germany, but a number of factories under the legal form of joint-stock companies are practically cooperative undertakings, as they oblige shareholders to deliver their beet crops, and profits or losses are divided over these suppliers. These factories also produce dried beet-root slices, which are considered a valuable feeding- stuff, and the refuse from the sugar-production process forms a valuable top dressing.! Breeding societies, which are obviously of special utility in areas where small and medium holders predominate, are very numerous, although the registered societies are relatively few (262 with 14,219 members in January, 1910). They provide suitable breeding stock, advise on breeding questions and markets, establish and keep herd books, and hold shares, usually in conjunction with other local societies. They receive encouragement and financial assistance in most German States from the official and semiofficial agricultural bodies. Certain pasture societies either rent or purchase land for pastur- ing the animals of members, and public aid is also granted to them, notably in south German States. The purchase and settlement of agricultural land by land purchase and settlement societies, whose members are themselves the purchasers or the settlers of land dealt with, is rare in Germany, although a certain number of local credit societies have undertaken the purchase and breaking up of estates in their localities for sale to their members, and there are some Polish societies which, in close association with Polish credit societies, also engage in this work. As regards the purchase of land for settlement by farmers there are a number of limited companies, one joint-stock company, and one cooperative society with limited liability. There is a limited company for Pomerania, East Prussia, Brandenburg, Hanover, Hesse, and Mecklenburg, while in Schleswig-Holstein there is a cooperative society. The land bank,? a purely commercial undertaking, is constituted as a joint-stock company. COMBINATIONS OF COOPERATIVE SOCIETIES. The unit of the German cooperative organization is the individual society, an association of at least seven persons for the pursuit of common business ends, who, under the act, must take shares ~ 1 See notes on visit to beet-sugar factory in appendix, p. 451. +See appendix. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 31 and bind themselves in a joint and several liability either to a fixed limited amount per share or to the extent of their whole property. In the further pursuit of their business ends groups of such individual societies have been formed, namely, central banks and central trading bodies for Prov- inces or States, and these have become further organized by the creation of central banks and central trading bodies which operate over Prussia or Germany. Apart from this organization for business purposes, over 90 per cent of all rural societies are attached to central organizations which serve their common as distinct from their particular business objects. Such bodies, which usually operate over whole Provinces or States, are entitled unions, and, while their main business is to undertake the audit and inspection of their affiliated societies, they act in general as the intelligent organizers and regulators.of cooperative effort in all its branches within their areas. Between the local societies and the unions is now generally found a rather loose grouping of societies which lie close together into subunions, and above the unions are the federa- tions, to which are directly attached the unions, as well as the central banks and central trading bodies. Finally, there is the International League of Agricultural Cooperative Societies founded by Herr Haas in 1907, and to which are attached (1912) the great cooperative organizations of Ger- many, Russia, Austria, Hungary, Italy, Denmark, Holland, Finland, Roumania, Servia, Bulgaria, and Japan. In point of date the central banks and trading bodies have been in almost every case posterior to the unions, having been established by the latter. The present position may be said to be the direct result of the cooperative societies act of 1889, which prescribed an obligatory audit for all registered cooperative societies once within every two years, permitting duly authorized unions of cooperative societies to carry out this audit. It provided that such unions must not conduct any purely business operations, such as banking or the purchase or sale of agricultural commodities. Previous to 1889 unions often undertook such business in addition to the work of promoting the general interests of their members, although the expediency of removing such economic functions from the sphere of their activity was recognized in many instances. These unions, and those subsequently established which became authorized to conduct the audit, created in due course central banks and central trading bodies to serve their affiliated societies. Their legal status is that of a registered association, which implies that they do not carry on profit-seeking- business. Membership of such an association does not involve any mutual liability of its members. Apart from audit:and inspection and the establishment of central business organization for the benefit of their societies, unions undertake regular propaganda and advisory work—issue model articles of association, business rules for use by credit and other societies, general manuals of instruction for officials of local societies, leaflets on various subjects—and in 1911, 28 unions alone published news- papers, mostly every fortnight, of which the total circulation was 248,190 copies. They compile and publish annual statistics respecting their societies, to each of which they furnish a copy. All the most important unions have instituted special annual courses of instruction for officeholders in local credit societies, such courses lasting a month, a week, five, four, three, and two days. In nearly every case public assistance is specially given to the unions for this purpose, and the latter usually pay in whole or in part the expenses of those attending the courses. Many unions have made agreements with important insurance companies, under which members of their affiliated societies may effect insurance (fire, life, accident, liability, fidelity, cattle) on pref- erential terms. Legal advice is regularly given by a number of unions, all of which are also able to give technical advice on banking, insurance, and on most matters relating to agricultural business (e. g., dairying, manures, feeding stuffs, machinery, fixing of electricity rates, marketing of produce, etc.), as they have at their disposal the services of their own officials, as well as of those employed by their central bank and their central trading societies. Unions also take an active part in promot- ing projects of rural social welfare. They obtain funds to carry on their work from three principal sources—the annual contributions from their affiliated local and central societies, the annual grants (in practically all cases) from the State or from the Provincial Governments, and grants (or their equivalent by assignment of services, or both) from the semi-State chambers of agriculture in Prussia and the corresponding bodies in other States. There are two federations of rural cooperative societies, namely, the Imperial Federation and the Raiffeisen or General Federation. Membership of the Imperial Federation is normally open to unions and to central trading bodies serving cooperative purposes. It is expressly stated in the articles of association that ‘‘the independence, internal organization, and administration of these organizations shall be in no way interfered with as the result of their association in the Imperial Federation.’ Since 1905 the Raiffeisen Federation and each of its constituent unions and other 32 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. central bodies have been affiliated to the Imperial Federation, and at the present time four-fifths (20,500) of all German rural registered cooperative societies are included in its membership. The gross total of members in all its societies is over 1,900,000. The object of the federation is to centralize all the rural cooperative forces for their general purposes under a system of provincial or State autonomy which admits of administration for the provincial or State areas being more effective and less costly than under a purely centralized sys- tem, facilitates cooperative work of a more intensive character by reason of local knowledge and local patriotism, and gives scope for development along lines most suited to the idiosyncrasies of the various areas as regards landholding, nature of their agriculture, and general economic position. It has exercised a remarkable influence upon the extension and improvement of all branches of coopera- tive organization—business methods, management ‘of individual societies as well as organization for business objects—upon agricultural insurance, banking, statistics, and education. Among its estab- lished activities may be mentioned its Training School for Cooperative Officials, which holds courses every year in Darmstadt from October till March; its central organizations for the purchase of potash salts (it has formed a company which represents a total of about 1,500,000 persons) and of basic slag; its year book, with complete annual report and statistics of its affiliated societies; its series of works on agricultural and cooperative topics, its cooperative handbook, and its newspaper, published twice monthly. The federation also audits the accounts of the unions and of the central trading bodies at their request; has made arrangements for insurance, and adopted various other suitable measures in the interest of its members. The Raiffeisen Federation undertakes the general supervision and the care of the interests of its unions, devotes special attention to the maintenance of a uniform and thorough system of audit by its unions, to the giving of legal advice to its societies, to insurance, and to projects of rural social welfare. AvDIT AND INSPECTION. Over 90 per cent of German rural cooperative societies are audited by auditors appointed by unions; the alternative course open to a society is to apply to the district court for the appointment of an auditor on each occasion of audit. Cooperative societies are never audited by a State or other public authority. The frequency and scope of the audit is defined by the cooperative societies act, which lays down that “the organization of the society and the administration of its business in all branches must be submitted in every second year at least to examination by an independent expert auditor.” The committee of management must allow the auditor to inspect all books, documents, cash in hand, stocks, shares, and other goods belonging to the society; the board of supervision must take part in the examination, and its results must be laid before the next general meeting of mem- bers. As carried out by most unions, auditing is not merely an accountancy audit, but rather a general audit and inspection of all the circumstances of a society. German experience is in favor of audit being intrusted to unions of cooperative societies authorized for the purpose. Audits car- ried out by appointees of courts are apt to be perfunctory and not fruitful toward bettering unsat- isfactory societies, because such auditors are not usually professional auditors or cooperators; and once the particular audit is over, it is no longer their natural interest or business to see that their recommendations are followed. But union auditors are professional cooperators whose interests and life work are linked with cooperation, and who are concerned to raise the level of good manage- ment and promote the success of their societies, while their familiarity with cooperative principles and practice and their training provide a certain guarantee of efficient and rapid work, as well as of their capacity to give sound advice. CooPERATIVE LEGISLATION. Cooperative societies in Germany are subject to a special imperial act, which defines the nature and general powers of registered cooperative societies, and covers fully the position of such societies. Three types of society are recognized: Those with unlimited, unlimited contributory, and limited liability. Registration is effected not at a central office, but at that of the court of the district in which the particular society has its seat. To qualify for registration an association must comprise at least seven persons, must have as its object the furtherance of the economic interests of its members, and must possess written articles of association. Every society must have a committee of manage- ment of at least two members, and a board of supervision of at least three members, both of which are elected by, and generally subject to, the meeting of members, which must be duly convened at least once every year. Shares are obligatory, but no minimum is fixed, except that in societies with limited liability they must not be less than the liability; the tenth part must be paid up at once or AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 33 by regular installments; and all share capital is withdrawable by members on retirement from the society. Reserves must be formed out of profits. Apart from the obligatory audit every two years, every society must publish annually in duly designated newspapers its balance sheets, as well as any other of certain changes made. The circumstances under which dissolution must take place or proceedings in bankruptcy commenced, and the procedure therein are fully set out in the act. AGRICULTURAL COOPERATION AND PusBLic AD. For nearly a generation the systematic furtherance of rural cooperation has been a matter of settled policy in the various German Federal States; and public aid has been liberally granted for this purpose. Financial assistance has usually taken the form of small grants to cover the expenses of establishing credit societies, contributions to unions toward the cost of auditing, of propaganda, and of courses of instruction for persons holding office in rural societies, advances of capital at low rates to central banks, or endowments of capital, or grants toward establishment expenses of such banks, or both; occasionally it has taken the form of assisting central societies to secure advantageous terms at large banks. Direct financial assistance has also been given to rural productive or trading societies of various kinds. The cooperative movement has been substantially promoted by the dis- trict governors, agricultural inspectors, rural teachers, and other public officials, while one of the primary aims of the semiofficial chambers of agriculture in Prussia, and of the similar bodies in other States, is the spread of cooperation among farmers. The most signal acts of the Prussian Government in this respect have been: In 1895 the establish- ment of the State Central Cooperative Bank, which has received up to date a total capital of £3,750,000; in the period 1896-1906 the construction and equipment of granaries at a total cost of £250,000; and in 1902 a loan of about £80,000 to the Berlin Central Cattle-Selling Society at 33 per cent interest, subject to an annual sinking fund payment of 1 per cent. At the present time annual grants are made by nearly all the provincial governments; and the chambers of agriculture established in each province usually work in close association with the cooperative unions, give to the latter the constant or tem- porary services of their officials free of charge, or make money grants, or do both. In Bavaria the State has, among other things, made a loan of £200,000 at 3 per cent to the Cen- tral Loan Bank to serve as working capital, and arranged for this bank a credit at the Royal Bank of up to £50,000 at 1 per cent below the official rate of that bank (but not at less than 3 per cent); it has advanced to the Bavarian Agricultural Bank, a cooperative society with limited liability, £50,000 without interest and £200,000 at 3 per cent, besides providing £3,000 toward its establishment expenses; and advances and grants on a considerable scale have been accorded to granary under- takings, breeding societies, and vine growers’ societies. The cooperative granaries obtain support in an especial measure from the State. Since 1904 the Bavarian National Union has received annually £1,700 toward the cost of audit; and other grants are made for general cooperative purposes in Bavaria. It may be added that the insurance societies for live stock also receive considerable State assistance. In Saxony, Baden, Hesse, Wurttemberg, and Alsace-Lorraine substantial public aid is also accorded; in each of these cases, except in that of Hesse, central credit or central trading organiza- tions, or both, obtain financial support from the State. NOTE ON POSITION OF AGRICULTURAL COOPERATION IN PRINCIPAL EUROPEAN STATES. Germany and Denmark are not alone in having developed a vigorous cooperative movement. Cooperation in agriculture is a world movement to-day, and corresponds to similar movements among other producing classes. In other branches of economic activity the development is in the direction of larger producing units, and these larger units tend to form unions of various types for business purposes. In the face of this modern concentration of forces farmers could not remain isolated as producers. Cooperation became for them a necessity if they were to obtain the raw materials for their industry at reasonable prices and of good quality, if they were to secure many of the advantages of large-scale production, and if they were to exercise any influence upon the formation of prices for their products. The following table,! which shows for the countries indicated (1) the number of persons engaged in agriculture with the respective percentages of total population, (2) the number of cooperative societies, (3) the number per 10,000 of such persons, and (4) to how many acres there is on an average a cooperative society, affords a comparative view of the present position of agricultural cooperation in the most important countries of Europe. A better criterion than the mere numbers of societies per 95273°—S. Doc. 17, 63-1——3 34 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 10,000 persons would be that of their membership, but unfortunately such data of a trustworthy kind are available in only a few cases: Percentage of ; Number of | such persons | Total num- | daatoryer| acres of eal ountry. occupied in oe ie ey 10,000 such | tivated area agriculture. population. persons. | per society. Great Britaine Anode ee A eae ee nose 1, 508, 767 9.2 520 3 28, 375 Trelandixeiertgerc ett hey recap Pee ened eet naa 871, 989 44.7 970 11 3, 378 PBEM lela saad isthe a caer ae Aisle hae 2 8, 205, 574 60.9 10, 515 13 2, 531 Belgium 697, 372 22.7 3, 844 55 943 i oe : 1, 739, 181 82.6 693 4 18, 816 530, 689 48.2 1, 220 23 5, 287 8, 843, 761 42.7 7, 200 8 8, 226 9, 883, 257 35.2 26, 026 26 3, 058 592, 774 30.7 2, 850 48 775 HUN PAR exten sot ym tet lee reams inet senna ctaha 6, 055, 390 69.7 5, 006 8 7, 110 OD Gey tetera yd vc eae na ei een tetra at 9, 666, 467 59.4 8, 630 9 3, 964 RUsSldias evn nen oz seca yess Veheamettetune so: cesses 18, 245, 287 58.3 11, 192 6 |. --2 eee eee ee Switzerland ccevisi: ove: eeeeee nee easewion ces ess ye 481, 649 30.9 5, 366 LTT, ||. cceeeerels 2 LIVE-STOCK INSURANCE. The two main branches of German live-stock insurance are life and slaughter insurance. By the former is meant the insurance of cattle owners against loss by death or by compulsory slaughter; by slaughter insurance is meant insurance against loss arising through the condemnation of the whole or part of a carcass as unsuitable for human food. The latter branch of insurance has developed as a result of the stringent modern requirements as to the suitability of meat for human consumption. The whole question of cattle life insurance has been greatly simplified by the veterinary measures adopted to prevent the introduction or extension of cattle disease as well as by the circumstance that liability for compensation arising out of loss through the execution of these measures is taken over by the State. Under the imperial cattle diseases act, which came into force in 1912, compensation for cattle affected with tuberculosis is now to be paid under certain conditions by the State treasury. Cattle life insurance is mainly undertaken by small local societies, the number of which may be estimated at about 10,000; but the extent of their business is not even approximately known. Larger cattle owners insure with large mutual cattle insurance societies; at the end of 1909, 27 of these had policies outstanding in respect of 464,858 animals of a value of £10,333,000. German writers agree that this branch of insurance is little developed in Germany, and that small and medium holders, who have the greatest interest in insuring their stock, make the least use of insurance. No joint-stock company is stated to undertake cattle life insurance in Germany. It has been recognized by the authoritative agricultural organizations that life assurance is most suitably under- taken by local organization of a mutual or cooperative character, through which effective valuation of animals, effective supervision of animals when insured, and proper steps in case of anything occur- ring can be best carried out. To meet the disadvantage of risk being borne by too limited a number of persons and over too small an area, remsurance is recommended. As to slaughter insurance, nine mutual societies insured in 1909 1,838,548 animals to the value of £16,344,658, and seven commercial undertaking insured 880,403 animals for £5,615,872. Efforts made to establish an imperial cattle-slaughter insurance institution did not meet with success. In the Kingdom of Saxony, however, compulsory slaughter insurance in respect of all cattle of over three months has been in force since 1900. The organization of cattle insurance, both life and slaughter, has been taken up by the State in Baden and Bavaria. The latter has built its structure upon mutual local societies voluntarily formed, which are offered the advantages of payment of half the compensation due when its model articles are adopted. Under the Baden act of 1890, as finally amended in 1910, every communal (that is, roughly, parish) authority is obliged to establish and administer a mutual cattle insurance institution when at a meeting of those cattle owners resident within its area two-thirds of those present vote therefor and their decision is ratified by the district authority. An important feature of both the Bavarian and Baden schemes is that the central organization, after approval of the reports of the local units, pay in the first instance the full amount of the compensation due to insured persons, and recovers later the proportion due by these units on whose behalf payment was made. 1 The most recent official returns have been taken as regards population and cultivated area. The total number of societies given relates in almost every case to 1911 or 1912 CONTENTS OF DETAILED REPORT. AGRICULTURAL CREDIT. I. MORTGAGE (LONG-TERM) CREDIT. . Land mortgage credit associations .............. 00. c cece eee e ee eee cece ce ceeeeee aioveniaeds s sae eben Ole se we sents Number and business—Character—Guaranty of bonds—Bonds not secured by specific mortgage charges—Area of operations—Central association—Hanoverian institutions—Bavarian Agricultural Bank—State grants—State supervision—Administration—Membership—Procedure—Entrance fees—Other payments by borrowers—Ten- dency to make small properties eligible for loans—Services to small landowners—Limitation of mortgage loans— Special concessions to small owners—Right to loan—Object of loan—Method of valuation—Reducible mortgages— Loans not subject to recall—Recovery against defaulters—Payment of loans—Choice of bonds—Consistently good market for bonds—Nominal value of bonds issued—Interest on bonds—Special merits of these associations— Mortgage credit association loan banks—Other auxiliary business—Active modern policy of associations. . State, provincial, and district mortgage credit banks...........2..22.0 22202 e cece eee eee eect eee teen eeeeseeecees Number—Business—Area of operations—Prussia—Other States—General features—Administration and supervi- sion—Capital—Loans, minimum and maximum—Limitation—Method of payment—Interest—Reducible mort- gages—Nominal value of bonds—Interest on bonds—Rural and urban mortgage loans—Success of banks—Notes on banks at Hanover, Cassel, and Wiesbaden. , Jomt stock morteaee banks: 2 5s.2.gec eee sad bs-csveeyewm agent eaten aedth aaanbae dae th ch bod Gomiiosieatedds aes SSRs Number—Total business—Rural mortgage business—History—Legislation—Legal form—State authorization and supervision—Two classes—Organization—Capital—Loans—Minimum loans—Rural mortgage loans by principal Prussian bank—Repayment—Reducible mortgages—Other legal provisions—Value of bondse—Redemption of bonds—Mortgage register—Bonds as trustee investments—Interest borne by bonds—Publicity—Paid-up capital and reserves—Dividends paid by mortgage banks—Notes on Prussian Central Land Credit Joint Stock Co. and Lérrach District Mortgage Bank. . German savings banks..............0. 2002 c cece ence eee e eee S Sele sisi ce SES os wie Fe BEERS See ae URL Seana eas Their importance to farmers as suppliers of credit—History—Kinds of savings banks—Collecting agencies—Number in Germany—Legislation—Minimum and maximum deposits—Interest on deposits and investmentse—Conditions for mortgage loans by savings banks—Loans on reducible mortgages—Limits of loan on mortgage security—Special regulations respecting small holdings—Amount of mortgage loans by savings banks—Restriction of area for mort- gage investments—Personal credit—Loans to cooperative societies—Tables. . Credit forland imiproyémen t.n.. 222% seis senses 2 ae oeeieeee ee gees See eee noe cat eee ely Nature of such credit—Special institutions existing. Prussia: (1) Land improvement funds; (2) Land improvement banks—Objects, privileges—Procedure on part of borrower, loans, interest, and sinking fund, security required, supervision of loans. Saxony—Bavaria: General provisions of the Bavarian Act. Hesse—Oldenburg. Results. erussian: provincial aid banks <:22.0.c. 6 s's< + ce-switeinee Sheeeos sees Lee eReeke oes sess Sod eeweeeebeaddaereeee ne case'e Functions—Administration—Existing banks—Silesian bank: Bonds guaranteed by Province, no loans from private persons, term and security of loans, direction and supervision, allocation of profits—Loans to individuals by banks—Profits—Limited utility of banks. L RON t Charoe: DANK oor ssa 2 Sic oe aces w teh ache ce Weis yw orcsuenwee SS Seda eispanerdeaialomarovavedeg Sods nate breed eee SOE eS Seis ate Their institution—Existing banks—Their functions and powers—Not independent agents—General commissions— General conditions—Interest—Repayment—Loans in connection with small holdings—Value of bonds issued— Importance of rent charge banks. . Insurance institutions and agricultural credit............... 0... eee ee cee ee ne eee eee e ete eeeeesees 1, State invalidity insurance institutions—Investment of funds—Conditions for Loans—Rate of interest—Total mortgage loans. 2. Insurance companies: Urban and rural mortgages—Special rules—Loans. II. Personau (SHort-TERM) CREDIT. . Local cooperative banks... 5..-.-- 00.02 cee cece cece nce ee ener nen c ence ecnsenccnseaeseaeseesesenseeseesaneens Their importance—Geographical distribution—Age and increase in number of credit societiee—Members not exclusively agriculturists—Condition of membership—Average number of members per society—Range of mem- bership—Differences in various districte—Area of operation of credit societies—Objects of limitation of area of operations—Functions of rural banks—Trading in agricultural requisites by credit societies—Advantages of such combination of functions—Sale of agricultural produce by credit societies—General social activities—Achieve- ments of societies in this sphere—Rural banks as credit institutions—Agricultural personal credit—Other sources of credit for German agriculturists: Public savings banke—Urban banks—Urban cooperative societies—Dealers— Provision of working capital—Mortgage transactions—Mortgage loans in connection with land transfer—Land purchase by cooperative societies—Amount of loans—No statutory limit to amount of loan by societies—Form of loan—Object of loan—Period of loan—Repayment of loan—Relation of repayments to fresh loans—Interest charged for loans—Relative cheapness of cooperative credit—Current account business—Repayment of loans on current account—Stimulation of thrift by rural credit societies—Savings boxes—Advantages as savings banks—Conven- ience-—Safety of deposits—Amount of savings deposits—Interest paid on deposits. He Page. 38 54 75 91 93 97 36 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 1. Local cooperative banks—Continued. Collective liability as credit basis—Increased need for visible capital—Liability—Meaning of unlimited liability— of unlimited contributory liability—of limited liability—Duration of liability of past members—Unlimited versus limited liability—Little danger from unlimited liability in rural credit societies—Limited liability as practiced in (a) Prussian Saxony; (6) Pomerania—Form of liability: Adaptability to English conditions—Working capital— Shares—Par value of shares—Tendency to raise value of shares—Actual payments effected—Entrance fees— PROS OHV OB alae aiasicsaleia eran ts so 2atavavatceaiaeavesSraice ay pentane a.av eek susie paved wre uss OS Se UNEP SIRE e S a ae anes dae rh bee ets Organs of administration—(1) Committee of management—Number of members—General powers and duties— Meetings—Chairman—Social classes represented—Remuneration of committee—Secretary—His membership of committee—Duties—Remuneration—Social classes represented—(2) Board of supervision—Duties—Meetings— Membership—Remuneration—Social classes represented—Liability to remissness on part of boards—(3) Meeting OP MEM DES wos occe ooo wc ceed Shdioacsd cies Sevees cewremenabiemon Muss xe" peplailneorsmtere Deceit ne Rees Sees Progress and present position—Tables showing (1) Ranges in volume of turnover of societies—(2) Operations of rural credit societies of imperial federation, 1905-1910—and (3) General view of position of 95 per cent of German rural credit banks on January 1, 1911-.........-.-.-- 220222 e eee ee ee eee eee eee nee e eee eens eeeeneeeeee Accounts of credit societies visited: Arheilgen, Auerbach, Augsburg, Bretleben, Brétzingen, Coethen, Cosel, Eggen- stein, Elxleben, Fischenich, Griesheim, Gross-Urleben, Guxhagen, Gross-Umstadt, Hambach, Nieder-Weisel, Rakow, Rinkerode, Sinzheim, Schifferstadt, Wallhausen, Zemitz.............-.----- 2 eee eee eee eee eet eee eeee 22 -Contral banks ca2.sertsaiae cost iemicanine os see ave ale vine cts wars ate Oe mn BO a ee RIO ev eae aieinei eaten weer Function of central banks—First beginning of central banks—Present number and membership—Organization— “Book” banks—Legal form—Membership—Shares and liability—Liability attached to shares—How far the lia- bility undertaken is excessive—Working capital—Form and extent of loans—Exclusive banking relations—Credit for fixed periods—Current account—Business done—Payments to and deposits by affiliated societies—Rates of interest on deposits and loans—Cost of management—Profits—Table. Special accounts of: Agricultural Central Loan Bank for Germany—Bavarian Central Bank—Hanoverian Central ' Bank—Pomeranian Central Bank—Saxon (Halle) Central Bank..............2. 2.221 ee eee eee eee cree e eee AGRICULTURAL CooPERATION (OTHER THAN FOR CREDIT). 1. Supply societies: (1) Local societies. Scope of business—Other societies undertaking supply—Importance of other cooperative agencies—Value of goods supplied by all cooperative agencies—Ad vantages of cooperative purchase: (a) Guarantee of quality; (6) Lower prices—Educational influences—Territorial distribution of societies—General develop- ment—Shares—Amount paid up—Nature of liability adopted—Amount of liability attached to shares—Number of members—Area of operations—Collection of orders and delivery of goods—Stores—Value of purchases per member and per society—Nature of goods purchased—Obligation upon members to purchase—Dealings with non- members—Fixing of prices—Payment for goods by members—Payment for goods by societies—Profits—Table— Sale of agricultural produce—Note on Gross-Umstadt Supply Society......... 2.2.0... 22.0. e cece eee eee ee eee eee (2) Central societies. Advantages of combination of local societies—Special advantages: Combinations of over 1,000,000 purchasers—Purchase of machinery—Local societies safeguarded in various respects—More impartial attention to special requirements—Educational efforts—Area of operations—Membership—Table—Legal form— Shares—Table—Exclusive dealing with central organizations—Payment for goods—Table—Expenses of manage- ments—Profits—Sale of agricultural produce by central supply organization 2. Dairy societies: (1) Local societies. Extent of movement—Causes of its growth—Advantages of cooperative dairying, especially for small holders as regards (a) equipment and utilization of raw material; (b) saving of time in the farm; (c) better product; (d) better prices with saving of time in marketing; (¢) economy of milk; (f) source of steady income; (g) influence on breeding and maintenance of stock—Types of cooperative dairies—Territorial distribution of coopera- tive dairy societies—Membership and liability—Shares—Reserves—Preliminary requisites for establishment of dairy society—Delivery of milk at dairy—Methods of payment—Regular testa of milk supplied—Auzxiliary busi- nesses—Sale of fresh milk—Milk-selling societies—Taxation of cooperative dairies—Growth and present position of societies within the imperial federation of agricultural cooperative societies—Notes on societies visited— Apolda Society—Gross-Umstadt Society—Ostheim Society—Zemitz Society .............00 0.0 e cece cece eee e eee (2) Centralization............ 222222 eee cern cece rece ett teen e reece eee eee eee e eee n ec cee eens eceeeeeaeecnees 3. Corn-selling or granary societies. ..-.-..------- +0221 22 eee eee eee ce eee eee eee eee e eee e cece cece Number and membership—State action—Decentralization of German corn trade—Cooperative movement—Lessons from experience in certain States—Prussia: Legislation—Construction—Leasing—Pomerania—Hesse Cassel— Province of Saxony—Halle Society—Silesia—Bavaria; exceptional importance in—State aid—Shares—Methods of payment—Results—Wurttemberg—Baden—Centralization—General points—Compulsory delivery—Methods of payment—Supply of agricultural requisites—General results. 4. Cattle-sellings0cieties:... -sc.s.ccs252 ees 2 sehen emine ek esisceies oo oi oes satel eee duis sos viaieldeeebiia doce German meat production and consumption—Importance of small holders in meat production—Advantages—Raiff- eisen’s efforts—Present market conditions—Failure of cooperative slaughterhouses—Present movement—Socie- ties: Shares, liability, area of operations—Mainly pigs and calves handled—Sales only through or to society— Methods of payment—Mode of operation—Managers—Insurance—Suitable conditions for such societies—Cen 'rali- zation—Business by Prussian organizations—Hanover—Eastern Prussia—Pomerania—Bavaria—Notes on socie- ties visited—Bergen—Janowitz—Schivelbein—Stolp—Anklam. 5. Egg-selling societies. ............-..-..-eee eee ceeeer cette teeter erent tee teen ee ence eee eee Importance of egg market—Advantages of cooperation—Title and objects of egg-selling societies—Shares—Area and mode of operation—The market problem—Payment for eggs—Centralization—Notes on two Hanoverian societies. Page. 114 124 132 135 163 185 189 199 206 218 219 229 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. G:, Electricity sociG tes: 36.0 4.2.55 sue aaa Gikd ae decreases Dice alta ade while’ s Vis pum aaeeeane toeddimceeececen Large consumption of electricity by German agriculturists—Advantages to farmers—Recent rapid development of electricity societies—Kinds of societies—Sources of supply—Membership—Liability—Sources of capital—Cost to farmers—Public furtherance in Pomerania, Province of Saxony, and other parts of Germany. 7 Machine societies tile wnat een

Per cent. per cent. * | 4 per cent. 5 per cent. 1905 i sterling. .| 106,000 | 14, 351, 500 | 51,576,000 | 27, 012, 000 582, 000 70 rage che aie an pea pr ee per cent........: 0.11 16. 78 54. 79 28. 70 0. 62 0.01 1906 pounds sterling..| 123,000 | 16,293, 000 | 52, 756,000 | 28, 492, 000 665, 500 225 TE Rie ee tga en baad eee per cent......... 0.18 16. 57 53. 65 28, 98 0. 68 0. 00 1907 ae sterling. .| 84, 500 | 13, 583, 000 | 48, 193,500 | 38,538,500 | 1, 046, 500 8, 000 Sg eg per cent......... 0. 08 13. 39 47. 50 37. 99 1.03 0. 01 1908 pounds sterling..| 87,500 | 9,152, 500 | 35, 094, 500 | 57,891,000 | 1, 554, 000 17, 000 Proper ras ger ee ee ie oy per cent......... 0. 08 8. 82 33. 81 55.77 1.50 0. 02 1909 fecr eee sterling..| 97,000 | 8,015,000 | 38, 627,000 | 60,608,000 | 1,472,000 4, 000 Seed ee ae ee per cent......... 0. 09 7.37 35. 50 55. 09 1. 35 0. 00 It will be observed that in this period the percentage of the mortgage loans at under 4 per cent fell by over one-half (15.89 to 7.46), and that those at exactly 4 per cent fell from over one-half in 1905 to one-third in 1908, slightly recovering in the following year; on the other hand the loans at over 4 per cent have increased from 29.32 to 56.44 per cent of the total. The Wurttemberg Savings Bank lent, in 1909, £753,590 on mortgages upon rural property at 4 and 4} per cent. In the Kingdom of Saxony, where the savings banks tend to invest four-fifths of their deposits in mortgages, the predominant rates are from 4 to 44 per cent, thus showing a higher level than 10 or 20 years earlier when they averaged about 4 per cent (4.01 in 1890 and 4.07 in 1900). In Baden loans on the mortgage of rural property were usually granted by these banks in 1909 and 1910 at about 44 per cent and in 1911 at about 44 per cent. The writer found cases in Baden in which, when a reduction was made in the rate of interest charged for mortgage loans, such reduction was made applicable to outstanding loans at a higher rate by the writing of the difference between the rates to the credit of the borrowers concerned. Conditions for mortgage loans by savings banks.—Compared with mortgages effected with other institutions for agricultural credit in Germany the mortgage loans made by savings banks are usually subject to certain disadvantages. Receiving deposits which are for the most part liable to withdrawal at short notice the savings banks are not in a position, except to a limited extent, to grant mortgage loans not subject to recall, nor, for the same reason, are most of the mortgages redeemable by install- ments. Mortgages of the latter kind are, however, coming into greater vogue, especially in Prussia, where in 1909 over 25 per cent of the mortgages effected on landed property had been made subject to annual sinking-fund payments. Since the middle of the nineties, in connection with their efforts to remedy the excessive mortgage indebtedness upon agricultural property, the State authorities have strongly urged upon the banks the application of this policy 1 in the case of, agricultural loans. From the point of view of the borrower a certain difficulty arises owing to the fact that, the rate of interest 80 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. charged by savings banks being rather high, the addition of a sinking-fund payment might make the the annual total charge beyond his power. Occasionally this difficulty is partially surmounted by fixing the rate of interest upon those mortgage loans subject to a sinking-fund payment at a lower figure than that upon other mortgages. It is usual, when no sinking-fund arrangements have been made, to retain the right to call in a mortgage at three or six months’ notice. In practice the lability of savings-bank mortgages to be called in is not of great consequence, as, unless in very exceptional circumstances, banks do not exercise their right. Borrowers on mortgage security from savings banks are exposed, however, to the risk of an increase in the rate of interest, which could not occur in the case of the mortgage loans granted by the mortgage credit associations, the State provincial or district mortgage banks, or the joint-stock mortgage banks. As a result of the financial crisis of 1907-8 a large number of savings banks found themselves obliged to increase their rates of interest for deposits, say, from 3} or 34 to 3} or 4 per cent, and could not therefore continue their mortgage rate at the old figure. Many mortgage borrowers were faced with the alternative of either repaying the loan or submitting to an increase of interest, and owing to the stringency of the market the latter course was necessarily chosen in most cases. On the other hand, savings banks are free to reduce the rates of interest payable on loans contracted at a period when money was dear, or to supply in some other way the difference in interest to the advantage of the borrower (e. g., writing off a corresponding portion of the capital debt). - Loans on reducible mortgages.—Like the mortgage credit associations and other institutions for mortgage credit described in this report, the savings banks, although it is not in their case compulsory, also grant mortgage loans subject to annual repayments of a percentage of the capital sum in addition to the interest payments. The other institutions just alluded to combine with gradual amortization nonliability to the calling in of loans; savings banks, owing to the necessity of their being in a position to realize their assets if necessary at short notice, are unable to concede these two advantages to borrowers. But the fact that nonliability to being called in can not be conceded does not preclude the adoption of reducible mortgages. The Prussian banks have been repeatedly urged by the Central Government to encourage repayments of mortgage loans by annual installments, the provincial and district officers of the Government being requested to exercise their influence upon the banks with. this object. A circular of the Prussian minister of the interior in 1886 advised the provincial governors to further the adoption of measures by the savings banks to assist landowners, and especially smaller landowners, to transform already existing mortgages into mortgages subject to swking-fund payments, and to encourage the latter class of mortgage being adopted by future applicants for loans. At the same time it was urged—with the view of enabling landowners in case of exceptional temporary need to obtain money without burdening their property with further mortgage charges—that, so far as it was feasible, borrowers should be allowed the free disposal of such sinking-fund accumulations. To lessen the difficulties of borrowers in meeting the payments both of interest and sinking fund, it was suggested in a ministerial order of 1893 that the savings banks might charge a lower rate of interest upon mortgages made subject to sinking-fund payments than upon other mortgages owing to the fact that the indebtedness of the former was annually reduced, and that the sinking fund in the possession of the banks grew gradually larger. Such reduced rates of interest should, however, only be granted to those borrowers who undertook not to exercise any claim upon their accumulated sinking-fund payments until the latter reached the fifth part of the capital indebtedness, and to cede priority respecting any part of the capital remaining over any other mortgage loans raised. It was further recommended that, while savings banks must necessarily reserve the right to call in mortgage loans on due notice, yet borrowers on reducible mortgages should be favored to the extent that, should banks be obliged to call in mortgages, those not subject to sinking-fund payment should be called in first. In order to make it possible for borrowers in exceptional circumstances to obtain the return of the sinking-fund payments, such payments—to be at least one-half per cent per annum of the loan—should, in accordance with this order, be entered to a separate account and should be credited with interest in the same way as other deposits; when a tenth part of the capital debt has been thus accumulated, it should be open to the mortgagor to apply to the bank for its withdrawal, but it is recommended that the banks should always retain the right to refuse such applications. These efforts did not meet with the desired success in all Provinces, but in the western Provinces and in Posen the savings banks began to grant reducible mortgages to a very considerable extent. In 1901 the ministry of agriculture issued a circular to the semiofficial chambers of agriculture urging them to use their efforts in their respective Provinces to secure that the rate of interest upon payments to sinking fund should be the same as those paid by mortgagors upon loans, instead of the rate paid AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 81 upon ordinary deposits, holding that such payments represented a reduction of the capital debt, which, merely on grounds of expediency, was not in fact effected. It was, of course, recognized that in cases in which borrowers withdrew and applied accumulated payments to purposes other than to the reduction of the mortgage charge, a retrospective reduction of the rates to those paid on ordinary savings deposits should be made. In several Provinces savings banks have now adopted the practice of allowing either the same rate of interest upon sinking-fund payments as is charged upon the capital debt or a higher rate than that paid on ordinary deposits. Many banks also allow debtors to effect reductions of their indebted- ness when the sinking-fund payments total a fixed percentage of the loan; thus the arti¢les approved for Pomeranian savings banks provide for successive 10 per cent reductions out of accumulated sinking- fund payments. On the other hand, the same articles lay down that debtors may only withdraw the sinking-fund payments for paying off mortgage indebtedness. The following table shows for Prussian savings banks the total of the loans outstanding on reducible mortgages, both urban and rural, at the end of 1909: Percentage | Percentage Peres |” oF total of total Amount. t loans on loans on ie rigage urban rural oanS. mortgages. | mortgages. Kingdom of Prussia. ...............-. S ssayesuestaeencimasaehi ge aeenc re eee eacans £55, 601, 000 17. 37 13. 75 24. 40 Provinces: : : East Prussia 877, 000 15. 92 13. 78 21. 36 West Prussia. 1, 002, 000 19.77 17.51 23. 66 Brandenburg 1, 975, 000 9. 34 3.70 21. 96 Pomerania 1, 933, 000 12. 51 6. 99 20. 99 Posen........-. 3, 111, 000. 50. 45 46. 44 59. 32 Silesia 2,112, 000 9. 64 4.35 20. 81 Saxony 2, 274, 000 8.33 6.77 10. 24 Schleswig-Holstein............2....20-0.0cececeeescececccnces = 202, 000 .75 . 99 . 49 HanOV Orso wecsseytek aerctte eae soc Dicalndinn cous aes) Sucariaabeeien 11, 039, 000 27. 83 16. 48 37. 53 Westphalias cc's nriisotiecinied onesies ted aceioseocia ansed dee otsacaud Seoeuaneens 9, 938, 000 15.10 15. 47 14. 33 Hesse-N assert sicisiccisieic ise niciec.c oes be eta hecieiele a aldcemeucodedaisieeaigiente 8, 213, 000 51.50 41.18 76. 14 Ribine Provinee:isigidicc acesaedese Cia.d erage sorsiseeenae wee ok De 12, 513, 000 19.09 15. 41 37. 64 Hohenzollern.................. hare) Guicuna ana Mead ok ae ee a ee 412, 000 98. 47 99. 26 98. 27 According to kinds of savings banks: * Wrbai. 3 ssc Shamed ants toa co ee Orton Aree a thee eet 15, 506, 000 9. 67 8. 84 13. 04 Rutal communes ce cassecnscuieiecichts semen sateen lccewamene sees oe 5, 666, 000 20. 98 25. 51 16. 55 District...............+4 29, 677, 000 28. 30 21.94 33. 96 Provincial or union . ... 4, 431, 000 49. 09 52. 88 40.77 Association and private... 251, 000 1. 40 . 84 2. 87 BS OOLS000 acceau oviece-|sanansaccess|scosenceanas Of the total sum outstanding against mortgage security both urban and rural only 17.37 per cent, or £55,601,000,-was amortizable by regular sinking-fund payments. In the case of mortgages upon rural property, however, 24.40 per cent, or £26,557,000 out of £108,822,000, was subject to such payments. In some Prussian Provinces, it will be observed, the proportion of reducible rural mortgages forms a very high percentage of the total rural mortgages. Thus, in 1909, in Hanover 37.53 per cent of the total loans against rural mortgages, or £8,028,000 out of £21,391,000, was in respect to those on the reducible system; in the Rhine Province the percentage was 37.64, reducible mortgages comprising £4,087 ,000 out of a total of £10,859,000 on rural mortgages; in Posen the percentage was 59.32 (£1,136,000 out of £1,915,000), in Hesse-Nassau it was 76.13 (£3,585,000 out of £4,709,000). In the small government district of Hohenzollern, a Prussian enclave in the Kingdom of Wurtemberg, almost the whole of the rural mortgages were on the reducible system, £340,000 out of £346,000, or 98.27 per cent,-being on this basis. Limits of loan on mortgage security—The maximum amount that may be lent upon any particular parcel of land is not definitely fixed, but in practice the limit may be said to be between 50 and 66 per cent of the ascertained value. The methods of valuation adopted in Prussia are various. A common, basis is the assessment of the net annual yield returned for the purposes of the land tax; the valuation which determined this net yield in Prussia was made over 50 years ago (about 1860). In different Prussian Provinces—model articles have been approved for savings banks by the respective provincial authorities—the banks adopt different absolute multiples of such yield, or different multi- ples according to the size or value of the particular property; thus the multiple taken as maximum appears as 224, 24, 25, 30, and even up to 45 times the value of the net annual yield as appraised 95273°—S. Doc. 17, 63-1——_6 82 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. for the land tax. The Pomeranian Savings Bank articles vary the multiple from 30 to 45 times the net yield according to the size or approximate value of real property in two of the three administrative districts into which Pomerania is divided; in the third the multiple is from 25 to 40. Property situated . within the district of the particular bank concerned may be lent upon up to an additional 5 times the net yield, while property outside Pomerania may not be lent upon beyond 30 times thie net yield. In general, buildings upon agricultural property—that is, dwellings for the occupiers, or for farm servants, and ordinary farm buildings—are not taken into special consideration apart from the prop- erty, but should there be at the same time other buildings, such as dwelling houses or buildings for industrial purposes, these buildings may be separately estimated at a low multiple of the assessment made for the building tax. P Valuations made by mortgage credit associations (Landschaften), provincial or district mortgage credit banks, or similar public institutions, by most insurance companies, special village courts and commissions appointed by the authorities of the administrative unit represented by the bank, are also generally accepted. Respecting such valuation the law enacts that, for the investment of trustee funds, mortgage loans may be regarded as secure, in the case of agricultural property, when the loan does not exceed two-thirds of the value thus determined, or in the case of urban property, one-half of such valuation. Valuations by village courts may not be accepted for properties exceeding £750 in value. The banks usually provide in their articles that valuations may be made by special valuers appointed by the bank, by two members of the committee of management or two other persons appointed as advisory members of the banks. Two special valuers are usually required, but one may be accepted as sufficient when the services of two or more would entail expenses out of proportion to the value of the property. Special regulations respecting small holdings.—Many savings banks provide in their articles that loans upon rural properties up to two-thirds of their valuation may be made only within the district covered by the bank, and when sinking-fund payments of at least one-half per cent per annum are included in the terms of the mortgage. But, with the view of encouraging the creation of small holdings and allotments, many savings banks are prepared to lend up to three-fourths and even five- sixths (e. g., some in the Province of Hanover) of the value of newly purchased holdings situated within their district, provided at least half per cent of the capital is to be repaid annually;: in special circum- stances this sinking-fund payment may be waived for a period of two years. The amount of mortgage loans by savings banks.—Although it is an undisputed fact that the mort- gage credit afforded by savings banks is especially beneficial to the small and medium landowners, no precise statement of the usual or average amount of mortgage loans granted by them is available. A report issued in 1906 by the Saxon Government—the Saxon savings banks, it may be explained, con- stitute in many respects the most developed group of savings banks in Germany—showed that the average amount for 92,649 mortgage loans outstanding at the end of 1903 for 319 savings banks was £545, while the 7 Saxon institutions for mortgage credit showed (at the end of 1904) an average of £1,180 for 24,351 loans. For the five years 1905-9 the average of the mortgage loans granted by Saxon savings banks amounted to £590, £610, £620, £625, and £635, respectively. The report just alluded to states that the average in the case of many of the banks of the smaller or less populous rural districts sank to £150 or £100, while for those in the larger towns the average mortgage loans were very high. As far back as 1898 the average of the mortgage loans of the banks in Leipzig, Dresden, and Chemnitz, were, respectively, £2,735, £2,040, and £1,175, and the entire tendency of the loans of urban savings banks since that date has been in an upward direction. An inquiry was made into the savings banks of the Prussian Province of Brandenburg—in which large and fairly large landowners predominate—by Dr. von Altrock, who collected detailed figures respecting about two-thirds of the loans on rural mortgages in that Province which were outstanding at the end of 1897. The total loans on rural mortgages amounted to £3,275,000; details obtained for loans representing £2,146,700 of the amount gave the following results: Loans. Number. | Percentage. | Amount. Average. Up to: £70... soasoncatate ous doathdwnisbcnieka cies oe ots Sea's Comeem oie 2, 821 36.7 | £130, 000 £46 Brom 20:0 2100): xe ceesissunendenedaspeawseneiase eee at cea ee eaaeaeees sees 2, 108 26.7 250, 000 118 Prom £150 to: £1,500 s.03 vee es cuse spesacicwe ese ieee hs secte ies oe nee ne 2, 819 35.6 | 1, 204, 000 427 Over: £1,500. sxcccmeresacetey ress a ep eeeecwecantsh oe obras emanate elke 159 2.0 562, 700 3, 589 7,907 100 2,146. 700 271 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 83 The average of all loans was £271. The above details show clearly how important these insti- tutions are for the smaller holders in Brandenburg, 63.4 per cent of the loans granted in that year having been for sums not.exceeding £150. Restriction of area for mortgage investments.—Savings banks are not restricted, either by laws or by regulations, to the lending of money on mortgage of property within their respective districts. It is, however, highly disadvantageous for an ordinary savings bank that the property mortgaged should lie at a distance, owing to the expense and difficulty involved in the periodic investigation necessary to insure that no depreciation has taken place; and a Prussian ministerial order declared that the lending of money on mortgage security outside the district of a bank should only be admissible when a fixed period for redemption is arranged and when such mortgages do not exceed the fourth part of the total mortgage investments of a bank. In their articles most banks either limit such investments to their own or adjacent districts, or lend less upon a property situated beyond these areas; or such investments are restricted to the Province (if in Prussia) or State to which they belong. Savings banks’ having small and moderate areas or in predominantly rural districts may not, of course, find it an easy matter to invest their deposits in first mortgages within their immediate district. Personal credit.—Besides the two main categories of investment, namely, in mortgages and stocks and shares, which constitute about 85 per cent of the investments of German savings banks, invest- ments are made by loans on bills, scrip, and bonds, with or without surety. Loans on bills or scrip ‘need not be discussed here, as the former are not currently employed by the majority of agriculturists, especially by the smaller landholders, nor are paper securities held by them in large quantities. As to loans on bonds or promissory notes, the Government has not ceased to urge the savings banks to help the smaller men by such loans. In 1856 a Prussian ministerial decree stated that the savings banks— could and should help the small man in cases of need by loans on bond with surety. * * * To assist such borrowers facilities should be granted to repay in installments or by payments into a sinking fund. * * * The adoption of this kind of business can not be too warmly recommended, and it is requested that the provincial governments, district governors, and local authorities make it their aim to encourage this form of investment. In 1896 the minister of agriculture recommended the newly established chambers of agriculture to use their influence in their respective provinces to induce the savings banks to grant credit on personal security in those localities when personal credit could not be satisfied by ROOpSnEtIne credit societies. ‘ Loans to individuals on bond with or without sureties are only admissible for residents within the area served by the bank; they may also be given to local cooperative organizations. The amount of the loans to one individual on bond with sureties is generally fixed in rural or semirural savings banks at a maximum of £150, £200, or £300; two sureties must usually guarantee capital interest and any costs arising. Repayments must be made within six or, less usually, twelve months; but the fixed period may be prolonged a fixed number of times, but rarely, however, exceeding a total period of five years. Such loans are also made subject to — repayments, usually of at least 10 per cent per annum. On personal bond without surety loans lower in amount are granted. A ministerial decree recom- mended such loans provided that they did not exceed £150 in amount, were granted with the unanimous consent of the cominittee of management, only up to a period of six months and subject to be called in at a week’s notice, as well as that such loans did not total more than 10 per cent of the reserves or 1 per cent of the liabilities of the particular savings bank. The Hanoverian model articles issued in 1911 provide that the period should be fixed for six months with a maximum prolongation for their like periods, or that they be made subject to six-monthly repayments of 10 per cent of the loan; the Pomeranian model articles fix the amount at £150 in normal cases and allow a period of six months with one prolongation for a like period. At the end of 1909, £768,000 was owing to Prussian savings banks on bonds without surety, and £8,090,000 on bonds with surety. Of the former sum £510,000 was lent by district savings banks and £71,000 by (rural) communal banks, while on bonds with surety £2,822,000 was lent by district and £1,432,000 by (rural) communal savings banks. Two years later (1911) loans on bonds with surety had risen to £9,800,000. Advances on bonds with sureties are made mainly by banks in certain Provinces. Of the total (£8,090,000) thus lent in 1909, £2,632,000 was lent by banks in Schleswig-Holstein, £1,371,000 by those in the Rhine Province, and about £950,000 by those in each of the three Provinces, Hanover, Westphalia, and Hesse-Nassau. 84 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The new (1911) Bavarian regulations for savings banks contain provisions respecting loans on bond with surety; they require that the advances made on such security must not exceed 5 per cent of the assets of a savings bank. A translation of the text of that portion of these regulations dealing with the investment of savings-bank funds, with the official annotation thereto, will be found in the appendix. The reader is also referred to the translation of the articles of a typical Prussian district savings bank, clause 28, which will also be found in the appendix. Loans to cooperative societies —The question of loans by Prussian savings banks to cooperative societies first came into prominence in the course of the nineties. In 1896 a ministerial decree pro- hibited savings banks from lending to these societies; in 1899 a similar decree authorized them to lend to any cooperative society with unlimited liability; and finally in 1901 the decree at present in force authorized them to lend to cooperative societies with limited or unlimited liability, with the exception of credit societies. When special security (e. g., by deposit of securities or by way of mort- gage) is not furnished, loans may be granted to societies with unlimited liability only to the maximum amount of 10 per cent of the collective value of the property of members, but societies with limited liability may be granted loans to the extent of 75 per cent of the collective liability undertaken by their members. As regards the valuation for this purpose of the property of members of societies with unlimited liability the list of members supplied by the society is submitted to the local inland revenue office which is authorized to furnish a summary statement—no details respecting individuals may be given—of the total of the income and supplementary land tax paid by the members. No credit in excess of a maximum of £5 per member may be granted to any society with limited lability without special inquiry—that is, a higher credit is only to be accorded when the return of the inland revenue authorities shows that the total assets of the members amount to at least 10 times the amount of the liability. Borrowing societies must be situated within the district served by the bank, or in an adjoining district; they must undertake to forward their annual balance sheet with a list of members admitted or retired during the year; they must be affiliated to an authorized audit union of cooperative societies, and must forward the reports of the audits carried out by the officials of the latter. As to savings banks their articles must expressly authorize the grant of loans to cooperative societies; the _loans must be made subject to annual sinking-fund payments in addition to interest, and the right to call them in at six months’ notice must be reserved; further, at least once in every three years the committee of any savings bank which has made loans to societies must undertake a minute examination of the financial condition of the societies concerned. The amount outstanding in 1908 as lent to private corporations (that is, cooperative societies, associations, etc.) by Prussian savings banks was £1,514,000; of this sum £1,062,000 was lent by district and rural communal savings banks. Two tables are added. The first shows the development of the deposit and mortgage loan busi-- ness by Prussian savings banks since 1860 and the second the percentage distribution of their invest- ments in each of the years 1904-1910, as also the actual amounts under each head according to the kind of bank at the end of 1909. Prussian savings banks. I. DEVELOPMENT OF DEPOSIT AND MORTGAGE LOAN BUSINESS, 1860-1910. 6 * Of which— wae ; eb % Total Total funds of banks. eposits. invested. In l Tisban 2 mortgages. , mortgages. TRG0 22220 oi deal ae nes ane Rae eo aa ARE eeed 471 £7, 569, 000 £7, 685, 500 £1, 842, 000 £1, 789, 500 HBTs sci s seeds sete eat aad EM ae os tone, ORO 932 24, 782, 500 25, 373, 500 7, 220, 500 6, 576, 500 TSO. celenie ee a aot eee ee 1,191 | 79,731,000 | _ 82,021,000 |‘ 22,517,500 23, 280, 500 MSO ie echo stepped Monae hand avaret aRanchebeieheeanteemuaate ree keee ee caked 1,393 | 164,078,500 | 170, 867, 000 44, 754, 500 -47, 875, 000 AQ Oc arh yah wees tse bean ene Rel che Al ae eat alae an 1,490 | 287,789,000 |. 298, 752, 500 74, 336, 500 | * 100; 010, 000 TOL Osa ince ieee coerce Cna'e deemoalidinntersh taxes tien 1,711 | 555,339,500 | 579, 447,500 | 115,142,500 | 229° 340, 000 DOD Lerscryae na onivas hora e wee Mg a is men eal 1, 727 | 591, 630,000 | 616, 450, 000 370, 900, 000 : AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 85 Prussian savings banks—Continued. II. DISTRIBUTION OF INVESTMENTS, 1904-1910. Percentages of total investments in the 6 years 1904-1910. Mortgages. On urban prop- | On rural prop- . erty. erty. ' Year. Total of ae . Bonds ~ invested. - | with |. To Of of | Secu) ond | Bills. Pledeed| public | Other. which which * |without ; ‘| bodies. * subject b subject sureties, to to Total. sinking- Total. sinking. fund , fund pay- pay- . ments. ments. M904 oc tadessetd £406, 311, 500 | 36.24 4.40 | 22.02]. 4.40] 26.90 2.02]. 0.98 1.17 |. 9.85 0. 82 434, 691,000 | 37.01 4.65 |] 21.65 4.43 | 26.27 1.90 .97 1.06] 10.26 . 87 459, 041,500 | 37.97 4.75 | 21.42 4.62 | 25.20 1. 84 . 83 1.03 | 10.78 .92 474, 536,500 | 39.11 5.08] 21.38 4.78 | 23.83 1. 78 71 1.04; 11.20 95 500, 063, 500 | 39.13 5.33 | 20.76 4.80 | 23.85 1.71 -68] 1.02] 12.00 - 85 538, 266,000 | 39.23 5.40 | 20. 22 4.93 | 24.16 1. 65 .75 | -° 1.02 | 12.10 . 87 579, 447,500 | 39.58. 5.59 | 19.87 5.06 | 23.63 1.61 . 93 91 | 12.35 1.12 Mortgages. Actual amounts invested, end of On urban property. On rural property. es 1909, by— Securities. Of which sub- Of which sub- Total. ject to sinking- Total. ject to sinking- } fund payments. fund payments. 1. Urban savings banks.............-- £129, 363,402 | £11,438,401| £31,876, 774 £4, 157, 427 £72, 760, 269 2. Rural commune savings banks..... 18, 347, 954 38, 405, 680 18, 657, 393 2, 260, 325 4, 221, 139 3. District savings banks.............. 49, 281, 437 10, 810, 458 55, 503, 697 18, 846, 662 37, 745, 144 4. Provincial savings banks........... 6, 204, 045 3, 280, 419 2, 821, 867 1, 150, 476 6, 653, 466 5. ociation and private savings Banks. cchvevonset cooceescnedeus 12, 988, 397 108, 834 4, 963, 008 142, 328 8, 686, 283 AP OtAN a sietois Geiniersioiate choiemiomaree es 211, 185, 235 29, 043, 792 108, 822, 739 26, 557, 218 130, 066, 301 . Bonds with . Actual ee os pnd. Gr and without Bills. Pledged effects. a ee < Other. » BY sureties. : 1. Urban savings banks..............- £2, 895, O11 £1, 602, 060 £2, 236,622 | £31,397, 765 £1, 699, 457 2. Rural commune savings banks..... 1, 503, 725 20, 422 185, 671 2, 388, 227 223, 423 3. District savings banks.............- 3, 331, 969 1, 020, 282 1, 407, 763 27, 618, 459 1, 339, 998 4, oe eae banks...... eer 401, 361 70, 612 482,917 1, 948, 349 188, 373 5. Association and private savings banks.;.o.ce0seesedetesessces 726, 585 1, 326, 656 1, 184, 774 1, 765, 657 1, 225, 734 Total cist oud aed eeiemeecekese 8, 858, 651 4, 040, 032 5, 497, 747 65, 118, 457 * 4, 676, 984 5. CREDIT FOR LAND IMPROVEMENT. Nature of such credit—The most important improvements in connection with agricultural land are concerned with drainage, irrigation, the construction and maintenance of dykes, and protection of river banks. Most landholders must seek credit for the execution of these often costly undertakings, which, however, where carried out properly upon suitable land, yield a large return. Credit for land improvement may be said to stand midway between personal and mortgage credit. Its basis rests upon the capacity and reliability of the borrower and upon the additional value which the land is expected 86 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. to acquire through the improvement. Owing to the nature of agricultural production, it is desirable, in the interests of the landholder, that such loans should be of adequate amount, should bear a moder- ate rate of interest, and should not be liable to be called in, while sinking-fund payments should be obligatory. Private capitalists, whether individuals or institutions, are rarely justified in lending money for this purpose on these conditions; they are not usually qualified to investigate the plans and probable return of such works, nor are they in a position to supervise the property at a later period. Private persons rarely, and ordinary banking institutions almost as rarely, are ready or able to waive the right to call in a loan or to accept repayment in installments spread over a number of years. These requirements can only be satisfactorily met by cooperative organizations or by public authori- ties working alone or in conjunction with such organizations. , Special institutions existing.—In Prussia a State central land improvement fund was established m 1850, and its total resources amounted in 1875 to about £175,000. In 1876 the bulk of this sum was handed over to the administration of the Provinces, the majority of which now possess land- improvement funds. In 1879 an act was passed authorizing each Province to establish a land-improve- ment bank, and up to the present time five such institutions have been established. Similar banks have been erected by law in Saxony (1861), Bavaria (1884), Hesse (1880 and 1890), and Oldenburg (1885). Prussia.—(1) Land-improvement funds: It will be convenient to deal, first, with the Prussian land- improvement funds, and, in the second place, with the Prussian land-improvement banks. These funds, which are usually administered either by the committee of the Province or by the governor of the Province, are obtained and supplemented by money raised by the Province in accordance with its budget, or by endowments (e. g., the amount allotted by virtue of the distribution of the central fund in 1876), or by raising capital by loans subject to gradual redemption. There are considerable diver- gencies in the conditions as to interest, sinking fund, repayment, and security in the different Provinces, but the chief points may be noted. The application for loans must set out the amount, the exact purpose for which it is required, and the method of repayment proposed. In some Provinces the amount loanable is limited; thus in East Prussia not more than £100 may be granted in a single loan; in Brandenburg a sum over £750 requires the assent of the committee of the Province; in Saxony and Westphalia (Paderborn fund) it must not exceed three-quarters of the cost of the improvement. There is sometimes a condition that landholders may only obtain loans when they show that they can not carry out the improvements by their unaided resources, or that the holdings must exceed a certain value. As to interest and redemption, in Brandenburg the annual payments of interest and sinking fund must not be less than 5 per cent, and in case of irrigation works not less than 7 per cent, of which 33 per cent in both cases is interest, and the balance sinking fund; reductions to under 5 or 7, or increases to 6 or 8 per cent, may be made by the provincial authorities. In East Prussia no interest is charged for the first three years, after the expiry of which period 24 per cent is charged, while the sinking-fund payment is fixed at 1 per cent; in exceptional cases free grants not exceeding £250 may be made. In Pomerania 37 annual payments (covering interest and redemption) of 44 per cent of the loan are required, except in the case of irrigation works, when 7 per cent is payable for 19 years. In Silesia such loans are granted ‘‘at moderate rates or free”; borrowers in every case are granted liberal facilities for repayment; it is permitted either to make separate payments, apart from the amounts due as interest and sinking fund, or to increase the annual payments to sinking fund. Minimum additional payments are sometimes fixed; thus, in Pomerania no installment of less than £15 is accepted; and additional annual payments to sinking fund must usually not be less than one-half per cent of the capital sum. Throughout the period of repayment interest is paid as on the full sum originally bor- rowed, but as the capital debt decreases the difference between the interest due upon the whole sum and _ upon the balance is written to the sinking fund. As guarantee for the repayment of the loan, mortgage security is usually required. In addition, in Brandenburg, in exceptional cases, mortgage claims, first-class securities and bills with good sureties may be accepted, while in East Prussia mortgage and first-class paper securities may be accepted in normal cases, and personal bonds and bills with sureties in exceptional cases. The payment is made, according to the discretion of the provincial authority concerned, in one sum or by installments. In Pomerania it is provided that loans of over £60 shall be paid in the latter manner. Supervision of the estates upon which loans have been made for improvement purposes is exercised by the provincial authorities. In Pomerania, for instance, the governor of the small admin- istrative unit, known as the Kreis, is required to perform this duty by the provincial government. 2 AGUHLUULTURAL CREDIT AND COOPERATION IN GERMANY. 87 On January 1, 1912, the total of the outstanding loans granted out of seven funds, for which particulars are available, amounted to £354,700. Of this total £118,000 and £108,000 came, respec- tively, from the Brandenburg and Panispanieas funds. (2) Land improvement banks: Five land improvement banks have been created in Prussia under the law of 1879: For the Province of Silesia (in 1881), Schleswig-Holstein (1881), Posen (1885), Westphalia (1894), and East Prussia (1904). Down to the end of 1908 these five institutions had lent a total of £565,869, of-which nearly half (£272,283) fell to the Silesian Bank. Schleswig-Holstein and Posen had made loans aggregating, respectively, £187,625 and £83,951, while East Prussia and Westphalia only lent £21,150 and £860, respectively. Of the total sum about two-thirds was lent for drainage purposes. The participants in the loans were thus distributed: Individual landowners holding under family or other settlements, £253,477; other individual landowners, £1,005; water- supply societies, £101,475; dike*societies, £25,000; afforestation societies, £1,450; societies for manur- ing with marl, £112,735; water-supply societies, £1,050; and urban and rural communes, £575. Objects.—The Prussian act states that land improvement banks may be established for lending money toward: (1) The furtherance of land cultivation and especially the execution of drainage and irrigation works, the laying out and maintenance of roads, forest cultivation, the reclamation of land, and the founding of new farm holdings. (2) Works for the protection of river banks. (3) The construction, widening, and maintenance of dikes, and the security and improvement of works appertaining thereto. (4) The establishment, use, or maintenance of water courses or basins, the construction or improvement of waterways, and other works of construction in connection with navigation. The existing banks have not in every case ‘adopted all the foregoing objects in their statutes. . In Schleswig-Holstein the promotion of drainage works is excluded; in Posen the objects are confined to drainage and irrigation; and in East Prussia funds may be given only for drainage improvements. The banks j in Silesia and Westphalia embody in their sphere of operations all the activities provided in the act. A complete translation of the Prussian act and of the statutes of the most important bank founded under its provisions, viz, that of Silesia, is printed in the appendix, to which the reader is referred for full information. The salient points touching these banks are, however, briefly treated in the following paragraphs. Prwvileges.—The privileges accorded to the Prussian banks are: (1) The right to issue bonds of £250, £100, £50, £25, and £10 up to the amount of the loans granted, the bonds being irredeemable by the holders, but redeemable by the bank by periodical drawings; (2) freedom from all stamp duty; (8) freedom from fees for registration in the registry of title; and (4) the right to proceed to summary execution for recovery of debt without the intervention of the courts. Procedure on part of borrower.—Intending borrowers must send to the directorate a plan of the proposed works, the time likely to be occupied on them, an estimate of cost by an expert, and, when mortgages or charges upon land are to be furnished as security, a certified copy of the folio of the register of title with a certified extract from the original land assessment roll and the assessment (if any) as made by the land mortgage association of the particular Province. If the assessment presented is not accepted the bank appoints a commission of one or two agricultural experts from the committee of the district (Kreis) in which the land is situate, or from the local committee of the land mortgage association, together with a representative of the bank (to be a director or provincial official of the same); and the final assessment is determined by the directorate on the basis of this valuation. The directorate is authorized to take into consideration the increase of value obtained or to be obtained from the improvements in the property to be mortgaged. The costs arising out of any investigation that taay be required are borne by the intending borrower. Appeal against any decision of the directorate lies to the provincial committee. Loans.—The bank pays the borrower in cash or in its own bonds at their nominal value. The nominal value of such bonds must be either £250, £100, £50, £25, or £10; and they must bear the same interest as is payable by the borrower. The bonds are holder bonds and are irredeemable by the holder, but the bank is bound to redeem as many bonds every half year as it may be possible to pay for out of the payments of borrowers. No borrower may be allotted bonds whose nominal value exceeds the amount of the loan granted. Any profit on the sale price of the bonds goes to the reserve fund, which 88 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. must be brought up to 5 per cent of the loans outstanding and restored to this amount should any drafts have been made upon it. Loans may be called in (at six months’ notice) only if the debtor de- faults as regards interest and sinking fund, or becomes bankrupt, or if the property is assigned or the mortgage title impugned, or if a successor in the ownership refuses to accept the obligation of the original borrower. Interest and sinking fund.—The act fixes the maximum interest payable at 44 per cent. Within this limit it is left to the articles of each bank to determine the rate. As to the sinking fund, the annual payment must, under the act, amount to at least one-half per cent, and in the case of drain- age loans to at least 4 per cent in ordinary cases, while the bank may add a sum not exceeding one-fifth per cent per annum of the loan to meet the cost of administration of the bank. In East Prussia interest is charged at the rate of 4 per cent, plus one-tenth per cent for administration expenses and 4 per cent at least—this bank only gives igans for drainage purposes—as sinking fund. In Posen the rate of interest is determined specially in each particular case, a charge of one-fifth per cent being made for administration, and the sinking fund payment, which is also determined in each individual case, must amount to at least 4 per cent (apart from the legal obligation where drainage is con- cerned) when the property is already charged with prior mortgages. In Silesia interest at 4 per cent, plus one-fifth per cent for administration, is payable, and the sinking fund payments are arranged in each case with a minimum of one-half per cent. In Westphalia the rates of interest are 3, 34, and 4 per cent, plus one-tenth per cent for administration, with sinking fund payments as in Silesia. In Schleswig-Holstein interest at 3, 34, and 4 per cent is payable, plus one-fifth per cent for administration; and at least 1 per cent is required toward the sinking fund. In all the banks repayment in full or by installments of not less than £25 in cash or bonds of the banks is per- mitted at any time. The interest fixed is paid upon the full sum, without regard to the progressive redemption of the loan, but the difference between the amount due on the original capital sum and the capital as reduced is credited to the redemption of the loan. Security required.—As security for the capital a mortgage claim is entered for the amount in the registry of title. The act provides that the security may be regarded as adequate if the capital sum does not exceed 25 times the amount of the land tax assessment or half of the valuation arrived at by a mortgage credit association, or by a special assessment of the bank. But if the resultant increase in value is taken into account, the security may be regarded as adequate if it does not exceed three- fourths of the prior value or half of the final value (after the improvement). The mortgage claim of a land improvement bank in Prussia does not possess, however, any right of priority over other mort- gages on the same property. No security by way of mortgage claim is required from urban or rural communes, water-supply societies (constituted under a special act of 1879), dike societies (with cor- porate rights) or forest societies (under act of 1875). The act provides that the owner of the land is obliged-to maintain the drainage works in good condition for the period of the annuity and that the bank must see that this duty is fulfilled. Supervision of loans.—In Posen the supervision of the execution and maintenance of the improve- ment is placed in the hands of the Posen Land Mortgage Credit Association; in Silesia the statutes provide for supervision by special commissions; in Schleswig-Holstein and Westphalia, by an agent of the governor. In practice, direct supervision is only required in the case of loans to individuals; in other cases the cooperative societies or communes undertake the supervision. Sazony.—The Land Improvement Annuity Bank of Saxony was the first bank of its kind in Germany. It was established as a State institution by an act of 1861. At first its operations were limited to providing capital to cooperative undertakings for irrigation and draining purposes, but in 1872 a second act extended its sphere to the grant of loans to local authorities for drainage works and road building. Up to 1888, interest was fixed at 4 per cent and the annual sinking fund payment at 1 per cent; since that date the interest has been 3} and sinking fund payment 14 per cent. The period for redemption is 38 years. As security for the loan, a mortgage claim for the amount is entered in the registry of title, and this claim has priority over all other charges against the property. No special limit to the amount loanable on a property is fixed in the act.’ The bank deals with applications for loans for agricultural improvement through the local Government office at Dresden. This body examines cases and transmits the final proposals to the bank. Down to the end of 1909 (from 1862) the Saxon Bank had granted loans aggregating £2,604,315 in bonds and £21,213 in cash. The loans were distributed thus: £66,291 for 1,510 loans, copayable by annuities to 59 cooperative water-course improvement undertalenes: £740, 522 for 5,196 loans for 3,217 agricultural irrigation and drainage AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. — 89 works, and £1,818,715 for 31,738 loans for 1,983 local authorities for drainage works and road works At the same date 32.24 per cent of the loans had been paid off. At the end of 1909 the market price of the bonds issued previous to 1888 and bearing 34 per cent interest stood at 94.69, and of those at 4 per cent (issued after 1888) at 102.59. Bavaria.—The most recent German legislation dealing with land-improvement banks has been enacted by Bavaria, which passed in 1908 an amending act to the act of 1884 (amended previously in 1900) considerably extending the functions of the existing bank. Apart from the purposes already indicated as within the scope of the Prussian land-improvement banks, and previously adopted in the main by the Bavarian Bank, this act specifically includes the granting of loans for the laying down and improvement of vineyards; the erection of works for providing drinking and other water in rural communes; the erection of dams and works, as well as reservoirs, by small rural communes and public water-supply cooperative societies for the predomi- nant purpose of producing and providing electric power for small industrial undertakings and for agriculture; ‘and the erection and sanitary improvement of dwellings for the poorer classes of the population, and for the settlement of agricultural laborers upon holdings. The institution enjoys considerable popularity «among Bavarian agriculturists. Between 1884 and 1904, 1,561 applications were made for loans, of which 1,506, amounting to £838,818, were granted. Seventy-two per cent of the total was devoted to water-supply undertakings and 14 per cent to irri- gation and drainage purposes. The activity of the bank has shown a considerable increase in the last decade. The number of loans, which in 1900 was 100, increased to 212 in 1905 and to 248 in 1910. The number of holdings affected by the loans rose from 949 in 1900 to 2,271 in 1910; the average loan per holding between 1904 and 1909 ranged from £91 to £238, and in 1910 was £164 10s. Down to the end of 1909, £1,997,736 had been lent by the bank; of this sum £1,458,638 was granted for 1,045 water-supply undertakings and 196,371 for 962 drainage and irrigation projects. General provisions of the Bavarian act.—Applications for loans are made to the district authority within whose area the proposed works are to be executed, and are forwarded with the necessary documents and opinion to the commission in Munich. Loans are made up to one-half of the assessed value of the property. They are payable in cash or bonds; if the amount of the loan does not tally with the exact value of the bonds the difference is always payable in cash. When large sums are involved, payments may be made by installments only, in accordance with the progress of the works ‘ undertaken. The nominal value of the bonds issued maybe £250, £50, £25, £10, or £5. Interest is payable half yearly, and may be at the rate of 33, 3}, or 24 per cent, with annual redemption payments of one-half, three-fourths, and 1 per cent, respectively; the annuity, therefore, may amount to 44, 4, and 33 per cent of the capitalsum. Loans for the erection of dams, works, and reservoirs in connection with the production of electricity must, as a rule, pay interest one-fourth per cent higher, and an annual sinking-fund payment of 1 percent. At the request of the borrower higher payments to sinking fund may be fixed in the case of water-supply or other works which are likely to require renewal after a short period. Debtors are free, at three months’ notice, to redeem their debt or to make partial payments toward its reduction, but such partial payments must be of sums not less than £2 10s. The amount payable in interest remains as fixed at the contraction of the loan, but the difference between the sum due on the original loan and on its progressively reduced amount is written to the sinking fund. Loans may not be called in, unless by default or other weakening of the security. Security must be furnished by way of mortagage; if a property is already mortgaged, such mortgage creditors must yield priority of claim to the improvement bank. Communes and corporations under State supervision are, however, exempt from the obligation to furnish mortgage security. The holders of the bonds are not entitled to demand repayment, but the bank is obliged to buy in or pay off the bonds out of sinking-fund payments unless its income is required for the issue of fresh loans at the same rate of interest. The State is guarantor of the bonds. The act of 1884 limited the value of the bonds permitted to be kept in circulation by the bank to £100,000; in 1904 this figure was raised to £1,500,000 and in 1909 to £2,500,000. No fees: (such as court fees, stamp duties, registry of mortgages, etc.) receivable by the State treasury are payable in matters arising in connection with the bank. The State undertakes the cost of administration of the bank, in so far as the payment to sinking fund and reserves (to be formed out of any. agio profits) do not suffice. These administration expenses comprise the cost of the land- improvement bank commission, the remuneration of the officials, the cost of producing the bonds, commission to banks, etc., and are said to be estimated at from £750 to £1,000 per annum. Inasmuch 90 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. as the State grants loans as one-fourth per cent below the interest.it pays to the bondholders, except in the circumstances alluded to above, the borrowers thus obtain a bonus to that extent. In 1908 and 1909 the amounts made good by the State in consequence of this difference were £3,730. Hesse and Oldenburg.—A land-improvement bank was established in 1880 for the Grand Duchy of Hesse, but in 1890 its functions were transferred to the State Credit Bank established by law in that year. Upon the establishment in 1903 of the Hessian State Mortgage Bank the operations of the bank of 1890 were practically restricted to loans for improvement purposes, although loans might be made to communes to build houses for the poorer classes, and loans are granted especially for reclama- tion, irrigation, and drainage purposes. Individual landowners are now rarely granted loans; these are generally made to communes. Capital was previously obtained by issuing 34 per cent bonds guaranteed by the State, but for a number of years no bonds have been issued, and the necessary funds are provided by the normal or exceptional payments to sinking fund by borrowers, as well as by the £200,000 State loan under the act of 1899, and the sum of £25,000 provided in the Hessian budget for this purpose. The sums lent by the bank have tended to decrease, and whereas in the years previous to 1902 about £100,000 per annum was lent (and largely to individual landholders) only about one-third of that amount is now lent. The general provisions of the Hessian act corre- spond with those of the Bavarian and Saxon acts. Mortgage loans are granted up to three-fifths of the assessed value; the claim of the bank has priority over others; the sinking fund must be at least three-fourths per cent; and the interest is based on the actual yield of the 34 per cent bonds at the current market rate, plus one-tenth per cent cover. The loan is paid in cash; it is not subject to being called in, but over and above the sinking fund loans may be'repaid by cash payments on three months’ notice, and the balance of interest (as the debt progressively decreases by payments to sinking fund) is written to sinking fund. In Oldenburg the Land Credit Institution (Bodencreditanstalt), established by act in 1883, includes among its objects the furtherance of land-improvement works. Results —From the above account of these banks specially created for land improvement it will be gathered that their success, judged from the standpoint of the volume of money lent, has not been remarkable, although in Bavaria and Saxony the results have been more important than elsewhere. Yet for individual holders they have been of little consequence even in these States; in Bavaria in the period 1884-1909 about nine-tenths of the total loans went to communal authorities, for water improve- ment purposes for the most part, and in Saxony, in the period 1861-1909, two-thirds were devoted to local schemes of drainage and road construction. In Prussia down to the end of 1908, £250,000 out of £565,000 lent had been granted to landowners holding under family or other settlements with an addition of £20,000 to other individual agriculturists. Several reasons account for the apparent lack of success, especially in Prussia, where the majority of provinces have not even established such banks. The purposes for which loans are granted are too restricted, only two of the five banks adopting all the objects allowed under the act. The existing institutions, viz, the Provincial Aid Banks or the land improvement funds are also apparently adequate for the needs. It is also ascribed to the ignorance among the country population of the existence of such institutions, or to the knowledge that loans are only rarely advanced to individuals. Further, the loans on mortgage obtainable by landholders at numerous other institutions, such as the mortgage credit associations and the public savings banks, are devoted to land improvement as well as to other purposes; and for the individual landholder these sources of credit probably offer greater convenience and are equally advantageous as regards interest and sinking-fund payments. For the smaller landholders the public savings banks would appear to be far more convenient, even though their mortgage loans have the defect of being liable to be called in at a few months’ notice. A further obstacle is the low limit of value up to which loans may be granted upon properties in the hands of individuals, although cooperative societies composed of persons equally indebted may obtain loans irrespective of such mortgage indebtedness already existing. Their potentiality for usefulness, however, is indicated by the demand, made in 1910 by the‘national advisory board of the ministry of agriculture, that the State should establish these banks in all the provinces of Prussia, or should empower the rent-charge banks to make loans for land improvements and the creation of small holdings.’ The exten- sion of the scope of operations of the Bavarian Bank in 1908 to the loan of money for promoting the production and supply of electric light and power, especially in country districts, as well as the erection of houses for rural and other laborers, and the settlement of agricultural laborers, also shows recogni- tion of the value of these institutions for modern agricultural policy. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 91 6. PRUSSIAN PROVINCIAL AID BANKS. Functions—Administration.—The main function of these banks is to supply credit to bodies of a public or semipublic character—to communes, communal groups (Kreise), school and church organi- tions, and cooperative societies, especially societies undertaking land improvement. In some prov- inces, however, considerable loans appear to be made by them also to individual landowners on mortgage security, although one bank at least does not lend to individuals at all, and others lend to individuals only for purposes of land improvement. These banks are conducted as branches of the provincial government administration, and are usually subject to the direction and supervision of the provincial councils. The latter must in particular determine the business regulations, annual budget, and the rate of interest payable for loans; and they delegate the: management to small honorary committees elected for a term of years and presided over by the provincial presidents (Landeshauptmann). The current business is transacted by the staff of the provincial councils in conjunction with the provincial financial departments. Existing banks.—The first bank of this kind was founded in 1831 for the province of Westphalia, and by about 1850 similar institutions appear to have been formed throughout the territory of Prussia as then constituted either for whole provinces or for parts of provinces. The Westphalian Bank, and that founded later for the Rhine Province, were subsequently transformed into the present. provincial mortgage credit banks (see pp. 54-65); but provincial aid banks still exist for each of the provinces of East Prussia, West Prussia, Posen, Silesia, Pomerania, and Saxony, for the administrative district of Wiesbaden, and for the district of Altmark in the province of Saxony, while in the province of Branden- burg there are three, for the Neumark, Kurmark, and Niederlausitz districts. The operations of these ‘banks, with the exception of those in Silesia, Posen, and East and West Prussia, are, however, incon- siderable. The following table shows, so far as data are available, the amount of loans outstanding at , the end of 1910, with the various rates of interest applicable: Loans Amounts of loans Loans Amounts of loans Bank: outstanding | outstanding at each rate Bank. outstanding | outstanding at each rate Dec. 31, 1910. of interest. Dec. 31, 1910. of interest. ; _ | Per cent. Per cent. East Prussia........ £8, 215, 365 | £6, 140, 808 34 || Silesia.......-....-.. £9, 041, 066 £117, 149 325 Heese acta » 42, 074, 557 4 Lah sedydacbspayanencyauae 209, 070 3 West Prussia........ 984, 001 13, 594 See ee nec 118, 835 Be tipi ae 17, 365 3h vecseeesseeese| 2,268, 615 a Pt eae 114, 042 33 ; decccuciand Sate 60S suaesgacictcvemeneryas 634, 801 4 isda uunscdoaWaveveveneys 485, 315 2 balck ioatieaaen itn 153, 409 44 satan 707, 650 45 S acee=panpie 790 43 Jiccsseeseeees-| 1, 600, 658 4h Brandenburg oe 159, 081 44 Neumark.......] ° 14, 797 14, 797 3 20 5. Kurmark...... 38, 262 38, 262 3 || Wiesbadeneccsccwscclecwe wo sses os) aeect ee eee Niederlausitz. . . . 18,005 13, 005 3 Saxony-.....-...--.. 215, 112 30, 467 34 Pomerania.......... 153, 242 128, 825 34 gp heed scence 7,095 3485 pt ONS OE ee take ees 21, 198 Be ee a actete 1, 000 34 eae aaa te 2, 610 4h Bets eee 5, 717 gt Seapilanedes hciohasches 609 Free. ba Seuscuasarascesie 78, 678 34 ROBCD ss sarearatviatecsianase 2, 785, 919 2, 785, 919 3h 34, 33, Leaaaaedene 3, 797 BE BAAR ices ti merece 74, 525 4 ‘and 52? Po cece 3, 500 4s Eee 10, 185 44 Sih tileideta inate 149 43 Altmark........... [seater toe ieeeea eaten 1 The sum on which interest is payable being reduced every 6 months by the amount added to sinking fund. ' It will be observed that these banks, with three or four exceptions, are not important as sources of credit. In the middle of the nineteenth century the Prussian Government distributed a total of £375,000 as foundation capital for all provincial aid banks, each receiving a sum according to the area, population, and amount of direct taxation paid. The combined capital of the Brandenburg, Saxon, Pomeranian, and Wiesbaden banks was stated in 1910 to reach the small total of £450,000. But the remaining banks (those of Silesia, Posen, East Prussia and West Prussia), having obtained authority to issue bonds, are enabled to procure sufficient capital for a considerable volume of transactions. 92 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Silesian Bank.—Considerable differences of detail occur in the general organization methods and scope of the existing banks. An account may be given of the Silesian institution (which though, closely followed by the East Prussian Bank, has the largest business of these banks) which may be taken in most respects as representative of the more developed banks in this group. The articles of this bank state that “with the object of facilitating by loans the provision of works and institutions for the public welfare, the carrying out of communal undertakings, amortization of communal debts, the improvement of land and industrial undertakings, as well as the maintenance of persons in possession of their property, the improvement of mortgage credit, and in general the furtherance of their financial transactions, an aid bank shall be established for the Province of Silesia.”’ The capital consists of the original foundation fund of £100,000 and its increase since its grant in 1847, but the bank was authorized in 1866 and at various subsequent dates to issue bonds, being finally (in 1909) authorized to issue bonds at 3, 34, 4, and 44 per cent up to a total value of £10,000,000. The bonds are issuable at the nominal value of £5, £10, £25, £50, £100, and £250; but bonds of £5 must at no time exceed 2 per cent of the total value of bonds in circulation. In each year at least 1 per cent of the bonds in circulation must be redeemed, either by purchase in the open market or drawings. The bank retains the right to call in all bonds. Bonds guaranteed by Province.—The security of these bonds and interest thereon consists in the foundation capital (the original amount of which was £100,000) reserves, mortgage claims and the Province ‘‘with its whole assets and taxing power.” The bank is also authorized to borrow money out of provincial funds as well as out of funds belonging to the districts (Kreise), communes, savings banks, and public institutions of the province, and to lend it for purposes within the sphere of the bank’s activities. No loans from prwvate persons.—-No loan, capital, or deposits may be taken from private persons— a restriction which, it may be remarked, appears to apply also to the banks of other provinces (e. g., that of Saxony). Term and security of loans.—Loans at interest may be made either for undetermined periods or subject to annual sinking-fund payments. If loans are made for an undefined period they may be recalled by the bank or repaid by the debtor on six months’ notice by either party. A minimum of £5 is fixed for loans, which are payable in cash or bonds, but in so far as the funds at the disposal of the bank allow, individual borrowers are usually paid in cash. As regards loans to individuals, the articles of the bank state, after enumerating as eligible for loans provincial and communal bodies, and other corporations, as well as registered and public cooperative societies, that loans may be granted also ‘‘to urban and rural landowners for increasing the value of their land, for useful agricultural undertakings, for the removal of indebtedness, for the betterment of their business position, and for maintaining them in the possession of their property.” Loans to individuals must be fully secured by mortgage, land being loanable up to two-thirds of its valuation or to thirty-six times the net yield as assessed for the land tax and buildings not employed as the dwelling of owner, his family, servants, or workmen, or as farm buildings up to twenty-five times the net yield for the buildings tax. In the case of properties worth over £500 special valuation must be made. Properties under 10 acres are not eligible for loans. To small owners in certain backward or distressed districts in the Province specially favorable terms are allowed; loans may be made up to five-sixths of the valuation, and stamp duties are remitted. Private borrowers must give a notarially attested undertaking that in case of default they will submit to summary process of distraint. As a rule, only reducible mortgage loans are granted to individuals by all banks, the rate being a matter of arrangement, but a minimum of one- half per cent as annual payment to sinking fund appears permissible in Silesia and Posen, although similar banks elsewhere maintain a minimum of 1 or 14 per cent. A maximum period for repayment of loan is fixed; thus small owners in certain distressed districts are allowed up to 40 years. (Other banks fix the maximum at 30, 32, 41 years.) Borrowers are generally allowed to repay installments at six months’ notice. Most banks charge a small percentage of one-fourth or one-half per cent for a period of years to cover cost of administration; the preliminary costs, if not included in this, fall on the borrower. The rate of interest payable in 1910 will be seen from the above table; 33 per cent bonds being down 8 to 9 points in 1911 there was a tendency to issue 4 per cent bonds in preference. Direction and supervision.—The bank is subject to the direction and supervision of the provincial council. In particular, the Jatter must fix the business regulations, annual budget, and the rate of interest payable. The immediate management is in the hands of a committee of four, composed of the provincial president (Landeshauptmann) and three persons elected for six years by the provincial assembly, their office bemg honorary. The current business is transacted by the staff of the provincial AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 93 council in conjunction with the provincial treasury. The bank is obliged to publish once every year a full statement of its financial position. : The administrative authorities in.the Province, including district governors (Landrite), local authorities, and police authorities, are required to answer inquiries made by the bank, and even to volunteer information when it comes to their knowledge that loans of the bank granted to persons within their areas are endangered. In each case of loan the district governor, mayor, or village clerk concerned is duly apprised by the bank. Allocation of profits —The net profits, after the annual allocation of £2,000 to reserve until the latter reaches 5 per cent of outstanding loans, and of £1,000 to a special reserve for the buying in of bonds, are payable to the provincial government of Silesia. Loans to indwiduals by banks.—The totals of the loans granted by provincial-aid banks to indi- vidual landowners are not considerable. By far the largest amounts are those advanced by the Silesian Bank, which in 1908 lent £275,000 to individual landowners. In 1899, out of the total of 7,836 loans amounting to £3,608,735 outstanding, 2,132 of the value of £388,620 were due by rural owners, apart from 3,649 loans of the value of £267,010 granted under special conditions to small ‘owners in certain distressed areas of Silesia. The East Prussian Bank had total loans of about £6,900,000 outstanding at the end of 1908, of which only about £300,000 were due by individual landowners for land-improvement purposes; in 1907, of the total of £2,700,000 due to the Posen Bank, only £185,000, and in the same year out of £900,000 due to the West Prussian Bank only about £75,000 was due by individual landowners. , Profits —The net profits of these banks are in some instances considerable. In the year 1903— the last year for which details on this point are available—there were paid to the provincial adminis- trations by their respective banks the following sums as the result of the year’s working: In Silesia, £7,524; in Posen, £6,638; in West Prussia, £3,362; in East Prussia, £2,301; in Saxony, £2,685. The banks for each of the three divisions of Brandenburg yielded a profit to their administrations of £1,357, £462, and £265, respectively. Limited utility of banks.—In general, these banks, in so far as they have served individual owners, have been principally beneficial in promoting land improvement within their districts. The Posen Bank grants for improvement purposes loans up to even three-quarters of the valuation, and the East Prussian Bank grants for drainage purposes loans up to five-sixths and even up to the full valuation, subject to increased payments to sinking fund. In Silesia, Posen, and East Prussia the banks have also granted credit to owners for other purposes, although the conditions in these Provinces give ample scope for improvement loans. Two banks formerly in this category; having developed con- siderable business other than loans to communes, church and school unions and registered and public cooperative societies, and to individuals for land improvement, were transformed into provincial mortgage credit banks, and, in fact, in many respects the position of provincial-aid banks empowered to issue bonds is analogous to that of these two provincial mortgage credit banks. 7. RENT-CHARGE BANKS. Their institution.—In order to facilitate the regulation of certain burdens attaching to the holding of land, two Prussian acts of 1850 abolished or declared commutable certain charges and servitudes obtaining in connection with land tenure, and created seven State rent-charge banks, some of which were to serve one and others more than one Province. Thesé banks were authorized to issue bonds to landowners in settlement of their claims and to collect from the landholders thus relieved annuities composed of interest and sinking-fund payments. In most of the other German States, as in Saxony, Bavaria, Baden, Wurttemberg, Hanover, and the electorate of Cassel (see the chapter upon State mortgage credit banks, pp. 54-65), similar banks had already been or were subsequently created with the same object, or State exchequers provided the necessary facilities. The special services which the Prussian rent-charge banks and similar institutions were called upon to render appear to have lapsed owing to the general redemption of the liabilities involved. But although the Prussian rent- charge banks, closed and reopened at different times, were suspended by an act in 1881, they were reestablished in 1891 for an indefinite period for the special purposes of the new policy of settling small and medium holders on the land. Further regulations in this connection were contained in the acts passed in 1896, 1900, and 1911. ° Existing banks.—There are seven rent-charge banks: One at Berlin for the Province of Branden- burg and the district of Berlin; at Stettin for the Provinces of Pomerania and Schleswig-Holstein; at Magdeburg for the Provinces of Saxony and Hanover; at Munster for the Provinces of Westphalia, ’ 94 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Hesse-Nassau, and the Rhine Province; at Breslau for the Province of Silesia ; at Posen for the Province of Posen; and at Konigsberg for the Provinces of East and West Prussia. Each bank is managed by a director, advised by two assessors, one of whom is usually the chief official of the provincial. inland revenue office, and the business is carried on under the guaranty of the State. Their functions and powers.—The present functions of these banks are: (1) To issue bonds on certain conditions to vendors upon the sale of their property for conversion into small holdings up to three-quarters of the selling price, and to be responsible for the annuities due in respect of the purchase of such holdings (act of 1891); (2) To grant loans for land settlement, either to pay off preliminary charges, etc., or for the erection of dwellings and farm buildings, upon the first establishment of such holdings, such loans being repayable by yearly installments of interest and sinking fund collected by the banks; and (3) Under certain conditions to settle, by cash payments, with coheirs to properties coming under the home colonization acts. In respect of the first two of their above functions the services of the banks have been considerably utilized. Down to the end of 1909 they had issued bonds to the value of about five and a half millions sterling under the act of 1891. These bonds rank as a Government security, and are officially recog- nized as a trustee investment. Not independent agents.—But although they constitute separate entities they are not independent bodies, being rather merely the financial departments of the ‘‘general commissions” (see next para- graph) in connection with the creation of small holdings. They do not determine the amount to be paid to the vendor nor the amount of the annuities to be paid to them by the purchasers; these matters are determined by the particular ‘‘general commission” having jurisdiction. General commissions.—There are eight ‘‘general commissions” (at Breslau, Frankfort on the Oder, Konigsberg, Merseburg, Hanover, Cassel, Dusseldorf, and Munster), and their approval is required previous to any action on the part of the rent-charge banks. The functions of these ‘‘general com- missions,” which are State organizations, are rather comprehensive. Within their competence fall the settlement of questions connected with charges upon landed property, rights of every kind, such as rights of common, pasture, and fishing, wood rights, turbary, foldage, and pannage; the consolida- tion of small properties and scattered parcels of land belonging to the same owner; land improvement; acquisition and reafforesting of moor and waste lands; the creation of small holdings; the formation of cooperative societies for irrigation and drainage purposes; registration of lands held under special tenure, etc. In the work of different commissions some of these duties assume special prominence; thus the general commission established at Frankfort on the Oder has been most prominently identi- fied with the small holdings or settlement movement, as its area extends over Brandenburg and Pome- rania, where numerous colonies have been founded. A broad distinction may be made between the work of these bodies in western and eastern Prussia; in the west their functions largely consist in the consolidation of small, scattered parcels of land, while in the east they are largely occupied in superintending the division of large properties and in general land-improvement works. In addition to their administrative functions they are invested with a certain judicial authority, being in most cases courts of first instance (in Hanover for some matters also courts of second instance) as regards matters coming within their administrative competence. The general commissions maintain branches called special commissions at convenient centers within their area; thus, the general commission for Brandenburg and Pomerania has its chief office, with a large official and technical staff, at Frank- fort on the Oder, and has established 12 special commissions in Pomerania (2 being in Stettin, Kol- berg, and Stolp, and 1 in each of six other towns) and half that number in Brandenburg, each with a State official and staff of technical and clerical officials (e. g., surveyors, draftsmen, and land- improvement experts). General conditions.—It is not possible to enter here into details concerning the part taken by the State in Prussia in furthering the creation of small holdings. It may be stated, however, that, except in west Prussia and Posen where the settlement commission—a State organization created under the act of 1886 to promote the settlement of Germans in these Provinces—directly purchases large estates, divides and distributes them; the State limits its action to granting credit through the rent-charge banks, and to making small grants and affording certain facilities as regards costs, etc. The annuity holdings acts, by virtue of which State credit (that is, through the rent-charge banks) is granted, allow any person or body to undertake the division and settlement of a property, but require, before State credit may be granted, that plans for division, equipment, settlement, etc., must be approved by the general com- mission. Upon such approval it is provided that vendors of land to be divided into small and medium AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 95 holdings may receive in settlement, according to arrangement, either twenty-seven times the amount of the annuity in 34 per cent bonds of the rent-charge banks, at their nominal value, or twenty-three and ‘two-thirds times the amount in 4 per cent bonds of the same banks, receiving in cash any balance that is not exactly coverable by bonds. Such bonds may only be issued by the banks in respect of the creation of holdings ‘‘of medium and smaller extent”; eligible holdings are elsewhere defined as ‘‘rural holdings from which the occupier can obtain his livelihood, and for the farming of which his presence is necessary, although he may at odd times find work in the neighborhood.” Different standards of size have been adopted by different general commissions; one has fixed the minimum at 24 acres and the maximum at 75 acres, another at 74 and 175 acres, and a third at 5 and 45 acres. General commissions may not authorize the banks to issue bonds unless the annuity claim takes precedence of all other charges upon the property, and adequate security appears to exist for the regular payment of such annuity. Security may only be admitted as adequate when twenty-five times the amount of the annuity does not exceed either (1) thirty times the amount of the annual net yield at the most recent assessment for land tax, including half the value of the buildings as accepted for an insurance policy, or (2) three-quarters of any valuation of the land made by a land-mortgage credit association, or special valuation to be made through the general.commission. If a special valuation is made, the value of the necessary dwellings and farm buildings to be erected may be taken into consideration. The market price of the bonds has been for a considerable time several points under par. In order to cover the vendor against loss a certain addition is made to the price agreed, if not represented by the price receivable for bonds, and more bonds are issued to him if necessary to bring up the amount. Interest.—The new landholders must pay either (1) 4 per cent upon the nominal value of the bonds issued at 34 per cent and upon any cash payments made as supplementary to the bond issue or (2) 44 per cent upon the bonds issued at 4 per cent and upon any supplementary cash payments. The annual payments of 4 per cent must be made for a period of 604 years and those of 44 per cent for 567; years. It is left to the ministries (of finance and of agriculture) responsible for the execution of the act to determine whether 34 or 4 per cent bonds shall be issued, but ‘‘so long as the market price of 4 per cent bonds remains at the nominal value or beneath it, 3} per cent bonds may only be issued with the assent of the vendor.’ Up to the present such bonds have borne 3} per cent interest. Capital due may not be called in by the banks if holders meet their liabilities. The competent general commission may require the bank to waive the annuity for the first year of the creation of the holding if the holder makes an application in that.sense; the amount of the postponed payment is then added to the capital debt, and the amount of the annuity is based upon this increased sum for the respective periods of either 504 or 567; years. Thus if the original sum amounted. to £100 the future annuity would be payable upon either £104 or £104 10s. It is expressly provided in the act that no arrears in annuities, apart from those of the first year, may be added to the principal. It is also provided that no subdivision of a holding may be legally effected without the assent of the competent general commission. The latter also require borrowers to insure dwellings, farm buildings, cattle, etc., and also their crops against damage from hail. Repayment.—Except with the approval of the general commission the banks may not accept repayment (beyond the sinking fund payments) until after the lapse of 10 years. Loans in connection with small holdings.—A special act of 1900 gave authority,to the rent-charge banks, on the recommendation of the general commission, to grant cash toans to clear off debts and burdens upon property to be split up for settlement, or separated from other property for the same object, and to set up the first necessary dwelling and farm buildings. Under the act the funds for these loans were to be drawn from the reserves accumulated by the banks and not to exceed a total of £500,000. The reserves amounted to £750,000 at the end of 1898 and to about £1,200,000 at the end of 1909. An act of 1911 increased the maximum to be applied in this way to £750,000 and extended the potential application of loans to purposes of land improvement or other expenditure expedient for the administration or equipment of land intended for settlement. These cash loans may be granted not only to the prospective small holders but also to persons ot bodies undertaking the establishment of small holdings. The Prussian State Bank (die Seehand- _lung, Berlin) is the responsible agency for distributing loans out of this fund and obtaining their repayment, but it acts in general upon the advice of the general ‘commissions. It is an accepted principle that the general plan of the proposed settlements must be approved by the general com- ‘mission and that a fair number of contracts must have been made for the purchase of the contemplated new holdings. No maximum loan is fixed for individual undertakings, its amount being dependent upon the security for its repayment, i. e., the value of the property. The rate of interest is fixed at a low figure, usually 34 per cent. 96 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Value of bonds isswed.—The total value of bonds issued by Prussian rent-charge banks since 1850 amounted to about £31,500,000 at the end of 1909, bonds of the value of about £14,500,000 being still in circulation. The total issued since 1891 in respect of small holdings amounted to £5,600,000. The services of these banks have been especially utilized in the eastern Prussian Provinces; to a . noteworthy extent in Pomerania, to which Province about one-half of the loans issued for land settle- ment since 1891 have fallen. Land settlement in Posen, it may be remarked, has been far more extensive than in Pomerania, but a special authority, the settlement commission, created in 1836 and amply endowed with State funds (reported to have reached in 1911 a total of £30,000,000), fulfills the function of rent-charge banks for Posen and West Prussia, in addition to functions connected with the actual establishment of small holders’ colonies. Importance of rent-charge banks.—The importance of these banks for agricultural policy consists in the fact that they are the agencies by which the State, while leaving the actual settlement of land by small and medium holders to private enterprise and risk, yet gives them the advantage of its credit. By their instrumentality the persons of this class are enabled to enter into possession of land and to obtain loans for establishment expenses at rates which, inclusive of sinking-fund payments, amount to probably quite 4 per cent less than they would pay for credit elsewhere. Landowners desirous theniselves of dividing their estates into small holdings or who hand over this task to others may also, under certain conditions, reap advantage from the fact that they receive an immediate and final settlement in State bonds. 8. INSURANCE INSTITUTIONS AND AGRICULTURAL CREDIT. 1, STATE INVALIDITY INSURANCE INSTITUTIONS. Investment of funds.—Under the imperial invalidity insurance act 31 insurance institutions (Landes-Versicherungs Anstalten), apart from 10 recognized funds (Zugelassene Kasseneinrichtungen) of insured persons drawn mainly from railway, mining and seafaring groups, have been established. Such institutions, which are public corporations, each with an independent legal status, have been created for each of the Prussian Provinces and for the Berlin district; in Bavaria there are eight, and elsewhere each institution serves a single State or groups of States. All insured persons occupied within the area assigned to each of these corporations must pay their contributions to and receive their benefits from them. The funds received by these corporations must be invested especially in readily realizable securities as laid down in the act, which recommends Imperial and State stocks, stock of State-guaranteed railways, communal bonds and mortgage bonds, after which loans to com- munes and finally mortgages, but which authorizes a certain proportion to be invested for purposes of general social welfare within the districts of the various institutions. At the end of 1909 over 50 per cent of the total invested funds (£78,705,550) of the 31 institutions and 10 recognized funds were invested in undertakings of this character, £14,025,900 being in respect of houses for workingmen, and £5,143,600 being devoted to agricultural purposes. Under the latter heading are granted loans for light railways in rural districts, for land improvement, and for the improvement and construction of roads; while for the housing of the working classes loans are granted to building societies, to com- munal organizations and to employers, and, indirectly, that is usually through local authorities or cooperative societies, to insured persons for the purpose of building or improvement of dwellings. Conditions for loans.—The conditions to be fulfilled in order to obtain the grant of loans for “agricultural” purposes need not be given in detail here, as such loans are made only to communal or other public or semipublic corporations. Loans are granted for the improvement of housing or for new erections, whether for the benefit of rural or urban workpeople. They are, however, rarely granted to in- dividuals, being, as a rule, accorded only to nonprofit-seeking cooperative societies or to employers or to communes. The Posen institution only lends to an individual through the intermediary of a communal organization—that is, as a rule, the district or kreis; in this way local supervision of the loan is secured. In some cases a limit is set to single loans. Thus the Weimar institution does not make a loan to a single borrower of more than £250; similarly the Baden institution, as well as that at Wurzburg, in Bavaria, does not lend over £350. Mortgage loans are usually made up to from 50 to 75 per cent of the value of the land and building held by the borrower. Mortgage security is required, and in most ' cases loans are subject to sinking fund payments, usually at a minimum of 1 per cent per annum. In Baden, however, 24 per cent is the minimum; and in Oldenburg there is a regulation to the effect that’ one-half of the loan must be repaid within 12 years, loans there being made for new buildings only. The institutions reserve the right to call in any loan on giving a fixed period of notice; this period is usually three or six months, but the Dantzig institution allows one year. The same institution allows AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 97 mortgagors, on giving four weeks’ notice, to repay loans wholly or in installments of £15. Similar facilities for repayment appear to be granted by all institutions. Rate of interest—The predominant rate of interest charged for loans now ranges from 3 to 3} per cent. Loans were formerly given by some institutions at 24 and 2? per cent, and predominantly at 3 per cent, but in more recent years 34 to 4 per cent has been a not uncommon rate. Total mortgage loans.—The total of the mortgage loans of all these organizations amounted to £17,205,000 at the end of 1908, against £13,105,000 at the end of 1905. The most important institu- tions from this standpoint are those in Westphalia, the Rhine Province, Hannover, and Brandenburg. 2. PRIVATE INSURANCE COMPANIES. Urban and rural mortgages.—Insurance companies conducting business in Germany possessed at the end of 1909 invested capital to the value of over £300,000,000 and nearly three-quarters of this sum was lent upon mortgages; investments in securities, in loans against policies or other security were thus of quite secondary importance. The investments in mortgages have more than doubled since 1900, when their amount was £118,775,000, although the actual percentage of the funds invested in mortgages has only advanced about three points. German commercial insurance companies, like the bulk of German joint-stock mortgage banks (see pp. 65-75), find agricultural mortgage business less attractive than similar urban business, and for like reasons. The proportion of the above total falling to rural mortgages is insignificant; in 1907, 91 companies reporting to the imperial supervisory office for private insurance had outstanding in respect of rural mortgages only £2,435,000, as against £162,710,000 upon urban mortgages. Of the total sum outstanding on the security of rural mortgages to one company alone, established at Gotha, £1,400,000 was due, so that the remaining companies only lend about £1,000,000 on such security. The total number of loans of the former kind was only 790, and these were, to the extent of nearly four-fifths, for sums exceeding £2,500. Even this small total of transactions was decreasing; in 1905, 57 loans of the aggregate value of over £150,000 were granted, but in 1908 only 24 loans totaling one-third of this amount were made. Special rules —Certain special rules have, however, been recently issued by the imperial super- visory office in respect of loans upon rural property. Such loans must not, as a rule, be granted upon individual properties for sums over £10,000. In the case of loans over £5,000 the valuation of the land must be carried out by two expert valuers, preference to be given to valuers proposed by the mortgage credit association or State or provincial mortgage credit bank, or chamber of agriculture com- petent within the particular area; if obtainable, the valuation of the credit institution itself is to be taken. Insurance companies are authorized by law to lend up to three-fifths of the valuation, or up to two-thirds in those States which specifically permit them to do so. In Prussia a special valuation is not obligatory when the sum to be loaned does not exceed twenty times the net yield, as assessed for. the land tax. Loans.—Loans are paid in cash. They are, in the main, of two kinds; either they are not subject to being called in until after the expiry of a period of years, when they may be either renewed or paid up, or they are subject to three or six months’ notice of recall, usually as at the end of a quarter or half year. Insurance companies do not possess the right to issue mortgage bonds. Few reducible mortgages appear to be granted; in 1907 their total was less than one-half per cent of all mortgage loans, although 3 per cent of the rural mortgage loans outstanding at that date were subject to regular amortization payments. The average of the rate of interest payable on mortgage loans made by insurance com- panies amounted in 1908 to 4.2 per cent, but the average for the loans granted in that year was consider- ably higher, being nearly 4.4 per cent. In addition to interest, mortgagors are usually charged a com- mission of at least 1 per cent of the loan; this amount, being payable in advance, is deducted from the loan. II. Personat (SHortT-TERM) CREDIT. 1. LOCAL COOPERATIVE BANKS. Their importance.—No branch of German rural cooperation has attained such remarkable success as that of cooperative credit. On January 1, 1913, there existed in the German Empire, according to the return of the Imperial Federation, 26,576 registered rural cooperative societies, which were grouped into 98 central societies (central banks and central trading organizations), 16,927 credit societies, 2,409 supply societies, 3,313 dairy and 175 milk-selling societies, and 3,654 societies of various other kinds. The rural banks thus represent two-thirds of the total. Their absolute number has increased 95273°—S. Doc. 17, 63-1——7 98 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. more than ninefold since 1890, when there were 1,729. The membership of the 14,993 societies of this kind existing on January 1, 1910, totaled 1,447,766 persons. The significance of this total is enhanced by the consideration that the bulk of these members are the heads of households. Con- sidered further from the point of view of business done, the importance of the village banks may be appreciated from the fact that in 1910 the total turnover of 14,729 societies (95 per cent of the whole) amounted to £261,665,000, and, at the end of the year, the loans outstanding for fixed periods, together with overdrafts, to £93,034,000, while at the same date the savings deposits totaled £92,429,000 and the deposits on current account £10,865,000. Geographical distribution.—The distribution of rural credit societies over the various parts of Germany is uneven. As might be anticipated on historical grounds they are found in greatest density in the West, where the rural bank movement was originated by Raiffeisen about 60 years ago. The Imperial Federation of Agricultural Cooperative Societies has calculated the average population and acreage served by all kinds of agricultural cooperative societies for the whole Empire, as well as for each German State and Prussian Province. As already remarked, credit societies constitute two- thirds of the total. Taking Germany as a whole, there existed in June, 1912, one registered rural cooperative society per 2,494 inhabitants and per 3,365 acres of cultivated land. In the Rhine Province (with over 7,000,000 inhabitants and great manufacturing industries) there was one rural society for every 3,286 inhabitants and for every 1,415 acres of agricultural land; in Hesse, for every 1,489 persons and 1,427 acres. In Baden, Alsace-Lorraine, Wurttemberg, Bavaria (Right of Rhine), and the Pala- tinate there was one for every 1,704, 2,543, 1,427, 1,353, and 1,244 inhabitants, respectively; taking these States in the same order, there was one society to every 1,695, 3,170, 1,822, 2,467, and 1,127 acres. Age and increase in number of credit societies—In these parts of Germany medium and small landholders predominate, the holdings rarely exceeding 60 acres, and, for the most part, containing under 30 acres. It was not until the nineties, and especially after the foundation of the Prussian State Central Cooperative Bank, that the movement, which was about 40 years old in the West, showed signs of distinct progress in the East, where large holdings predominate; but since then rural banks have been established in great numbers in the East. Their remarkable development is indicated by the following table, showing the number of such societies in the more eastern Provinces of Prussia in the years 1890, 1894, 1898, 1901, 1911, and 1912: Province. 1890 1894 1898 1901 1911 1912 Brand ¢nbures.co25 045Gb iene ee sees ee 10 27 304 382 816 820 Prussian Saxony wes 35 61 219 316 696 740 Pomerania......--..- sat 2 4 159 202 500 508 West Prussia......... 8 19 132 182 287 291 Hast Prussians cs. 32: eesenire sed canintine Mencia ws x os eeeie eo 51 86 240 269 402 407 Posen s,s .2025 422253 2 Se BRE Re ARR Rete owas 9 17 327 401 535 568 Beech sore a neds er emrneaamaie teen ore ee 35 137 783| 1,048| 1,596 1, 665 In 1890 there were 754 rural credit societies in Prussia and 975 in other parts of the Empire. Of the Prussian societies 237, 168, 137, and 67 (a total of 609) were situated respectively in the Rhine Province, Hesse-Nassau, Westphalia, and Hanover; while of those in other parts of the Empire 290 were in Bavaria, 288 in Wurttemberg, 125 in Baden, and 140 in Hesse, the total of 843 societies in these four States forming 86 per cent of the total in the Empire outside of Prussia. The striking increase between 1894 and 1898 in the eastern Prussian Provinces is attributable to various causes, not the least important of which were the facilities for credit accorded by the Prussian State Cooper- ative Bank specially created in 1895, the organized support given to the movement by the Government in the way of propaganda, the efforts of the quasi official chambers of agriculture created after 1894, and behind all, of course, the necessities of the agricultural classes. At the present time the credit societies have established themselves firmly in all parts of Prussia, and are utilized to some extent by the large landholders in Pomerania, Silesia, and other Provinces. For details of the distribution of rural banks in the various parts of Germany in 1912 reference should be made to the table in this sec- tion, in which such societies are classified according to the nature of liability adopted, as well as to the table (also in this section) in which, for nine Prussian Provinces, is shown the percentages of holdings occupying various acreages with the average acreage of holdings in each group. The following table shows the periods within which rural credit societies (excluding central societies) existing in the German Empire on January 1, 1909, were established: AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 99 Table showing periods of establishment of rural credit societies existing in the German Empire on Jan. 1, 1909 (central societies excluded). ; ast With unlimited Total number of— yee et contributory With limited liability. y: liability. Period of establishment of ‘ ocieties. als : : - Addi- | Total lia- pg Members. Soe Members. Rarie: Hem c Rocio: pene tional | bility un- : ; 3 ; ; i shares.! | dertaken. 1. Up to 1866 ..........2....- 30 7, 646 28 Ey ASE: I occcccremecc) se acies e's 2 162 36 1, 790 2. From 1867 to 1888.....-... 1,253 | 220,721 | 1,243 | 215, 789 2 855 8 | 4,077 677 201, 655 3. From 1889 to 1894........ 2,657 | 328,291 | 2,622 | 322, 887 ||........|-----.- 35 | 5,404 19, 000 248, 777 4. From 1895 to1903....... 7,589 | 675,993 | 6,940 | 632, 100 16 | 1, 299 633 | 42,594 | 148, 852 | 2, 476, 773 5. From 1904 to 1908... ... .| 3,067 | 157,809 | 2,668 | 139, 238 1 94 398 | 18, 477 45, 645 791, 760 Motil ca ex jk 14, 596 |1, 390, 460 | 13, 501 |1, 317, 498 19 | 2,248 | 1,076 | 70,714 | 214, 210 | 3, 720, 755 ’ By the term ‘‘additional” is meant shares held by members beyond the single obligatory share. Members not exclusively agriculturists—It may be noted that membership in these societies is not confined to persons whose principal occupation is agriculture, all persons resident within the fixed area of the particular society being admissible on application to, and approval by, the committee. Besides farmers and farm hands, local shopkeepers, master and other artisans, local officials and others are to be found among the members of nearly all societies; many of these, it should be observed, have small holdings which they cultivate in their spare time. Official statistics divide cooperative credit societies into two classes, those predominantly rural and those predominantly urban in char- acter. In some parts of Germany the percentage of members of rural societies whose principal occu- pation is other than agricultural is considerable. The writer found this condition marked in districts mainly industrial in character, such as in the Rhine Province (particularly in the Saar mining region and round Cologne and Dusseldorf), Westphalia, Saxony, and in parts of Silesia, Baden, and Hesse. With the tendency of industrial undertakings to seek rural sites, and the extensive use of the bicycle by German workmen, as well as the system of workmen’s trains, villages often contain many inhabi- tants working in a local factory or traveling to a factory in the neighborhood. A large proportion of these men rent or own holdings, the cultivation of which is in large part carried on in their absence by their families. No figures are published showing the occupations of members of rural credit socie- ties as a whole, such as are available relate to asmall proportion, and date back 14 or 15 years. In 1897 the percentage of agriculturist in 320 Westphalian societies with 41,495 members was 44.26, of jour- neymen and master artisans 25.17, of laborers (agricultural and industrial) 17.76, of traders 7.86, and of other classes 4.95 per cent. Westphalia, can not, however, be regarded as typical, manufacturing and mining being extensively carried on in the Province. In 96 Brandenburg societies with 3,597 members it was found about the same time that 67.65 per cent were agriculturists, while 6.7 per cent were clerks of various kinds, and 13 per cent journeymen or master artisans. An inquiry made by von Altrock in 1898 respecting 133 societies with 3,913 members in the same Province showed that 57.2 per cent of the members consisted of landowners with from 5 to 250 acres, 3.4 per cent of owners with over 250 acres, and 1.1 per cent of tenant farmers, but 13.2 per cent of persons with other prin- cipal occupations held over 5 acres of land. Experience gathered in the course of this inquiry left the impression that in the northern and eastern Provinces generally the percentage of landholding members whose main occupation was agri- culture amounted to about 75 per cent, and that in the normal society elsewhere they represented between 60 and 70 per cent. Conditions of membership.—Membership in a rural credit society is open to all persons, includ- ing corporate bodies, who are capable of binding themselves by contract and who live within the area fixed by the society for its business, subject to their acceptance by the society and the fulfillment of certain conditions. Women are eligible, but the act allows the articles of association to determine whether they may take part in the general meetings of the society. It makes an exception in their favor in regard to voting by authorizing them to vote by proxy at such meetings. Other coopera- tive societies established within the same area, such as supply societies or dairy societies, frequently become members of cooperative credit societies. The admission of members of other credit societies with unlimited liability is usually made conditional upon their withdrawal from such other societies. 100 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. In regard to this matter the German Agricultural Cooperative Congress in 1905 resolved that “the simultaneous membership of one and the same person in several cooperative credit societies or similar institutions must, on principle, be prohibited by the articles of association. Exceptions require the expressed sutherization of the credit societies involved.’”’ It is, of course, the aim of a society to acquire as large a number of members as possible, and especially to attract the better-to-do inhabitants who are less likely to borrow than to bring substantial deposits. But there is no compulsion upon a society to accept any applicant nor to state reasons for his rejection. The word ‘‘unrestricted’’—it may perhaps be explained—in the definition of a cooperative society as being “‘societies whose mem- bership is unrestricted” does not imply that membership is open to every applicant, but merely that its numbers may not be permanently limited. Further, a society reserves to itself the right to exclude members who become insolvent, are in arrears for unduly long periods with payments on share capital, of interest due or of capital borrowed, or who in any serious way impair its general interest or prestige. Members who move out of the area to which a society confines its operations are usually called upon to resign at the earliest convenient date. In case of death membership is held to cease at the end of the year in which the member died, the membership being continued till that date by his legal heir. Every member may retire at the close of a financial year provided he has given due notice; by the cooperative societies act this period of notice may be fixed at not less than three months and at not more than two years. Actual commencement or cessation of membership obtains legal validity by the entry in or deletion from the list of members of a society, as kept at the proper district court, of the name of the person affected. Detailed statements enumerating the various duties and rights of members of cooperative credit societies will be found in the model articles of association printed in the appendix. Average number of members per society.—The average number of members at the end of 1901 in 12,787 societies (82.1 per cent of all rural credit societies) within the Imperial Federation was 94, as compared with an average of 87 in 10,999 societies in 1905 (83.4 per cent of all those then existing). If the societies affiliated to the three unions (the Treves, Baden, and Wurtemberg unions), which are not attached to the Federation, are taken into account, we find the average number of members for 14,729 credit societies at the end of 1910 to be 97. Range of membership.—The following table shows the range of membership of all German rural credit societies according to the official returns relating to January 1, 1910: ‘ ee i With unlimited . ss . Total number of— With aed lia- contributory With ae ted lia- y: liability. mays , Range of membership. Socie- Menbers Socie- Manibexs Socie- Memb Socie- Rieiihy ties. : ties. TBs ties. embers: | “ties: enubers. 3 119 2 12 1 7 39 365 38 355 aL 10 531 8, 786 470 7,777 61 1, 009 1, 047 27, 313 879 22, 920 168 4, 393 1, 443 51, 482 1, 256 44, 824 187 6, 658 1, 582 71,706 | 1,413 64, 088 166 7, 481 1, 389 76,721 | 1, 267 69, 971 119 6, 580 1, 304 84,972 | 1,202 78, 319 100 6, 518 1, 068 79,200; 1,009 74, 771 58 4, 357 914 77, 878 867 73, 851 47 4 027 806 76, 544 769 T3030) |e oa aiscers| wae x cuepsrers 37 3, 514 1, 473 165, 265 | 1, 409 158, 121 3 348 61 6, 796 MOG EEO: Ui Oexere yesernetee pea mvs mre mo ble mre ree 1,013 139, 157 972 133, 585 1 128 40 5, 444 ADS Oe Les acces Feccrtis etc 10 olor ent an nce ge peat 630 102, 018 616 DO TL. || a costs cet ace area tees 14 2) 297 MTG 02 00 eres cashes open 449 83, 744 440 BD AVA rece eis nicl ai pesaecueions 9 1, 630 DOT GOCSO0 asec etek ie ae 2B eaves 866 208, 270 851 204, 863 2 434 13 2) 973 BOT O00: co caleseshca cisse ctecvcveserapbatvesesovevereicjane 231 79, 395 227 CE NGOR: |'s,cserardvaiesa) Croenerdarcacs 4 1, 443 401 to 500... ........---. eee eee ee eee : 100 44, 254 95 42026) | a.ciaracpera'l inestermrcrne ci 5 2, 228 BON E01 OOO i cstarcccrasoratare wisiwietaroiasa-siuvenceonn! 96 60, 200 86 53, 700 1 668 9 5, 832 ¥,00110:2000: n.nccwceaxesexccccauannis 9 10, 477 8 9,075 |..-..-..].-----..-- 1 1, 402 MO tall atch keen eer its 14,993 | 1, 447, 766 | 18,876} 1,371,075 16 2,092 | 1,101 74, 599 1 One society returned less than 7 members (which is the legal minimum number for a cooperative society. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 101 Differences in membership in various districts—There are considerable variations in the average membership of credit societies as grouped in provincial or State Unions in different parts of the Empire, which may be ascribed in large measure to the division of property that may happen to obtain and the consequent density or sparseness of population. The largest average membership in 1910 occurred in the societies of the Wormditt Union (East Prussia) which embraces ‘a fertile district called the Ermland, occupied mainly by small and medium farmers; the figure for this district was 190 for 70 societies. This union was followed by that of Konigsberg (East Prussia) with an average of 174 members in 300 societies and by the Westphalian Union with 166 (535 societies). In the Rhine Province, the Coblentz Union showed 148 (389 societies), the Bonn Union 144 (114 societies), the Cologne Union 99 (548 societies), and the Treves Union (outside the Imperial Federation) 106 (346 societies). In the Administrative District of Hesse-Cassel the Cassel Raiffeisen Union returned an average of 129 (383 societies), the second Cassel Union an average of 96 (71 societies), the same figures for one Nassau Union being 124 (123 societies), and for a second (Raiffeisen Federation) Union 86 (176 societies). Outside Prussia the average for 407 societies in Hesse was 126; for 2,495 societies affiliated to the Bavarian National Union 84; for the 249 societies (most of which are in the Palatinate and Hesse) of the Ludwigshafen Union (Raiffeisen Federation) 129; and for the 473 societies of the Nuremberg Union (Raiffeisen Federation) 86. In Alsace-Lorraine the average membership was 121 for 448 societies in the Strassburg Union; and in Oldenburg 110 for 57 societies. In the independent Wurtem- berg and Baden Unions the averages were 113 for 1,141 societies, and 146 for 416 societies, respectively. In practically all these parts of Germany small holders are in an absolute predominance, notably in Wurtemberg, Baden, Hesse, the Palatine and Alsace-Lorraine, as well as in the Rhine Province, and the Province of Hesse-Nassau. Societies with a smaller number of members are found in Brandenburg, where 476 societies in one union show an average of 48, and 481 societies (n Brandenburg, Pomerania, and Mecklenburg) in another union an average of 56; in Pomerania the average membership of 374 societies in the Stettin Union was 65; in the Province of Saxony for 641 societies it was 54, and in Schleswig-Holstein for 326 societies it was 638. In the Kingdom of Saxony the average for 256 societies was 58; in the Grand Duchy of Mecklenburg: for 34 societies it was 33; and in the Grand Duchy of Brunswick for 155 societies 46. In these districts large and medium holdings predominate. Area of operation of credit societies.—The area of operation of-a rural credit society is strictly limited. As a rule, one large village or two or three small villages lying closely together are fixed as the area within which all members must reside. Raiffeisen considered that areas with a minimum population of 400 and a maximum population of 2,000 should be chosen. In 1890 the Congress of the present Imperial Federation of Cooperative Societies, to which the Raiffeisen Federation was then not a party, passed the following resolution with regard to the area of credit societies: In districts with a predominance of medium and small landholders cooperative societies for credit and supply should only be established, as a rule, for areas extending over a single commune, or at most one parish or a number of contiguous com- munes. The establishment of such societies with a larger area is only to be recommended when, other conditions of land- holding obtaining, some departure from this rule is called for on general grounds, or when otherwise no cooperative organization of enduring vitality can be established. ; Agricultural credit societies almost without exception observe these limitations of area, although it is not possible to adduce statistical evidence bearing on this point. The Raiffeisen Federation, however, publishes details concerning the number of inhabitants within the area of its affiliated societies, which are established throughout Germany; and these may be taken as fairly representative of German rural credit societies. The following table shows, for each of the three years 1908-1910, the number of these societies with the percentages found in areas containing the ranges of population indicated: 1908 1909 1910 Total societies........---- Seer rere errr eee seein 4, 184 4,154] 4,165 Percentage in areas containing: Up to 2,000 inhabitants. ...- pace eee eee e teen tence eee eens 72 72 72 Over 2,000 up to 3,000 inhabitants. ................-..------- 11.8 12 12 Over 3,000 up to 5,000 inhabitants. .-.-..........------------ 9.6 9 9 Over 5,000 up to 10,000 inhabitants. .......-.--.--.---------- 4.6 5 5 Over 10,000 inhabitants.........--.---------------- eee eee eee 2 2 9 102 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. In 1908 the number of persons in the areas covered by 4,184 societies amounted to 9,800,000, showing an average of 2,342 per society. But this average is raised above the normal by the inclusion of societies in large towns; thus, there are included 4 societies in towns with over 100,000 inhabitants, 10 societies in towns with from 75,000 to 100,000 inhabitants, 16 societies in towns with-from 20,000 to 75,000 inhabitants, and 19 with from 15,000 to 20,000. The vast majority cover areas with under 2,000 inhabitants, 38 per cent being established in those with under 1,000 souls; and in those cases in which a society is established in a large town the area of the society is always confined to one nar- rowly limited locality within it. Objects of limitation of area of operations.—This limitation of area constitutes one of the essential principles of cooperative rural credit societies. By this means a certain security is guaranteed. The members are intimately acquainted with each other; they know the means and capacity of each other; they know that such a one is industrious and farms well; that another is intemperate or a bad farmer, whose circumstances are gradually becoming worse. When loans are proposed, the management can thus gauge correctly not only the capacity for credit of the intending borrowers, but also how far they are deserving of them. Capable and hardworking members with little capital may be in this way helped without risk. Loans are most usually made on bonds backed by sureties. The latter being naturally for the most part relatives or friends of the borrower living in the same com- mune, the society can readily judge their financial soundness. The supervision of the use to which the loan is put is also facilitated, while the general management of the society can be observed by the members. If business is extended over several communes, the cost of administration is increased and the scrutiny of details is necessarily less effective. When business becomes so large that it is necessary to employ a trained official or officials, giving their whole time to the work, the societies can no longer work cheaply, as salaries and other expenses must be earned either by increasing the interest on loans or decreasing that on deposits. If loans become dear, the principal reason for the existence of a rural bank is destroyed. Banks with extensive business are also compelled to conduct that business on ordinary commercial lines. Loans for long periods, arrangements for easy repayments, and other conveniences of essential importance to farmers that the rural society provides can not be provided by banks covering wide areas. The meetings of the committee of management and of the board of supervision are likely to be less well attended when distances have to be traversed to reach the meeting place. Representation on these bodies is also facilitated. Complaints may well arise, when the area is large, that certain villages or communes are not fairly represented on the committee or on the board of supervision. Another important advantage of a restricted area is that savings deposits, which constitute the bulk of the working capital of these societies, are more conveniently lodged by members. In regard to area, the rural societies are distinguished from the cooperative credit societies estab- lished on Schulze-Delitzsch principles. The articles of association of the latter do not, as a rule, con- tain a provision determining any limited area within which members must live, and these societies may thus have a wide sphere of operations. The close supervision by the administrative organs of the employment of loans and an intimate knowledge of the circumstances of individual members, as well as the honorary management by the committee, may be therefore rendered unattainable, with the result that the society must adopt the ordinary methods of a commercial bank, with technically trained officials, working on the ordinary banking lines as to acceptable security, length of periods of advances, commis- sion, etc. Functions of rural banks.—The principal functions of rural credit societies are (1) to meet the needs of their members for supplementary personal credit or working capital; (2) to promote thrift among the rural population by receiving their savings and paying interest thereon; (3) to act in general as the village bankers. In the development of rural credit societies two main conceptions have emerged as to the proper limitations of the activity of such societies; and the special points of view naturally find expression in the model articles of association issued by the great organizations. Those recently published by the Imperial Federation, of which Herr Haas is president, define the object of the society as ‘‘the con- ducting of a savings and loan bank to foster banking and credit transactions as well as to promote thrift.” In this view the society restricts itself to acting as the village banker without undertaking any further functions. But in another publication the federation recommends that, in the absence of a special suyiply society in the locality, the credit society should also become the agency for the supply of agricultural requirements to its members. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 103 The model articles of association issued by the Raiffeisen Federation provide for more varied activities; sections 2, 3, and 4 run— (2) The object of the society is to prepare the necessary capital for furnishing loans and credit to members, and otherwise to effect the betterment of their economic conditions, especially by (a) the purchase in common of farming requisites, (6) the preparation and sale of agricultural products and of the products of rural industry for members, and (c) the procuring of machines and other objects of utility on their joint account for letting on hire to members. (3) The society aims less at realizing profits from its operations than at strengthening such of its members as are economic- ally weak and at promoting their intellectural and moral welfare. Its activities must, therefore, extend to (a) the furtherance of thrift, (b) the accumulation of an indivisible common fund (foundation fund) for the advancement of the economic con- dition of members, (c) the organization of means for the promotion of rural social welfare and of love of home, (d) the establish- ment of conciliation courts for the diminution of legal disputes, (e) vigorous opposition to such transactions in real property as are against the public good, and such participation in the relief of landed property from indebtedness as may be expedient, and (f) the holding of instructive lectures and the exchange of practical experience at the meetings of members. (4) The society rests upon a Christian and patriotic foundation. At meetings and in all the activities of the society opinions and measures of a religious or political character are absolutely prohibited. Raiffeisen, whose general principles are expressed in these articles, may be said to have recognized only this kind of society. The individual rural society was not only to accept savings deposits and lend money to members for the purposes of their business, but was also to buy manures and other farm requirements, sell agricultural products, purchase and maintain machinery on the joint account of members, and, if advisable, carry on the business of dairying, buying and selling cattle, etc., as part of its activity. This enlarged scope of the functions of the village bank, and the refusal on the part of Raiffeisen to acknowledge other societies, led at an early date to disagreements in German rural cooperation and to secessions from the Raiffeisen Federation. Other leaders held that the business of banking should be separated from other business, which should be undertaken by societies independently constituted. Experience has, in part, justified their contentions. Dairies and other cooperative undertakings requiring technical management and considerable capital can not be suitably carried on as a mere department of a village credit society. As to the supply of agricultural requisites and the sale of agricultural products the principle of separation was laid down by the opponents of Raiffeisen, but has not proved realizable in practice, especially in regard to the supply of agricultural requisites. Trading in agricultural requisites by credit societies —Not only the credit societies affiliated to the Raiffeisen Federation, but the greater number of those attached to other organizations act as the regular medium for the purchase of manures, feeding stuffs, etc. It may not be amiss to emphasize that only agricultural requisites are supplied, the sale of groceries and provisions, for instance, not being undertaken by these societies. In the Kingdom of Saxony the most frequent title of these societies is ‘‘ savings, credit, and supply societies.’’ The model articles issued by the Bavarian National Union, which includes some 2,500 credit societies, state the object of these societies (apart from their deposit and credit business) as ‘‘the purchase from members of their agricultural produce and the supply of purely agricultural requisites, inclusive of machines and other implements to be obtained for hiring or selling to members.”’ The Pomeranian and Saxon model articles also add as the third object, after the loan and deposit business, “the obtaining of agricultural requisites.” The most important union outside the Imperial Federation of Agricultural Cooperative Societies, namely, the Wurtemberg Union at Stuttgart (with nearly 1,200 affiliated credit societies), states in its model articles for such societies that, apart from credit and loan business, they ‘‘may undertake on behalf of members the joint purchase of agricultural requisites as well as the joint sale of agricultural produce.” But no reference is made to the extension of their functions to purposes affecting the moral, intellectual, or general social welfare of their members. On the other hand, the Baden Credit Union (425 societies), also independent of any other organization, gives in its model articles larger scope for these societies: The object of the undertaking is the conduct of a savings and loan bank. The society aims especially at procuring for its members the capital necessary for their business, as well as at facilitating the investment of money lying without interest; and in this way, as well as by the adoption of other suitable measures, it aims at improving the condition of its members in every respect. Advantages of such combination of functions.—One of the principal difficulties operating against the creation of a separate agricultural supply society in a village in which a credit society is already established is the dearth of suitable’ men to fill the responsible offices in two societies. The advan- tages of amalgamation are, moreover, considerable. The credit society need not raise special capital in order to be able to carry on the business of a supply society, as it either has cash at disposal or, 104 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. by reason of its credit at the cooperative central bank, can settle accounts through that agency. The recovery of sums due by purchasers is assured by the knowledge of the financial condition of members possessed by the committee of management. The small percentage added to the cost price by the society constitutes a useful source of revenue to meet the cost of management and strengthen the reserves and, when this business is large, enables perhaps the rates for loans and deposits to be respec- tively lowered and raised. This extension of business, of course, increases the work of the manage- ment. In most cases, however, the society confines itself to collecting orders from members, trans- mitting these to the central trading society, advising members of the arrival of their goods, carrying out the necessary bookkeeping, and recovering the payments from members on receipt of goods. When the society is very large, and the members make great use of these facilities for obtaining reliable com- modities at reasonable prices, either additional remuneration is paid to the member who acts as secre- tary, or a store is maintained, the work in connection with which is often allotted to another member, who receives payment in return for his services. Sale of agricultural produce by credit societies.—As a regular part of their work the collection and sale of agricultural products by credit societies does not appear to have attained noteworthy dimen- sions, except in Bavaria, including the Palatinate, and, to a less extent, in Wurtemberg. In Bavaria, where especially the business of cooperative corn selling has been energetically taken up by a number of these societies, there is a minimum of risk involved, owing to the support of certain great State departments which purchase supplies preferentially from cooperative societies. Individual societies were met with elsewhere by the writer which undertook for their members the sale of corn, cattle, eggs, and fruit; but such transactions are in most cases merely occasional, and the societies, generally selling directly to their central trading organizations, are spared the pains and risk of finding a market. General social activities—As may be observed from the quotation from the Raiffeisen model articles of association already given, rural societies ot the Raiffeisen Federation aim not only at the material welfare, but also at the moral, intellectual, and general social welfare of their members. Similar efforts are made by other large groups of rural banks. Thus the model articles approved by the Westphalian Union (having 540 credit societies in 1912) lay down: The object of the undertaking is the conduct of a savings and loan bank (1) to facilitate the deposit of money and to encourage thrift, and (2) to grant loans to members for business purposes. The whole organization and business of the asso- ciation should be governed not by the desire for profit, but by the desire to help such members as are economically weak, and, with the view of improving the material welfare of members, especial attention should be paid to their moral elevation. To this end, regard should be had not only to the capacity for credit of intending borrowers, but also to their worthiness for credit; before approval of loans their intended employment should be ascertained, and subsequently the application of same should be supervised so far as possible. The model articles for credit societies issued by the Bavarian National Union (2,500 credit societies) contain also a clause to the effect that the administrative organs of these societies should pursue such a policy that “by the supervision of the employment of loans, by accustoming members to punctuality, business habits, and thrift, as well as by encouragement of public spirit, their moral improvement may be effected.” The same ideal objects are associated with the rural credit societies of other unions, although their expression in the articles may not be so definite. Yet it must not be taken that undue promi- nence is attached to these aims. The essential objects are first and foremost to furnish rural dwellers with suitable means for depositing money and obtaining loans, and then to pursue less material objects as far as may be compatible with sound business achievement. German rural cooperation in all its branches is advancing steadily as regards commercial development, but many men who have lent no slight impetus to the cooperative movement are loath that the ideals which animated leaders like Raiffeisen should be entirely lost, and that rural cooperation should merely represent a form of business organization. Achievements of societies in this sphere.—It is not without interest to inquire how far the cooperative credit societies do, in fact, endeavor to promote the general social, intellectual, and moral welfare of their members apart from that economic welfare which is their primary aim. As already noted, a very large proportion of the societies insert in their articles of association clauses to the effect that subventions from the profits of the society shall be accorded for the betterment of their members in these respects. The Raiffeisen Federation instituted in 1908 an inquiry into these activities of its affiliated societies, and the reports received show the way in which measures toward such ends, either initiated or supported by the societies, had materialized. The returns showed— AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 105 (1) For raising the level of popular education, 458 libraries, 237 continuation schools, 96 ‘“ Raiff- eisen’”’ evening clubs, 23 juvenile clubs, 24 village institutes (meeting halls, etc.). (2) For the benefit of children, 108 infant schools, 181 children’s savings banks. (3) For the sick, 357 village nurses, 20 ambulance corps and Samaritan funds, 32 sets of surgical appliances. (4) For the general benefit of members, 329 death benefit funds, 103 cattle insurance societies, 109 accident funds, 13 sick funds. (5) For various objects of public utility, 130 fire brigades, 49 telephone services, 20 veterinary pharmacies, 70 hearses, 53 cases where protection or help (veterinary and other) in the event of disease, etc., was afforded. (6) Appliances for use in cultivation, on steadings and in barns, 3,870 machines, implements, and other agricultural equipment. As to actual amounts expended by these societies it may be stated, by way of illustration, that the 500 credit societies attached to the Raiffeisen Union at Breslau applied to these objects in 1911 a total of £1,557. But, as has been noted, schemes of this nature are not confined to the 4,200 credit societies attached to the Raiffeisen Federation. Societies visited by the writer which were affiliated to other organizations had instituted arbitration courts and libraries; had provided for members telephone services, weighing machines, agricultural machinery and implements; had furnished maps to schools; supported local cattle shows; given money bounties to farm hands who had remained a certain number of years in the same service; supplied cooperative papers free to members; organized evening circles for reading and acting; and held regular meetings in which instructive lectures on cooperation, agri- culture, and other topics were delivered. In Bavaria, Hesse, and Baden, as well as in the case of the societies attached to the unions established at Cologne, Munster (Westphalia), and Treves, considerable attention is devoted to these actavities. The general secretary of the Hanoverian Union reported in 1912 that in the two previous years, as far as was ascertained, the societies affiliated to that organization had contributed a total of £2,894 for various objects for the benefit of the members or of agriculture generally in the locality. In 1908, 1909, and 1910 one society granted £50 to the local agricultural association which had originally brought the society into existence, and a second gave in the same years £30 14s., £37 10s., and £40 17s. to a similar local association. In 1909 and 1910 one village bank allotted £25 for the purchase of manure for distribution among its members. Hanoverian societies made grants also for continuation schools, village libraries, gymnastic societies, bathing establishments, singing societies, cattle and poultry breeding societies, fire brigades, cattle-transport wagons, weighing machines, nursing sisters, churches (for bells, pulpits, general restoration), créches; for the betterment of roads—one society gave £250 for this purpose; subscriptions on the occasion of a mining disaster (a total of £320); to assist two struggling credit societies (total of £68); and for other numerous objects. The Pomeranian Union made an inquiry in 1911 among its affiliated credit societies on the s' me subject. From the report by Herr Sparr it appears that as regards— (1) Existing public institutions, 41 credit societies subscribed to public libraries, 26 credit societies subscribed to local nursing sisters or women and infant aid associations, 9 credit societies subscribed to continuation schools, 2 credit societies subscribed for lighting the roads, 2 credit societies subscribed for providing church bells, 2 credit societies subscribed toward a telephone service, and others subscribed to a bathing establishment, for heating church, for a cripples’ home, and to an anticonsumption society. (2) Independent undertakings for the public welfare, 3 societies have formed a general fund for public objects out of 25 per cent of the annual profits, 5 societies have established libraries, 4 societies have established telephone service in their villages, and other societies have severally acquired a medical chest, a surgical chest, a hearse, and musical instruments for the village school. (3) Measures for the benefit of members, 28 societies have acquired one or more machines and implements of different kinds. Rural banks as credit institutions —The village banks aim at meeting the need for credit, especially for working capital, on the part of their members. Savings deposits are accepted from nonmembers as well as members, but loans may not be made to the former. The cooperative societies act states that cooperative societies having as their object the granting of credit may not extend this part of their business to nonmembers, except when it is done by way of investment of idle funds. 106 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Agricultural personal credit.—It is of great importance that due account be taken, when working capital is advanced to agriculturists, of the special conditions of their industry. Money borrowed by them does not usually bring in a rapid return. Corn sown in autumn, after much plowing and manuring of the land, is reaped in summer, threshed and sold perhaps some months later. If money required for the purchase of manures and seeds, the payment of labor, the keep of horses, the mainte- nance of machinery, etc., is borrowed in whole or part, the return that it yields may not come in for quite a year. Money borrowed to purchase a calf is returned within perhaps two or three years; that is, when the animal is grown; if a loan is employed to buy a foal an even longer period must usually elapse before any benefit from the purchase can be realized. Not only length of time necessary to the process of production or slowness of return upon expenditure, but also accidents of harvest, risk of disease, serious fluctuations in price, and other circumstances make the returns from the farming industry more uncertain than those in commerce and manufacturing industry. Agriculturists thus need long credits. Short credits of three months with renewals up to six or nine months, which are the practice in commercial life, do not meet their requirements. The cooperative societies of the Schulze-Delitzsch type use this method of short credits, which is perhaps one of the chief reasons of their failure to satisfy medium or small holders possessing little capital. But the rural credit societies are able to grant without difficulty loans for periods fixed according to the needs of the borrower, for 1, 2, 3, 5, even 10 years, and to allow repayment by installments. Other sources of credit for German agriculturists—Public savings banks.—Before the institution of village credit societies, medium and small farmers possessed no regular convenient channel through which their temporary credit needs might be met. The public savings banks were at that time few in number, and the great bulk of their advances were only given on mortgage security. It was not their practice nor were they organized suitably to carry out efficiently the business of personal credit. Their number has immensely increased, and in recent years their scope of business has been enlarged, but their operations, in so far as personal credit is concerned, remain comparatively restricted. The statistics of the Prussian savings banks for 1907, 1908, 1909, and 1910 show that only 1.78, 1.71, 1.65, and 1.61 per cent, respectively, of the deposits were invested in advances on personal bonds, with or without surety, while for the same years only 0.71, 0.68, 0.75, and 0.93 per cent of the deposits were advanced on bills of exchange. Further, of these totals for advances on bonds and by discount, amounting to roughly 214 per cent of the total investments, probably not one-half fell to landholders. In the same four years an average of 20.56 per cent of the deposits was advanced on mortgages of rural property and an average of 39.26 per cent of deposits was lent on mortgages of urban property, while an average of 23.86 per cent was secured on stocks and shares. Urban banks, urban cooperatwe societies, and dealers ——The banks established in the towns did not adapt their conditions to meet the needs of smaller agriculturists, who for the most part kept no regular banking account; and the same was true of the bulk of the credit societies of the Schulze-Delitzsch type, with the exception of those in certain eastern Provinces where large landholders predominate. Circumstances thus compelled the smaller class of farmers to seek credit from dealers in the country towns or from the small bankers, often to be more correctly described as professional money lenders. Such relations opened the way for the gravest exploitation of the economic position of the farmers. Not only was the credit dear, but it also led to the loss of independence. The extent and ravages of the usury practiced upon them in various parts of Germany have been described by many writers, notably in the volume of the Association for Social Reform entitled ‘The Personal Credit of Small Landed Proprietors in Germany,” and in “Usury in the Country.’”’ Dealers were generally willing to make advances, but onerous conditions were attached. Interest of at least 1 to 2 per cent above the normal rate was charged, its amount being deducted at once from the loan or credit allowed. Commissions were also charged in most cases. If renewals were granted, they were often only made at higher interest or on payment of a commission. When business transactions were carried on betwen farmer and dealer, the former was forced to accept prices below the current rates for his produce, and was likely to pay more than unindebted customers for manures and other farm necessaries. One writer reporting for Hesse speaks of dealers who, before granting a loan, would insist upon the borrower devoting up to 50 per cent of its amount to the purchase of commodities sold by them. In the districts where small proprietors predominate, as in Hesse, Wurttemberg, Bavaria, Baden, and the Rhine Province, such exploitation was not confined to dealings in corn, manures, and feeding stuffs, but was also rife in connection with property transactions and cattle dealing. As to the latter an illustration of the methods in vogue may be given. In the west and south of Germany small landowners often obtained young animals from dealers at a certain price, but without paying cash, on the condition that AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 107 they should feed the stock till ready for market. The dealers retained a lien on the animals and fixed the sale price, the difference between the first and second prices falling to the farmers, who bore the whole risk during the fattening period, as well as the cost of feeding and tending the animals. In those cases in which animals were obtained with borrowed money, dealers were in a position to press other sales upon the borrowers by threatening to foreclose the loan. Rural credit societies have contributed more than any other factor toward the almost complete dis- appearance of these gross forms of usury. Excessive rates of interest and unfavorable conditions may still be imposed upon farmers, but those either of good standing or worthy of credit are able to obtain all necessary working capital on reasonable terms from the 17,000 cooperative societies established and managed by themselves. At the end of 1910, 14,729 such societies, with a total membership of 1,445,900 persons, had the immense total of £93,000,000 outstanding with members, of which £67,000,000 was lent for fixed periods and £26,000,000 took the form of overdrafts. The rate of in- terest most generally paid ranged from 4 to 5 per cent. Provision of working capital_—The principal aim of these societies is not to supply the entire per- sonal credit needed by farmers, but rather to supplement it. Far less is it their purpose to advance money for permanent improvements, buildings, etc., from which the return on capital outlay is likely to be spread over a large number of years. Loans are granted, as a fixed general rule, only for current productive or provident purposes. Under the former heading would be classed advances to purchase stock, fertilizers, feeding stuffs, machinery and implements, or to pay wages of workpeople, etc.; under the second, advances to enable farmers to hold over cattle or corn instead of selling, through need of ready money, under disadvantageous market conditions. Loans may of course be granted in order to clear off debts or to reduce liabilities resulting from previous credit transactions. Thus members indebted for agricultural requisites and paying perhaps 6 or 7 per cent interest may be given loans to cancel their debts; and societies frequently assist mortgagors by advancing money to pay off fixed mortgages at a high rate of interest, substituting repayment by installments and a lower rate of interest. Mortgage transactions.—Speaking generally, the German societies have confined their business to providing supplementary credit on personal security for productive or provident purposes. In some districts, however, especially in South and West Germany, many societies advance money on mortgage security; and in some cases at the risk of unduly tying up their capital, the bulk of which is composed of deposits at three or six months’ notice, this means of investing their funds has reached considerable dimensions. The chief motive of this policy is to secure better rates of interest. They find that it is more profitable that such sums as are not required for loans to members should be invested in mort- gages rather than sent to the central provincial banks. Four to five per cent is readily obtained on mortgages, whereas only 3 to 4 per cent is usually obtainable from the banking center. The Prussian State Central Cooperative Bank pays only 3 per cent for surplus funds deposited by the provincial central banks on behalf of their constituent societies, although these central banks have in fact to pay more to these societies. Mortgage security, in default of other sufficient security, is of course often demanded from members even though the particular loans may not be of the permanent nature of mortgage loans. Such “caution” or security mortgages, as distinguished from loans granted for more or less long periods for purposes that yield slow returns—e. g., for improvements in drainage, building operations, etc.—are especially frequent in Hanover, Schleswig-Holstein, Westphalia, the Rhine Prov- ince, Hesse, and Bavaria. Mortgage loans in connection with land transfer.—Mortgage security is very frequently taken by the village banks when money is advanced for part or full payment for holdings in those parts of Ger- many where small holdings predominate. On the death of a small farmer the property usually passes to or is taken over by one of his sons, who has to settle with other members of the family in cash, and the necessary amount of ready money is borrowed from the village bank. In one Baden village the writer was informed by the keeper of the registry of title that about 10 per cent of the porperty in the immediate district changed hands in the course of a year. Under such and similar conditions of frequent transference of property in those parts of Germany where small proprietors predominate, the credit societies are afforded abundant opportunity for investing their funds in this way. Holders also who wish to increase their farms are frequently accommodated with the necessary advance. In both these cases the charging of the land with a “security” or “caution” mortgage is common. But loans made for these purposes are in most cases repayable in regular annual installments, which are usually 5 or 6 in number and only rarely exceed 10. Societies find the business of advances for property purchases profitable, while the members obtain far better conditions than elsewhere, paying 44 to 54 108 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. per cent with a commission of one-half to 2 (usually about 1) per cent, whereas interest at 6 to 8 per cent with a commission of about 5 per cent would be charged by other lenders in connection with such transactions. No complete statistics are available showing how far loans on mortgage security are granted, and the figures published do not generally distinguish whether such loans are pure mortgage loans or merely “caution” mortgage loans. The Imperial Federation obtained information on this head from the banks in less than half the union districts that furnished reports for 1909, and this information was stated to be quite incomplete. It showed, however, that a total of £10,970,000 was lent upon mort- gage security, plus £3,922,000 lent in respect of property purchases. Mortgage and property transfer business appears to be on the increase; the totals supplied by those groups of societies that reported on these points both for 1905 and 1910 grew (for mortgages) from £4,599,000 to £8,803,000 and (for property transfers) from £2,223,000 to £3,445,000. Land purchase by cooperative societies —The cutting up of larger properties into small holdings has also been carried out with good results by some rural credit societies. In such cases a mortgage charge is entered against the holding in the registry of title in favor of the particular society. When properties come into the market, land speculators, usually from towns, often buy and divide them, exploiting the ‘‘land hunger” of the small holders in order to obtain high prices. The prevalence of these transactions, which tended to increase further the already heavy indebtedness upon small landed property, led the Bavarian Legislature to pass an act in 1910 by which special privileges in the way of purchase were given to cooperative societies in the case of property sales in rural districts (see p. 178 of this report); and, as will be seen in the account of the Bavarian Central Cooperative Bank, which has formed a special department to deal with this business, it is anticipated that credit societies, in conjunction with it, will develop into important agencies for the transfer of landed property in Bavaria. The Erfurt Union has also recently established a similar land-transfer department; in 1911 it dealt with properties of the total value of £56,000 and created 11 new small holdings. For an illustration of the procedure of rural credit societies in this matter the reader is referred to the reports upon the savings and loan banks of Fischenich, near Cologne; of Elxleben, and of Gross-Urleben, both in Thuringia, to be found appended to this section. Amount of loans—The majority of the loans granted by rural credit societies are for relatively small amounts. Particulars on this point covering all rural societies are not published, but the Raiff- eisen Federation furnishes information for over 4,000 of its affiliated credit societies. The classification, according to amount, of loans outstanding at the end of 1908, 1909, and 1910 is shown in the following table: Number of loans outstanding Percentage of total at end of— number. Amounts of loan. 1908 1909 1910 1908 1909 1910 UP AO£ Diskin aecsioelslsie s weiica meee ames ese ese sed 62, 685 63, 069 61, 070 17.5 17.2 16.2 Over £5, Wp 10; £15 oui. nese ole eiesaaobenee cases deeekese.- 102, 867 | 101,878 | 102, 556 28.7 27.7 27.5 Over £15, up to £25...........220 een cee eee eee eee e eee eee 56,726 | 57,756 | 59, 176 15.8 15.7 15.7 Over £25, up to £50....... 22... 222 eee eee eee eee eee renee 58,807 | 61,005; 63,889} 164] 16.6 16.9 Over £50, Up t0 L100 i. sec sccncccew scion. cceeiemermtiinnaieie sss ne ee 40, 217 42,731 44, 764 11.3 11.6 11.9 Over £100, up to £250.........-2--2- 2-222 eee eee eee eee eee 27,459 | 30,302 | 32, 814 7.6 8.3 8.7 Over £200 siecadcnostice cave x eeu. Cawaeseneraneraeace sees 9, 541 10, 539 11, 749 2.7 2.9 3.1 Total number of loans............--..------ 2-2 e ee eee eee 358, 302 | 367,280 | 376,018 | 100.0] 100.0 100. 0 Number of societies reporting.....-......-..-.-..-2eee eee e eee 4, 223 4,154 QOD lie idiass ohasnin acd cee oxic It will be noted that the small accounts are by far the most numerous. In these years about 45 per cent of the loans outstanding were for sums up to £15, and in a further 16 per cent for sums exceeding £15 up to £25. Three-quarters of the total number of loans were for sums not exceeding £50. The loans for £250 and over, and also for those over £100 to a considerable extent, are often made in connection with land purchase, settlement with coheirs, or mortgage transactions for invest- ment purposes. There appears to have been a notable increase in the large accounts between 1908 and 1910. No statutory limit to amount of loan by societies —No English agricultural credit society estab- lished under the friendly societies act—all existing English societies have been registered under this AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 109 act—may grant on loan to any member, to be held at any given time, a total exceeding £50. In this respect German societies are only restricted to the extent that every society must fix for each year at a general meeting the maximum of the total advances that individual members may hold at any one time. By virtue of this facility every society is enabled to adapt itself to the needs of its mem- bers and to the state of development of its own resources. In illustration of this point may be cited the limits set by 376 Pomeranian credit societies (all of which possess limited liability) to the credits that might be granted to individual members in the year 1911: The maximum was fixed by 103 socie- ties at up to £500; 130 societies, over £500 to £1,000; 107 societies, over £1,000 to £2,500; 27 societies, over £2,500 to £5,000; 9 societies, over £5,000 to £10,000. The actual amount of credit extended to individuals by German societies is of course dependent on each particular case—on the standing and character of the applicant and the security he can give (whether sureties or other). In the Pomeranian and Prussian Saxon societies with limited liability each member is normally entitled to a fixed credit without further security on the basis of his share holding in the society; in the majority of societies with unlimited liability each application for a loan is separately examined by the committee. No unsecured credit is given to individuals by German cooperative societies; and under the act loans may be granted only to members. Form of loan.—Loans are granted most usually on promissory note or personal bond (Schuldschein) backed by two or more sureties. The rules of most societies require at least two sureties, and in many cases societies only accept one surety, say per £50 of loan, considering that in case of default it is sufficiently onerous on a surety to be obliged to make good such an amount. New loans numbering 91,191, to the value of £4,864,642, were granted in 1910 by the 4,165 societies of the Raiffeisen Fed- eration, and the security furnished was reported as follows: 2 Number of | Amount of Form of security. loans. Toss. Sureties! 6 cee tes oecouor cus scene nea ecsm erst Ge anette jibhedicsieest aesasce se 65,727 | £2,573, 914 MOFtPage: oso vccicone ata tees vad bance ae meno aa aenes Lae ce ES OAC crea Sita A avied oi 2s0 le ara ecead 18, 187 1, 805, 935 Sureties and mierteage sooo il le Aeeane eed aed ett lele deemowdaae uae se ees ee oe 2, 346 182, 251 Pledging of mortgage claims and scrip... .......---2- 22-20 e eee eee eee eee eee eee eee 2, 832 222, 027 Other seeurity 1c caja tetoeee's oe iia ede ee Rae eee oe Le co Le ieee ease eee 1, 939 77, 728 No spécified s@curity !isscesceey cog se csiuecre ee ayeieicmiteiov ee bans ealesaiaws sadeuieies 2 oes enlace 160 2,787 Total wscscenanaeerscee hye ose ais siecle ety ee ieee al see eecly aed dee hiiedntts obese texas 91,191 4, 864, 642 ‘ Loans to public bodies, etc. In the limited liability societies in Pomerania and Prussian Saxony borrowers sign a bill entitled sole-bill. These bills, which run for three years, are not negotiated, but remain with the society until the debt is cleared. No sureties are normally required when the credit extended does not exceed three-fourths of the liability undertaken by the borrower in respect of his share holding in the society; for credit in excess of that amount, sureties or other security must be forthcoming. Object of loan.—The purpose for which the loan is required is usually asked by the committee, and is usually entered in the minutes of the transaction. Many of the more developed societies do not, however, ask this question, being only concerned with the standing of the borrower and of his sureties. Period of loan.—Loans are granted by rural societies for at least a year; in most cases probably they run up to two, three, or five years. Loans for longer periods are, however, far from rare. Accord- ing to returns received by the Raiffeisen Federation in respect of 91,191 loans granted by its affiliated societies in 1910, 14,903 loans, of a total value of £563,925, ran for periods not exceeding 1 year; 69,410 loans, aggregating £3,588,989, from 1 up to 10 years; 3,482 loans, of a total value of £429,635, were for over 10 years; 3,396 loans, for £291,096 in all, were repayable by annual sinking-fund install- ments equal in amount to the stipulated interest. But, for their protection, societies reserve the right to recall loans granted under any form of security at from four weeks’ to three months’ notice; the latter is that by far the most usually given in practice. Repayment of loans.—Easy terms of repayment are a distinguishing feature of Raiffeisen societies. Borrowers are rarely obliged to repay the whole loan in a lump sum, but are allowed to repay in regular annual (or six-monthly) installments. When arranging for loans, borrowers submit to the committee the length of time for which they require them, and their proposed method of repayment. So far as 110 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. the experience of the writer went, the most usual plan is to fix the annual (or six-monthly, but far less frequently) installment at equal amounts based on the number to be effected; thus, if a loan is repayable in five years, an annual repayment of one-fifth is due from the borrower; if in four years, of one-fourth. Committees insist rigorously upon the punctual keeping of the terms of the contract, unless it is clearly shown that special circumstances have adversely affected the income or expendi- ture of the borrower. Thus, in the case of a drought such as occurred in 1911, which compelled Ger- man farmers to incur unusual expenditure upon feeding stuffs, extension of periods of payment would be allowed as far as the resources of the credit society would permit; or in the case of the outbreak of foot-and-mouth disease, which also ravaged many districts in 1911, a postponement of the sinking- fund payment would be allowed to those who were direct sufferers. But while such remission is granted no society permits borrowers to postpone the payment of interest, or the addition of arrears of interest to the capital sum. On the other hand, it is always permissible to anticipate repayment wholly or partially; most societies require, however, a certain period of notice—usually one to three months—of such intention. Relation of repayments to fresh loans.—In 1910 13,365 societies granted loans for fixed periods of £16,910,300, and were repaid £10,990,000 in respect of such loans due to them; in 1909 the corre- sponding figures for 13,030 societies were, respectively, £15,075,000 and £9,270,000. That is, roughly, two-thirds of the value of the fresh loans for fixed periods were repaid in these years. Taking sepa- rately the loans of the societies of the Raiffeisen Federation (included in the foregoing), 64 per cent in 1910 and 67 per cent in 1909 of the value of fresh loans was covered by repayments. Interest charged for loans.—So far as could be ascertained by the writer, the rates of interest for loans charged by rural societies range generally from 4 to 5 per cent. Exact information on this point cov- ering all societies is not published, but the rates charged by the 4,000 societies of the Raiffeisen Fed- eration in 1908, 1909, and 1910 for loans on promissory notes, mortgages, and title deeds show an overwhelming predominance in the rates not exceeding 5 per cent. Rates from 3} to 5 per cent, inclusive, were charged by 86 per cent of the societies in 1908, 95 per cent in 1909, and 95.9 per cent in 1910. Seventy-two per cent of the societies in 1908, 76 per cent in 1909, and 76.6 per cent in 1910 charged rates ranging from 4 to 5 per cent. Money being more abundant in 1909 and 1910, the rates for deposits and for loans were rather lower; in 1909 only 1.2 and in 1910 0.9 per cent of the societies charged 5} per cent and over, but in 1908 5.2 per cent had charged such rates. A commission on the amount loaned is charged in addition by a considerable proportion of the societies; for the great bulk of them it is small in amount, one-tenth, one-fifth, or one-half per cent (most usually one-tenth) on loans on bonds and caution mortgages, but when money is advanced on title deeds (Kaufschillinge, Giiterzieler) a commission of about 1 per cent is usual. Relative cheapness of rural cooperative credit—The rates quoted show that members of rural credit societies usually obtained capital at from 4 to 5 per cent in these three years. Even in times of dear money, such as prevailed in 1907, they were able to borrow at low rates. The rates charged for loans on bonds with sureties in that year by the societies in Silesia which were attached to the Breslau Raiffeisen Union, as well as by those which were attached to the Raiffeisen Unions in Berlin and Cassel, may be cited in illustration: Societies in— Societies in— Branden- Branden- burg, burg, Rates for loans. Silesia Mecklen- er Rates for loans. Silesia orklen Hees (Breslau | burg, and (Cassel (Breslau | burg, and Cl Union). | Pomerania Union). Union). | Pomerania 5 asse (Berlin : (Berlin nion). Union). Union). Up to and including 4 per 5} per centae cen. veecces 5 1 2 Cent sscwe vs sed eed 65 55 88 || 54 per cent...........--- 21 31 2 44 per cent.............. 39 16 42 || 52 per cent.....-.-...-.. 3 Dl iver eeated 44 per cent......-....... 189 181 136 || Over 52 per cent.......-- 1 3 4 4% per cent.............. 37 27 31 5 per cent...........-..- 87 75 54 Total. scccasencine 447 402 359 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 111 The average for the Silesian societies was 4.6 per cent. Yet the imperial bank rate rose to 7 per cent, showing an average for the year of 6.04; and the current market rate for some time was 7 to 8 per cent. The Breslau Union reports that at the end of 1907 the outstanding loans of the societies amounted to nearly £2,350,000, and that, allowing a difference of 14 per cent between this average rate and the current average rate, the total saving to borrowers in interest for the year would amount to about £30,000. ‘‘As a fact the saving must have been still greater; for in that period of tight money no private individual obtained money at the discount rate, at least 1 per cent above it being paid in addition to the usual commission charges.” The rural banks are in a position to provide this cheap credit, even in times of stringency, by reason of their large deposits, their nonspeculative business, their competence for supervision, their low cost of management, the absence of aim at high dividends, their organization (provincial central banks, State or other large banks), and, of course, the good eventual security offered by borrowers, who are for the most part landholders. Current account busvness.—Rural societies are developing their loan business on current account; -at the end of 1910 such loans, granted by societies attached to the Imperial Federation, amounted in value to about 28 per cent of the total loans outstanding. In the societies with limited liability in the Prussian Provinces of Saxony and Pomerania most of the loans take the form of overdrafts— in 1910 in the former Province £2,085,000 was paid to members on current accounts as against £247,000 in loans for fixed periods, the corresponding figures for the Pomeranian societies being respectively £1,760,000 and £17,600. As regards societies with unlimited liability, those attached to the Pro- vincial Union in Silesia only lend by way of overdrafts on current accounts, 738 societies having thus outstanding with members at the end of 1910 a total of £2,849,100; in the Brandenburg Union, with 476 societies, the figures were £1,515,000 as against £393,600 in definite loans; in one Posen Union, with 294 societies, £1,361,000 against £176,300; in the Palatine Union, with 267 societies, £1,081,600 against £448,800; and in the Oldenburg Union, with 57 societies, £299,500 against £144,300. Com- pared with 1905 the total payments on current account in 1910 to members of the rural banks attached to unions within the Imperial Federation (within these years such banks represented from 82 to 83.4 per cent of all existing German rural credit societies) showed an increase of over 100 per cent (from £16,679,500 to £34,130,594), the average amount per bank and per member in 1905 being £2,148 and £24, and in 1910 £3,036 and £35. As to loans for fixed periods, the total increased from £10,792,900 in 1905 to £15,539,559 in 1910, or about 45 per cent, with an average amount per bank and per member of £1,122 and £12 in the former and of £1,599 and £15 in the latter year. Repayment of loans on current account.—Care is taken to prevent loans on current account, that is, overdrafts, from becoming in fact standing loans. The rules of most societies holding current ac- counts with members provide that a certain percentage at least of the overdraft must be repaid into the account within each half-year or year, and that if such payment is not effected, the whole amount may be called in at once, the credit reduced, or the rate of interest raised. Societies find that under the rules adopted for their current-account business they are afforded not only a better insight into the financial position of their members, their incomings and outgoings, but that their own resources are also main- tained in a more liquid state. On reference to the table on pages 133-134 it will be observed that payments to members and payments by members on current accounts in each of the six years, 1905- 1910, were maintained in satisfactory relationship. , Stimulation of thrift by rural credit societies.—Credit societies, which, it may be noted, bear almos universally the double title of ‘‘Savings and loan bank,”’ aim at stimulating the practice of thrift. It is their first interest to do so, the success of their work as lenders being largely dependent upon their success in attracting sufficient deposits. Not only are members urged to bring in their savings, but the savings of nonmembers are also welcomed; and efforts are made to reach all ages and classes in the district. Farm hands and servants are recommended by masters to deposit part of their wages with the society ; teachers in schools distribute savings books; savings boxes are given out free of charge; and in many cases societies employ collectors who make weekly visits to houses for the sale of savings cards of different denominations (from 6d. up to 5s.). At Arheilgen in Hesse, which was visited by the writer, the society paid £20 a year to a collector, who, assisted by two sons, sold each week cards to the total value of between £45 and £50. At another village (Griesheim) near Darmstadt two collectors are paid £10 each per annum for the same work; in 1908 they sold cards to the amount of £3,850 in this manner. This plan of obtaining deposits has been especially developed among the societies attached to the Hessian Union; in 1908 a total of £114,000 was thus obtained by some 180 societies, this sum 112 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. representing 10 per cent of the total deposits held at the end of the year by the 402 societies in this union. Savings bores.—Owing to the success of the savings boxes distributed by many credit societies and public savings banks, the Pomeranian Union of Agricultural Societies, considering that those on the market were too costly (2s. to 7s.) to come into general use, arranged for the manufacture of small savings boxes. These were sold cheaply (for 23d.) to affiliated societies for introduction into their respective localities. They met with great success and have been circulated among societies through- outGermany. In three years, 1908-10, about 250,000 were sold by the union; during 1911 over 200,000 were ordered. The boxes are usually distributed by the societies gratuitously among children. When at least 1 mark (1 shilling) has been collected in the savings box it may be brought to the secretary of the society to whose charge the keys of the boxes are intrusted. He opens the box, ex- tracts the contents, credits the amount in a savings book, fastens, and returns the box to its owner. Advantages as savings banks—Convenience.—Among the advantages offered to the rural popula- tion by these societies in their functions as savings banks are proximity, almost absolute security, and adecuate interest. Although there are about 3,000 public savings banks, besides numbers of other deposit banks, they are mainly situated in places with over 3,000 inhabitants, and thus can not ade- quately serve the rural population, while the 17,000 rural credit societies reach the small villages. It is true that there are about 6,000 receiving agencies in connection with the public savings banks, but the importance of these agencies is not considerable, the representatives of the banks being persons with other principal occupations (teachers, parish officials, tradespeople, etc.), and in many districts it is a debated subject as to whether the deposits obtained by them are remunerative. Accordingly, by utilizing the services of the rural credit society the country depositor saves not only a good deal of time, but also the cost of the journey to the nearest town and other necessary or incidental expenses which may reduce to very little the balance obtained in interest. Before village banks were widely established, the idea of depositing at interest was unfamiliar to the majority of country dwellers; and the societies have thus not only spread the idea of money being itself an instrument for the acquisition of further wealth, but have provided suitable means for its realization. Money was previously either hoarded in the farmhouse, or was only deposited, perhaps at considerable intervals, in the nearest savings bank, so that even when money was so deposited not a little interest was usually sacrificed by re- taining money till a suitable occasion arrived for its deposit. Deposits may be lodged with the vast majority of country credit societies at almost any time. In the case of most of the numerous societies visited by the writer the secretaries were willing to accept deposits whenever they were at home (the offices of these societies are mostly in the houses of the secretaries). The times most favored by deposi- tors appeared to be the midday interval, the evenings, and Sundays from 12 to 2. Some societies fix certain hours on one or two days in the week. Safety of deposits.—The security of depositors’ money is safeguarded (a) by the fact that the society confines its operations to a small area and to simple, well-secured transactions; (b) by the fact that its management is controlled by the board of supervision; (c) through a general knowledge of the affairs of the society being common to the bulk of the members; (d) through regular outside audits; and (e) finally, if all these safeguards should fail, through the individual and collective liability incurred by the members. This liability is unlimited in the case of 92 per cent of the rural credit societies, while, when limited liability is adopted, although members are only liable up to the fixed amount attached to each share held by them, the committee of management is bound to move for the opening of pro- ceedings in bankruptcy when the indebtedness of the society as disclosed in its balance sheet exceeds the assets by a fourth of the total amount of the collective hability represented. This provision serves as a safeguard against the ultimate nonrecovery of claims. The further legal provision that the total amount of the savings deposits that may be accepted and of the loans that may be contracted by a society, as well as the limits of the totals of the advances that may be granted to individual members, must both be fixed each year by the general meeting of the members, prevents the extension of business beyond the collective solvency of the members com- posing the society. It has been the boast of German rural societies of the Raiffeisen type that no money has ever been lost by them; this statement has not meant that the societies, as such, have not lost money on rare occasions by fraud on the part of officials and by loss of interest, or of capital advanced, but that depositors or creditors have never lost their money. When sureties, or other security taken for loans, were insufficient to meet the debt of a defaulter, the ordinary assets, such as reserves and share capital, were drawn upon, and, finally, the liability of members, when realized, AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 113 always proved adequate. This boast has remained justified to the present time; as regards depositors, one eminent Union director with a long and special experience of credit societies remarked to the writer that no case had come to his knowledge in which depositors in rural credit societies had suffered loss. Amount of savings deposits —The savings deposits held by 14,729 credit societies at the end of 1910 amounted to £92,429,100, showing deposits per society and per member of £6,275 and £64, respec- tively. It must be recalled, however, that the deposits of nonmembers with these societies are included in the total. Some societies receive very considerable deposits; one society visited by the writer which was attached to a Raiffeisen Union at the end of 1910 a total of £116,727; another, also within the Raiffeisen Federation, a total of £48,715; the average per society for the 4,165 credit societies of this federation at that date was £6,460 as against £5,998 for 4,154 societies in 1909. In some Provinces the average of the savings deposits per society is considerably greater; thus for 1910 the average for the 454 credit societies affiliated to the Hanoverian Union was £10,668 (in 1909, £9,697 for 434 socie- ties); for 535 Societies in Westphalia £18,015 (1909, £16,838 for 533 societies); for 114 societies in the Bonn Union £19,023 (1909, £17,273 for 113 societies); for 389 societies in the Coblentz Union £10,179 (1909, £9,775 for 389 societies); and for 70 societies in the Ermland (east Prussia) Union £25,324 (1909, £22,397 for 70 societies). As to the amount of individual savings deposit accounts no comprehensive statistics are available. The following table shows, however, for the societies in Pomerania and Westphalia, two Provinces with widely divergent conditions, especially as regards landholding, mining, and manufacturing indus- tries, and density of population, the ranges of their savings deposit accounts at the end of 1910 (and also of 1911 in the case of Pomerania). It may be noted that all the Pomeranian societies have adopted limited liability and all the Westphalian societies unlimited liability. Pomeranian credit societies. Westphalian credit societies. Number of Number of savings deposit savings accounts. s deposit accounts. 1910 1911 1910 Upitol0secsiidce ct Wil he De ees 29, 820 Up to £ lenweeseecerssciesasercecentes 17, 572 17, 934 || From 10s. to £1.............-2..----- 18, 372 From £1 to £2 10s......--...---------- 10, 342 10, 891 |) From £1 to £2 10s...........-2.---.-. 26, 190 From £2 10s. to £5.......--.-..------ 8, 424 9,223 || From £2 10s. to £5. ......----..----- 23, 589 From £5 to £15.... 13, 813 15, 211 || From £5 to £10...-. 29, 595 From £15 to £25... 5, 617 6, 397 || From £10 to £25.... 41, 487 From £25 to £50... ei ad 5, 710 6, 320 || From £25 to £50.... re 30, 824 OVER £50 = 3a ioiasora oicisa ne eiaiaereresereisioiereres 6, 814 7,945 || Over £50........-..000-2- 22 eee eee eee 45, 514 Total number of accounts........ 68, 292 73, 921 Total number of accounts. -.-.- 245, 391 Total savings deposits.....-..........-. £1, 357,300 | £1,574, 500 || Total savings deposits.............---. £9, 638, 400 Number of societies.....-...----------- 372 376 || Number of societies..........--..--.-- 535 Average per society......-.---.--.----- £3, 649 £4, 187 || Average per society...........-.------ £18, 016 In both these Provinces the depositors of over £25 form a noteworthy percentage of the total number, but the figures show prominently to what a remarkable extent these societies are utilized by small depositors. In this table are given only the savings deposit accounts held by the societies; they do not include deposits by members on current account, which, it may be stated, amounted in the Pomeranian societies at the same dates to £462,275 and £529,025, respectively, and in the West- phalian societies to £564,043. Interest paid on deposits.—The rate of interest paid by the societies is largely influenced by the rate paid by the public savings bank in the neighborhood. It exceeds that rate as a rule by from one-fourth to one-half per cent, although public savings banks now tend to accord more generous rates than formerly. The average rates paid in 1908 and 1909 by all Prussian savings banks were 3.45 and 3.49 per cent, respectively. Figures showing the rates of interest paid on deposits are not available for all rural cooperative credit societies in Prussia, but 4,219 of the credit societies attached to the Raiffeisen Federation paid in 1909 rates ranging from 3 to 5 per cent, as compared with rates of from 3 to 54 per cent paid by 4,154 similar societies in the previous year. 95273°—S. Doc. 17, 63-1——8 114 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The percentage classification of societies in the Raiffeisen Federation, according to the rate of interest paid in 1908, 1909, and 1910, is shown in the following table: Percentage of societies paying the rates of interest stated. Rate of interest. 1908 1909 1910 Sto SF. Inc lusivelysjcccades cha ecwese cc sascinigeeisv e's nc saree perenne nie ates 30.8 46.5 48.3 AU Shs cswcoseccdan ins 21.8 OL besa eiereiaria/e ale Over 3} to 34, inclusively 20. 5 21.6 21.5 Over 3} to 4, inclusively-.... os er ae 32.9 25.0 24.5 Over 4 to 44, inclusively.........2...0... 0.2022. 2 ee eee eee ee ae ae 12.6 6.2 5.3 Over 4d wasscenss5e os rent peer ecesenaed owas se ine She Badamnioni al Bea e Re 3.2 a 4 100. 0 100. 0 100. 0 The public savings banks, as has been stated, paid averages of 3.45 and 3.49 per cent, respectively, in the two years given above. The above figures for over 4,100 credit societies, which in this respect may be taken as fairly representative of all rural credit societies, show, therefore, higher rates in 91 per cent of the cases in 1908 and in 84. 9 per cent of the cases in 1909. Rates exceeding the average rates of the public savings banks by up to one-half per cent were paid by 53.4 per cent of the societies in 1908 and by 46.6 per cent of the societies in 1909. In 1910, 51.7 per cent of the societies paid over 34 per cent interests on deposits. The general lowering of the rates paid by these cooperative societies in 1909 was due to the abundance of money, which compelled their central bank to reduce rates, and thus made it necessary for them in turn to lower their rates. In 1910 deposits being again abundant, a further decline is observable. It is noticeable that the rate of interest paid by cooperative societies in the eastern and north- eastern Provinces tends to be higher than in the remaining parts of Prussia, and indeed of Germany. Out of the 235 societies in the Raiffeisen Federation which paid over 4 per cent in 1910, 186 belonged to the two unions in East and West Prussia. The societies of the Pomeranian Union, which is not affiliated to that federation, paid 34 to 4 per cent for savings deposits (as well as for deposits in cur- rent account) in 1910 and 1911. In the west and south of Germany rural cooperative societies tend to allow about 34 to 32 per cent. The competition of the public savings banks, which as a rule possess the guaranty of the district or town in which they are established and are authorized to take trust and other moneys on deposit, is keenly felt by the societies. Latterly also these public banks have adopted a more active policy. A large number advertise regularly for deposits in the newspapers not only of their own, but of more remote localities, and many have extended their business in new directions, such as by the opening of current accounts, the issue of check books, and discounting of bills, etc. (For public savings banks, see pp. 75-85.) Collective liability as credit basis.—It was the distinctive merit of the founders of modern German cooperation to have introduced into business a new form of financial security, namely, the collective lability of persons as organized in a cooperative society. Raiffeisen considered that this unlimited collective lability was adequate to secure from outsiders, whether bankers, members, or nonmembers or depositors, the advances required without any further share capital. His opinion has been so far justified that rural societies continue to obtain over 95 per cent of their working capital on this col- lective lability, whether unlimited, as in the case of 92 per cent of the rural credit societies, or limited. The Prussian State recognized its validity by building up its system of credit for cooperative societies upon the foundation of the liability undertaken by members. But Raiffeisen did not fail to see that it was advantageous for societies to possess in addition visible resources upon which credit might be obtained. His indivisible foundation fund and the reserve fund had as their object the for- mation of adequate assets, so that in time the society might be free from the necessity of using its collective liability as its only basis of c1edit. The urban societies of the Schulze-Delitzsch type have laid great stress from the beginning upon the creation of considerable share capital. They adopt: shares of high nominal value and insist upon regular installments until full payment has been reached unless adequate capital is otherwise obtained. Increased need for visible capital.—The increase of cooperative business and the consequent increased influence of commercial principles in cooperative circles, combined with the general substitution of the AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 115 use of currency for barter and. payments in kind in rural districts, have made more clear the desirability of possessing sufficient share and reserve capital as distinguished from loan capital. Most of the leaders of the movement exercise their influence in this direction, and the Prussian State Central Cooperative Bank has issued special recommendations to the societies on the point. (See Appendix.) Before proceeding to discuss the question of working capital, it is perhaps advisable to consider the all-important matter of liability. Inability —The financial basis of credit societies is the collective liability of their members; and it is open to them, as to all cooperative societies, to choose one of three forms: Unlimited, unlimited con- ‘tributory, or limited liability. The following table, kindly furnished to the writer by the Imperial Federation, shows the distribution of rural credit societies in the German Empire, according to the nature of the liability adopted, on June 1, 1912: Table showing the distribution according to liability of the rural credit societies in the German Empire on June 1, 1912. Number of credit Number of credit societies with— societies with— pepe Total. ee Total. Unlimit/ ipa. | Limit- Unlimit-| Fipu. | Limit- ed lia- t U- | ed lia- ed lia- | U- | ed lia- bility. | 32% | bility. bility. | %Y | pility. a- lia- bility. bility. BAVARIA—Contd. PRUSSIA. : Wurtemberg. .......-.-- L274 cece 10! 1,284 East Prussia............- (0) i ees 6 AQT || Baden... ..::.cieccmcearerean a 540 |....---- 4 544 West Prussia.........--.- 28Gb ices 5 5 291 ||| Hesse ea. :accecewee sve oo SLO jeesecaes 8 518 Brandenburg.......----- 774 10 36 820 || Mecklenburg-Schwerin .. L0H sees oa. 1 121 Pomerania...........---- 139) Sie 369 508 || Mecklenburg-Strelitz .... Tle descee 2 14 PORE cacice Sereiiiccm cate! 544 |.......- 24 568 || Saxe-Weimar Hisenach... TBD. Vosessrsee es 2 133 Silesia.................. 1, 649 1 15 | 1,665 || Oldenburg..............- 119 Jo... 5 124 SAXOD Visine swacmmcacsce E 2G | ceacorctcterees 614 740 || Brunswick.....-.--..--- 151 3 4 158 Schleswig-Holstein....... Bl, seeks. 9 360 || Saxe-Meiningen.......... DO) |ercaecencs 1 57 Hanover......-.2..-....-- 477 2 27 506 || Saxe-Altenburg....-.... DEW seratatere ase 5 47 Westphalia.............-- ATO amore sxe 15 485 || Saxe-Coburg-Gotha....... BOM iiassiavvens 9 67 Hesse-Nassau.....-.-.--- 804. Pees ees 17 821 || Anhalt............-.---. Aly esieceetatnte 32 33 Rhine Province. ........ 1, 449 1 13 1, 463 || Schwarzburg -Sonder- Hohenzollern ......-...- AR locus ssaexeens 48 Nalseniencccewwcccess| | 28) exec eslescesess 28 Schwarzburg-Rudolstadt. 4 21 Total......222...- 7,518 14| 1,150] 8,682]| Waldeck................. 1 43 =| |} Reuss Older Line.......-.. 1 8 BAVARIA. Reuss Younger Line..... 1 14 Schaumburg-Lippe...-.-.) 2 |... Jee eee 2 Right of Rhine..........- 3, 333 1 24 8,358 || Lippe ...« «--sanniewharens 3 13 Left of Rhine (Palati- Wubeckecrescceeccciocsen| Willbcdadadlvasadace 2 NALE) » sscrccnmeaiieees 494 |........ 3 497 || Bremen. ..--..--------- 1 2 - Hamburg. .-....-------- 2 6 Total.....---..---- 3, 827 1 | 27| 3,855 || Alsace-Lorraine........- 650) leccccces 3 683 SAXONY seecnes asescese 2s 298 | 1 | 15 314 Grand total........ 115, 664 219 | 31,291 | 416,774 * Equals 92.2 per cent. * Equals 7.7 per cent. 2 Equals 0.1 per cent. 4 Equals 100 per cent. Unlimited liability has therefore been adopted by over 92 per cent of these societies. Comparing this percentage with the corresponding figure for other principal groups of registered agricultural cooperative societies it may be observed that at the same date 53.7 per cent of supply societies, 65.8 per cent of dairy societies, and 29.7 per cent of societies of all other kinds had chosen this form of liability. Pomerania and Prussian Saxony are distinguished in that 76 per cent of all German rural credit societies with limited liability are established in their area. Meaning of unlimited liability—In a society with unlimited liability the members over and above the liability to pay in full the nominal value of the obligatory single share—only one may be taken—undertake liability for the engagements of the society to the society and to its creditors directly, to the extent of the whole of their property; and this liability is individual and collective. In the event of bankruptcy any deficit is recoverable by a per capita levy upon the members. Proceedings by creditors against individual members for the enforcement of claims against the society are, under the cooperative societies act, only permissible when, after the lapse of three months from the date 116 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. on which the contributory levy upon members is declared executable, such claims have not been sat- isfied. In the ordinary course this period would suffice for the society to make arrangements with its creditors. But should judgment be obtained by a creditor of the society against any member the latter retains his right to sue the society for restitution of the amount he has been compelled to pay. He becomes a creditor of the society, and if ultimately his claims are not duly met by the society he may proceed against any other solvent member or members. A further form of unlimited liability, which was introduced by the act of 1889, is entitled ‘ unlim- ited contributory liability.” The position of societies adopting this form differs in no way from those possessing ordinary unlimited liability except in case of bankruptcy. In that event the property of individual members of a society with the latter form of liability, as has been shown in the preceding paragraph, may, after three months, be individually attached by unsatisfied creditors, whereas when unlimited contributory liability has been adopted per capita contributions may be levied, but no direct proceedings against single members may be taken by creditors. Detailed provisions concerning bankrupty procedure in the case of these societies may be read in the cooperative societies act. (See Appendix.) It may be noted here that contributions not recoverable in the first or subsequent levies from individual members, owing to their insolvency, are to be distributed in equal amounts over the remaining members. But in considering German cooperation this form may be disregarded, since it has been adopted by only one-tenth of 1 per cent of all credit societies existing in 1912. The possi- bility of such lengthened and tedious procedure for enforcement of claims being obviously not calcu- lated to improve the credit of societies, the disinclination to adopt this form of liability may be readily understood. . Meaning of limited liability —In a society with limited liability a member undertakes, over and above liability for the payment in full of the nominal value of the share or shares held by him, a lia- bility for the payment of a fixed sum on each share held. The amount of this fixed sum, constituting the liability attaching to each share, as well as the maximum number of shares that may be held by a single member, must be determined by the general meeting of members upon the establishment of the society and must be stated in the registered articles of association. The amount, as well as any alteration of the amount, must be duly published. Any increase requires for its legal validity the sanction of three-fourths of the members present at a general meeting convened in due form; and fur- ther provisions on this point may be included in the articles. Statutory provisions have also to be observed in regard to any reduction of this share liability. Thus notice must be published three times in the papers fixed by the articles of the society for its usual notifications, creditors must be informed and have the right to claim settlement, and if not satisfied refuse their assent, etc. Moreover, it is legally provided that the annual balance sheet must show the number of members, the amount by which the paid-up share capital and the total amount of the liability incurred by all members have increased or diminished during the financial year, and must state the total actual liability represented at its close. Such precautionary measures are necessary for the protection of third parties, because the basis of credit of a cooperative society is the amount of the collective liability undertaken by the members. No member may take up an additional share before his previous share or shares have been paid up in full; and upon each share taken up a member incurs a distinct and fresh liability for the amount determined in the articles of association as share liability. Thus the nominal value of a share being fixed at 10s. with a liability of £5, a member holding 10 shares undertakes over and above liability for £5 in respect of the total value of the 10 shares a further liability to the extent of £50. As to_the determination of the amount of liability upon a share, the only statutory restriction provides that it may not be less than the nominal value of the share itself. In the two Provinces of Saxony and Pome- rania, where 76 per cent of all German rural credit societies with limited liability are situated, the actual amount of liability is in most cases forty and nearly forty-two times, respectively, the amount of the share value (5s. with £10 liability in Saxony and 6s. with £12 10s. liability in Pomerania). But by a very important provision in the act the actual liability of members is, in effect, considerably reduced. When, apart from suspension of payment, the indebtedness of a society is disclosed in the balance sheet at 25 per cent of the collective liability assumed by members in respect of their holdings in shares, the committee of management must move the court for the commencement of proceedings in liquidation; in other words, one-fourth of the liability undertaken is risked in normal cases of default. As to actual payments recoverable from members to meet claims made good as against the society by creditors in bankruptcy proceedings, no contribution in excess of the liability attaching to the share or shares held may be claimed from a member. Contributions proportional to the share holding of each AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 117 member must be levied from all members, irrespective of the importance of their share holdings, unless the articles have adopted some other principle for apportioning contributions in cases of losses not covered by share capital and reserves. Duration of liability of past members.—If a society dissolves within six months after the retirement or exclusion of a member, such cessation of membership is null and void, and such person must con- tribute to cover any deficit arising from obligations incurred up to the date of cessation of membership, as well as for those incurred within six months therefrom. When, moreover, the claims of bankruptcy creditors have not been met by a society with unlimited liability within six months after the supple- mentary contributions have been declared executable by the court, the property of past members who have left the society within two years from the opening of proceedings in bankruptcy may be attached, but only in respect of obligations incurred within the two years preceding the date of their leaving the society. Unlimited versus limited liability —The respective merits of unlimited and limited liability for credit societies have long been matter for discussion in Germany. Apart from the fact that until 1889 only unlimited liability was possible and that the foundations of modern rural cooperation were laid before that date and therefore development tended to take place along these lines, unlimited liability for rural credit societies has very solid grounds inits favor. By offering as security for its engagements the full amount of the property of its members a society with this form attracts savings deposits more readily, and improves its credit in the eyes of bankers and others from whom it may be necessary to borrow. Societies with limited lability may only be held responsible up to the aggregate of the special liability (as stated in their articles) attaching to each share taken up by members; but it can not be readily known to what extent that aggregate may be already exhausted by reason of prior claims. Depositors, therefore, or other creditors (e. g., for agricultural requisites supplied) may find in case of default that the amounts due exceed what is recoverable under the terms of the liability of members. Rural cooperative banks work with considerably over 90 per cent of loan capital in the shape of deposits from members and nonmembers and advances from their central organizations; but these resources may not be obtainable if their eventual recovery does not appear absolutely secured. The manage- ment and supervision on the part of the organs of administration and of the members is likely to be more careful when there is the consciousness of unlimited liability. While, too, the equality of the members as members is emphasized—each member may legally take up only one share—the vigilance of the more substantial is kept more alert by the knowledge that not merely a fixed, and perhaps for them not a vitally large amount, but their whole pessessions are involved. Raiffeisen and Schulze-Delitzsch were both convinced advocates of unlimited lability. From the beginning up to the present time all credit societies affiliated to the federation founded by Raiffeisen are constituted upon this basis. The Schulze-Delitzsch Federation has not entirely abandoned the same principle. Its present leader holds that the question of the superiority of unlimited over limited liability may not be determined absolutely; that it depends upon conditions prevailing in particular places, but that in the first instance, until a society has reached a certain degree of development, unlimited liability is in general to be preferred. Schulze-Delitzsch died in 1883, but it was not until 1895 that the organization founded by him formally admitted to membership societies with limited liability. The proportion of such societies in that federation has continuously increased since that time, but the relative strength of rural credit societies with unlimited liability has undergone little variation since 1900. The Imperial Federation of Agricultural Cooperative Societies recommends the latter form on the ground that it assures to a higher degree to a society the requisite credit. Little danger from unlimited liability in rural credit societies—While for members of large urban societies such as are those affiliated to the Schulze-Delitzsch Federation unlimited liability may present certain dangers, there is, in fact, little risk of members incurring great loss by reason of unlimited liability in a rural credit society. Its area is limited to at most a few parishes; the members are acquainted with the general character and circumstances of their fellow members; supplementary working capital to a moderate amount is mainly advanced on the security of promissory notes backed by sureties, on mortgages or on deposit of first-class securities, sv that if the borrower proves insolvent the loan is well covered; the collective knowledge possessed by the committee of management and the board of supervision and their collective surveillance are not likely to prove at fault. There is no incentive to undertake speculative or risky business—speculative business is, in fact, expressly for- bidden by the rules of the majority of societies—with a view to large profits, dividends being either not paid at all or being at the most quite small, and working expenses inconsiderable. The committee and the board are, in the first instance, legally responsible to the society to the full extent of their 118 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. property when losses occur as the result of their not exercising the ‘‘prudence of ordinary business men”’ to the affairs of the society; and, finally, there is the further safeguard of the audit, which must be carried out at least once within every two years. The history of rural credit societies affords conclusive evidence upon this point. During the period of 16 years from 1895 to 1910 the total number of rural credit societies, whether with unlimited or limited liability, that were involved in bankruptcy proceedings amounted to only 19. According to the yearbooks of the Schulze-Delitzsch Federation in five years no case of bankruptcy of a rural credit society occurred, and in five other years there was only one in each year. Such figures are convincing when one recalls that since 1901 there have been over 10,000 registered rural credit societies. In 1909 and 1910, in which years considerably over 15,000 such societies existed, no society with unlimited liability and only three with limited liability—one in 1909 and two in 1910—became bank- rupt. Compared with urban cooperative credit societies in this respect their record is very favorable. Between 1895 and 1908, 69 cases occurred in that group, although the total number of such societies has not, over the major portion of that period, exceeded the tenth part of that of rural societies. The record of German rural credit societies stands in still stronger relief when it is compared with that of ordinary commercial banking and credit undertakings. According to figures quoted by Dr. Grabein from the official bankruptcy statistics there occurred between 1895 and 1905 a total of 386 bankruptcies among some 6,000 such businesses. Calculating the frequency of bankruptcy per 10,000 undertakings for rural cooperative banks and private credit institutions over this period the same writer computes that failures were fifty-five times more frequent among the latter than among the former. Limited liability as practiced in Prussian Saxony and Pomerania.—Limited liability had been adopted in 1912 by only 7.7 per cent of German rural credit societies; and, as already observed, 76 per cent of the societies (983 out of 1,290) with this form of liability were situated in the Provinces of Saxony and Pomerania. In the small State of Anhalt also there were 32 such societies as against one with unlimited liability. It is worth inquiring what were the reasons that led to the establishment in these districts of societies with limited liability in this preponderating measure, and to explain the scheme adopted. For this purpose, Anhalt, which is almost an enclave in the Province of Saxony, may be regarded as having come within the influence of the Saxon movement. (a) In Saxony: When the imperial cooperative societies act was passed in 1889 there were but few rural credit societies existing in Prussian Saxony, although it was in this Province that the first German urban cooperative credit society was established by Schulze-Delitzsch. The landholders had grown distrustful of such societies, because many of those founded in the Province on the principles of Schulze-Delitzsch had by their collapse involved many farmers to a very serious extent by reason of unlimited hability. The burden of settling with creditors had fallen with especial severity upon land- holding members, whose assets were more tangible and not capable of surreptitious transfer to others. The rural cooperative movement did not, therefore, show signs of much progress, although the Raiff- eisen Federation had succeeded in establishing by 1890 a certain number of credit societies with unlimited liability. It is noteworthy, as indicating the former mistrust of the Saxon landholders toward cooperative credit societies, that, while in most parts of Germany credit societies were the first to be established, in Saxony productive and supply societies preceded credit societies. By the act of 1889 the adoption of limited liability was first made possible, and dairy and other societies were then founded in Saxony on this basis. The movement for the erection of credit societies followed about 1893. To overcome the mistrust of the agricultural classes limited liability was adopted. In societies with unlimited liability cash payments upon shares are the same for all members, but the liability in case of failure may fall much more heavily upon the larger than the small landholders or other members. In Saxony large, medium, and small properties are fairly evenly distributed; and it was decided to adopt a method that should take account of the actual circumstance of each member. The wealthier members were not to be burdened with the liability for the benefit of those less well-to-do, or the latter for the default of the former, while the advantages were apportioned roughly according to liabilities undertaken and share capital paid-up. Thus each member was obliged to take one share of 5s. for every shilling of supplementary land tax (payable upon estates of over £300 assessed value) levied, and to undertake liability of £10 in respect of every share taken. In order, however, to prevent members exceeding in the amount of their liability their actually realizable assets, a limit is set to the number of shares that may be held; and the credit accorded to each member is fixed on the basis of his liability. A member with 20 shares undertakes a liability of £200; his share holding implies that the capital value of his AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 119 property is at least £2,000 as assessed for taxation. He is allowed three-fourths of £200 (or £150) as .credit without further security on his own sole bill (not negotiable). If a member holds 50 shares he is normally allowed in the same way three-fourths of £50 multiplied by 10, or £375. When members require a higher credit, or their own position appears rather unsound, sureties or other securities are of course demanded. It may be noted in passing that as regards practical working this system has the great advantage that sureties need not be procured for small advances. (b) In Pomerania: In 1890 there were two and in 1894 four rural credit societies in Pomerania. The movement, therefore, taking root subsequent to the act of 1889, credit societies were able to adopt limited liability. The leaders of rural cooperation were strongly influenced by the Saxon point of view and example, and in many respects had to provide for the same conditions. The most influ- ential pioneers of the Pomeranian movement were convinced supporters of limited lability. Herr von Knebel-Doberitz, its leader, considered that in a district like Pomerania, where large, medium, and small landholders, together with clergymen, officials, teachers, artisans, shopkeepers, and others were to become members of the same society, it was more expedient to adopt limited liability. The wealthier inhabitants of a commune would not readily undertake an unknown amount of liability on behalf of smaller people, so that if the participation of the larger landholders who are strongly represented in that Province was to be secured this was more likely to be attained by the adoption of limited liability. It was also more equitable; more substantial landowners, as being likely to require larger credits, should be subject to a greater proportional liability than, say, a small allotment holder, ‘when losses were to be met, instead of being assessed at an equal figure. In Pomeranian credit societies with limited liability the shares are fixed at 6s., and members are obliged to take one share for each 4s. (or part thereof) of State income tax or for each 1s. (or part thereof) of supplementary land tax, as in Saxony. To each share held attaches a liability of £12 10s. The usual limitation to number of shares to be held by a member is 25, so that the utmost liability undertaken by a member would be £312 10s. As in the Saxon societies it is the accepted practice to lend in normal circumstances up to three-fourths of the liability undertaken by the borrowing member on his own bill without sureties. It is usually urged as a principal objection against limited lability that the credit of a society— that is, its power to obtain deposits and other working capital—is likely to be weaker under this form. The experience of Saxony and Pomerania has not shown that their societies have suffered on this ground. In fact, this form of lability constitutes in the circumstances and as practiced in these Provinces a credit basis approximately equal to that of unlimited liability. The security represented by a society with limited liability in which members are required to take up shares and liability in proportion to their means represents an effective value closely approximating to that of a society with unlimited liability. In these two Provinces the economic situation of the bulk of the members strengthens this effective value; in Saxony, which contains probably the most extensive consolidated area of rich agricultural land in Germany, the societies have attracted medium and larger landholders in. considerable numbers, and the Pomeranian societies also include a noteworthy proportion of the more substantial inhabitants of their districts. (See details below respecting social classes engaged in their management.) In both Provinces the societies succeeded almost from the first in attracting considerable deposits, and the unions at Halle and Stettin, respectively, which are both among the most efficient in Germany, have brought their central banks (formed in 1893 and 1895, respectively, to serve primarily as banks for cooperative credit societies; for a special account of each of these banks see pp. 181-188), into a position of great strength. The Stettin Bank has shown considerable credit balances at the end of each financial year since 1901 (see p. 184), and the Halle Bank is among the most important central cooperative banks in Germany. As to the maximum credit granted to a society by its central bank this amounts to three-quarters of the collective liability represented on the same principle as is followed by single societies in giving credit to their members; for credit beyond this limit deposit of securities or special bills must be deposited. The Prussian State Central Cooperative Bank, as a rule, advances money to societies with limited liability up to a maximum of 75 per cent of the collective liability undertaken. It appears hardly open to doubt that the spread of limited instead of unlimited liability in Saxony and Pomerania was due to special circumstances and influences rather than to any causes arising out of the conditions of the distribution of landed property or other special inequalities in the social economy or economic position of the rural population in these Provinces. That it was inherently impossible to create societies with unlimited liability is disproved by the fact that in 1912 there were 120 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. in Saxony 126 and in Pomerania 139 rural credit societies with unlimited liability. These Provinces are, Moreover, not unique in Germany in point of distribution of landed property. The following table shows for nine Prussian Provinces in 1907 the distribution of agricultural holdings according to size with the average acreage of the holdings within each group. The number of rural credit societies with their respective liability is also added in each case for the year 1912. Table showing (for 1907) the agricultural holdings in nine Prussian Provinces grouped according to size; the percentage of the total number in_each ge and the average area of each holding in statute acres; as also the number of cooperative societies with limited and unlimited liability in each Province in 1912. [A=percentage of total cultivated area; B=average acreage per holding.] 12 ee of Number of Province iglesia cn | ee 1 || BS | rc ae er acres. eae liability a Saxony{RTTTTTTI TT) gs] akts| gets | ees | goes ff 128 614 PomeraniafS' 72777777] tao |aas| «gts | bets | aaame |} 189 369 Hast Prigin| pe esse] aioe) lee] aes | eeea | OL 6 West Prawn See! Be ay | ag || aeee| eee F288 5 Brndenbong rr | | te aoe gees | Gass ee |): | 36 Basen or er) Eel aay | eae || sere ae ey | eM 24 Bilesiaf pT) be] eds] bee | anes | aieeas|t 1:69 15 Schleswig Holstein{ i} * sc] Ray] aods| 8'95| ateas| one P| 882 9 Hanover, terres) | a | aes | casees| oae |} ae 27 It will be observed that in most of these Provinces there is a mixture of large (above 250 acres), medium, and small holdings which is not dissimilar to that prevailing in Saxony and Pomerania, but that the country population has not been deterred by inequality of risk from adopting unlimited liability. That, too, the more substantial elements have not held aloof from these societies will be illustrated from the particulars given elsewhere of the social composition of the various organs of administration for over 700 societies with unlimited liability in Silesia as well as for similar groups in other parts of Germany. Form of lability: Adaptability to English conditions—The question may perhaps be summed up in this way. The adoption of unlimited lability is not a matter of principle but of expediency. It may well be the case in England that unlimited liability, having been long abandoned in business, may appear so far-reaching in its possible consequences that to secure its general adoption might present almost insuperable difficulties to the extension of the cooperative movement. As already observed, the likelihood of rural credit societies restricted to a narrow area and under conditions of management and inspection such as are applied in Germany, involving their members in serious losses, is extremely remote; but for practical purposes consideration might be extended to the prevalent disinclination in this respect. The essential point is that members should incur such liability that, in rough proportion to their means and to their utilization of the services of the society, their interest in its success, as well as an adequate basis of credit for the society, should be secured. This object is attained under the system of limited liability in Saxony and Pomerania. Working capital.—The working capital of a credit society is made up of (1) the owned capital of the society, consisting of share capital, entrance fees, and reserves; (2) the deposits of members and nonmembers; and (3) specific loans from individuals or banks, especially credit at the central co- operative banks. The last-named banks are dealt with in a separate section; and the question of deposits having been already discussed, that of owned capital may now be examined. Shares —Although the basis of the credit of the village banks consists in the liability undertaken by the members collectively, yet experience shows that the creation of adequate visible capital is ex- tremely desirable. This may be done either by writing to reserve most or all of the profits, or by increas- ing the value of the share. Raiffeisen adopted the first plan and advocated the formation of an indivisible permanent foundation fund. The general tendency in recent years has been to raise the value of the shares while not neglecting due appropriations to reserve. The payment of large shares AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 121 by medium and small landholders is difficult, but it is now generally considered that shares should be made as large as possible, having regard to the circumstances of the particular locality, and that easy regular instalments should be insisted upon until the whole or the greater part of a share is paid up. Better-to-do inhabitants generally pay the amount in full. Wher interest is paid—although it is usually laid down that the rate of interest shall not exceed the rate paid by members for loans— many nonborrowing persons may be led to’ join a society, with the view to the investment of their savings. In this way they obtain higher interest than if they place their money on deposit or in an ordinary safe investment, while the society obtains cheaper capital than it might perhaps borrow, and in any case it obtains working capital of a more permanent kind than mere deposits. When large shares are paid up there is also an additional stimulus to the interest of members in their society. Members of registered cooperative societies with unlimited liability may not legally acquire either more or less than one share; members of societies with limited liability may acquire any num- ber up to a maximum to be determined by the general meeting of members, and inserted in the articles of association. But the law prescribes that in a cooperative society no member may exercise more than one vote, so that, although the larger shareholders in a society with limited liability may acquire greater personal influence than the smaller, yet in the decision of all matters of importance, which by law are bound to be placed before the general meeting of members, all members have an equal voting power. Nominal or par value of shares.—The par value of shares in rural credit societies shows great varia- tions. True to the principles of Raiffeisen, who advocated low or even merely nominal share values, the societies of the Raiffeisen Federation still maintain low shares; in 1908 only 1 per cent—that is, some 40 out of 4,000 of these societies had adopted shares exceeding 10s. Several reasons seemed to justify his standpoint. Persons, who would become members chiefly in order to obtain loans, would be kept away by shares of high denomination. [teady money was scarce in the rural districts at the time of Raiffeisen’s greatest activity, rural Germany having passed at a relatively late period from payments in kind to payments in currency. Shares of 20 or 50 shillings would have been simply out of the question for the majority of the peasant proprietors in the west of Germany, especially in those economically backward districts where Raiffeisen began his work. If the shares were high, share- holders would expect dividends, and the desire of gain would thus be introduced into the business of the association; and this would have been contrary to his ideas respecting the moral aims of the society. But there was another important reason. His societies rested upon the combined unlimited lability of their members, who were mostly possessors of at least a small property, and this basis afforded sufficient ultimate security for advances. The imperial act of 1889 provided that societies must have shares, of which one-tenth of the par value must be paid up, but no maximum or minimum amount was prescribed, nor was any period laid down within which this tenth part must be paid. The following table shows the denomination of the shares of all German cooperative credit societies, with special details respecting rural credit societies, as on January 1, 1909. No complete figures of more recent date have been published. Table showing the nominal value of the shares of all German cooperative credit societies on Jan. 1, 1909. ge ieee a Of which rural credit societies. . ee With unlimited| Totals. Wit eit’? | contributory With limited liability. Graduation of shares. liability. Socie- ties: Members. hae Tota a Socie- Socie- Socie- | Mem- | Socie- | Mem-| tional | lections ties, | Members. | “ties, | Members. | ‘ties, | bers. | ties. | bers. | shares oy held! | of socie- Up 128 14,141 126 13, 449 77 TO5689) | o-ciacs-cicrennt|ovoeeeee: 49 | 2,810 27,264 | £219,010 Over ls. to 2s.. 229 27,670 229 27,670 171 DA SZAD: leccrcreSenmel|lraitiatciersn 58 | 3,429 15, 769 239, 582 Over 2s. to 5s.. 3,134 279,590 | 3,131 279,178 | 2,459 242, 827 1 108 671 | 36,243 | 113,414 1,746, 260 Over 5s. to 10s. 4,795 | 479,913 | 4,767 | 453,132 | 4,620 | 444, 805 7| 600{ 140 | 7,727 | — 28%082 | °’357’ 134 Over 10s. to 20s 5 260 32, 573 252 27,805 6 26, 272 8 468 8{ 1,065 6, 562 134, 695 Over 20s. to £2 10s.....-..------- ---| 1,309 121,302 | 1,239 107,573 | 1,207 105, 238 1 228 31 | 2,107 5, 182 140, 442 Over £2 10s. to £5..---.0..-0--- “2] a'ss7 | 343}605 | 2614 | 255,751 | 2)585] 251,611 /.......-|.------ 29} 4,140 | 27253 | 155/957 Over £5 to £10.......-.------- ---| 1,109 200, 607 714 57,345 691 62,645 73 22 Over £10 to £15......... ateie wee 608 220, 520 133 16, 207 122 14, 105 Over £15 to £20.... B 71 30, 553 13 2,069 13 2,069 Over £20 to £25.. 1,215 275, 632 846 81, 462 840 79,798 Over £25 to £30 112, 335 6 2,15 4 1,738 Over £30 to £40. 19 15, 096 1 912 1 912 Over £40 to £50.. ies 111 73,610 11 1,509 10 1, 443 Over £50 to £100... Sistaslaciiseis 39 39,114 1 84 1 84 Over £100 to £250......-..-..- aie 17 6,511 1 174 1 174 OVCT L250 sweicsstesrdasaisacivre dieieapersin see 2 TSE || ceseuct| eeesicecweet lawseles esl wewan soci Total cccuancssssicn tacncclsineise, 16,106 | 2,274,833 | 14,084 1,326,477 | 13,038 | 1,258, 601 20 | 2,283) 1,026 | 65,593 201, 839 | 3, 481, 392 By additional shares are meant all shares taken by members over and above the single obligatory share. 122 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The model articles of association framed by the Raiffeisen Federation in 1910 for adoption by its 4,200 affiliated societies fix 10s. (to be fully paid up at once or within a short period) as the value of the share. The Imperial Federation recommends in its model articles for credit societies, whether with limited or unlimited liability, that the shares should be fixed at as high a value as possible, but in no case at less than £5, and that the articles should provide for their payment in full within 10 years. At the congress of that federation in 1909 it was unanimously resolved that ‘‘on legal, economic, and cooperative grounds, it is an imperative duty of rural societies to aim at strengthening adequately their share and reserve capital by increasing the value of the shares and the amounts assigned to reserve.” Herr Quabeck, secretary of the Westphalian Union, proposed and carried a motion that for rural credit societies the denomination of shares should not be less than £5, and, if possible, as high as £25, with obligatory payment of £2 10s. within a short period. The Prussian State Cooperative Bank exerts its influence in the same direction, e. g., it fixes as the normal maximum of credit for a central bank the assets of such bank represented by its paid-up share capital and reserves (cf. p. 121). Tendency to raise value of shares——Several unions have carried through within recent years an increase in the value of shares of affiliated credit societies. Up to 1911, the shares of the credit societies in one Posen union did not exceed 10s.; it has now been decided that they are to be raised to £5, with one-fifth or one-tenth part paid up on admission to membership, and the remainder in regular installments. One Breslau union in 1909 raised the denomination of its shares to £5, 10s. to be paid up, and the balance by yearly installments of 3s. to 5s., while it was stated that a second union in Breslau, whose societies now have shares of 5s. to 10s., proposes to take a similar step in the near future. In Westphalia the shares have also been raised in value from 3s. or 5s. to 30s. and 50s. In the Treves union, which is not attached to the Imperial Federation, shares which until recently were from 5s. to 10s. are to be gradually raised to £2 10s. In Baden, where shares were formerly low, no new societies with shares under £2 10s. have been founded for a number of years; and many societies founded with low shares have increased them to £2 10s. and £5. Although a very considerable number of the societies in the Bavarian National Union have lower shares than £5, the majority of societies founded since 1900 have adopted this figure and their new (1911) model articles of association contain it. The credit societies in the Palatinate attached to the Landau union have now, almost without exception, shares of £25; in Hanover the shares are now mostly £2 10s.; in Kiel practically all are £5 and over, while in the Bonn and Darmstadt unions the societies have, for the most part, shares of from £15 to £25. Actual payments effected —The amounts actually paid up on large shares fall far short of the nominal value, whereas in the case of shares up to 10s. the full amounts are now usually paid up either on admission to membership or by regular installments. Thus of the 12 unions now com- prised in the Raiffeisen Federation, which has in recent years set 10s. as the standard share denomi- nation, 6 showed at the end of 1909 an average share payment of 10s. per member of individual societies, 2 an average payment of 9s., 2 of 8s., and 2 of 7s. The act only insists upon the payment of a tenth part, but it prescribes that members of societies with limited liability may not take an additional share before the previous holding of shares have been fully paid. Taking all credit societies reporting to the Imperial Federation the average amount paid-up per member at the end of 1910 was 19s. For the seven years 1904-1910, during which period the number of members of credit societies so reporting increased from 954,000 to 1,209,000, this figure ranged between 17s. and 19s. The inequalities in the averages for the separate unions are striking. In 1910 the highest average was £5 3s., this being provided by 16,242 members in the Bonn Union, and the lowest 4s., in the case of 88,987 members in the Westphalian Union. After the Bonn Union came the Hessian with £4 8s. for 51,138 members, one union in Nassau with £3 14s. for 15,306 members, the Brandenburg Union with £2 16s. for 22,999 members, one union at Posen with £3 2s. for 30,287 members, and one in Silesia with £1 3s. for 56,438 members. Of the two unions which comprised only credit societies with limited liability, the average for 34,734 members of the Prussian Saxony Union was £1, and for 24,260 members of the Pomeranian Union also £1. In 1908 the Hanoverian societies with 38,539 members showed an average payment per member of 9s., but two years later the figure stood at 13s. for a membership of 44,608. An average of 11s. per member was returned by two unions with 65,378 members, of 10s. by eight unions with 252,212 members, of 9s. by four unions with 144,104 members, of 8s. by six unions with 186,728 members, of 7s. by two unions with 63,554 members, of 6s. by one union with 6,243 members, and of 4s. by one union with 88,987 mem- bers. Taking the cooperative unions attached to the Imperial Federation—which comprised, at the end of 1910, 82 per cent of all rural credit societies then existing in Germany—we find that at that AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 123 date the average amount paid up per member on account of shares did not exceed 11s. in the case of 66.8 per cent of the members of all these societies, an additional 3.6 per cent attaining average pay- ments of 13s. The average payments per member of the societies in the Wurttemberg, Baden, and Treves unions may be seen in the table on page 134. Entrance fees—It is a very common practice now for rural credit societies to levy a small entrance fee. The Raiffeisen Federation, however, is opposed to the charging of any entrance fee, its model articles for credit societies recommending that no such fee be levied. The object is not to raise any barriers that might deter persons from becoming members. The Imperial Federation sanctions entrance fees, leaving their amount to be fixed by each society, and assigning the receipts on this account to the reserve fund. The levy of an entrance fee of moderate amount appears quite justi- fiable in the case of established societies. The founders have incurred trouble, expense, and risk in establishing and placing the society upon a firm footing; and it is reasonable that a new member should contribute a small amount, seeing that he has the advantage of the reserves already accu- mulated as security against losses, of the low rates of interest for loans, and of any other benefits provided by the society as the result of previous good management. Despite the smallness of the entrance fee—which is not reimbursable on a member leaving the society—the necessity of its pay- ment tends to deter members from resigning, as they might were reentry facile and gratuitous. As to amount, rural credit societies rarely fix the entrance fee at more than 5s., the predominant range being from 2s. to 4s., and 3s. probably the most accepted amount. In Hanover it is almost invariably fixed at 3s., perhaps 20 societies levying a higher amount; in Westphalia it is 2s. to 3s.; in the Pomeranian societies with limited liability it is usually 1s. to 3s., these limits being accepted as minimum and maximum; in the Province of Saxony 1s. per share taken up, or a fixed sum of 3s. to 5s. is required. In Bavaria the model articles issued by the National Union fix the entrance fee at 3s. In Wurttemberg the societies have chosen sums of from 2s. to 5s., while of 422 rural credit societies in Baden reporting for 1910, 117 had an entrance fee of 2s., 148 of 3s., 59 of 4s., 48 of 5s., 7 of 6s., 3 of 8s:,9 of 10s., and 3 of 20s. For the 20 or so remaining societies the amounts were either 1s., 1s. 6d., 2s. 6d., or 3s. 6d. Reserves.—From a business standpoint it is a weakness of cooperative societies that members are free to resign at will, although such resignation may, by the articles of association, be made ineffective before the expiry of two complete financial years from the beginning of the year succeeding the date of notification of withdrawal. Retiring members have a right to the share capital standing to their credit, so that if many members withdraw simultaneously the capital of a sosiety may be seriously reduced. In the case of rural credit societies with a low average amount of paid-up share capital such withdrawal would not be serious, but the society might suffer a greater injury by the withdrawal of the amount of the liability in respect to the share or shares held by such retiring members. On this account the legal status of “company,” rather than of “cooperative society,” has been adopted by several organizations that are cooperative in aim. To meet this difficulty was the main purpose of the indivisible “foundation fund” of Raiffeisen; the creation of a permanent inalienable asset of the society. But on the retirement or death of a member no legal claim can be asserted to a share in the reserve fund. This method of building up capital is open to all societies, and their power to do so is increased by the legal provision that members are not entitled to receive any part of the profits. Sec- tion 20 of the act states that the articles may prescribe that profits be not divided but written to reserve. It is also left to the articles to determine the method of forming the reserve fund of the society and the proportion of profits to be devoted thereto, the act merely stating that reserves are to serve to cover any losses disclosed in the annual balance sheet. No uniform practice is in vogue among rural credit societies in respect of the formation of reserves. The model articles issued by the Raiffeisen Federation for their adherent societies state as to appro- priation of profits: “In the first place the paid-up share capital, if it has been diminished by losses, is to be restored to its former amount. A sum not exceeding one-fifth of the balance may be devoted by resolution of the members to objects of public utility. The remainder shall be written to reserve until a sum amounting to is reached (a footnote here states that for small associations £500 suffices as reserve fund, for large societies the amount must be fixed on the basis of the number of its members and of the volume of its business). This reserve shall be used to meet losses appearing in the balance sheet. When the requisite reserve has been accumulated the reserve known as the ‘indivisible foundation fund’ is to be further strengthened. The purpose of this foundation fund is to make the association gradually independent, and to render possible (or support) objects of common utility for the improvement of the position of members. The accumulation of profits in the foundation fund 124 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. shall be maintained until this fund and the reserves together have reached such an amount that in combination they suffice as working capital for the association. Until this position is reached interest on the foundation fund may be added to the capital amount or applied in some suitable manner by resolution of the members; after that the interest and further profits must be applied to objects for the common welfare of members. When the reserve fund is inadequate to meet losses in the balance sheet, the foundation fund may be drawn upon, but only after the paid-up share capital has been ex- hausted.” The model articles issued by the Imperial Federation for credit societies run— The reserve fund shall be formed by the entrance fees, the fines payable according to the articles, and the payment of at least 10 per cent of the annual net profits. It shall be brought up to and maintained at a figure representing 20 per cent of the total working capital as shown in the balance sheet, and in no case shall it be less than a sum corresponding to the fully paid-up share capital. In addition, for extraordinary purposes to be decided upon by the general meeting, but especially to meet losses occurring on business transactions, a special working reserve shall be accumulated by the appropriation of at least 10 per cent of the net profits, as well as by other appropriations to be determined by the members. This working reserve shall be brought to 20 per cent of the total working capital, as shown in the balance sheet, or to at least the total amount of the shares when fully paid up, and shall be maintained at that level. The net profits obtained in 1909 by 11,544 credit societies in the Imperial Federation amounted to £414,976 as against losses by 970 societies of £64,170, while 100 societies showed neither profit nor loss in their balance sheets. Thus the net profit of all these societies in that year amounted to £350,806. Only a small proportion of profits are distributed as dividend upon share capital, such dividends being low (usually 3 to 4 per cent), only paid by a relatively small number of societies, and as often as not placed to the credit of members’ shares not fully paid. The bulk of it, roughly seven-eighths, was written in 1909 to reserves, which increased, as compared with 1908, by a total of £364,094, including entrance fees and fines, and stood at the end of the former year at £2,548,934. Similarly in 1910, when the net profits for 11,795 societies amounted to £441,920,911 societies showing losses of £88,273 (two societies accounted for £26,291 of this total), and 90 societies neither profits nor loss, the reserves were further strengthened by a total of over £300,000. In 1910 the average amount of reserves per society and per member, taking a total of 14,790 societies with a membership of 1,447,913, was £221 and £2 5s., respectively. These figures show that the average reserve per society and per member were more than double the average paid-up share. capital per society and per member; in 1910 the average paid-up share capital per society and per member amounted to £108 and £1 2s. In the societies with limited liability in Prussian Saxony and Pomerania the averages in 1910 were— Prussian Saxony £84 12s. per society and £1 11s. per member for 641 societies with 34,734 members, and in Pomerania £92 18s. per society and £1 8s. per member for 374 societies with 24,260 members. At the same date the average paid-up share capital in Saxony was £55 per society and £1 per mem- ber; in Pomerania £64 per society and £1 per member. The usual ratio of share capital and reserves to liabilities snown in the balance sheets of cooper- ative societies is considered far too low by the cooperative authorities in Germany; and the regula- tions already quoted from the model articles for credit societies issued by the Imperial Federation and by the Raiffeisen Federation show that the great central organizations seek to remedy this unsatisfac- tory condition. The Prussian Bank has also advised (see Appendix) the societies to bring their share and reserve capital up to 10 per cent of their liabilities, and to do this as far as possible within two years of their foundation. For a general view of the relationship of borrowed capital to share capital and reserves in cooperative credit societies in 1910 the reader is referred to the table at the end of this section (pp. 133-134). ; Organs of administration.—The organs of administration are three: (1) The committee of manage- ment, (2) the board of supervision, and (3) the general meeting of m-mbers. The authority and relationship of each of these are formulated, as to their essential points in the act, which leaves other matters of procedure and practice for regulation by the society in its articles of association and busi- ness rules. Committee of management— Number of members.—The committee of management must legally consist of at least two members, who must be elected by the general meeting of members. Although such clection by the general body of members is obligatory, the act expressly permits the articles of association to provide special methods of nomination; thus, the articles may determine that appoint- ments to the committee may only be made by the meeting of members on the motion of the board of supervision. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 125 In most credit societies the number of members is most usually fixed at three or five. It is con- sidered advisable that there be at least three, owing to the legal provision that all documents to be binding on the society require the signature of two members of the committee; and if the body should consist of only two, the absence or inability to act of one might considerably hamper business. Its restriction to two members may, moreover, throw an undue burden upon men who usually under- take such duties voluntarily and without recompense. In many societies the articles of association require at least three members (chairman, deputy chairman, and another) to sign all documents giving an undertaking on the part of the society. When more than five are elected, the object usually is to secure representation of a number of different villages or occupations. Election to the com- mittee is generally for a period of four years, certain of its members retiring by rotation every year or every two years, but being eligible for reelection. Their appointment is cancelable at any time by the board of supervision, subject to confirmation by the meeting of members. General powers and duties—The general powers and duties of the committee of management are defined in the cooperative societies act, sections 24-35 (see translation of act in appendix), but the salient points of these provisions may be here enumerated. The committee represents the so- ciety both judicially and otherwise; and all engagements entered into by it are binding upon the society. But the articles of association or a resolution of the general meeting may limit the extent of its authority; thus it is a common practice for credit societies to fix a limit up to which loans may be granted by the committee to individual members and to require the assent of the board of supervi- sion or of the general meeting for the loan of higher amounts. If the committee exceeds its authority the society can sue its members for recovery of any resultant losses. As regards third parties, of course every transaction of the committee legally executed binds the society. The act also states: “The members of the committee must exercise the prudence of ordinary business men; members who fail in this respect are responsible to the society jointly and severally for any losses hereby sus- - tained to the society.” This jomt responsibility is intended to insure the interest of all members of the committee and to prevent the conduct of affairs falling into the hands of perhaps one man. Such a tendency is.also safeguarded against by the provision that at least two members must sign in the name of the society. The granting of a loan by the committee to any of its own members, in so far as it is at all permissible under the articles of association of the particular society, requires the approval of the board of supervision, whose sanction must also be obtained before a member of the committee may be accepted as surety for a borrower. The committee is also responsible for the publication of the annual accounts within six months from the close of the financial year, for the execution of the obligatory legal audit within the statu- tory period, and for the fulfillment of all necessary legal formalities as to registration of the articles, notification of new members, change in the personnel of the committee or board of supervision, etc. For a detailed description of the duties incumbent upon the committee the reader is referred to the model articles for German credit societies printed in the appendix. Meetings—Meetings of the committee are usually held once each month, except in the case of socicties with considerable business, whose committees meet once a fortnight or even once a week. A favorite time for holding meetings is on Sundays after church, or in the evening on week days. Chairman; social classes represented.—The chairman of the committee holds the most responsi- ble position in the society, and upon his energy and capacity its success largely depends. It is his duty to summon meetings both of the committee and of the general body of members; to see that the records and books are properly kept and safely preserved; to sign, in ordinary cases, on behalf of the committee; and, in a word, to supervise the entire practical working of the society. For this position, which, in the great majority of cases, is an honorary one, the societies endeavor to secure a landholder with business aptitude or some public official (village burgomaster, parish clerk, revenue collector, postmaster etc.), a teacher, or clergyman, but a not inconsiderable number are drawn from the shopkeeping, innkeeping, and small employers class owing to their greater familiarity with bookkeeping. The latter function is apt to present itself as abnormally difficult to the farmer, who is consequently loth to undertake it. In the credit societies attached to the Halle Union, out of 627 chairmen in 1910 there were 10 large landholders, 130 medium landholders, 306 small land- holders, and 13 tenant farmers, these groups forming 73 per cent of the total; there were 34 clergy- men, 23 schoolmasters, and 31 shopkeepers, innkeepers, employers of labor, while 80, described as belonging to other social classes, included officials, persons of independent means, etc. The Province of Saxony forms one of the richest agricultural areas in Germany, and its agricultural population, whose three classes—small, medium, and large landholders—hold almost equal shares of its territory, 126 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. supplies an abundance of persons qualified for such responsibility. In the south and west of Ger- many, where peasant proprietors constitute the bulk of the farming class, other occupations are more numerously represented. Thus, in Wurtemberg, in 1909 of the chairmen of 1,148 credit societies there were 448 village burgomasters, 217 public officials of various kinds, 172 shopkeepers, innkeepers, and small industrial employees or artisans, 148 peasant proprietors, 14 medium and 7 “‘large’’ land- owners, 52 clergymen, 30 teachers, 3 members of Parliament, 11 doctors and lawyers, and 46 who came under various descriptions. In those parts of Germany where the larger landholders are found they appear to be fairly well represented so far as this responsible task of acting as chairman is concerned. Figures for Prussian Saxony have already been cited. In 1905, in Pomerania, in 50 out of 305 societies the chairmen were ‘‘large”’ landowners, while in 209 out of 720 Silesian credit societies affili- ated to 1 of the 3 Breslau unions, in 1909, the chairmen were ‘‘large” landowners, and in 171 other societies the chairmen are described as peasant proprietors (Bauer) and small holders. Among other classes represented in this office in this group of Silesian societies may be mentioned 40 clergy- men, 38 teachers, 61 officials, 8 doctors and lawyers, and 159 persons engaged in commercial or indus- trial occupations. It may be explained that by “large” landowners are meant in Germany those possessing over 250 acres of land. Remuneration of the committee—According to the act, payment may or may not be made to the members of the committee for their services. The area of operations of societies and their member- ship being in most cases small, the volume of business is not usually so great that members require to devote so much time to their work on the committee as to require payment for their services. In the 4,200 societies of the Raiffeisen Federation no member of the committee may receive any pay- ment, apart from reimbursement for expenses incurred on behalf of the society. In anumber of other unions which are not attached to that Federation—as, for instance, in the 550 credit societies of the Westphalian Union, the 2,500 societies of the Bavarian Union, and the 1,200 societies of the Wurttem- berg Union—the same principle of nonpayment is observed. But in those cases in which a member of the committee is also the secretary of the society, such secretary-member, in the great majority of cases, receives payment. The model articles issued by the Imperial Federation include the secretary in the committee, and state that his remuneration 's to be fixed by the board of supervision, ‘‘The other members of the committee shall exercise their office gratuitously; in special cases the board of supervision may also assign remuneration to them in proportion to services rendered.” In many societies which elect their secretary to the committee the regular supervision of the accounts is assigned to another member, who is not the chairman. This supervisor, or ‘‘comptroller,”’ is usually obliged to be present with the secretary on the one or two days or afternoons in the week when the office is open, and to go through the accounts at regular periods. He also receives an annual fee, which may amount to from one- fourth to one-half of the remuneration of the secretary. The chairman, or director, as he is often termed, occasionally receives in such cases also a fixed annual payment. When payment is made to chairmen, it varies, of course, according to the extent of the business of the society and of the routine work undertaken by them. As to the actual practice in rural credit societies at the present time it would probably be correct to say that in 60 per cent of these societies the secretary is not a member of the committee, and that payments are not made to any of its members, while in the majority of the remaining societies, apart from the secretary, the chairman alone receives remuneration. In many societies, however, small sums of from 6d. to 2s. are allowed to members for each sitting at- tended. Such remuneration may hardly be regarded in the light of regular payment, since during a whole year it will not amount to more than, say, 10s. to 30s. The tendency to allow remuneration of some kind to committee members appears, however, to be on the increase. Secretary; membership of the committee.—The current business of a society is transacted by a member who is elected by the general meeting of members, and who is called the accountant (Ren- dant, Rechner), but whose duties correspond to those usually undertaken by a secretary of an ordinary society or club in England. In the societies (4,300) affiliated to the Raiffeisen Federation and in other societies that adhere closely to the original Raiffeisen principles (e. g., 550 societies in West- phalia, 2,500 in Bavaria, 1,200 in Wurttemberg, 425 in Baden, 552 in the Cologne Union, and 350 in the Treves Union), the secretary may not be a member either of the committee of management or of the board of supervision, although he may be present and take part, without a right to vote in the discussions of cither body. He appears, indeed, to be invited to be present at the ordinary committee meetings of the majority of those societies whose statutes formally exclude him from mem- bership. In those societies belonging to unions which have been guided in their development by AGRICULTURAL, CREDIT AND COOPERATION IN GERMANY. 127 the general principles of the organization now entitled the Imperial Federation—for instance, the unions with their headquarters at Darmstadt (to which are affiliated 410 credit societies), at Hanover (487 societies), at Kiel (355 societies), at Halle (694 societies), at Stettin (384 societies), one of the two unions with headquarters at Posen (305 societies), one of those at Berlin (487 societies), one of those at Breslau (764 societies), and the Dresden Union (299 societies)—the secretary is usually a member of the committee. The presence of the secretary on the committee has the advantage of convenience as regards routine work; every receipt and document requiring the signature of two members of the committee (in many cases, as already noted, the articles require three), three persons (secretary and two of the committee), or even four (secretary and three members of the committee), may thus be obliged to participate in such a small transaction as a receipt for the deposit of a few shillings. In practice it is arranged that the secretary gives a provisional receipt, the necessary sig- natures being afterwards secured. Apart from the question of convenience, it is also considered that the feeling of responsibility and the prestige of the secretary in the eyes of the members are in- creased by his inclusion in the committee. It is objected, on the other hand, that the committee is liable to be less free in its action toward borrowers and others and in its supervision of the details of the routine business when one of their number is thus employed. The duties of secretaries are regulated by their contract of appointment, by which they undertake to carry out the provisions of the articles of association and of the business rules, to follow the instruction of the organs of admin- istration and to make good any losses due to their want of care or infringement of the articles, rules, or instructions. They are appointed for indefinite periods, subject to three or six months’ notice on either side. Security must be furnished by them, either by bond backed by surety, the deposit of cash or scrip, or in some other approved form. Duties; remuneration —As to the duties of the secretary the reader is referred to the model articles for rural banks, translations of which are printed in the appendix. Although the nature of his work may be very simple, yet its volume is often by no means inconsiderable. Keeping the ledger and account books, entering every payment and receipt, drawing up monthly and annual statements, carrying on correspondence with the cooperative central bank, preparing documents and agenda for meetings of the committee and of the board of supervision, as well as for the general meeting of members, attending at the same, and (in about two-thirds of all credit societies) looking after the supply of agricultural requisites must, even in small societies, involve the expenditure of much time. In the majority of societies the secretary is remunerated for his work, the amount of his remu- neration being determined by the board of supervision on the recommendation of the committee of management. It may be fixed, or it may be reckoned as a percentage of the total business done, of the payments or of the disbursements or of the gross or net profits. Fixed payments predominate, and the model articles drawn up by a large number of unions for the guidance of their affiliated soci- eties provide that secretaries may not be paid according to either business done or profits. By the former method of payment any temptation to increase the book turnover or to seek profits by unwise transactions is removed. A common standard adopted in determining the amount of the remuner- ation is to take the total number of accounts in the ledger or the number of depositors’ accounts alone, and to allow a fixed sum per account. The statement of any general average, or predominant range of salaries paid to secretaries of German rural credit societies would be misleading unless accom- panied by a large amount of explanation or reservation which would render the statement of little value. The amounts are, however, on the whole, small. In ordinary societies with from 80 to 120 members the secretary will receive from £15 to £40 per annum according to the volume of business, the number of members, the capacity of the individual secretary, the generosity of the members, and other circumstances. Actual figures bearing on the point and covering any representative propor- tion of these societies are not available. The following statement shows the payments made in 1905, 1909, 1910, and 1911, to the secretaries of 282, 366, 372, and 376 Pomeranian rural credit societies, but for reasons given later these payments are probably inferior to those ordinarily made to secretaries: 1905 1909 1910 | 1911 1905 1909 1910 | 1911 No remuneration......-.-.- 74 50 35 33 || Over £20 to £25 ........... 14 14 25 93 Up to £2 10s..........---- 51 22 27 20 || Over £25 to £50 ........-. 11 25 26 30 Over £2 10s. to £5..--.-..- 48 67 64 51 || Over £50 to £150 ......... 3 9 12 8 Over £5 to £10.......-..... 50 77 78 87 || Over £10 ence encnceee: se alieeacezcs Ate lboseaence ns 2 Over £10 to £15..........-- 22 64 69 65 Over £15 to £20.....---...- 9 37 36 57 otal osc oausneeeee 282 366 372 376 128 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. In 1905 the total cost of management of these societies—the remuneration to the secretary amounts to about two-thirds of the whole—was £2,100, or an average of £7 9s. per society; in 1909, £7,601, or £20 15s. per society; in 1910, £9,713, or £26 2s. per society; and in 1911, £11,095, or £29 10s. per society. In explanation of the apparent inadequacy of the payments summarized as regards the secre- taries of these Pomeranian societies with limited liability, it may be mentioned that the member- ship of these societies averaged only 60 in 1909, 65 in 1910, and 67 in 1911, whereas the average mem- bership of 14,790 rural credit societies in 1910 throughout Germany was 98; and there were provincial unions in which the average membership of affiliated credit societies averaged at the same date, e. g., 190, 174, 166, 148, 144, 129 (two unions), 126, 124, and 121 members. The figures are also influenced in a downward direction by the fact that owing to the comparative thinness of population consequent upon the prevalent conditions of land distribution—Pomerania is one of the classic Provinces of large properties in Germany—the nonmembers’ deposit business is relatively inconsiderable, while these credit societies also for the most part do not purchase agricultural requisites for their members to any great extent, there being 22 supply societies in the various Pomeranian districts which undertake this business. It will be observed that a considerable proportion of the secretaries received either no payment or merely nominal payment—over 27 per cent receiving not more than £5 in 1911— this is explained by the circumstance that in Pomeranian societies there is an unusual number of larger landholders, as well as of clergymen and others who prefer to accept no payment for their services as secretary. Dr. Grabein, the general secretary of the Imperial Federation, states that the average salary paid in 1902 to secretaries of 2,071 credit societies attached to the Bavarian Union amounted to only £5 11s., and to the secretaries of 140 credit societies in the Schleswig-Holstein Union to £7 16s. All unions furnish particulars of the cost of management of their affiliated societies, without, however, distinguishing the amount paid to secretaries. But in respect of most credit societies the greater part of such expenses of management may be ascribed to the payment of salaries to secretaries and of allowances to them for office accommodation—in most cases the secretaries set aside a room in their own dwellings for this purpose—and the amount stated under “‘cost of management or administration” enables the approximate remuneration of secretaries to be estimated. The following table shows the ave-age expenses of management of rural credit societies in 1900, 1901, and 1904 to 1910, with the number of societies to which the figures relate, and their proportion to all existing rural credit societies in each year: Percentage Percentage Average cost | Number of so- | such societies Average cost | Number of so- | such societies Veer of manage- cieties to form of all Year of manage- cieties to form of all ar ment per which the | societies exist- 7 ment per which the | societies exist- society. figures relate. | ing at end of society. figures relate. | ing at end of year. year. £8. £ 8. 1900... 22 sceenee 17:18 7, 326 74.8 || 1907........-- 24 17 13, 436 95. 4 L901 ss ss ceweees 18 4 9, 528 90.8 || 1908........... 27.7 13, 675 93. 7 1904 oss scene 20 17 12, 010 95.6 || 1909.......... 29 16 14,171 94.5 1905 sos saiscee 20 6 12, 660 96.1 PTO. ecicie se 331 14, 909 96. 2 1906 ........... 22 12 13, 083 96. 0 It will be observed that the average cost of management shows a steady increase in the period under review. As to the proportion of this amount falling to secretaries, it may perhaps be conjectured that about two-thirds of the amount entered as expenses of management are assigned to them as salary and rent of office. As to office expenditure, the provision of the necessary safe (which may cost from £15 to £30) and of office books and stamps constitutes the most serious outlay. In the majority of cases the union concerned arranges for the supply of a safe, debiting its cost to the account of the particular society with itself or with the central bank which, the society having likewise joined, has accorded a fixed credit at a normal rate of interest. The debt is liquidated by installments at regular periods. The initial expenses of establishment are very frequently met either by the union out of its own funds or out of funds granted by public authorities for the encouragement of agricul- tural credit societies. Current administrative expenditure consists mainly, after the remuneration of the secretary, in the cost of audit, subscription to union, postage, and stationery. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 129 Occupations represented.—The success of a society depends mainly upon the capacity and integrity of the secretary and of the chairman of the committee of management. The relations of the mem- bers and nonmembers depositors with the society are, however, principally those with the secretary, who, if he has not a high reputation for discretion and capacity, is not likely to secure their confidence and support. The field of choice is sometimes restricted. Farmers, especially the smaller land- holders, not being accustomed to book and account keeping, tend to be reluctant to undertake the work, which also offers little attraction to the more substantial members, whether engaged in farming or in other occupations. At an earlier period the village schoolmaster and minor public officials (village or parish clerks, etc.) constituted the largest single classes among the secretaries; and they are still very numerously represented. Of recent years the public authorities have been less willing in certain parts of Prussia to sanction the acceptance (especially by schoolmasters) of that office; but the teach- ing profession is still very largely represented, especially in Silesia, in Thuringia, and in the west and south of Germany. Secretaries who are landholders are stated to be increasing. Shopkeepers, small industrial employers, and artisans, chosen owing to their familiarity with account keeping, form a larger element than might be expected from the proportion of the membership represented by them. In Wurttemberg in 1909, of secretaries of 1,145 rural credit societies 151 were schoolmasters, 255 were public officials (other than schoolmasters and burgomasters), 90 were village burgomasters, 349 were shopkeepers, innkeepers, small industrial employers, and artisans, 205 were peasant proprietors, and 23 were medium proprietors, while there were 67 to whom no occupations were assigned. One member of parliament, 1 clergyman, 1 solicitor, and 2 doctors were also included among the holders of this office. In Wurttemberg small proprietors preponderate. In the Province of Saxony, which, as already men- tioned, is an area of great agricultural richness and prosperity, where the land is occupied in almost equal parts by sma'l, medium, and large holders, the secretaries of 620 credit societies in 1910 were distributed in various social classes as follows: Large landowner, 1; fairly large owners, 44; medium owners, 175; tenants, 2; clergymen, 22; teachers, 112; shopkeepers, industrial employers, artisans, tc., 180; and those in other occupations including officials, 86. As secretaries of 372 Pomeranian credit societies in 1910 there were 154 teachers, 31 clergymen, 12 dairy managers, 121 persons under the description of ‘‘medium proprietors, small industrial em- ployers and artisans (Handwerker), and small proprietors,” and 54 belonging to unclassified employ- ments. In the Province of Silesia, of the secretaries of 722 credit societies there were 287 teachers, or teachers and organists, 190 engaged in commercial or industrial occupations, 53 officials of various kinds, 64 large landholders, 95 medium and small holders, and 22 described as house owners. In Silesia there were in 1911 some 1,600 credit societies, and it was stated that in the societies not included among those just dealt with the occupations of teaching and of farming are equally strongly represented. In the densely populated Kingdom of Saxony, where manufacturing and mining industries pre- dominate, there were, in 1911, 286 rural credit societies; of the secretaries of 257 of these societies 118 were large and medium landholders, 82 were engaged in commercial and industrial occupations; there were 21 teachers, 14 officials, and 4 clergymen. In the same year, of the secretaries of 2,160 societies attached to the Bavarian National Union, 425 were teachers and 291 clergymen. Board of supervision—Duties.—The committee of management is responsible for the conduct of business, and the board of supervision is responsible for the supervision and general control of the activities of the committee. The cooperative societies act provides that the board ‘‘must super- vise the committee in its conduct of business as regards all branches of administration, and to this end must keep itself informed of the progress of the affairs of the society.” It may at any time require from the committee a report upon the state of business, and, individually or collectively, its mem- bers may examine all books, documents, and records, cash in hand, etc. The board of supervision must examine the yearly accounts and balance sheets, and proposals for the assignment of profits and losses, and must present the same to the general meeting of members for approval. It may also convene an extraordinary general meeting when it deems such to be neces- sary. It may suspend the committee at its discretion and undertake the business of the society until the general meeting passes the necessary resolutions with respect to its further administration. The conclusion of agreements on behalf of the society with the committee, and any legal action on the part of the society against the committee, must be undertaken by the board. Other obliga- tions may be imposed upon it by the articles of association. The act further requires its members in the discharge of their duties to exercise the prudence of ordinary business men, and makes them jointly and severally liable for any losses due to their negligence. All loans to members of the com- 95273°—S. Doe. 17, 63-1——9 130 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. mittee, or the acceptance of a member of the committee by the society as a surety, requires the approval of the board. For the general rights and duties of the board as laid down by the cooperative societies act, and as further imposed by societies in their articles of association, the reader is referred to the appendix (cooperative societies act, secs. 36-41, 63) and the model articles issued by cooperative central organi- zations. : One of the most important duties of the board in credit societies—to examine the merits and standing of members who have received or who apply for loans and the security offered by intending borrowers—may be especially noticed. In this respect the intimate knowledge of its members in the small area of the normal credit society is of great value. It is usual to elect to the board members representing different classes of occupation as well as different villages, when several villages are com- prised within the area of operation. In most societies the meeting of members authorizes the committee of management to make loans only up to a certain amount, making the grant of loans of higher amount subject to the approval of the board of supervision. Decisions which are thus based upon the collective local knowledge of at least five members up to usually nine or ten members are not likely to prove wrong in many cases. All members of the board, as also all members of the committee and the sec- retary, are bound by the articles, under pain of fine, to absolute secrecy in all matters coming to their knowledge by virtue of their holding office in the society. Meetings —The actual number of meetings held in the course of a year by the board of supervision in a credit society is not great. The committee has to hold frequent meetings for the execution of ordi- nary business, but only when cases arise needing decisions reserved to the board or when the annual business statement has to be examined is it necessary for that body to meet. Most model articles require at least four regular meetings in the year; in certain cases (e. g., those of the Raiffeisen Feder- ation and of the Westphalian Union) the articles add one extraordinary meeting for a general audit and inspection of the affairs of the society. A not uncommon practice is for the board to hold its meet- ings jointly with those of the committee. Membership; remuneration.—The board of supervision must consist of at least three persons, and election to the board must be made by the meeting of members. The number chosen is usually six or nine. The model articles issued by the Imperial Federation recommend a multiple of 3, and those of the Raiffeisen Federation that it should consist of from three to nine, and that ‘‘the number should always be divisible by 3.” A multiple of 3 is chosen because it is generally provided in the articles that the members are to be elected for three years, and that one-third of the members retire each year. The act lays down that none of the members of the board may be at the same time members of the committee of management, or act as permanent substitutes for members of the latter body, nor may they act as employees of the society. As to payment, remuneration based upon profits or business done may not be allowed, but otherwise there is no restriction. In most cases remuneration is not offered, although some societies allow fees per meeting attended and for time expended, as well as reimbursement for out-of-pocket expenses. Occupations represented.—The persons elected to serve on the board are usually drawn from the most substantial residents who happen to be members. In the western, southern, and central dis- tricts of Germany it is very common to find that the chairman is a clergyman; in the east and north- east large and medium landowners constitute the most numerously represented class among the chairmen, but clergymen and officials are also frequently found in this position. In Bavaria in 1911 the chairmen of 488 (out of a total of 2,160) societies were clergymen. In 600 societies in the Province of Saxony in 1910, 16 large, 98 medium, and 242 other landowners, and 8 tenant farmers were chairmen of boards of their societies; there were also holding this office 66 clergymen, 37 teachers, 46 shopkeepers or industrial employers and artisans, and 87 persons following various other occupations. In the Kingdom of Saxony in 1910, of the chairmen of the boards of 257 societies, 142 were large and medium landowners, that is, 54 per cent; 32 were officials of various kinds; and there were 15 clergymen, 4 teachers, and 53 shopkeepers, industrial employers, and artisans. In Silesia agriculturists of all classes are also very strongly represented. In 1909 there were, as chairmen of the boards of 722 rural credit societies affiliated to the Provincial Union, 44 owners of mano- rial estates (Rittergutsbesitzer), 135 large (but nonmanorial) landholders, 165 medium and small landholders, agriculturists constituting thus 48 per cent of the total; of other occupational groups there were 88 clergymen, 48 teachers, 84 public officials, 138 engaged in commerce or industry, 7 belonging to liberal professions (mostly doctors), and 23 who may be described as retired professional or business people. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 131 In Wurttemberg in the same year there were as chairmen of the board of supervision in 1,144 societies, 100 clergymen, 40 teachers, 99 village mayors, 166 public employees of various descriptions (post-office, communal, excise, and other officials), 336 shop and inn keepers, industrial employers, and artisans, 255 peasant proprietors, 18 medium and 5 large proprietors, and 94 were described as of various occupations not comprised in those already cited or as retired from business, while there were 20 doctors, lawyers, and surveyors, and 1 member of Parliament. As compared with the Kingdom of Saxony and the Province of Silesia, the prominence of clergymen, village mayors, and other public officials, and of those occupied in commerce and industry, is note- worthy in the case of Wurttemberg, and may be held to reflect the conditions obtaining as a result of the respective differences in the distribution of property. Inability to remissness on part of boards.—That the board of supervision is liable to view its duties rather lightly is apparent from the repeated comments of auditors and the attention given by the unions to urging greater activity on their part. Members of the board are found to be too ready to leave things to the committee and to accept its advice without much inquiry. Their apathy is due to many causes, among which perhaps the most important are the disinclination to examine too closely the work done by persons with whom they are in neighborly relations, and the fact that many have but little business knowledge, while a proportion of the members of the boards are often elected to office as lending local prestige to the society. A certain general supervision is, however, in most cases assured by the responsibility attaching to the members to make good all losses shown to be due to their failure to carry out their duties ‘‘with the prudence of ordinary business men.” Meeting of members.—The rights of individual members are exercised through the meeting of members, or general meeting, as it is most usually termed. In the general meeting rests the supreme authority of the association. No member may possess more than one vote. Women, who, though admitted to membership, are usually prohibited by the articles of association from participating in a general meeting, and corporate bodies, exercise their vote by proxy, but it is provided that no member may act as proxy for more than one such person or body. Other votes must be exercised in person. The act provides also that ““a member may not vote upon any motion which releases him from any liability as regards the society (e. g., a member of the committee may not vote upon a motion touching the liability of the committee arising out of its conduct of business) or which relates to the conclusion with him of a contract binding upon the society (e. g., the conclusion of an agreement with a member for the loan of money to the society).” General meetings are usually convened by the committee. In ordinary cases a week’s notice must be given to the members, and the purpose of the meeting must be stated at the time of sum- mons; if notification of a resolution to be proposed is not given three days in advance, such resolution may not be put to the vote of the meeting. One annual general meeting must be held, and this usually takes place early in the year—the annual accounts must be presented to the members within six months of the close of the last financial year. As a rule, two ordinary general meetings are held each year. If one-tenth of the members (or a less number, if so provided in the articles of association) submit a written request for a meeting, giving their reasons therefor, the meeting must be at once summoned, and upon similar application a notification of the agenda must be furnished. All reso- lutions passed by a general meeting must be recorded in the minutes of the society, the inspection of which must be permitted to any member upon request. The following matters are usually subject to the decision of the general meetings, either by virtue of the act or of the articles of association adopted by societies: (1) Alterations of and additions to the articles of association. (2) Approval of and alteration in the working rules (business regulations). (3) Dissolution and liquidation of the society. (4) Approval of the annual accounts and assignments on account of profit or losses. (5) Elections to the committee of management and to the board of supervision. (6) The institution of legal proceedings against members of the committee or of the board. (7) Removal from office of members of the committee or of the board. (8) The interpretation of the articles and of the decisions of the general meeting itself. (9) The fixing of the amount of the share and of the liability attaching to it, and of the installments of shares to be paid. (10) The levy of entrance fees. (11) The determination of the maximum amount of the loans and deposits to be accepted by the society. 132 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. (12) The determination of the minimum deposits to be accepted by the society. (13) The determination of the total of the loans to be made to members. (14) The determination of the rates of interest for loans and deposits. (15) The determination of fines to be levied upon officials of the society for violation of business secrets. (16) The acceptance or rejection of the report of the legal audit presented by the auditor. As to (4), the act provides that the annual accounts and balance sheet must be posted up at least one week before the meeting which is to vote upon them takes place, in the regular office of the society or in another suitable place to be duly indicated by the committee, or otherwise brought to the knowl- edge of members. As a rule, the notice of meeting and the accounts are published in the local newspaper or in that of the union to which the society is affiliated. On application, any member is entitled to have made at his own expense a copy of the balance sheet and of the annual statement of accounts. Participation in the general meetings of rural credit societies offers little difficulty to members owing to the narrow area covered by the societies, and by prohibiting voting by proxy (except in the cases already alluded to) the law aims at securing the actual presence of members and maintaining in this way an essential characteristic of a cooperative society as a combination of persons for the purpose of achieving by united action a common purpose not attainable by individual effort, as distinct from a mere union of capital as exemplified in a joint stock or other company. By providing that no person shall possess more than one vote the law also seeks to prevent con- centration in a few hands of influence on the affairs of the society. The number of members in a rural society is rarely so large that the members are unknown to each other, and the business of the society is seldom or never so extensive and complicated that the members can not realize the points obviously at issue. Yet it is a not uncommon complaint that the meetings are poorly attended, and in very many cases societies exact fines (6d. or 1s.) from members absent without cause. The usual agenda of a meeting, being concerned only with the reading and passing of the accounts, the fixing of rates of interest, of maximum totals of deposits receivable and of loans to be granted, election of officers and other business matters of a formal nature, possess little attraction for the ordinary mem- bers, who regard the just decision on such points as more properly within the competence of the com- mittee and board of supervision of the society. With a view to stimulating interest in the meetings, special addresses are given in a large proportion of societies, sometimes by members, sometimes by outsiders, on subjects likely to be of interest, either on general, agricultural, educational, legal, eco- nomic, moral, or social topics. In the model articles of the Raiffeisen Federation it is stated that “the members’ meetings should also especially conduce to the strengthening of friendly relations among the members and to the extension of business knowledge through the reading of instructive papers and toward the interchange of practical experience.” Political and religious subjects are rigor- ously banned at general meetings. An impression may be left upon readers that the system of government of a rural cooperative society is somewhat complicated and unwieldy, with its committee of management, board of supervision, and general meeting; but this threefold machinery works easily and smoothly in practice without loss of efficiency. The business of the ordinary village society is exceedingly simple in its nature and limited in extent. Indeed the actual time to be necessarily spent by the members of the committee in examining applications for loans and signing receipts for deposits, which is the principal part of their business, is small, while the boards of supervision usually find four to six meetings in the year quite ample for the adequate discharge of their obligations. It is generally arranged that the meetings of the committee and the board shall be held more frequently in the months from November to March, when a village population has more leisure. Finally, while it is proper for the general meeting to keep its control effective, actual recourse to its decision on the points enumerated above does not entail any very serious expenditure of time, two meetings in the year, each occupying perhaps two hours, being generally found adequate. Progress and present position.—The recent progress and present position (down to Jan. 1 ; 1911) of the rural credit societies attached to the Imperial Federation of Agricultural Cooperative Societies may be seen from the general table below, which gives the most important results of each year’s working from 1905 to 1910. The statistics may be taken as representative of all German rural credit societies, inasmuch as for each year over 80 per cent of all existing societies are taken into account. Similar detailed figures covering the remaining societies are not available to the writer. This AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 133 general table may, however, be suitably preceded by the following, which shows the range in volume of turnover for a large percentage of all rural credit societies in the years indicated: Business done. Number of societies to which figures relate in— 1900 1905 1906 1907 1908 1909 1910 Up to £2,500...... 2222-2 e ee eeeeeeeeeeee eee 1,127 1, 568 1, 561 1, 405 1, 291 1,274 1, 105 Over £2,500 up to £5,000............2200-0000- 1, 107 2,177 2, 255 2,070 1, 856 1, 949 2, 169 Over £5,000 up to £25,000. .......-+.2.2.s0.-. 1, 850 5, 986 6, 147 6, 527 6, 199 6, 940 7, 150 Over £25,000 up to £50,000................0.- 185 812 925 1, 088 1,477 1, 462 1, 409 Over £50,000 up to £100,000. ............+.--- 49 308 325 380 bl 511 590 Overt ION se: cacace* sasctencanawace reacts: 16 34 122 148 176 248 273 th sa Ueee eau te is ....--| 4,384| 10,885 | 11,335] 11,618] 1,510] 12,384 12, 696 It will be observed that there is a steady increase in the aggregate of societies doing a business of over £5,000, and that those banks with a turnover of from £5,000 to £25,000 number considerably more than half of those reporting to the federation in the years 1905-1910. RURAL CREDIT BANKS OF THE IMPERIAL FEDERATION OF AGRICULTURAL COOPERATIVE SOCIETIES. Comparative table showing the most important statistical results of their operations for the years 1905-1910. [This table has been compiled from the yearbooks of the federation, the figures there given being merely changed into English currency at the rate of 20 marks to the pound sterling.] 1905 1906 1907 1908 1909 1910 Imperial Seas banks reporting: Per cent of all rural banks....... 83. 4 83.4 82.0 82.0 83.2 81.9 Banks, number..... jeeeees 10, 999 11, 373 11, 669 12,161 12,614 12,797 Total membership.... 959, 717 1, 015; He 1, 059, 348 1,111,174 1, 163, 186 1, 208, 997 Average per: bank... .cc-2-neeecpecseuee cee 87 91 91 92 95 Turnover, AMOUNE.....55..secsce secre seeoss ee teeceeneeee £139,904,087 £158,703 442 £179,029,103 £196,272,076 £222,808,076 £247,000, 195 , ie Cae eearecageny ae easrs 12, nig 13, 954 15,390 16, is 17, 663 19,301 er member............-. 204 Total working capital 63, 519, 943 71, 286, 699 78, 015, 588 86, 520, 399 96, 776, 163 106, 394,910 ee El ee let lat lage | 8 Working capital owned.........-- 2, 357, 548 2, 634, 825 3, 098, 854 3, 233, 721 3, 666, 975 4, 060, 806 fsa alsa aySyote apes 14 231 265 266 295 317 or. meu per eoiictamcelecioreciacecmneae oueinaae ace 2.5 2.6 2.9 2.9 3.1 3.3 which— fees el CAD Ital a ohcccuccteamasiiorbaueseeeeee 814, 964 881, 483 “962, 448 1, 048, 880 1,117,921 1, 202, 367 Fer an. ies 74 es 82 oC eS ue ‘er member . 0.9 0. . . Reserve. .......2.2ceeeeeee eens 1, 542, 582 1, 753, 341 2,004, 961 2, 184, 840 2,549, 053 2, 858, 439 Por ane ; 1.6 a 7 " — 9 - 2 = 3 er mi er 4 1.9 ; 3 . Borrowed ee capital 61, 116, 397 68, 651, 874 75,048, 175 83, 286, 677 93, 109, 188 102, 334, 132 oo r Tr ban: . , 960 5 ee 6, a 6, = 7,381 7,996 er member Of which— Deposits on current account at end of year........... 6, 807, 882 7, 709, 734 8,026, 175 9,421, 932 9, 453, 892 10, 326, 523 Per inombor tM “0 ty mM oD 0 mem ll Savings deposits at end of year 49, 417, 880 55, 363, 701 59, 988, 800 66, 915, 879 72, 780, 923 82, 953, 667 fat en ae ‘ ie 4,912 5, 2 5, Be 5, 7 6, Sums outstanding with memb' end of year.... 15, 203, 633 17, 254, 578 18, 542, 662 20,570, 945 21, 299, 770 23, 271, 269 oe lee stare 2,143 tet 2, 266 , O61 201 a Sums outstanding with members on loans fo: Bb ONG Of Year ec csc a ceeiienciaeicin oon) siaieicivi: 35, 758, 401 40, 688, 552 44, 789, 299 48, 375, 830 54, 122, 319 59, 548, 394 foe Tele) eee ee te | ee Payments on current accounts to members during year 16, 679, 502 19, 468, 324 22, 105, 561 24, 154, 419 30, 683, 192 34, 130, 594 ne bank 2, oe 2, oe 2, os 715 3, ss 3,378 29 35 Loans setian for fixed periods during year. . 10, 762, 985 12, 217, 722 13, 295, 051 12, 843, 885 14, 374, 195 15, 539, 559 rae ee D 0S ot mi Ba: iB ‘er member Total payments to members during year as loans and on current accounts 27, 442, 487 31, 686, 046 35, 400, 612 36, 998, 304 45, 057, 387 49, 670, 153 Per bank........... 2, ee 2, ee 3, i ) a , ef 3, 881 41 14, 840, 795 17, 943, 334 19, 847, 184 23, 070, 492 29, 878, 650 33, 518, 820 1 at y 2 2, ape 2, oof , 015 3, 367 32 4. 6, 733, 582 7, 741, 676 8, 431, 443 8,580, 548 9, 409, 547 10, 060, Gas 706 762 919 910 965 026 Per moniter j : 7.5 8.2 9.4 9.6 9.5 9.9 Total of all payments by members on loan and curren AReuiauiege ee 21,574,377 | 25,685,010 | 28,278,627 | 31,651,040 | 39, 284, 197 45,578, 333 & Y' a ee seiadaamee Seb aaenaemepiomcces namneswe 2, Pe 2, ae 2, I ; ce 3, i 3, 105 AE MOM DEM sec scars rcieizisrctorerciecisiais wareieinwarcinin eet OAT a Ssianisaiaiapecrarassioseanisceseek aes 17, 970, 449 19, 607, 857 20, 704, 178 22, 652, 390 25, 267,984 27,080, 443 earn Poraek see Ae cei ene ened "1,720 **"'13 808 "1868 "33957 23.003 2116 Per olor cists Bath Ghd OG aimed iatolenca a elatacanerecraam ne 19.2 20.1 22 a7 134 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Comparative table showing the most important statistical results of their operations for the years 1905-1910—Continued. 1905 1906 1907 1908 1909 1910 Cost of administration . £257, 414 £257, 705 £296, 436 £340, 708 £287,884 £443, 891 Per bank... 24 24.4 26.8 28 31.9 34.7 Per member........ 27 27 -30 -32 +35 -36 Value of agricultural requisi 2, 354, 084 2, 646, 369 3, 029, 617 3, 936, 770 4, 443, 285 4,272, 573 Per bank reporting.......... 461 9 490 544° 615 561 (6,187 banks) | (6,020 banks) | (6,172 banks) | (7,231 banks) | (7,217 banks) | (7,611 banks) Reserve, average per cent of total turnover............... 11 Ll Lt 1.1 11 1.1 Total working capital, per cent of total turnover......... 45 45 44 44 43 43 Hcpentiies of total working capital on an average formed y— FROSORVO ie rsisinivicincraicireraistoatcrsinaininininlviv ipl aticlelataweeats 2.5 2.4 2.6 2.6 2.6 2.7 Paid-up share capital........... 1.3 1.2 1.2 1.2 1.2 11 Working capital owned by banks. ts 3.8 3.6 3.8 3.8 3.8 3.8 _ Borrowed a Capitals wicca esr 96. 2 96.3 96. 2 96.2 96.2 96.2 Working capital owned by banks stands to borrowed working capital in relation of 1 to...-.......-.-----2.-- 26 26 25 27 25 25 Net profits, per cent of— aid-up capital of members. .......--...--.2---eeeee- 34 82 33 31 32 37 Total working capital................22- 2. ee eee eee e ee -4 74 4 4 4 A The following table gives a general view of the position of 95 per cent of the German rural credit societies January 1, 1911. Although the credit societies attached to the Polish Union at Posen are not usually classified as belonging to agricultural credit societies of the ordinary type for certain reasons—e. g., they work with large shares, pay good dividends, operate over larger areas, grant mostly loans for short periods though renewable, usually have skilled and paid management—par- ticulars respecting them are here added on account of the fact that two-thirds of their members are returned as landholders. General view of the position of 95 per cent of the German rural credit banks, with that of the Polish cooperative credit banks, Jan. 1, 1911.! Imperial |p 5 i otals ee Wurttem- Baden Treves eae respecting | Polish Union ucing | berg Union. | Union. Union. ae columns at Posen. aiffeisen Berlin. 2 to 6. Federation). oe 1 2 8 4 5 6 7 8 Number of banks affiliated - . . 12, 978 1,168 422 356 106 15, 030 265 Number reporting...........-- 12, 797 1,164 422 346 61 14, 790 265 Membership of societies reporting. - : 1, 208, 997 132, 494 63,325 36, 753 4,344 1, 445, 913 125, 108 Average membership........-.-------+--++-eeeee esse ee 114 150 106 T1 98 472 Owned capital5..sjoi a erscinnieiciccisiacprnabaermserabauaisicieseek £302, 646 £409, 805 £82, 259 £10,812 | £4, 866,328 £1, 804, 258 Per bank.... 260 959 238 177 322 6,810 POP OM DOR sscransesiarers ats srciemra ennai Satsfe(eicpeirccces 2.3 6.4 2.2 2.5 3.3 14.4 Of which— Paid-up share capitale:ccccisssivsciccwsn sinensis ace, 1, 202, 367 121, 730 250, 743 11, 643 6, 568 1,593, 251 1,188, 313 Per bank........ cel 94 103 595 34 108 108 4, 488 Per member... 9 -9 3.9 3 1.5 1.1 9.5 Reserve. ..-.------ 2, 858, 439 180, 916 158, 862 70,616 4, 244 3, 273,077 615,945 Per bank..-...- 223 155 365 204 70 221 2,3! Per member..... Sci 2.3 1.4 2.4 1.9 1 2.6 4.9 Borrowed capital aoa ieicie:s.cjeinsinesnemnrascwainelnineisiajemssinntion 102, 334, 132 4,804,502 | 3,661,331 TI OD: emia cromnannisin 113, 271,127 11, 626, 456 14, 7: Portbanletescacnancsaceacnoal anaesegsencatere 7,996 4,127 8,676 7,142 |. Per MeMbEer .52.).c-ccsensccuisiavsces menomensices 85 36. 2 57.8 67.2 Of which— Savings deposits. .........-...-------- eee eee eee eee 82, 953, 667 3, 875, 686 3,216, 327 2,433, 415 Per bank... 6, 482 3,329 7,621 7,035 Per member... 68 29.2 50.8 66. 2 |. Current deposits.......--.-.--------- 10,326, 523 445,391 55, 765 37, 747 114, 729 Por haniess. 6 agasah- exe cave Laewaasieses ene 1,739 132 109 "TIBI onetcencecivn on Per member Give 3 3.36 88 1.03 7.53 |. Dla DATOS srscecerereichascraca siaistsparchararcteneserstateta ictal ie iapoimeentne cele 106, 394, 938 5,107,149 4,128, 994 3,026, 960 118, 658, 041 114, 729 Pon Dati hems cuariewiadid wacom ecessorsennaavaes 8, 470 4,387 9, 794 BE TARE cst wer ot 8,056 |... ..2.. eens POL MOM ber ec.wses assaeeewrersieeut ee aapcze 88 38.5 65.2 BZA | saisieraicciaisieieisigs 82.3 |.... ASSOUS cece cicpascinianistnele atalomr eISSN RA eee Re mar arneoenss 106, 748, 592 5, 128, 558 4,156, 501 3,053, 643 281,162 | 119,368, 456 13, 431, 715 Per bank........ 8,342 ; , 849 8,8 4,609 8,07 50, 685 POT TOI DOR Se crsvecancusrssais iss iegeieesiaieasiace Zieid 88.3 38.6 65.6 183.1 64.7 82.5 107.4 Loans and overdrafts outstanding at end of year........ 82, 819, 663 4, 458, 022 3, 273,918 2) 482) 965 | arscreweinwnore ss 93, 034, 568 10, 401, 382 114,729 PROr Wat cercdorninysrecteccemntey eet Anoeeeer aes 6, 470 3, 830 7, 758 TAG: | oeetewemeeeea. 6, 316 Per member............ 00. .sscseseeeseveeeeene 68.5 33.7 51.7 70 lisscrne woman 64.5 Nt Loans and payments to members on current accounts UID PV OAR sece.cco mie eaneroneeaiing Sina awa pees 49..670;193: |scussuweceeavs 995, 485 818, 882 Per bank......- Bs Fetters use aoes 3861 locpucasseacee 2,358 2,366 POr MOM VCP iinrwiesisnocwsse ie ecceeeemeeeaset Aly || aensstenretercrersigts 15.7 22.3 Repayments of loans and payments on current ac- counts by members............... 00.202 ee eee eee ee ABS 78, 839" (a cisjeawiepieccas 737, 160 641, 848 POR DADE crores fas cece aye vic iccetasesbisiesecyartaramaanek 3, 413 1, 746 1, 855 |. Per member 36 11.6 17.4 Savings deposits made during year 27, 080, 443 915, 431 753,318 |. Per Dan ee syaiicsrwrsnnctaeuneeencew 2,116 |.. 2,169 2,177 Per member 25 22.4 14.4 20.5 1 In computing the averages per society and per member in this table the total number of societies and divisor. The figures indicated in column 7 indicate the number of societies included to find general av having been also made in these cases) where the Wurttemberg Union or the Agrarian League, or both, do n members given as report! erage (the corresponding daiebion of members ot report. has been taken as AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 135 The attention of the reader is particularly directed to the following accounts of individual rural banks, selected from among those which were personally investigated by the writer. They present concrete pictures of agricultural credit societies at work and exhibit in each case some noteworthy special feature. In any summary statement respecting them their individuality would be entirely lost. Many fresh points of some importance, as well as illustrations of statements made in the fore- going pages, will be found in the accounts of several of these banks. Included are accounts of two societies of the Schulze-Delitzsch type, namely, the Augsburg Agricultural Credit Association and the Cosel Advance Association. ARHEILGEN SAVINGS AND LOAN BANK. Arheilgen is a Hessian village about 24 miles from Darmstadt, with a population of about 5,000 persons. On the initiative of certain inhabitants of Arheilgen this bank was formed in 1865 as an independent bank (freie Kasse), and did not join any union until compulsory audit in 1899 caused it to become affiliated to the Hessian union. The membership has grown from 50 in 1865 to 380 in 1910. Less than one-third of the members are engaged in agriculture as their principal occupa- tion, but many of the remaining two-thirds (small employers of labor, shopkeepers, artisans, and other workpeople employed in or near Darmstadt) have small holdings or allotments. The ordinary farmers have small properties; the largest cultivated about 50 acres and the majority from 6 to 12 acres. Rye, oats, and potatoes are largely grown, and cattle (stall fed) and pigs are kept by the smallest holders. The shares are of £2 10s. nominal value, and the lability is unlimited. The manager stated that there was no intention of raising the value of the shares, as the society had a reserve fund of £4,030. In 1909 a dividend of 5 per cent was paid. Loans for fixed periods up to £50 are granted to members on promissory note, backed by at least two sureties; in 1909 and 1910 4? per cent interest was charged. Repayments should be made in five annual installments payable on January 1; the society, however, is not, in practice, stringent upon this point, as for some years it has received abundant funds. The committee has authority to grant loans to members on current account (overdrafts) up to £150, and, with the assent of the council of supervision, up to £200. For higher amounts the vote of the members must be taken in each case. Overdrafts of £500 and £750 have been sanctioned by the members. At least two sureties, who must be resident in the village, are required. The authority to overdraw may be canceled and repayment demanded at three months’ notice. The interest charged on such loans had been 4} per cent for a considerable period. Loans on mortgage are granted at 44 percent, and advances are also made for the purchase of real property (e. g., when in consequence of death a property is auctioned for division of proceeds among the heirs and is bought perhaps by one of them) at 5 per cent plus a small commission, and for the rent of land at the same rate, but with a higher commission (24 per cent). Advances on mortgage are given for an amount not exceeding 60 per cent of the estimated value of the property in question. The valuation is generally made by the committee, which includes the mayor and the clerk of the village, who are cognizant of the taxable values. It may here be remarked that in societies in which these officials do not happen to be members of the committee of management, the latter body has only to send a member to the office of the local authority, where all information is kept as to all landed property, the charges thereon, etc., in the land register. In Arheilgen the register of title was estab- lished in 1910. Loans on mortgage and for purchase of property are made to both members and non- members. No advances are made upon the security of pledged goods (e. g., corn, cattle). Deposits receive 4 per cent interest, which is reckoned by the calendar month from the first of the month following its receipt. The rate for many years had been 34 percent. All deposits receive the same rate of interest irrespective of the period for which they are made. The secretary said that it was not to the interest of the society to pay higher rates for money at 3, 6, or 12 monthly terms, as it had abundance of money, and if need should arise the society could borrow from its central bank in Darmstadt. The society had not yet introduced the home savings boxes, but had the intention of doing so. It has achieved great success by the sale of savings cards, which have been sold by it since 1865. A collector is paid £20 per annum to make the round of the village every Sunday to sell cards valued at 6d., 2s., 3s., and 5s. The proceeds are paid in on the following Wednesday, when fresh supplies of cards are obtained. On the day of the writer’s visit the collector procured cards of the value of 136 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. £55 for sale on the following Sunday. The secretary stated that from £45 to £50 in deposits were obtained in this way each week. Interest on such deposits is paid from the beginning of the next quarter. As bank connection the society uses the central provincial cooperative bank and binds itself to carry on no business with any other banking institution. The society is a sharehoider in the central bank, which measures the maximum amount of credit it is willing to grant according to the number of shares at the rate of £400 credit for each £50 share held. The society does not often need such outside capital. The council of supervision numbered 12, and was composed of 4 farmers, 2 carpenters, and 1 man with no occupation, the other 5 being in various employments (master mason, hardware dealer, tax collector, compositor, and cooper). The committee of management consisted of six persons—the chair- man was secretary to the village mayor, the controller of accounts a compositor, the secretary a teacher; the others were the mayor, a farmer, and a bookbinder. These members of the committee with no further official duties received the yearly remuneration of £2 10s., the chairman received £5, the controiler (who was always obliged to be present on Wednesday afternoons when the office was open and to check the books weekly) £17 10s., and the secretary £57 10s. per annum. The council of supervision receive no remuneration. The expenses of management in 1909 amounted to a total of £180. Among the items (apart from those just detailed) were taxes, £15; rates, £21; books, stationery, etc., £8. The society has only paid rates and taxes for the four years since loans to nonmembers were first granted. Further, £10 was paid to the union as annual contribution and another £10 for a minute audit by the union. The annual contributions of the society to the union consist of a fixed amount of 15s. plus a rate deter- mined by turnover, with a total maximum of £10. This payment gave a right to free legal audit and to a copy of the union paper. For a minute audit of all the accounts of the society additional charges are made by the union. The society has had such an audit carried out in each year since 1902, the cost having been in 1902, £6 18s.; in 1903, £7 4s.; in 1904, £8 5s.; in 1905, £9 12s.; in 1906, £10 2s.; in 1907, £6; and in 1908 and 1909, £10. Out of the profits of the society in 1909 the directors gave £2 10s. to a drawing school, £11 7s. to the public school (for atlases, sewing machine, etc.), and £6 10s. to the district cattle show. The position of the society at the end of 1909 was as follows: Membership, 360; paid-up share capital, £922; reserves, £4,030; savings deposits, £67,084; outstanding on current account £11,127; and in loans for fixed periods, £57,882. In 1909 £9,442 was paid out on current account, and £9,164 paid in; £9,659 was paid out in loans for fixed periods and £7,010 paid in on such accounts. The amount of savings deposits paid in during the year was £17,483. There are four other cooperative societies in Arheilgen: (1) A supply society for agricultural requisites. This society sells manures, seeds, fodder, etc., but keeps no shop. It collects and trans- mits the orders of its members to the central society, and upon arrival of commodities at the railway station the members concerned carry away their goods. The society, which was founded in 1880, with unlimited liability, had in 1909, 90 members, a paid-up share capital of £9 10s., and reserves of £161. The goods received in 1909 amounted in value to £945 and the cost of management to £27 10s. (2) A cooperative thrashing-machine society. This society was originally an association of farmers, and on its foundation as such borrowed £1,250 on current account at the cooperative village bank. In 1904 it was converted into a cooperative society, with shares of £2 10s. each and with unlimited liability. It possesses a thrashing machine, locomobile, and a thrashing hall upon its own piece of land. It thrashes for members and nonmembers at the same rate of 13d. per minute. At the end of 1909 the membership was 27; the paid-up share capital, £72; the reserves, £9; the book value of assets, £705; and the management and working expenses for the year, £282. (3) A refuse cooperative society. This society was formed for the acquisition for manure purposes of the sewage and refuse from Darmstadt. Its members number 50 and its shares are £5. (4) A distributive cooperative society. This society, which had about 400 members, is concerned with the sale of provisions, ete. AUERBACH SAVINGS AND LOAN BANE. Auerbach is a village with 2,500 inhabitants situated 10 miles from Darmstadt, on the main line of railway between Frankfort and Basle. It is regarded as a small summer resort, and attracts about 2,000 visitors each year. The farmers cultivate for the most part small holdings of from 10 to 15 acres, and fruits, grapes, potatoes, and beets are largely grown. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 137 The bank was founded in 1883 with 27 members; in 1903 the number of members had grown to 188, and in 1910 to 231. The nominal value of the shares, which carry unlimited liability, is set at £25, £2 10s. being paid up. The most numerous class of members are independent artisans; after them the farmers, and then the small shopkeepers. The board of supervision consists of nine persons; the chairman is the village mayor, who is an innkeeper and winegrower; there are two farmers, two master masons, a master joiner, a glazier, a shoe- maker, and a cork cutter. The committee of management contains six members; the director (a farmer), the supervisor and the secretary (who are teachers), a carpenter, a brickmaker, and the village tax collector. The ordinary members of the committee are paid 2s. per meeting; the director receives an annual sum of £10, the supervisor £15, and the secretary £50. Deposits at call not exceeding £75 receive 4 per cent interest; above that amount 34 per cent. Current account deposits, open only to members, receive 4 per cent up to a sum of £100, and 34 per cent above that amount. No collections are made by savings cards, or home savings banks, or stamps. Loans are granted almost exclusively on current account at 44 per cent. The total amount of loans outstanding may not exceed £35,000; until 1909 the limit had been fixed by the meeting of members at £25,000. The normal credit for members backed by sureties is fixed at £150, but with the consent of the board of supervision it may be extended to £300. Two sureties at least are always required, and not more than two, provided that they are good for the amount in question. Non- members may become sureties, but they must live in Auerbach or in the village of Hochstalt, 14 miles distant. If a surety leaves these villages another surety must at once be found. A surety may not withdraw at will, but he may notify the directors of his wish to withdraw, stating his reason; the mem- ber is then informed and requested to find another surety or repay the society within three months. One person may become surety for two members, the committee deciding as to whether his means appear adequate to cover the amount. Loans are also granted on mortgage, but mainly to nonmembers. The cooperative societies act permits loans to nonmembers by way of investment of surplus funds. The rate of interest is usually 44 per cent. Advances to pay for property purchased are common, and are found very profit- able by the society. Such advances, usually repayable in six yearly installments, are charged 44 or 5 per cent, plus a single commission charge of about 14 per cent, and are secured by mortgage claim upon the property, this being canceled when the last payment is made. Sometimes the whole of the purchase money is advanced, but as a rule only up to 60 per cent of the assessed value of the property. The society owns six shares of £50 in its central bank, which allows it a credit not exceeding £3,000 at the rate of 44 per cent (1910). This credit is rarely utilized to its full extent. The society was able to make several donations out of its profits after payment of a dividend of 6 per cent upon the shares. Thus, the local school for children under 6 years old received £2 10s., and the cattle insurance society £3 10s., while a further £5 was devoted to other public objects. A total of £1,400 has been placed to reserve. The position of the society at the end of 1909 was as follows: Membership, 207; paid-up share capi- tal, £540; reserves, £1,417; savings deposits, £19,245; moneys paid out on current account, £5,650; and paid in, £5,973; loans granted for fixed terms, £3,323; and repayments on such loans, £2,513; savings deposits made in the course of year, £6,141, and cost of management, £121. AUGSBURG AGRICULTURAL CREDIT ASSOCIATION. This society, which is affiliated to the Schulze-Delitzsch Federation, possesses several distinguish- ing features. Its area of operations is not confined to a small district, but extends over the Kingdom of Bavaria; and there is probably no society (other than central societies) in Germany with so large a sphere of action. Nor has any cooperative credit society so large a membership; in 1910 it amounted to over 12,000. A noteworthy feature of the society is its system of local representatives, of whom there are some 300 distributed in every district of Bavaria. The society was founded in 1868 with the object of serving agriculturists at a time when great agricultural depression prevailed in parts of Bavaria. The provincial government then lent some £260 and a grant of about £110 toward first expenses was made out of district funds. Business was commenced in a room in the provincial government building. Its success was so rapid that after the first year no further aid was required, and the above-mentioned loan was repaid after two years. In 1872 its area, hitherto confined to two Bavarian Provinces (Swabia and Neuburg) was extended to 138 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. cover all Bavaria. On its establishment 185 members had joined; a year later the number had grown to 965, in 1878 to 7,228, in 1888 to 10,627, and in 1909 to 12,586. In 1907 landholders formed 62.5 per cent of the members. The shares are fixed at £50 with unlimited liability, but at present not more than £25 may be paid up. Each member must pay up one-tenth of the nominal value either on admission or in suc- cessive monthly installments of at least 2s. There is an entrance fee of 4s. Dividends are payable upon each completed tenth part of the full share value. Members wishing to retire from the society must give written notice at least three months before the end of the year—that is, not later than in September; otherwise their retirement only takes effect at the end of the succeeding year. The committee of management is composed of three directors, who are paid officials giving the whole of their time to the business of the bank. The permanent clerical staff consists of about 20 persons. The board of supervision contains 9 members. Of these one is described as an agriculturist, another as farm bailiff or agricultural manager (oekonom), four as men of independent means, two as manufacturers, and one as a lawyer. To act as substitutes in the absence of any of these 9 mem- bers, 6 persons are elected, of whom one may be an agriculturist (oekonom). Nine of these 15 are residents of Augsburg. The bulk of the business is in fact transacted with nonagriculturists who are mostly resident in western and southern Bavaria, although the society has also many members resident in Augsburg. Formerly the bank had a larger business with agriculturists, for whom it was originally created, but at the present time only about one-fifth of its loans are made to this class. Within the last 25 years about 2,500 new societies, designed for the special purpose of meeting the particular needs of agri- culturists, have sprung up in Bavaria, and this side of the society’s business has not therefore expanded to such an extent as its urban business. Until 1886 the association remained exempt from taxation as an agricultural cooperative society; but between 1886 and 1908 its annual payments in taxes fluctuated between £108 and £845. In order to handle its business outside Augsburg the society maintains no branches, but appoints agents—stated in 1911 to number almost 300—in the larger villages and small towns of Bavaria. These agents are mostly tradespeople. Their business is to obtain new members, receive deposits, transmit proposals for loans and investments, collect bills, etc.; no authority is given them to grant advances, nor may they give other than provisional receipts for moneys received on account of the society. In forwarding proposals, whether for membership, loans, or any other matter, they are required, for instance, to express their opinion of the intending borrower and of his proposed sureties; and they are held responsible for the authenticity of all signatures to bills and other documents passing through their hands. As to cash, they may not retain moneys received for the society in excess of £5. As remuneration for their services these agents are paid a percentage upon the business transacted through them, and half of the same percentage upon that transacted directly by the society within their allotted district. In addition to these ordinary agents the bank appoints confidential agents, usually unpaid, for areas embracing the districts of several ordinary agents. No public intimation is given of their functions, no signs being posted up stating that they are agents of the society, as is done for the other agents. Their principal duty is to examine and note loan proposals, which must be sent to them by the local agents before they are forwarded to Augsburg. As another means of organizing its business the society authorizes in its articles of association the formation of district committees, when at least 60 members of the societies are resident within a given district, the limits of which are determined by the committee of management at Augsburg. These committees may also be elected by a minimum number of 60 members living in one commune, or in at most three adjoining communes. Their duty is to supervise the business done by the agent, to examine proposals for loans, and generally to safeguard and advance the interests of the society. Any member of this body, when so authorized unanimously by the committee, has the right to inspect the books and all documents of the society. District committees have no power to grant loans or to enter into any engagement binding upon the society without its express authority. Loans are granted on (a) securities, (6) bonds and bills backed by sureties, (c) mortgages, and (d) pledging of goods. (a) Securities are loaned upon up to 90 per cent of their current market rate, but should they decline in value below the amount advanced on them, additional security must be furnished. (b) The amount lent on bills depends upon the soundness of the borrower and of the sureties. (c) Sums are lent on mortgages to the extent of not more than one-half of the value of the property, and in the case of second mortgages must be secured by supplementary surety. Mortgage loans are rarely made. (d) Loans on goods are given up to a maximum of two-thirds of the current market value of such goods. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 139 No loans under £1 are granted, and no repayments of under that amount are accepted. In 1911 the loans outstanding with members ranged in amount from £5 to £1,500 and £2,000, but loans to single members of up to £15,000 are authorized. The purpose for which loans are required must usually be stated by the borrower and verified by the local agent. Loans are made for the most part on bills backed by sureties (who may be members or non- members), run for three months, and are renewable for periods of three months, with a maximum period of 18 months. If the loan is not then repaid, further security is required. But the association grants only supplementary capital, not permanent capital. After 18 months the capital sum should be repaid, because the loan of money, especially of larger sums, to individuals for too long periods, may frustrate the object of the association, namely, to help its members in accordance with their individual needs. The management is not, however, rigid as to this point, and, provided installments of the debt are repaid, the loan may be allowed to run up to perhaps three or four years. The bills are not negotiated, but are always retained by the society till maturity. The rate of interest charged, compared with the rates of the vast majority of Raiffeisen societies, is not low, the Lombard rate of the Imperial Bank, which is 1 per cent over its discount rate, being taken as basis. For advances against the deposit of securities the bank charges the current Lombard rate of the Imperial Bank, plus one-eighth per cent commission; against bills backed by sureties a rate not exceeding one-half per cent over the Lombard rate, with one-fourth per cent commission when the advance is made, and one-third per cent if its period is extended; while against bills with sureties, but with renunciation of extension, the same rate with one-eighth per cent commission is charged. If loans are taken up for periods shorter than three months, the commission is less, and if the loan transaction is carried out without the services of the local representative, which is not usually the case in their agricultural business, no commission is charged when the bill is discounted. The average Lombard rates of the Imperial Bank for the six years 1905-1910 were, respectively, 5.20, 6.41, 7.01, 5.17, 5.07, and 5.38, or an average of 5.7 per cent over this period. If a borrower, therefore, wanted a loan of £100 for one year from the society through its local representative on a bill backed by sureties, it may be estimated that he paid (taking the average for the above period and adding one-fourth per cent—the society, as already stated, charges up to one-half per cent over the Lombard rate) about £6 as interest, 5s. as commission at time of grant, and 6s. 8d. at each renewal, or a total sum of about £7 5s. for the loan. Both interest and commission are payable in advance. Deposits are taken from members and nonmembers. According to the state of the market, 2 to 24 per cent is allowed on deposits at 1 month’s notice, 24 to 34 per cent at 3 months, and 3 to 4 per cent at 6 months, while at 12 months an unvarying rate of 34 per cent is allowed. On check accounts and on deposits at 8 days an unvarying rate of 2 per cent is paid. The Schulze-Delitzsch societies do not bind themselves to deal exclusively with any central bank, but carry on business with any bank that suits their convenience. When large credits are needed by the society it obtains them, generally by drawing a bill which is accepted by the Dresdener Bank, with whom the federation has entered into an arrangement. The Dresdener Bank does not extend credit upon the basis of the collective liability of the members of a cooperative society, but on the ordinary security currently accepted in commerce. The society is audited by a professional auditor appointed by the Bavarian Union of the Schulze-Delitzsch Federation to audit the Bavarian societies—about 16 in number. The examina- tion, which extends to tests of accounts, vouchers, and securities for loans by selecting at random a number of such items, lasts usually from three to five days. The general position of the Augsburg Agricultural Credit Association at the end of 1909 may be seen from the following figures: Membership, 12,586, of which 7,000 obtained credit during year; paid-up share capital, £72,900; reserves, £66,181; outstanding against bills, £182,245; deposits at over three months’ notice, £67,285, at under three months’ notice, £1,738; credit balances at banks, £13,106; and value of its owned securities, £7,920. The cost of management amounted to £5,107, the net profits to £4,343, and the dividend paid on the share capital to 4 per cent. BRETLEBEN SAVINGS AND LOAN BANK. Bretleben, a village situated upon a minor railway line in the Thuringian section of the Prussian Province of Saxony, about 40 miles west of Halle, has a population of 900. The holdings are of the most varied size. The largest, a manorial estate of 280 acres, is occupied by a tenant. The mem- bers of the society farm holdings which range from 6 to 160 acres. 140 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY, The society was founded in 1904 with shares of 5s., each of which carried a liability of £10. This share liability has since been increased to £20. The secretary stated that the farmers of the locality could never have been induced under any circumstances to join a society having unlimited liability. Fifty shares are the maximum that may be acquired by a single member; no member holds, in fact, more than 20. The number of shares which members are expected to take is proportioned according to the supplementary land tax paid by them. (Supplementary tax of 1s. per £100 is paid by land- owners upon all property over a fixed minimum assessed value of £300.) The membership of the society in 1910 was 48. The committee of management is composed of two farmers (one of whom is secretary) and an innkeeper. The secretary alone is paid, receiving one-tenth per cent of the turnover. The board of supervision has also three members, of whom two are farmers and the third is a miller. Loans are given almost exclusively in the form of overdrafts, but since 1909 the granting of loans for fixed periods has been introduced. Sureties are not ordinarily required. Members obtain, without specific security, advances to the extent of three-fourths of the amount of the lability of the shares which they hold. The society does not, however, bind itself to this, the individual circum- stances being in all cases taken into account. When the member does not appear good for such an amount, or if, being good to this extent, he wishes to obtain a higher credit, sureties or “‘security” mortgages may be required. The conditions of repayment are made to suit each applicant. The rate of interest on advances is 5 per cent. On deposits 4 per cent interest is paid. It was stated that the rate is so high because the society has to pay a higher rate (44 per cent) for money obtained from their central bank, and, further, because the agency of the district savings bank pays 3} per cent. The banker of the society is the Halle Cooperative Bank, in which it is obliged to take shares and with which it has to transact all its banking business. Its shares have a par value of £15 and carry a liability of £300; for each share which it holds a society is entitled to a maximum credit of £225, but the bank usually fixes the credit upon the basis of three-fourths of the collective lability of the shares of the members. The bank paid 44 per cent for deposits at the beginning of 1909, and 3% per cent at the end of that year; at the same periods it charged 5 to 54 per cent and 44 per cent (in December), respectively, for loans. A commission of one-tenth per cent on the total of the larger side of the account is deducted for maintenance of the account. The society pays a fixed contribution of 15s. per annum to the union, plus a percentage upon the business done. When the audit is carried out 12s. per day occupied in audit is paid. In 1910 the audit lasted four days. The books may also be minutely audited in Halle at the special audit office of the union, in which case a further charge is made. The position of the society at the end of 1909 was as follows: Membership, 45; paid-up share capital, £46; reserves, £67; savings deposits, £1,698; outstanding overdrafts, £3,275; ordinary cur- rent account deposits, £367. Overdrafts paid in 1909 amounted to £1,738, repayments upon such accounts to £732, and savings deposits to £1,148. The working expenses during the year amounted to £13. BROTZINGEN RURAL CREDIT ASSOCIATION. Brotzingen, till a year or two ago an independent commune about a mile and a half from the center of Pforzheim, the Baden town well known for its extensive manufacture of jewelry and trinkets, has since been incorporated with that town. It had already lost its rural character and become a manufacturing quarter with a resident population predominantly industrial. Within its area, how- ever, is still found a sprinkling of small freeholders or leaseholders, and some allotment holders. When the society was founded in 1890 its membership was mainly composed of men wholly or partly occu- pied in agriculture, but the general transformation of the commune wrought a similar change in the callings of the members. The society commenced operations with 110 members, who adopted shares of £5 nominal value and unlimited liability. The shares, if not paid up at once upon admission to membership, were to be paid by yearly installments until such installments, added to dividends accruing, attained the full nominal value. The entrance fee amounts to 3s. The present committee of management is composed of two agriculturists, an insurance agent, and the former mayor (for 15 years) of Brotzingen, who was stated to have been at an earlier date a gold worker. The last named, who is termed the “director,” attends the office daily and is paid a salary of £80 per annum, while the other members receive an annual fee of £3 for their services. On the board AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 141 of supervision there are three agriculturists, a master carpenter, a retired jewelry worker, and a master joiner,-all of whom also receive an annual sum of £3. The two bodies hold joint meetings every fort- night, which last about two hours. The secretary, who is not a member of the foregoing organs, and who was formerly a gold worker but is now a grocer, is paid £100 per annum, and must attend the office from 3 to 7 every week day. Loans are mostly given on bond with surety. The period of loan, which at one time was generally one year with the option of renewal, is now usually five years. If repayment is not made within this period, the sureties are notified, and if good reasons for extension are not found, the loan is called in. Loans of £1,500 and £1,000 have been given, but it was stated that only about one-third of the entries in the books were for sums over £50. If sureties can not be procured by the borrower, or if he is unwilling to obtain sureties, mortgage security is accepted. Only first mortgages are taken, and these only up to 60 or 70 per cent of the assessed value of land and buildings. When loans are made on mortgages upon buildings in course of erection, repayment must be made upon their completion. In the case of loans on bond three sureties must give their guarantee when the sum lent is over £50, and the wives of borrowers must also add their signature. Overdrafts on current accounts are also accorded upon similar security. Check books are issued, but are little employed; only 12 members at the date of visit had obtained them. Bills are also discounted for members, but are never negotiated, being retained by the society until maturity. Advances for purchase of property—the deed of purchase is pledged to the society—are not infrequent. The purpose for which the loan is required is always asked if the committee is not already aware of it. The risk of defaulting borrowers or sureties is not great, it being a condition that all members and their sureties should be residents of the Brotzingen quarter of Pforzheim. The members of the committee and of the board of supervision, 11 in all, are old members who reside in the same quarter, so that by reason of their combined local knowledge mistakes do not often occur in their appraisement of character and general circumstances of borrowers and sureties. The completeness of the local registry of title affords a further valuable safeguard when there is question of mortgage security. For overdrafts interest at the rate of 6 per cent is charged, but for many years 5 per cent has been the rate for loans for fixed periods. Advances for the purchase of property are made at 4, 44, and 5 per cent with a commission, the amount of which is determined by the rate of interest agreed upon and the length of time within which repayment is to be effected. If the loan is to be repaid by three yearly installments, 3 per cent commission is charged; if by five installments, 5 per cent. In one case in which £800 was advanced at 5 per cent interest, a commission of 10 per cent was charged, because the repayment was spread over 16 years. The society pays 4 per cent upon deposits for fixed periods and 34 per cent upon those on current account. Interest is reckoned by half-monthly periods of 15 days. The society issues savings books to depositors, but no savings boxes, savings stamps, or cards are in use as a means of encouraging thrift among members. The public municipal savings bank is a strong competitor of the society, as it has the guaranty of the town for its obligations. The books of the association are sent to Carlsruhe for legal audit, and the same auditor has examined the books for a long period of years. When the books have been gone through by him, he pays a visit to the society to confer with the committee and board of supervision upon any points that may have arisen. The association pays to the union a fixed annual contribution of 15s., a further annual sum based upon its turnover—in 1910, £5—and a fee of £4 for audit. The position of the society at the end of 1910 was as follows: Membership, 454; paid-up share capital, £1,285; reserves, £6,097; outstanding assets—in loans against bond, £35,605; against mort- gage and for property purchase, £7,276; in overdrafts, £706; at the bank, £3,184; labilities—savings deposits, £47,897; deposits in current account, £34. The profits for the year were £559; the amount paid as interest, £1,825; and received as such, £2,247. Loans for fixed periods were granted to the amount of £42,191, and repayments in such loan accounts were made to the amount of £34,786. Mortgage and property purchase loans aggregated £2,041, while repayments on such accounts totaled £2,457. Savings deposits received amounted to £47,685 and deposits repaid to £39,812. Receipts from commission and entrance fees came to £266. The cost of management was £465. In 1909 the society paid £32 in local taxes and £10 in State taxes. The society has an open credit of £3,500 at the Mannheim Mortgage Bank, the banker of the Baden rural societies, but it rarely has recourse to it. Among its assets the society held at the time of visit 34 per cent mortgage bonds of this bank to the value of £5,000. 142 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. COETHEN SAVINGS AND LOAN BANK, Coethen is a town of 23,000 inhabitants, in the Duchy of Anhalt, which is almost an enclave in the Prussian Province of Saxony. As a rural cooperative credit society the Coethen society presents some unusual features. Its sphere of action is rather extensive; in 1910 it covered 62 villages within a radius of about 10 miles from Coethen, where its office is situated. It agrees to accept as member any farmer within this area (if suitable) upon the basis of the registry of title and his assessment for purposes of taxation. Members may be millers, farriers, etc., but they must at the same time be farmers. An exception is made in the case of the secretary, who is an insurance agent. The committee of management consists of three persons—two farmers and the secretary. The latter keeps his office open daily from 8 to 12 and 2 to 6, and receives £180 per annum for salary and expenses. Meetings of the committee are held monthly. The nine members of the board of supervision, which meets four times in the year, are, of course, all landholders. The shares are fixed at 5s., with £10 liability per share. An entrance fee of 1s. per share is levied and paid into reserve. The credit business done is almost exclusively on current account. Loans of definite amounts for fixed periods are made usually on mortgage, though occasionally to public bodies on promissory note. In one case a large sum was lent on this security to a commune. The possession of a certain number of shares normally entitles the holder to a fixed maximum overdraft without further security, as in all the limited liability credit societies in Pomerania and Prussian Saxony. Sureties need only be furnished in exceptional cases, when the credit desired exceeds the normal limit or the general position of a borrower does not warrant the grant of credit without outside security. The interest charged is 44 per cent, with commission of one-tenth of 1 per cent per annum reckoned on the debtor side of the account. Three per cent is allowed on credit balances on current account. No check business is done, chiefly owing to the recent tax on checks, which strangled its development. Surplus money is sent to the Central Bank in Halle, which pays 34 per cent on deposits on current accounts. The society has never had occasion to borrow from the latter, although it holds 15 shares (of £15 each), car- rying a liability of £4,500 and entitling it to a credit of £3,375. These shares, which must be fully paid, receive dividends at 4 per cent. Losses have been very rare; in one case about £300 was lost by the default of one borrower, the balance sheet showing a deficiency of £15 on the year’s operations. The society pays the maximum contribution of £15 to the Agricultural Cooperative Union at Halle and 12s. per day for audit, which generally occupies two or three days. At the end of 1910 there were exactly 200 members in the society, holding 2,663 shares. The paid-up share capital amounted to £665 15s. and the collective liability upon the shares to £26,630. At the same date there were 140 members with total credit balances of £30,728, and 79 members with debit balances of £16,868, leaving credit balances at £13,860. Loans, apart from ordinary overdrafts normally authorized on current accounts, against bonds and bills, amounted to £2,810; the amount due against mortgage security to £9,046. As to savings deposits, £6,860 was paid in, £7,685 paid out, and £940 written to accounts as interest, leaving the total deposits at end of the year at £33,766. On current account with its banker (the Central Cooperative Bank at Halle) its credit balance on December 31, 1909, was £33,551; during 1910 £48,226 was paid in and £48,922 with- drawn, leaving on December 31, 1910, a credit balance of £32,855. The total assets and liabilities of the society at the same date were, respectively, £67,673 and £67,385. Its reserves amounted to £1,167, in addition to £805 as working reserve. © The society holds two shares of £15, each carrying a lability of £100, in the Central Agricultural Supply Society of Halle. By virtue of this holding it may purchase at Halle for its members agri- cultural requisites up to a value of £1,000 per year. The society charges a commission of 1s. per £15 (or part thereof) worth of goods purchased on their behalf. In 1910 purchases amounting to only £38 were thus made. COSEL ADVANCE ASSOCIATION. Cosel, a small country town of 7,500 inhabitants, situated on the left bank of the Oder, in Upper Silesia, was formerly the capital of a duchy and was fortified down to 1874. It is now a center in a district predominantly agricultural. The railway line from Liegnitz (60,000 inhabitants) to Kandrzin serves the town, which is about 4 miles from the main line from Breslau to Vienna. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 143 The Advance Association, founded in 1860, is, apart from the public savings bank, the only banking undertaking in Cosel. Its special interest arises from the fact that, although established on the principles of Schulze-Delitzsch, 60 per cent of its members are landholders. Its success in an agricultural district is due to its adapting itself to the special requirements of farmers, especially in regard to the length of time for which credit is granted and the method of its repayment. The The majority of the banks of the Schultze-Delitzsch type are urban and are calculated to meet the needs of traders and small employers of labor. The usual term for credit granted by these societies, namely, three months with the option of renewal for two further three-months periods, is of little use to farmers, who require at least a year and find it highly advantageous not to be obliged to repay in a lump sum, but to have the option of repayment by installments. This bank has given loans to farmers for periods of 10 years, repayable in 10 installments, and terms of 3,4, and 5 years are frequently allowed. The director mentioned that much of the money advanced to agriculturists was employed for the purchase of modern agricultural machinery, land improvement, erection of buildings, etc., the district being still comparatively backward as regards general agricultural equipment. The society limits its operations in practice to a district of about 10 square miles, although its articles of association do not assign any fixed area within which members must live. Apart from its Cosel office there is one suboffice in an outlying center managed by the widow of a local shopkeeper who transacted this business for the society for 20 years till 1910. Deposits are received, advice given to intending borrowers, the necessary forms, etc., kept, but no independent authority is given to grant loans. Several agents who undertake the same duties have also been appointed in different parts within the area of the society. The shares are fixed at £60; they must not be paid in full in one sum but by installments not exceeding £6 in any one year. Payments of from ls. to 10s. per month, as arranged, are obligatory upon members until the sum of £6 has been reached. Although many per- sons desire to make the full payment upon admission, regarding the transaction as an investment at good interest, the society always rejects the offer. At an earlier date full payment was accepted, the object of large shares having been to attract more substantial men as well as share capital. Members of small resources would have taken a considerable time to supply the necessary capital either by paying the full amount of the share or by deposits, while more substantial persons when enlisted as members not only paid up their share in full, but also brought deposits and prestige. For a large number of years the association has felt no need to seek additional share capital, its present paid-up share capital and reserves having attained a total sufficient for probable needs. Savings deposits, which are ob- tained in abundance, constitute cheaper capital than share capital. Dividends paid on shares from 1895 to 1910 have always stood at 5 per cent and from 1886 to 1894 at 6 per cent, whereas only 3 to 3} per cent was paid on ordinary savings deposits. Dividends are due to members on their share from the time when one-tenth part of its nominal value has been reached. The liability attaching to each share is unlimited. New members pay an entrance fee of 3s., which is placed to the reserve fund. The membership, which amounted to 26 in 1861, 298 in 1871, and 853 in 1891, had become 3,145 at the end of 1910. At that date the classification of members in eight groups showed the following result: Percent- Percent- Number. age. Number. age, 1. Landholders, foresters, and market 6. Carriers, boat owners, and innkeep- gardeners........---+--------++5> 1, 906 60. 6 CTS aka parte ee he us cer tar a ae 163 5.1 2. Manufacturers and builders......... 74 2.3 | 7. Doctors, State, communal, and 306 10.0 3. Independent master artisans.......- 437 13.9 other salaried employees......... 4, Factory hands, journeymen, artisans. 89 2.8 || 8. Independent persons and pensioners 19 6 5. Independent shopkeepers and deal- OMS: heece e252 2 ereaeeeat eerie rei ere 149 4.7 Totals ss. .capesesveeuseee sk 8, 143 100. 0 Persons holding land form the most numerous class. Large landholders also are members, the bank being in a position to meet all their requirements. By ‘‘independent master artisans” is meant master carpenters, painters, farriers, etc., while the large number of employees shown include all teachers, those employed in the post office and on the railway, and in other institutions. About 70 per cent of the members are Polish-speaking. 144 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The committee of management consists of three persons, two of whom are paid officials devoting their whole time to the business of the bank. The board of supervision, which numbers 12 persons, contains 1 landowner, 1 secondary school teacher, 1 printer, 2 law court officials, 2 master artisans, 2 shopkeepers, and a miller, a chemist, and an innkeeper. The board meets every month to examine the business position, giving about six hours to the inquiry. In the Schulze-Delitzsch banks this body exercises many of the functions that fall to the committee of management in most Raiffeisen banks, where the committee is not daily occupied with current business. Each member of the board receives an annual fee of £6. Credit is mainly accorded on bills and bonds backed by sureties and on mortgages. The Poles are especially inclined to mortgage their holdings, disliking to ask acquaintances to become sureties. Very little credit without security is given. A certain amount of caution credit is allowed; this is granted, e. g., to persons engaged in railway, mining, or state undertakings, and to distillers who wish to postpone payment of taxes till their spirits are sold. The object is to guarantee the payment of fine for nonfulfilment of contract in the first cases, and of the taxes due in the case of the distillers. For such guarantee the bank charges only 1 per cent, as it is really a risk premium, not a loan. A great part of the business done with landholders consists in lending money on mortgage secu- rity, as well as on bonds backed by sureties for the purpose of reducing mortgage indebtedness already existing. The mortgages thus cleared are nearly always second mortgages. The Prussian mortgage credit associations, in this case the Silesian Association, only grant first-mortgage loans, and the highest amount loanable may nor exceed two-thirds of the taxed value of the property to be mortgaged. But this maximum is rarely conceded, nor is the increase in value of land since the old assessment fully taken into account. As second mortgages are made generally with private persons, they have the disadvantage of being subject to foreclosure. The society advances the money to pay off such private mortgages; the borrower obtains the loan at a lower rate of interest and is allowed to reduce his debt by installments. The bank, preferring to lend its money on good security in its immediate district, is not averse to such transactions. It is unusual for Schulze-Delitzsch societies to grant mortgage credit. The opinion strongly held by successive leaders of the Schulze-Delitzsch Federation has been that credit should not be given for a longer period than the period of notice of withdrawal of the deposits held. But this is largely mere theory, because savings tend to remain longer than the period of notice of withdrawal, and to a large extent for a long time, nor are they taken out in a great mass at once. To make the position more secure, however, the director of this society takes a larger proportion of deposits than he would otherwise take at a year’s notice of withdrawal. A recent congress of the federation (at Freiburg) passed a resolution that real credit up to an amount not exceeding the owned capital (share capital and reserves), or at least up to the total of their deposits at one year’s notice, might be granted without danger. The maximum single credit which may be granted to one member is £5,000; within this limit the amount is fixed according to circumstances. There is no regular assessment of members based on their assets. The great bulk of credit is made on sole bills—that is, bills kept at the bank till maturity and not circulated. At the end of 1910 there was £148,000 outstanding on bills, and £19,000 on mortgages. In 1909 and 1910 the bank charged 43 per cent to members whose borrowings did not exceed £50, and 5 per cent upon higher sums, without any commission. The society is affiliated to the General Federation of Self-Help Cooperative Societies (Schulze- Delitzsch), which audits the business and supplies cooperative and statistical information and legal and technical advice on banking matters. The federation levies a charge of 14 per cent of the net profits (subject to a maximum of £7 10s.) for auditing, and 1 per cent of the net profits, but not more than £5 for other services. In this Province there are no professional cooperative auditors for these societies, as in the west and south of Germany, the audit being carried out by the chief officers of other societies within the Province. Thus, four officers (including the director of this society) have been nominated to audit the 80 to 90 Silesian societies, 40 to 45 per year. This “audit” is chiefly directed toward impressing upon the board of supervision the necessity of learning their duties and of performing them. There is no minute examination of individual items, such as is generally made by auditors of rural societies attached to the agricultural unions, nor would the task beso light, having regard to the fact that these urban societies carry on a much larger business. The audit occupies about one day, and consists of little more than a mere investigation as to whether the pre- scriptions of the law have been duly observed by the administrative organs and the business has been generally conducted in accordance therewith. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 145 The society is not affiliated to any central cooperative bank. If credit is required—which is extremely rare, owing to the abundance of deposits—it is obtained from the nearest branch of the Im- perial Bank, with which a deposit of £250, not bearing interest, has been made, this amount being determined in accordance with the business done with the Imperial Bank. Business is also done with an important Breslau cooperative bank. But no such exclusive relations exist between the Cosel Bank and any other bank as usually obtain between rural credit societies and their central banks. The arrangement made with the Dresdner Bank by the federation to which it belongs means, in effect, only that the collection of bills and clearing of checks shall be mutually undertaken by that bank and its branches for the societies and by the latter for the bank. The society, true to the practice of the Schulze-Delitzsch societies, does not carry on any sale or supply business for its members. The position of the society at the end of 1910 was as follows: Members, 3,145; paid-up share capital, £22,723; reserves, £21,616; savings deposits, £193,228; percentage of owned to borrowed capital, 22.9; amount of advances outstanding, £147,878; amount outstanding on mortgage security, £19,150. The total turnover in the year was £2,892,130; the net profit, £1,833; the cost of man- agement, £1,810; the amount paid in interest upon all deposits, £6,299. Savings deposits paid in aggregated £162,919, and those withdrawn, £146,103. The amount of 1,677 new advances was £63,224, and of 7,551 extensions of loans, £511,736. There is a public savings bank in Cosel, but the director of the Advance Association, who is also a leading official of the savings bank, holds that the two organizations do not compete, inasmuch as, while the main object of the association is to grant credit of a personal kind, that of the savings bank is to take savings and furnish mortgage credit on a basis of first mortgages. EGGENSTEIN SAVINGS AND LOAN BANK ASSOCIATION. Eggenstein is situated about 7 miles from Carlsruhe. Its population of 2,300 is mainly com- posed of small freeholders, farming less than 30 acres. There are, however, two small factories, and some inhabitants go to work daily in the Baden capital. This village bank was the first of its kind to be established in Baden. It was founded in 1873 by the district agricultural instructor, and was constituted by 60 members who pledged their unlimited liability, but subscribed no shares. When shares were made obligatory by law in 1889, small shares were introduced; and in 1910 their nominal value was raised to £2 10s., of which 5s. must be paid upon entry, further annual installments being levied until the shares are fully paid. Dividends are paid, but are appropriated to the individual shares until they have been fully paid up. The first year’s working of the society showed that members deposited £605 and borrowed £995. Being absolutely isolated, without banking connection, and with their credit basis, which consisted in the joint and several unlimited liability of members, quite unfamiliar to the ordinary business world, considerable difficulty was found in obtaining the funds to lend. The society was finally able to pro- cure the necessary money from a credit society of the Schulze-Delitzsch type in a neighboring town, which, however, charged 54 per cent interest, in addition to commission and costs, which raised the price of the loan to 6 per cent. Borrowers paid 64 per cent interest and depositors received 4 per cent, which at that date was the current normal rate paid by banks in Germany. The confidence of the population grew, and after a time the deposits exceeded the demand for money. The investment of the idle money became a matter of difficulty, particularly as banks only gave the society at the most the same rates as it gave to its depositors. Cooperative central banks had not then been created, except one which was still in its first stages of development. A considerable source of income was, however, found in dealing with the contracts for property transfers, upon which the society advanced money at the normal rates of interest, but charged a commission. As there was no share capital, the whole of the profits were, in accordance with the statutes, paid to reserve, which grew year by year. The progress 95273°—S. Doc. 17, 63-1——10 146 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. of the society in the first 15 years of its existence may be seen from the following table, in which, for purposes of comparison, the figures for 1897, 1910, and 1911 are also included: Income from— Paid as— Number Year. of Commis- Turnover. prot Peay 2 members. Interest. ne ae Interest. | Expenses. fee. 1B 78 con cess PSE aan e eee 77 £21 £30 £13 £25 | £2,445 BAT lo Banna VS TA eek is yah thys ae Net he beh od gh these 92 84 12 54 7 5, 775 14 £97 DR U5 seis siege et tet ecru 107 124 12 87 33 7, 250 20 23 NB 2G scpire cneeoteput bee Sn Man rwercetors 121 182 17 117 36 7, 533 42 44 VST ice ye Assposalae seen tev iain ARAN aO aS 140 242 17 151 34 11, 230 73 87 WB78 seis aisek fat bY cre ne lets aap Rte 153 246 26 174 43 11, 174 79 160 NS 70 ae thc tonha aia aacitie nin manok eel 166 245 19 165 39 11, 283 74 239 DBS 0 serciescsniesrensestan ae we win wc mannonnn oe 176 240 37 153 37 14, 175 91 313 VSB lye acaecesee ys ru Sew etd 172 259 22 164 50] 11,601 70 405 DB RP. correc ccdecei wties An aie BS eaeidh tice 179 224 28 199 45 12, 004 76 475 ABB 8 ect ypalete on wae Rasa apgetanies 216 213 26 214 47 13, 200 57 551 VRS4.. Prec aeatits pees ae St eeeetas 217 233 11 174 56 10, 887 33 609 TBS cS Ast dae Chee aaa 217 212 15 137 54 10, 005 33 642 TSS. iy signees eon ts Lieegeene 226 218 cnt 139 55 10, 503 35 671 WBS 7 53 sec ctetacn ert rape te aaa oracle 226 253 8 165 56 8, 516 39 711 N87: ose scpech ec hactagciataserhesieie vee elena 241 328 5 242 68 16, 603 54 938 MOTO otetessixe a Re Kle! Sita terriers Gaiele 250 446 2 354 78 18, 655 63 1, 042 TQ reeks Batre an sakinda ites m c'= o/tleneae 247 475 1 335 OD aebeoaee se 43 1, 050 In 1880 the society joined the then existing Hessian Union, but, similar societies in Baden having in 1883 made an agreement with a Baden bank to serve for their banker, the Eggenstein Society, with 27 other societies, associated themselves in 1884 in the Baden Union of Credit Societies. In 1909, the total contributions of the society to this union amounted to £2 8s. 7d., of which 15s. was the fixed con- tribution, while the remaining £1 13s. 7d. represented three-eighths per cent upon the commission, interest, and entrance fees received by the society. Previous to the obligatory audit imposed upon all societies by law in 1889, the Eggenstein Society was regularly audited—in the years 1881-1883 by the Hessian Union, and since 1884 by the auditors nominated by the Baden Union. The same auditor was usually appointed for a number of years for this society; thus from 1883-1886, and from 1887-1898, the same auditor investigated its accounts. The following notes on the practical working of the society at the present time were made at the time of visit in the autumn of 1910: The committee of management of the society consists of three persons: The chairman, who is vil- lage mayor and a member of the Baden Parliament, has a brickworks in the village, while one of the two others is a small landowner, and the third combines rope making with farming. The chairman receives £10 and the others £4 to £5 per annum. The board of supervision is composed of three small holders, who receive nominal fees. The secretary, who has held this office in the society since 1873, is the village clerk and registrar of the local registry of title. He is paid by the society £40 as salary and £2 10s. as office rent. The office hours are not fixed, but customers are received whenever the secretary is at home. Loans are granted only on personal bond backed by surety. No current accounts are kept, so that overdrafts are not granted. Loans are given for 12 months and then extended at the request of the borrower, provided the surety or sureties are willing to continue to act. The rate of interest has been 5 per cent since 1904, previous to which year it stood at 44 per cent for a long period. Larger sums are still lent at the latter rate. The amounts lent vary greatly; the writer saw in the books sums of 25s., £5, £9, £15, £20, etc., but most of the amounts ranged between £10 and £35. The purpose for which the loan is required is not asked; the essential point for the committee is whether the surety is good for the amount. There is considerable difficulty or disinclination to find sureties, but prospective borrowers are informed that sureties must be furnished, as the society does not lend as a rule on mort- gage security. When the sum is over £100 two sureties must be procured in all cases; otherwise one is sufficient, provided the surety proposed is considered an adequate guaranty for the amount. Money is sometimes lent to members on mortgage, but this is not as a regular part of the business of the society, but rather as a channel for the investment of surplus deposits in order to provide interest thereon since its bank only pays 4 per cent. The interest charged for mortgage loans is 44 to 5 per cent. No AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 147 fixed periods are usually arranged, but the condition is inserted in the mortgage deed that three months’ notice of repayment must be given to the society. The difficulty of finding remunerative investment for surplus funds in more recent years has also led to advances being made for the purchase of prop- erty. In addition to interest at 44 to 5 per cent, 1 per cent commission for larger sums, and 14 to 2 per cent for smaller sums, is also charged for such advances. Deposits, subject to three months’ notice of withdrawal, received 4 per cent interest from 1905 to 1910; in 1910 it was reduced to 3? per cent. Interest is reckoned from the 1st of the month fol- lowing deposit. In some cases as much as £100 has been deposited at one time by individuals. Owing to the absence of public guaranty it is not permissible for trustee moneys to be deposited with the society, but the commune frequently makes deposits of its money, obtaining the current rate of interest. In 1908 over £700 and in 1909 over £7,500 were thus received from the commune. The interest paid on deposits in 1909 totalled £492. The society has an account with the mortgage bank in Mannheim, which acts as banker to the Baden rural credit societies upon special terms arranged by contract with the union. The Eggen- stein Society has an open credit up to £2,500 with this bank, which is ample for its needs. The inter- est charged by the bank upon overdrafts is 44 per cent and a half-yearly commission of one-tenth per cent upon the total of the amount overdrawn. The society receives 4 per cent upon deposits. Apart from making deposits of its surplus moneys with this bank, the society endeavors to find borrowers among its fellow societies, to whom it lends at 44 or 4} per cent plus the very trifling commission of one-tenth per cent. Up to the present the society has not lost a penny in bad debts. In 1910 it granted loans to to the value of £4,428, and was repaid loans amounting to £3,982; as interest it received £446, and paid away £354 on deposits; it took up loans amounting to £4,525 and repaid such loans to the value of £4,201. The totals of all receipts and payments for the year were, respectively, £9,211 and £9,444, It may be mentioned that in the village there is also a local cattle insurance association, a horse insurance association, and a cooperative retail store. ELXLEBEN SAVINGS AND LOAN BANK ASSOCIATION. Elxleben is situated some 8 miles from Erfurt in a rich agricultural district of Thuringia. The largest holding occupied by a member of the village bank is 185 acres, and there are a few of 30, 40, and 60 acres, but the majority contain from 12 to 18 acres. The shares of the society, which was founded in 1899, are 10s. each, with unlimited liability; in 1910 there were 235 members. Its field of operations embraces Elxleben and two villages lying 1 or 2 miles distant in different direc- tions. Three members of the committee of management live in Elxleben, and one in each of the other villages. The chairman is a pastor, and save one, who is a teacher, the others are all farmers. A fee of sixpence is paid for each committee meeting attended. The chairman of the board of supervision is a teacher, the remaining eight members being farmers; five live in Elxleben and two in each of the other villages. No remuneration is paid to the board. The secretary, who is never a member of the committee of management in societies on the pure Raiffeisen system, is a teacher and receives a fixed salary of £21 per annum. There is no store, but the member who super- intends the supply business carried on by the society is paid a fee based upon the sales. In 1909 the total cost of management of the society amounted to £113. Most loans are granted for fixed terms on bonds backed by sureties, but loans on current account (overdrafts) are increasing, and those on mortgage are not inconsiderable. At the end of 1909 the total of the 118 loans for fixed terms which were outstanding amounted to £4,777; of these 11 were for sums not exceeding £5; 29, for sums over £5 up to £15; 15, for sums over £15 up to £25; 32, for sums over £25 up to £50; 23 for sums over £50 up to £100; 7 for sums over £100 up to £250; 1 was for more than £250. At the same date a total of £1,150 was outstanding as overdrafts. Of the 20 loans for fixed periods granted in 1909, 2 were for a period up to 1 year and 18 for periods exceeding 1 year but not exceeding 10 years; generally the period is 5 or 10 years. The interest charged for loans on bond or on mortgage is 43 per cent plus a commission of one- tenth to one-half per cent; if the loan is to be paid off in 10 years it is the latter sum; for less periods rate is correspondingly less. Women may be members of the society, but can not vote except by proxy. In the case of all loans the wife of the borrower must add her signature. The interest paid on deposits was 4 per cent. The society does all its banking business with its central bank, which is the Erfurt branch of the Raiffeisen Central Loan Bank; in 1910 the latter paid 148 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 33 per cent for deposits at call and 3} at six months’ notice, while it charged 4} per cent for “normal’’ credit and 4} for credit over and above this normal fixed amount allotted by it to the society. The society owns three shares of £50 in this bank and five shares of £25 with £100 lia- bility per share in the central supply society of the Thuringian Union at Erfurt. The sales effected with members amounted in 1909 to £3,259, of which £2,308 was for feeding stuffs, £326 for manure, and £295 for coal. These commodities are sold by the sack or by the centner (110 pounds). Five per cent interest is charged upon accounts not settled within six weeks after receipt of goods. The audit is carried out every year; five days were occupied at the work on the last occasion, the cost being £2 15s. The society pays a contribution to the union in proportion to its turnover. The society bought recently a property of 45 acres and sold it to members who were required to pay immediately one-sixth of the purchase money in each case, the balance beong secured on mort- gages redeemable in a fixed number of years. The land was mortgaged up to £3,500, and the owner— a local mill owner—offered it to the society for £4,000. The society paid off the mortgages, handed £500 to the vendor, and made a profit of £40 on the whole transaction. The secretary mentioned that a neighboring society had also bought a property of some 65 acres which they resold to its mem- bers upon similar conditions. At the end of 1909 the membership was 213; the paid-up share capital, £109; reserves, £571; savings deposits, £7,688; and outstanding loans, £6,435. Loans for fixed periods were granted in the course of the year for £757, while £597 of such loans was repaid; payments and withdrawals on current accounts amounted to £523 and £935, respectively, and savings deposits to £3,785. FISCHENICH SAVINGS AND LOAN BANK ASSOCIATION. Fischenich is a large village with 2,400 inhabitants. It is situated about 6 miles from Cologne, which is rapidly extending toward it, and with which it is connected by asteam tramway. The holdings are small, the majority ranging from 1} to 24 acres, though a few cover as much as 18 or 20 acres. These small holdings are not always entirely owned, part being sometimes rented. Agricultural land fetches very high prices in the whole district; in 1905 one agricultural property close at hand was sold at the average price of £320 per acre, and when the society bought 137 acres in the same year at the average price of about £133 per acre it was declared a very low price. (See details below.) Prices have risen since 1905. The production of vegetables is the chief agricultural pursuit, and the conditions are so favorable that three or four crops may be obtained by the most skillful cultivators. The produce is brought regularly to the Cologne market by the wives of the holders. Attempts to organize the sales upon a cooperative basis have met with the resistance of these women, who are stated to prefer to go to market. There are, however, in the neighborhood one or two cooperative societies for the sale of such produce. The Fischenich bank began operations in 1894 with 19 members and attained a turnover of £30 in its first year. In 1909 the turnover amounted to £43,000. The society was established by the cen- tral Raiffeisen organization of Neuwied, but with about 100 other societies in the Rhine Province broke away seven years later and joined the present Cologne Union. The nominal value of the shares remained at 10s. till 1907, when it was raised to £5. The liability is unlimited. No entrance fees are levied. The committee of management consists of five persons, who are farmers, and who receive no remuneration for their services on the committee. In 1910 there were 31 committee meetings. The board of supervision, which consists of nine persons, is representative of various callings, four of its members being farmers, three workmen, one a master artisan, and one a shopkeeper, who also farms a small holding. In the ordinary course of events meetings are held four, five, or six times a year. The secretary, who is the head teacher at the village school, receives a fixed salary of £50 per annum, and, in consideration of his extra work due to the purchase of the estate, 1 per cent on the annual receipts in connection therewith. Interest on deposits is reckoned from the first day of the month following their receipt. Loans are given mainly on personal bonds backed by sureties, but they are also granted without difficulty on mortgage. Advances for the purchase, or to aid in the purchase, of property arecommon. In the latter case interest at the rate of 5 per cent, plus a single payment of 14 per cent commission, is charged. For loans on mortgage 44 or 5 per cent is usually charged, but there is no commission, although formerly 7 per cent commission was also charged for such transaction. In 1910 no deposits were received, nor was any credit granted, on current account. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 149 Loans, the object of which must be stated by the intending borrower, are generally for the purpose of, buying manures, fodder for cattle, a cart or horse, a head of cattle, implements, outhouses, or land. The society has 200 savings boxes in circulation, and although they give a deal of trouble to the secretary, he thought that it was well worth while to promote their use. They are distributed to the school children free of charge. The maximum credit allowed to the society by the central bank at Cologne, to which it is affiliated, was raised in July, 1910, from £7,500 to £11,250. Shares must be acquired in the latter undertaking; each share is £50 (to be fully paid up) with a liability of £300 upon each share taken, and holders are entitled to a maximum credit of £750 per share. In 1909 the Cologne Union was paid £4 16s. as contribution from the society, the amount being determined according to the total assets or liabilities. The audit of the accounts is carried out entirely in Fischenich, no books being sent to the union offices. In 1909 the audit occupied 5 days as compared with 12 days on the previous occasion. The society pays for each day of audit a fixed sum and the out-of-pocket expenses of the auditor. Several measures worthy of mention have been undertaken by the Fischenich Bank for the benefit of its members. The society erected at the station a large weighing machine for wagons, for the use of which members pay 14d. and nonmembers 3d. A large thrashing machine and two sowing machines, one worked by hand, the other by horsepower, have also been purchased. The society owns a warehouse in which fodder, manures, and seeds (but not coal) are stocked. Members are not obliged to order in advance, unless their orders are large. Except as regards seeds, the minimum quantity sold is 110 pounds. The warehouse keeper, who is also a member of the society, is paid £3 monthly; he also takes care of and operates the thrashing machine, for which he is paid 13d. per hour of thrashing, and is given one-third of an acre of land rent free. The society sells to the vegetable growers some 4,000 or 5,000 baskets every year at a cheaper rate than they would obtain them elsewhere. It was also intended in 1911 to establish a free library. A most interesting institution of the society is the legal protection commission, composed of nine members representing different occupations (e. g., farmers, shopkeepers, artisans) who are chosen by the general meeting of the members. The object of the body is to endeavor to prevent disputes going into court. All manner of disputes are dealt with; for example, the damages due to a man who has been kicked by a horse or the interpretation of a dispute relating to contracts are equally the concern of the commission. If in any case a settlement is not reached and the matter comes into court, half the expenses of a member are paid in cases in which members and nonmembers are involved. The society also provides six or seven lectures each year on economic and agricultural subjects, and outsiders are very often invited to deliver them. The position of the society at the end of 1910 was as follows: Membership, 264; paid-up share capital, £117; reserves, £2,500; savings deposits, £10,228; outstanding loans for fixed periods, £24,487; loans granted in 1910, £7,119; amounts repaid on loan accounts, £7,050; and savings deposits made, £3,333. : The most conspicuous achievement of the society has been the purchase and division among its members of a property of 137 acres. The property, which had been rented for many years previously, came into the market in 1901. Various offers up to £18,000 made by professional property dealers, as well as a proposal of the society to pay £20,000, were rejected by the owner, who would not accept less than £23,000. Four years later the society obtained the land for £18,250. The purchase money was obtained at 44 per cent from its Central Bank in Cologne, £4,500 being paid to the vendor on signature of the agreement, and the balance within a fortnight. The whole matter was settled within a short time; the committee of management submitted it to the board of supervision, who approved, and, before signature, the general meeting authorized the purchase. The land was subdivided according to plans of a member of the committee of management—a gardener by occupation. The plots were of 25, 50, and 100 poles, and on each size of plot was set minimum prices of £25 and £30, £65 and £70, and £100 and £110, respectively, the higher prices in each case applying to plots in the more favorable positions. Three auctions were held at intervals, the unsold land being rented. In December, 1910, 56 acres were still unsold. If a member (only members could purchase lots) bought one lot at the auction he was free to acquire the lot parallel thereto or directly in front of it at the rates given above; thus, if he bought a third or fifth lot he was free to purchase the fourth or sixth lot, as the case might be, in the same manner. In order to cover possible loss, the cost of two roads, of survey, subdivision, and of valuation, and other incidental expenses (court fees, etc.), the society added 10 per cent to the purchase price when fixing its sale 150 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. prices. The conditions of payment were made easy. Purchasers paid down 5 per cent of the purchase money (instead of the 10 per cent usual in ordinary business); the remainder might be paid immedi- ately, within a short term of years, or in 20 annual installments. These installments were to be made up of 5 per cent interest (to be reduced to 44 per cent when the “over normal” credit obtained from the Central Bank in order to carry through the purchase, had become normal, the society having to pay a higher interest for the former) and 34 per cent sinking fund, or 84 per cent, falling later in the ordinary course to 8 per cent. By 1910 many purchasers had already paid up in full. When it occurred that, through no fault of his own, a member was unable to make the payments when due, the society accepted the interest alone. Of 190 members of the society, 76 became purchasers of 80 acres in the aggregate. An average price of £158 per acre was obtained, giving a gross profit of £25 per acre on the purchase cost. This average was extremely low for the district, in which no land was then purchasable under £200 per acre, and the normal price was stated to be £240. The remaining 57 acres were let to members, who were not in a position to purchase, at alow rental. It was determined that no profits were to be aimed at; the rent was to be fixed at the sum paid in interest upon the purchase price, plus 10 per cent. As already mentioned, 10 per cent had been spent in the general costs, which weré incurred especially in meeting the cost of the land utilized for two roads, 16 and 26 feet in breadth, laid out through the whole property. The effect of the society upon the general economic condition of the village has been happy. One pastor is reported to have said that in Fischenich the villagers formerly used dogs for draft purposes, and then oxen, while now they could afford horses. The old houses had been improved or rebuilt, the holdings were better cultivated, those formerly rented were becoming the property of the occupiers, the general habits and moral tone had improved, the people had grown well to do out of great pov- erty—and in all this evolution (the secretary said) the most influential factor had been the village bank. GRIESHEIM SAVINGS AND LOAN BANK. Griesheim is a large village with 5,900 inhabitants, about 4 miles distant from Darmstadt, with which it is connected by a steam tramway. A large proportion of the population are workpeople with small holdings, who are employed in Darmstadt. The locality is noted in the district for its market gardening. The bank, founded in 1888 with 71 members, had 170 members in 1910. The secretary estimated that half of the members were artisans, small employers of labor, and tradespeople, one-fourth were workmen, and about one-fourth persons whose sole occupation was farming. Many in the first two general groups also had market gardens and kept cattle and pigs. The prosperity of the village is attributed to this combination of agriculture with industry; the wives and children of the workmen and others look after the holdings, while the men work at other occupations either in the village or at Darmstadt. The vegetables and potatoes are sent to the neighboring cities. On certain days in the week the women, carrying immense baskets into Darmstadt, are so numerous as to fill several cars of the steam tramway. The holdings of the farmers are not large, few having as many as 25 acres. The shares were formerly £2 10s., but were subsequently raised to £5 and then to £5 10s.; they will be gradually raised to £7 10s. or £10. The society adopted unlimited liability. The paid-up share capital which amounted in 1888 to £170, was returned in 1910 at £800. The dividend paid in 1909 was 10 per cent, 5 per cent of which was added to the share capital of individual members and 5 per cent paid in cash. _Deposits receive 34 per cent interest, and three months’ notice of withdrawal is supposed to be given, but the bank is always willing to pay out on demand all save very large sums. The rate of interest is largely determined by the policy of the public savings bank about 3 miles away, which is the great competitor of the society. A large amount of deposits are obtained by the sale of cards. Two collectors make their rounds till midday on Sunday selling tickets of the value of 3d., 6d., 1s., and 2s. Each collector receives £10 per annum for this work. The sums annually received by this means amount to about £4,000. The workmen living in Griesheim make great use of this method ot saving. In 1909 the society introduced the home savings banks. Every child in the village school received a savings bank free of charge. In the nine months of 1909 during which this method of collection was in operation a sum of £66 was received. Loans on current account (overdrafts) are given on bonds backed by sureties for sums not exceed- ing £250. One surety must be furnished for each £50 of credit granted; such surety must be resident AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 151 either in Griesheim or in the other village included in the area of the society and must be a landowner. The society formerly gave higher credit per surety, but found that in case of default £50 was a suffi- ciently large sum to claim from a single person. All credits above this sum are only granted against other security (land, stocks, etc.). It is a rule that all such credits are subject to three months’ notice and that at least one-tenth of the overdraft must be returned in the course of the year. Loans on bond for fixed periods are also given (one surety to be provided for each £50 of credit advanced) and on mortgage (only first mortgages being accepted). As a rule property is lent upon up to 55 per cent of its value as estimated by the local valuation court. Advances for the purchase of property at auction upon decease of owners or otherwise are common. Loans on gilt-edged securities are given up to 85 per cent of the current market price; but on live stock, as an additional precaution, sureties must also be furnished. Loans up to £250 may be granted by the committee; for higher amounts the council of supervision must give its assent. In 1910 there were only some 30 loans for fixed periods given on bond with surety; about 230 were granted on current account, while there were about 400 and 350 advances, respectively, outstanding on mortgages and for property purchases. There were 2,000 deposit accounts. Different rates of interest are charged. Overdrafts in 1909 and 1910 were charged 4} per cent, with a commission. The same rate was charged for loans on mortage, while for loans for fixed periods on bond with surety it was 5 per cent and for the purchase of property 5 per cent plus a commission of about 1 per cent of the purchase money. Loans for fixed periods on bond are mostly granted-for one year, 10 years being the maximum, and if for more than a year must be repaid in equal yearly installments; loans for the purchase of land are usually repayable in six yearly installments; for those on mortgage arrangements are generally made for amortization at rates agreed upon between the society and the borrower. The object of loans is not inquired; the committee only takes into consideration the sum applied for and the security offered. In the case of sureties, if one gives notice of withdrawal, a substitute or security of another kind must be immediately obtained. Although no surety may undertake a liability of over £50, he may, of course, be surety for two or more persons provided that the total sum for which he stands surety does not exceed this amount. Sureties may not legally withdraw at will from their obligations. Loans are made to nonmembers as much as to members, and sureties may be nonmembers, but in both cases residence within the area of the society is essential. The secretary, who is assisted by a clerk, attends the office every day. He has been engaged over 20 years in cooperative work, first in a distributive society, and afterwards at the cooperative union. He receives a salary of £125, plus office and house allowance. The supervisor or controller is a teacher, and receives £30 per annum; and the director (a farmer and master joiner) £10. The supervisor in this society, as in other similar societies in Hesse, has generally a good deal to do; he attends during office hours once a week as arule and checks the accounts every week. The management expenses amount to £325 per annum. The society has a credit on current account with its union bank, that is, power to withdraw, up to £10,000. Until recently, however, the limit was set at £6,250. The present conditions are that for every £500 credit up to £2,500 one share (of the value of £50) must be taken; and for every further £250 credit a further share. From 1908 to date of visit interest at the rate of 5 per cent had been paid to the union bank for overdrafts, the interest being reckoned daily according to the amount overdrawn. The position of the society at the end of 1909 was as follows: Membership, 167; paid-up share capital, £763; reserves, £2,571; deposits, £72,889; outstanding in current account, £15,206; in loans for fixed periods, £65,819. During 1909 £21,572 was paid out on current account, and £22,433 paid in; £14,440 was paid out in loans for fixed periods, and £13,289 repaid on the same account. Savings deposits received during the year amounted to £21,654. GROSS-URLEBEN SAVINGS AND LOAN BANK ASSOCIATION. Gross-Urleben is situated about 20 miles from Erfurt and 5 miles from a railway station; with Klein-Urleben it has a population of about 600. The area of operation of the credit society includes two other villages, one of which (with 250 inhabitants) is over a mile, and the other (with 300 inhabit- ants) 2 miles distant. Practically all the members are farmers, some working only their own prop- erty, others renting additional land, and others (few in number) being purely tenants. The holdings vary greatly in size; some are only 6 acres; the largest noider in the society farms 125 acres. The secretary considered that the predominant size ranged from 15 to 20 acres. 152 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. This society, founded in 1893 with 120 members (in 1910 it had 172 members), has shares of 10s. each with unlimited liability. There is no entrance fee. The State gave no grant toward meet- ing the initial expenses. The books, safe, etc., were supplied by the union, who debited them to the new society, which undertook annual payments of 5 per cent, inclusive of interest and sinking fund. The committee of management consists of five persons, all farmers, two of whom live in Gross- Urleben and one in each of the three other villages. The board of supervision has nine members, all farmers; three are taken from Gross-Urleben, and two from each of the other villages. By this means the responsible organs are thoroughly conversant with the conditions in each center. No payments are made to members of these bodies. The secretary, who is also a farmer, receives a fixed salary of £22 10s. per annum, the articles of the society forbidding payment according to percentage of business done or of profits. The object of this prohibition, frequently met with in rural credit societies, is to prevent all possibility of the manipulation of accounts (to provide a greater gross turnover within the year) or speculative business. The secretary also undertakes the charge of the sale of agricultural requisites, for which he is paid his out-of-pocket expenses and commission amounting to about 3s. per 10 tons. There are no fixed office hours. The secretary sets apart a room in his house as an office; but members come generally in the evenings and on Sundays. No store is kept, and the members themselves transport the goods from the station. The cost of management in 1909 amounted to £46. The credits granted are mostly direct loans for fixed periods, the loans being given on personal bond backed by sureties, and, to a limited extent, on mortgage. In 1909, 14 loans of the total value of £1,002 were granted on bonds backed by sureties, 1 loan of £45 without any specific security, and 2 loans amounting to £196 on mortgage. One surety suffices for small loans. The sum of £4,250 was outstanding on 55 loans at the end of 1909. Of these, 3 loans were for amounts not exceeding £5, 10 for amounts over £5 up to £15, 8 for amounts over £15 up to £25, 11 for amounts over £25 up to £50, 7 for amounts over £50 up to £100, 15 for amounts over £100 up to £250. One loan was for over £250. As already noted, the period of repayment of loans is always fixed, and the number of installments equals the number of years for which the loan is granted. Loans on mortgage must also be gradually paid off by yearly payments. In 1909, 10 of the 17 loans were for periods of over 1 year and not exceeding 10 years, 5 were for over 10 years, and only 2 for periods under 1 year. The interest charged in 1910 and for some years previously was 4 per cent; it was raised to 44 per cent in 1911, as in connection with the purchase alluded to below the society had to find a large sum, and to borrow from the central bank at 44 per cent with one-tenth of 1 per cent commission. No bill business is done, and there is no loan business on current account. The society obtains credit when necessary and deposits its uninvested funds at the Erfurt branch of the German Agricultural Loan Bank, in which it is the holder of one share of £50, fully paid up, with a further liability of £50. In 1910-11 it paid for loans up to the amount reckoned as normal credit (about 5 per cent of the value of the total assessed property of members) 4} per cent and for loans in excess of the normal credit 44 per cent. Each depositor receives a savings book, but there are no savings boxes, cards, or stamps. Small amounts (up to £15 or £25) may be withdrawn at any time. In 1910, 32 per cent interest was paid on small deposits; at the end of the year the total deposits amounted to £7,608 and the interest paid for the year to £270. The Erfurt Union receives as annual contribution from the society a sum equal to one-tenth of 1 per cent of all deposits and payments made in the year. The books of the society are not sent to the union headquarters for a minute accountancy audit, but are thoroughly examined in Gross- Urleben by the union auditor. The audit carried out in 1910 lasted five days and cost £2 15s. The paid-up share capital of the society at the end of 1909 was £79; the reserves, £183 ; the total turnover in the year, £35,759; the sums lent for fixed terms, £1,243, and sums thus lent which were repaid, £1,089; deposits and withdrawals on current account, £835 and £829; the savings deposits made during the year amounted to £3,158; and the total savings deposits at the end of year to £7,608. In 1909 the society sold fertilizers to the value of £2,679; feeding stuffs, £2,013; coal, £44, and seeds, £39. The whole of the goods sold were received by the society in four consignments at intervals within the year. The society took an important step in 1909 in connection with the sale of a property of about 300 acres. The owner having approached the central bank in Erfurt with a view to disposing of his AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 153 estate, its official visited Gross-Urleben, and the cooperative society being assured of adequate credit from the central bank, it agreed to lend money to members who wished to purchase lots. The prop- erty realized about £20,000 when sold, the prices obtained ranging from £25 to £80 per acre. The cooperative society paid 44 per cent to the central bank for advances and charged 44 per cent to the members. Thus the central bank paid the whole purchase money to the vendor after the sales, advancing the greater part of it, and was in the position to secure continuous local supervision of the debt through the society, which bore the legal responsibility for the advances to its members. GUXHAGEN SAVINGS AND LOAN BANK ASSOCIATION. Guxhagen is a village with 1,450 inhabitants situated in Hesse-Cassel, about 12 miles from Cassel by rail; it is situated about 2 miles from another station which is on the main line between Frankfort and that town. The area of the society covers 8 hamlets or villages, all within 3 miles of Guxhagen, and the total population within the area, in 1910, was 5,600, distributed among 1,030 households. The holdings rarely exceed 65 acres, the largest being of 185 acres, and the greatest number ranging from 6 to 18 acres. Wheat is extensively grown, and other important crops are rye, oats, peas, and potatoes, with a little barley. The society began its career in 1881 with 17 members, who took shares of the nominal value of 3d., with unlimited liability. The capital in hand at starting amounted to £1. No Government grant was received to meet the first expenses. In 1886 the shares were raised to their present value of 5s., to be fully paid up. No entrance fee is charged; and no dividends are paid—a principle observed in all credit societies of the pure Raiffeisen model. In 1909 the membership was 532, the paid-up share capital £133, and reserves £1,722. The committee of management is large, consisting of 12 members. The chairman is the village head teacher, and the other members are all farmers. Four members belong to Guxhagen and the others to the different villages. The chairman receives £17 10s. per year, and the other members 1s. each for every meeting attended. The board of supervision has also 12 members; 5 are farmers, and among the others are a laborer, a smith, a painter, an innkeeper, a forester, and a clerk of the commune. The object of this large board is to secure the representation of as many callings as possible, as well as that of the various places served by the society. Four live in Guxhagen, and the remainder are distributed over the villages. There are about six meetings held in the year, and each member receives 1s. per meeting attended. The secretary, a joiner and farmer with 12 acres of land, had occupied his position for 29 years. He is paid £40 per annum, this sum including his payment for the provision of an office, for which, in fact, he utilizes a room in his house. The office hours are from 12 to 4 o’clock on Mondays, Wednesdays, and Saturdays. By the articles of association the secretary is required to furnish caution money or security. In 1909 the total cost of management of the society amounted to £147. For a number of years 3} per cent has been paid on deposits. In 1909 £12,226 was paid in, leaving the total deposits at the end of the year at £45,900. At the same date £35,550 was outstanding in 732 loans for fixed periods, and £6,640 in overdrafts. Of the 732 loans, 78 were for sums not exceeding £5; 200, for sums over £5 up to £15; 196, for sums over £15 up to £25; 91, for sums over £25 up to £50; 109, for sums over £50 up to £100; 46, for sums over £100 up to £250; 12, for sums over £250. Of the loans for fixed pericds, which amounted, as stated above, to £35,550, £10,750 was secured by mortgage. In 1909, 55 loans for fixed periods to the value of £3,957 were granted; 42, amounting to £2,795, were granted on personal bonds backed by sureties; 3, of the value of £137, on deposit of scrip; and 10, for £1,025, on mortgage. The period of loan was up to one year in 2 cases, representing £60; between one and two years in 43 cases, representing £2,872; and for various longer periods in 10 cases, representing loans of the value of £1,025. The last mentioned are mostly on mortgage, and very frequently the sinking fund is fixed at 1 or 2 per cent of the original capital sum until the loan is paid off. Debtors are always permitted to pay more than the amount stipulated by the conditions of the loan toward the reduction of amount due. The rates of interest on overdrafts are higher than on loans for fixed periods; in 1909 and 1910 the rate on the former was 4} per cent, and on the latter 4 percent. A commission of one-half per cent is charged in both cases. Many of the loans on mortgage are advanced for the purchase of property. In 1909 £4,232 was lent by way of overdrafts on current account and £2,608 was repaid; in loans for fixed periods £3,957 was lent and £2,580 repaid. Part of the surplus funds are deposited at the branch of the Central Loan Bank at Cassel and part invested. The Central Bank pays 34 per cent for deposits at call, but charges one-tenth per cent 154 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. commission on the amount on the larger side of the account; with six months’ notice of withdrawal 3 per cent, and with twelve months’ notice 4 per cent is paid without commission. The society pays 4} per cent for advances within the allotted credit, and 44 for advances beyond that amount. At the date of visit the society had a balance of £6,100 at the Central Bank, in which it owns six paid- up shares of £50 (with an additional liability of £50 per share), yielding 34 per cent interest. The union receives a contribution of 30s. from the society, plus 2 per cent of the net profits, and makes a charge of 12s. per day occupied in the audit. In 1909 this occupied about four weeks, the normal period for such a society when an item-by-item audit is made being up to three weeks. (It will be remembered that the auditor works single handed.) There are no fewer than eight ledgers for savings accounts and six for loans, besides the accounts for agricultural requirements supplied to members. The societies in this union, like those in all unions of the Raiffeisen Federation, are audited locally and with great thoroughness. Different auditors are sent on each occasion of audit. The society obtains from the union every fortnight 150 copies of its cooperative paper, which gives a large amount of general and special information of use to farmers. The cost of 150 annual subscriptions is £5 12s. The society sold agricultural necessaries to the value of £3,805 in 1909; of this sum manures represented £1,157; feeding stuffs, £2,123; coal, £278; seeds, £220; and implements, £12. A store is kept at the railway station, and there the goods not directly delivered to the consignees are stored. The secretary for this branch of the society’s business is paid £20 per annum, and the storekeeper receives 1 per cent upon value of goods sold at the store, which is open three afternoons in the week. Three months’ credit is allowed, although the society must meet its bills for goods received in 30 days. Supplies are obtained from the Central Supply Society, to deal with which it is obliged to become a member. In 1910 it held three shares of £50, each carrying a liability of £50. Several measures for the benefit of the members and the public have been adopted by the society. Relatives of a member of at least five years’ standing in the society receive from the society’s funds 30s. on the death of such member; 20s. is paid when the deceased’s membership has lasted from two tofive years. Atelephone is placed at the disposal of membersfree of charge in the case of district calls. The society paid in 1910 the expenses of a two weeks’ course of seven hours per day in ironing for any women who cared to take advantage of it, as well as of an afternoon course of cookery instruction for six weeks. The competition experienced of late years by rural credit societies was mentioned in the course of the visit. In the smaller country towns, where small bankers usually already exist, larger town banks are now establishing agencies or branches, and are seeking deposits with great energy. The public communal or district savings banks also compete for the savings of the country people, and the number of these organizations is also increasing. GROSS UMSTADT SAVINGS AND LOAN BANK. Gross Umstadt lies in an essentially agricultural district, where beet root especially is largely cultivated. It is 12 to 15 miles distant from any large town, but has direct railway connections with Aschaffenburg, Mayence, and Darmstadt. Its population in 1910 amounted to 3,500. A large sugar factory, which was started on a cooperative basis in 1895, is still successfully carried on in a cooperative spirit, though under the legal form of a company. There is, in addition to two cooperative credit societies, a cooperative dairy and a supply society. The single agricultural school in the Grand Duchy of Hesse is situated in Gross Umstadt. A public district savings bank is also established here, but its credit business is practically confined to loans on mortgage. The society was founded in 1897 with 18 members; in 1910 there were 142. The shares have a nominal value of £25 with £5—formerly £2 10s—to be paid up, and carry unlimited liability. The members include shopkeepers, small employers of labor, artisans, officials, clerks, the few local professional men (doctors, lawyers), and landholders, these latter forming one-third of the total. The board of supervision consists of six and the committee of management of five members. Of the five the secretary, who was formerly an artisan but is now employed in a public office, and acts also as secretary to the Gross Umstadt Agricultural Supply Society, receives from the bank an annual sum of £47 10s., including his allowance for the rent of a room to serve as office. The supervisor, a draper, is paid £10 a year for his services. On deposits at daily call interest of 3} per cent is allowed; at 6 months, 4 per cent; and at 12 months, 4} per cent. Deposits are taken from nonmembers at the same rates. Advances are made almost exclusively on current account, but loans for fixed periods are also given repayable in yearly installments, not exceeding 10 in number. Bonds for overdrafts up to £250 require indorsement AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. : 155 by at least one surety, and over that amount, but not exceeding £500, by at least three, while for loans from £500 up to £750 adequate mortgage or other first-class security is required. In the case of mortgage security, amounts up to 70 per cent of the assessment, as made by a special local court composed of inhabitants of the district, may be advanced, but actual mortgages are not frequent, the particular property being made merely contingently liable. Sureties need not be members of the society, but must be residents of Gross Umstadt or its immediate neighborhood. Loans of all kinds usually cost 5 per cent. The period for repayment is not fixed by rule, but in the case of overdrafts the society always insists upon one-fifth being paid back within a year, over- drafts not being permitted to remain permanently at their limit. In addition to the interest a small yearly charge is made for loans on current account, ostensibly for the purpose of covering the cost of keeping accounts. Loans for fixed periods are only rarely made for terms of over 10 years. In the case of advances of purchase money for buying land or house property in Gross Umstadt, a com- mission of about 1 per cent is charged; such advances are frequently made to nonmembers. No credit is given without security, which may take the form of sureties, mortgage, or scrip. The society pays to the Hessian Union at Darmstadt £10 annually, this sum including the cost of the regular legal audit. In 1910 a voluntary minute accountancy audit cost an additional sum of £3 7s. The position of the society at the end of 1909 was as follows: Membership, 139; paid-up share capital, £489; reserves, £193; savings deposits, £7,841; outstanding on current account, £5,873; and in loans for fixed periods, £3,456. In 1909 £13,188 was paid out on current account, and £12,550 paid in. The amount paid out in loans for fixed periods was £5,118, and that repaid on the same account was £4,257. Deposits paid in totaled £4,214. The cost of management was £81. HAMBACH SAVINGS AND LOAN BANK ASSOCIATION. Hambach, a village with 2,300 inhabitants, is situated less than 2 miles from Neustadt, the center of the Palatinate wine trade. Most of the holders own 5 to 12 acres, but there are a consid- erable number with less than 5 acres. In only three or four cases do the properties contain as many as 50 acres. Apart from vegetable and potato growing, vine growing is the almost exclusive branch of agriculture in the district. The society was founded in 1892 with a membership of 37; in 1910 it had grown to 256, this figure including not only farmers but artisans, shopkeepers, clerks, etc. The nominal value of the shares, which is 10s., must be paid up in full, and the liability is unlimited. The committee of management is composed of five members, all but one of whom are vine growers. The board of supervision consists of nine members, eight of whom are vine growers, and is presided over by aclergyman. The secretary, who is also a small proprietor, is paid £55 a year inclusive, of allowance for office expenses. The office hours are from 11 to 3 on Tuesdays, Thursdays, and Saturdays. The committee meets 30 to 40 times and the board of supervision 5 times a yea (every quarter and once for an extraordinary meeting); the general meetings of members is held twice in the year. The advances to members are made more by way of loans for fixed periods than of overdrafts. The purpose of the loan is always asked, and is entered in the minutes of the transaction. The sums most usually lent do not exceed £25 or £30, but as much as £500 has been granted in asingleloan. One surety is required, and when he does not suffice as security, mortgage security must be furnished. In case of mortgage, loans are made up to two-thirds of the estimated value of the property; the highest amount thus secured was £250. When money is required to purchase land the full pur- chase money is often advanced if money is abundant. In 1909 advances of £270, £150, and £335 were made for this purpose. The interest charged for loans has stood at 5 per cent for a great number of years; for overdrafts the interest begins two days previous to date of drawing and terminates two days after the date of repayment, and for advances of purchase money 1 to 1} per cent commission is charged. The periods within which repayments must be effected are made to suit the convenience of the borrower as far as possible. They run up to 10 years, although even longer than this period is sometimes granted. If it extends over several years the repayment is by equal installments due annually; thus loans for 10 and 5 years are repayable, respectively, by yearly installments of 10 per cent and 20 per cent of the capitalsum. Advances of money to purchase property are always, however, repayable in a maximum of five yearly installments. The society pays 4 per cent interest upon savings deposits subject to three months’ notice of withdrawal. The public savings bank in Neustadt, less than 2 miles away, was stated to pay the same 156 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. tate, but to require four to six months’ notice of withdrawal. Each member has a savings book, but no savings tickets or stamps are now sold by the society, as the supervision and clerical work involved proved too burdensome to justify their continuance. The Agricultural Central Loan Bank for Germany, through its provincial branch at Ludwig- shafen, acts as exclusive banker of the society, which holds three shares of £50 in the bank. The maximum credit open to the society, based upon the assets of the members, is £7,000, or 5 per cent of the assessed value of the assets of members. This credit is generally fixed every three years. The society rarely utilizes its credit, except in the autumn, when for a time about two-thirds of its credit. is exhausted, mainly by the local Vine Growers’ Cooperative Society, which is a member, and which then requires a considerable amount of money te meet its purchases of grapes. The union receives a fixed contribution and a percentage upon the business done when such exceeds £2,500; in 1909 the society paid the total sum of £2 19s. 6d. For audit an additional sum of 12s. per day occupied in the work is paid; as a rule, five to six days are required for the audit of this society. The audit is carried out with great thoroughness, all entries, the solvency of sureties, and the general conditions and conduct of business being subjected to examination. No dividends are paid upon shares, but each member receives, free of charge, a copy of the “R aiff- eisen Messenger,” the fortnightly organ of the provincial union. Like the majority of the village banks, the Hambach Society sells various agricultural require- ments to its members, such as manures, fodder, coal, flour, etc. About 5 per cent is added by the society to the original cost of the goods. In 1909 the hastens done amounted to about £7,500. There is a store, managed by a storekeeper who is paid £27 10s. for this work, for delivering the cooperative paper and for summoning meetings. The society owns and conducts an inn, attached to which is a large festival hall, in which plays are given, and dances and other social meetings are held. The building is kept by a man and his wife, who receive free lodging and £5 per 220 gallons of wine sold. Only house and insurance taxes are paid in respect of the undertaking. The accounts of the society for the year 1909 showed the following position: Membership at end of year, 266; paid-up share capital, £132; reserves, £674; sums outstanding as overdrafts, £1,161, and as loans for fixed periods, £4,380; savings deposits, £7,764; and deposits on current account, £392. During the year £1,238 was paid out, and £660 repaid on current accounts. Loans for fixed periods were granted to the amount of £1,181, while repayments on such account totaled £691. Into the savings account £2,773 was paid. The cost of management of all its undertakings for the year was £234. NIEDER-WEISEL SAVINGS AND LOAN BANE. This village, with a population of 1,800 inhabitants, is situated close to the main railway line between Frankfort and Marburg, about 30 miles from the former. Small landholders predominate, few farms containing more than 25 acres. The bank was founded in 1880 with 79 members; in 1910 the membership was 263. The shares were fixed at £10, with unlimited lability, and as a rule the members pay their shares in full, as the interest is attractive. Profits have generally been 10 per cent, and on one occasion 11 per cent, but the society pays 10 per cent of net profits to reserve and the same percentage to working reserve. The committee of management is composed of five persons, of whom three are communal offi- cials. The director, who is also the village mayor and postmaster, is paid £6 10s. per annum; the “controller”? or supervisor, who owns a farm of 15 acres and a grocery (managed by his wife), receives £13; and the secretary, formerly a small farmer and joiner, receives £45. The latter is the third person since 1880 to occupy the post, his two predecessors having been a teacher and a shopkeeper. Of the remaining members one is clerk to the village and possessor of a small holding, and the other a baker, also with a small holding. Their services are given gratuitously. The bulk of the work naturally falls upon the secretary, but the supervisor is obliged to attend every Saturday at the office provided by the secretary—a room in his house—to receive deposits, consider applications for advances, and check accounts. The board of supervision consists of six members. The chairman is a farmer and deputy mayor, three are farmers who have ceded their holdings (or the working thereof) to their children, another farms his small property, and the sixth is a cartwright. They receive no payment. Loans up to £50 are given on bonds backed by two sureties, and up to £1,000 when backed by four adequate sureties. The sureties must as a rule belong to the village or its neighborhood. The society aims more and more at granting credit on current account instead of in definite loans. Larger AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 157 amounts may be lent on mortgage of land or houses within the area covered by the society—up to three-fifths of the net value of farm land and half of the value of dwelling houses. The committee, whose members are all old residents and thoroughly acquainted with local values, determines the assessment. The establishment of registry of title for the village in 1908 simplifies such transactions by making clear the exact title and charges upon any particular property. Money is also advanced for the purchase of holdings, the proportion of the purchase sum to be decided by the committee. No credit is given upon the security of produce or of live stock. The interest charged for loans on mortgage (44 per cent) has been cheaper for three years, 1907— 1910, by one-fourth per cent than for loans or overdrafts backed by sureties (4% per cent). These rates were to be reduced by one-fourth per cent in January, 1911. Advances for purchase of property are charged 44 per cent, with one-half per cent commission. To stimulate thrift, the sale of cards of the value of 1s., 3s., and 5s. was introduced in 1906, and about £500 yearly is collected in this way. But a member of the committee remarked that this way of saving was instituted for the ‘‘smaller folk,’’ meaning the farm hands and servants. The seller of these cards, who is also employed by the society to summon meetings of the committee, board of supervision, and of members, makes a weekly round, and is paid for all his duties £8 15s. annually. The interest upon sums thus collected begins from the first day of the next quarter following purchase. The secretary found that these card accounts involved a good deal of trouble, as the card buyers were constantly withdrawing their deposits. The rate paid for deposits with three months’ notice is 34 per cent. In ordinary circumstances, however, deposits are repaid on demand if the requisite cash is in the office, or within three days. The society had formerly made an agreement to deal exclusively with the bank of its union, but it was renounced some years previous to 1910, as better terms were obtained from a bank in a small town about 2 miles distant. Business is still done, however, with the union bank. The sum of £10 paid annually to the union entitles the society to the legal audit without extra payment. All credit societies in this union pay a fixed sum of 15s. plus 1s. per £50 of turnover, with a@ maximum of £10. A detailed audit of all the accounts must, however, be specially paid for; in 1909 such an audit, covering the previous three years, cost £16. At the end of 1909 the position of the society was as follows: Members, 265; paid-up share capital, £2,640; reserves, £1,126; assets, £46,535; liabilities, £46,167; outstanding in loans on current account, £17,159, and in loans for fixed periods, £16,767; total savings deposits, £39,470. In 1909 there was lent on current account £14,336 and in loans for fixed periods £3,002, while on each of these accounts respective repayments of £11,577 and £3,035 were made; savings deposits amounted to £8,168; and the cost of management was £94. The society is exempt from taxation, as no credit business is done with nonmembers. RAKOW SAVINGS AND LOAN BANK. Rakow is situated in a region of large and medium farms in western Pomerania, about 18 miles from Greifswald. On its foundation in 1895 the society consisted of 14 members. Limited liability was chosen, and the shares were fixed at 4s., with £12 10s. liability. Members were obliged to take shares accord- ing to their taxable assessment; when business was commenced 90 shares, with a total liability of £1,125, were taken by the 14 members. An entrance fee of 3d. per share, with a minimum payment of 1s. and a maximum of 3s., was required from each member. The ministry of agriculture made a grant of £4 toward the initial expenses. . Only residents in Rakow and its immediate neighborhood were eligible for membership. Mem- . bers belonging to other credit societies, or who were sureties for persons not members of the society, were obliged to renounce such membership or obligations. Up to the time of the establishment of this society there had been little cooperative experience in western Pomerania, and difficulties in management were experienced. People held aloof through mistrust and through thinking that their financial position would become generally known, or that higher taxation would result. Gradually, however, both large landholders and laborers joined. At first only loans for fixed periods were granted, but gradually the curernt account business was substituted. The investment of surplus deposits at remunerative interest was not easy. The Union Central Cooperative Bank allowed under 4 per cent between 1896-1898, and it was necessary to invest in mortgage and other securities. After 10 years’ existence (in 1905) the society consisted of 75 members holding 521 shares with a total liability of £6,512. The paid-up share capital, which received 158 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. interest at the rate of 3} per cent, was £104. The members were composed of 8 large owners, or tenants, 13 clergymen, teachers, or clerks, 26 medium farmers, 16 small employers, and 12 small allotment owners or laborers. The committee of management consisted of 5 persons, and was com- posed of a clergyman (who was chairman), a teacher (who was secretary), and 3 farmers. Meetings were held every month. The board of supervision consisted of 6 persons, and met four times a year to examine the accounts. A combined meeting of these two bodies was held to fix the maximum over- drafts to be allotted to each member and to arrange other agenda for the general meeting. The charge made for overdrafts is 4} per cent with a commission, which was reduced successively from one-fifth to one-tenth per cent and in 1904 to one-twentieth per cent. The interest paid on balances on current accounts is 34 per cent. Members and nonmembers receive 3 per cent on savings deposits at call and 33 per cent on deposits subject to six months’ notice of withdrawal. The savings deposits amounted in 1895-96 to £333, in 1905 to £7,670, in 1909 to £10,835. In 1905, £240 was paid as interest on the savings deposits. In that year depositors paid in 34 separate sums of over £50, 23 sums from £25 up to £50, and 30 sums £15 up to £25. The society had at the end of the year 1905 a balance at their Central Cooperative Bank of £5,330, of which £4,000 was not at call. The whole of the share capital was deposited at the Central Bank. For four years previously the society had had no occasion to borrow money. The society has not undertaken the purchase of agricultural requisites, as the majority of mem- bers belong to a supply and sale society in the neighboring town of Grimmen. At the end of 1909 the society showed a membership of 85; paid-up share capital, £186; reserves, £351; outstanding as overdrafts, £8,424; as loans for fixed periods, £1,832; deposits on current account, £3,382; savings deposits, £10,835. During the year 1909 £13,173 was lent by overdrafts and £907 in loans for fixed periods. The amount paid into current account was £12,413, and as savings deposits £3,424. The cost of management was £56. RINKERODE SAVINGS AND LOAN BANE. Rinkerode, a village of 1,400 inhabitants with railway connection, is situated a few miles from Munster. Like many villages in Westphalia, with their scattered homesteads built upon the holdings and their hedgerows, it recalls in a measure an English countryside, although the houses architecturally are of the peculiar Westphalian character, and the old hearths, without chimneys proper or grates, and with big log fires, are still found in the bulk of them. The holdings are rather large, the pre- dominant size was stated to be 60 to 90 acres, with a fair number of holdings of from 15 to 18 acres. It is the custom for the eldest son to inherit the holdings. Beets for cattle, rye, wheat, barley, oats, beans, peas, and potatoes are all grown. Cattle are stall fed save for two months in the year. The shares of the society, which was founded in 1897, are 15s. (3s. to be paid up), with unlimited liability. Members must pay an entrance fee of 3s. The present committee of management consists of three farmers—one of whom is chairman—a teacher, and an innkeeper. None of these are paid. Meetings are held on the second Sunday of the month after church. The board of supervision is also presided over by a farmer, and includes a second farmer, a teacher, a forester, a farrier, and a master artisan—six members in all. Meetings are fixed to take place every three months, also on a Sunday. The secretary is the village postmaster, who also keeps a tavern. He is paid a salary of £35, and is required to lodge £100 as caution money. Loans for fixed periods amount in value to about five times those granted as overdrafts. At the end of 1909 the former totaled £9,250, and of these 3 were for amounts not exceeding £2 10s; 2 were for amounts over £2 10s. up to £5; 7 were for amounts over £5 up to £10; 9 were for amounts over £10 up to £25; 12 were for amounts over £25 up to £50; 49 were for amounts over £50. Forty-eight of the above loans, of the total amount of £7,500, were secured by morgtage, the- others being secured by sureties or securities. The periods for which loans were granted were very varying; in two cases (one was a loan for £75) the period was 100 years, and loans for 60, 45, 32, 95, 70, 16, etc., years were seen in the books of the society. Repayments are arranged in every case to suit as far as possible the convenience of the borrower. Fixed proportions of the loan must, however, be redeemed in yearly installments. The interest charged is 4 per cent, with a commission of one- half per cent paid at the time of taking up the loan. At the end of 1909 there were 39 advances outstanding on current account of the total value of some £1,900. A considerable portion of this sum was secured by mortgage or “security” mortgage charges. Four and a quarter per cent is charged as interest, with a yearly commission of AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 159 one-fourth per vent upon the debit side. The committee is authorized to grant loans not exceeding £50; for higher amounts the approval of the board of supervision must be obtained. Savings deposits, subject to three months’ notice of withdrawal, receive 3} per cent interest. Deposits may be withdrawn, as a rule, at the will of the depositor, but if the due notice is not observed, a commission of one-fifth per cent is deducted. In 1909 the deposit items ranged in amount as follows: 53 up to 10s., 45 over 10s. up to £1, 58 over £1 up to £2 10s., 64 over £2 10s. up to £5, 71 over £5 up to £10, 84 over £10 up to £25, 65 over £25 up to £50, 63 over £50. ‘The audit imposed by law once in two years is here carried out almost every year. In 1909 the special fee paid for this work to the union was 15s.; the annual contribution, calculated upon the turnover, amounted to 34s. The union also undertakes at the request of the society the minute audit of the books at headquarters, which costs about 25s.; but this is not obligatory. The society has an exclusive banker, the Union Cooperative Bank, of which it is a member. The bank’s shares are £25, with a liability of £250 per share; one share gives a claim to a maximum credit of £1,000, and each additional share to a further credit of £500. It is a condition of membership of the bank that surplus moneys must be deposited with it and all loans obtained from it. The society received from the bank 4 per cent for deposits at the beginning and 314 per cent at the end of 1909, while the rates for loans at the same periods were 5 and 4 per cent, respectively. A commission of one-tenth per cent is charged upon one side (whichever is the greater) of the account. The position of the society at the close of 1909 was as follows: Membership, 112; share capital, £18; reserves, £205; total savings deposits, £14,000; ordinary deposits, £800; loans outstanding for fixed periods, £9,250; in current account, £1,900. In 1909 £2,500 was paid out on current accounts and £2,650 paid in; £1,050 was granted in loans for fixed periods and £150 repaid upon such items. Savings deposits amounted to £3,600. The cost of management during the year was £38. There is also a cooperative dairy and a cooperative supply society in the village. The latter had in 1909 2 membership of 66, with paid-up share capital of £11 and reserves of £370. The value of goods supplied in 1909 was £3,400; the cost of management was £115, and the book value of stock, etc., £15. SINZHEIM SAVINGS AND LOAN BANK. The village of Sinzheim is about 6 miles distant from Baden-Baden, and is situated on the main line of railway from Carlsruhe to Strassburg. The population of the commune of Sinzheim, which covers an area of 5,750 acres, amounts to 4,000. The vast majority are small or peasant proprietors, who rarely hold more than 5 to 10 acres of land, the largest farm containing 50 acres. Small ownership has existed in the commune for 200 years, and the registry of title, of which the secretary of the society is the present keeper, was established in the early years of the eighteenth century. Church property, extensive especially in the southern parts of Baden, does not exist in the commune. The principal branches of agriculture followed are vine growing, corn growing, market gardening, cattle breeding, and dairying. There is a small brewery, but apart from this no factory undertakings are carried on in the village. The freeholders are not so heavily indebted in this part of Baden as in the vine-growing dis- tricts, where they are dependent on one crop; here the farming is mixed. Founded in 1880 with 114 members, the membership of the village bank in 1910 was 675. The shares, at first fixed at the nominal value of £5, were subsequently increased to £10. Each member must pay at least one-tenth (£1) within the first year after his admission, and 5s. in each succeeding year till the share is fully paid. Larger installments or immediate payment in full are permitted, and very many members pay the full amount on entry. For a large number of years a dividend of 6 per cent has been paid upon fully-paid shares. When shares are not fully paid, dividends due on the amounts actually paid up are credited toward completion of the shares. The committee of management consists of two small holders, a market gardener, a communal clerk, and a foreman field drainer. The chairman now receives £5 per annum, but the office was formerly without any emolument. The other members are unpaid. The board of supervision has six members, and comprises four small holders, a market gardener, and the accountant of the com- mune. The secretary, who in Baden is rarely a member of the committee of management, is by pro- fession a clerk in the communal office, and part of his work is to keep the registry of title. He is also a small proprietor. He has held the same office in the society since its foundation. As secretary he is paid at the rate of 43d. per £100 of turnover, which means an annual sum of £90 to £100, but he finds it necessary to employ an assistant. The office hours for the business of the society are from 1 to 2 o’clock every day, the business being transacted at the secretary’s house. 160 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Loans are made for the most part on promissory notes backed by sureties, and the most usual period (when it is fixed) is three or four years. The union to which the society is affiliated always advises that the loans should not be accorded for more than three years. As a rule, however, no period for repayment is fixed, but the loan is renewable yearly. The rate of interest has been 44 per cent for the last 20 years. When the bank was started it was 6 per cent, subsequently 5 and 4 per cent, but the last-named rate proved to be unprofitable, and 44 per cent was adopted. When overdrafts are allowed the interest varies between 4 and 5 per cent, with a commission of one-tenth per cent on amounts outstanding at the close of the financial year. One or two sureties may be required, according to the amount and the standing of the sureties. The wives of sureties must in every case add their signature. The object of the loan is not inquired into, but as a rule it is known to the management. The amounts borrowed range for the most part from £5 to £50, but about 30 per cent exceed £50. The committee, with the concurrence of the board of supervision, may grant single credits up to £1,500 without seeking the authority of the general meeting of members. Mortgage loans are not made as a rule, but occasionally, when the financial position of the bor- rower or that of his surety weakens, a mortgage is effected upon his property. The society, however, frequently advances money for land purchase, especially when there are plenty of funds available. About 10 per cent of the freeholders (according to the keeper of the local registry of title) sell or transfer their property every year, and a considerable amount of ready money is required by pur- chasers. As arule the society lends the money in its ordinary way on surety; but when the title deeds are handed over as security an additional one-half per cent commission is charged. The sums advanced in this way for the purchase of land amount to between £1,000 and £1,500 every year. No loans may be made to nonmembers, and it is compulsory that members live within the com- mune. Sureties, however, are accepted who live outside this area. Deposits, which are received also from nonmembers, obtain 4 per cent interest. No check books are issued to members or other depositors. Only savings books are in use, no savings stamps, cards, or money boxes being issued. Stamps were formerly sold, but the keeping of accounts under this system proving too troublesome, it was given up. The commune has an annual current account ranging from £1,000 to £1,500, and since the founda- tion of the society has deposited from £500 to £750 in the latter half of every ear. The district authority at one time had a sum of £5,500 on deposit with the society. Communes in Baden may, with the assent of the district authority, deposit funds temporarily with the rural cooperative credit societies with unlimited lability. The society borrows when necessary from, and deposits its uninvested funds with, the Rhenish Mortgage Bank at Mannheim, with which its union has made a special agreement. The societies are not obliged to take shares in this bank, whose other business is purely concerned with mortgages. This society has an open credit up to £5,000, which is estimated upon the basis of the number of members (about £10 being allowed per member); but this credit has never been drawn upon to its full extent. Drafts on this credit at the mortgage bank are subject to 44 per cent interest, and a commission of one-tenth per cent is charged upon amounts outstanding at the end of each half year. The position of the society at the close of 1910 was as follows: Membership, 675; paid-up capital, £4,336; reserves, £6,056; outstanding loans for fixed periods, £67,693; overdrafts, £3,577; loans for land purchase (i. ¢., of title deeds), £3,727. Owed by the society: To its central bank, £2,844; to depositors for fixed terms, £65,3{2; and to depositors on current account, £4,645. In 1910 there were: Deposits received, £15,374; loans repaid, £6,231; installments (of purchase money advanced), £1,295; paid into current accounts, £3,239; interest, £3,697; commission and entrance fees, £(2). Outgoing payments during the year comprised: Ordinary deposits withdrawn, £13,065; loans made, £9,480; advances for land purchase, £1,792; paid out by way of overdrafts, £7,836; and interest, £3,025. The cost of administration was £275. The society paid about £50 in taxes. (In Baden cooperative societies are subject to taxation when their reserve fund attains £2,500.) SCHIFFERSTADT LOAN SOCIETY. Schifferstadt lies about 7 miles west of Ludwigshafen. Its population of 8,000 is principally composed of workmen employed in and around Ludwigshafen and of railway servants. Many of these men have small holdings, and there are also large numbers of farmers living in Schifferstadt itself, AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 161 The society, founded in 1892, had 213 members in its first year. In 1910 the membership was 860. No grant was made by the Government toward initial expenses. The shares were originally of 10s. each, with unlimited liability, but were subsequently raised to £3 in consequence of losses incurred in connection with a productive society in i907. - The bank has been very well housed since 1904 and employs two regular officials. The committee of management is composed of seven members, four of whom are farmers, one an innkeeper, one a master mason, and one a railway employee. The chairman receives an annual fee of £10. Meetings are held once a month. The board of supervision, which meets six times a year, has 12 members, including farmers, shopkeepers, and factory workers. The secretary, who was formerly employed in the offices of the union to which the society belongs, receives a salary of £115 a year, with lodging, the rental value of which is estimated at £25 a year. The office is open daily. Deposits of members receive a higher rate of interest than those of nonmembers; in 1910, 4 per cent was paid on the former and 34 per cent upon the latter. Deposits for fixed periods obtain one-fourth per cent more in both cases. The bank has adopted no special method of collecting savings beyond the selling of stamps worth 13d., which are bought for the most part by children. There is a public communal savings bank in Schifferstadt, which inevitably draws away a certain amount of savings from the society. The former pays only 34 per cent on deposits. Loans and overdrafts may be accorded up to a maximum of £1,500 without the approval of the general meeting of members. As arule one surety may not guarantee over £50, and additional sureties must be furnished for each further sum of £50, but in practice it depends upon circumstances—if the surety is good for the amount he is allowed to guarantee perhaps £200 or £250. The surety must be an owner of land or must have sufficient deposits or must hand over securities, or two or all of these conditions may be required. The highest single loan which has been granted up to the time of the present inquiry was £750. Loans are given on mortgage security in ordinary cases up to 50 per cent of the taxable value of the property ; in exceptional cases up to 70 per cent. But this business, as well as advances for the purchase of property, is small compared with that on bonds with surety. No unsecured loans are granted under any circumstances. The interest charges for advances on bonds or on mortgage security in 1910 were 5 per cent and for overdrafts 5 per cent plus one-fourth per cent per annum as commission. The bulk of the loans, with the exception of those for small amounts, are usually repayable in 10 installments, which are generally extended over four, five, or six years. Overdrafts are given for indefinite periods, but care is taken that a real movement of funds is effected in the particular accounts. The society has a maximum open credit of £50,000 with the Ludwigshafen branch of the Raiffeisen Central Loan Bank. This credit is based upon the value, as assessed for taxation, of the real property of the members. A statement of the means of each of the members must be regularly sent to the Central Bank. The society holds five fully paid shares of £50 each in the latter. An annual con- tribution of £10 plus 14d. for each £50 of credit business is paid to the Ludwigshafen Union, and in addition 12s. per day is paid for the period which the auditor spends in the audit of the accounts at Schifferstadt. The total expenses of management in 1909 were £730. The turnover in the year amounted to £135,000; the sums outstanding in loans for fixed periods at the close of the year to £43,250 and in overdrafts to £11,250, while the deposits at the same date were £43,750. The credits given in-the year on current account (overdrafts) totaled £18,750 and the sums paid in on the same account £19,650; the loans given for fixed periods amounted to £15,200 and the repayments of such loans to £12,400. The paid-up share capital was £2,325 and the amount of the reserve £1,204. WALLHAUSEN SAVINGS AND LOAN BANK. The Wallhausen Society, established in 1904, had, in 1910, 56 members. The shares are of 5s. each with £10 liability. The maximum number of shares to be held by any person is fixed at 50, but, as a matter of fact, no member actually holds more than 4. In 1910, 65 shares with a liability of £650 were held. The operations of the society are limited to Wallhausen and its immediate neighborhood. The village is situated in Prussian Saxony, in the very fertile district known as the Golden Plains (Goldene Aue), not far from the Kyffhauser. The holdings are of all sizes; one farmer rents a property of 1,000 acres, and the other farms range from 5 up to 200 acres. Sugar beet, the normal gross yield 95273°—S. Doc. 17, 68-1——11 162 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. of which in this area is about 23 tons per acre, is largely cultivated, and there are several sugar fac- tories in the district, including one organized as a registered cooperative society with limited liability. Advances are made for the most part by way of overdrafts on current account. Three-fourths of the liability incurred—that is, £7 10s. per share—is advanced to members on application without their having to find either surety or security. For higher credits the bill must be signed by the member and backed by a surety. According to the statutes of the society a portion of the amount must be paid off annually, but this is not rigorously insisted upon, provided the interest is regularly paid. The lowest advance in 1910 was £35 and the highest £100. No mortgage loans are granted. Deposits on current account obtain 3 per cent interest, and those subject to three months’ notice of withdrawal 34 per cent. The society has to compete for deposits with a communal and a district savings bank, both of which are situated within easy distance of Wallhausen. It is at a disadvantage in two respects; in the first place, the other savings banks are guaranteed by the commune or by the district and may receive trust and public moneys on deposit; and, in the second place, many country people do not care to leave money with a cooperative society because there is often still an unfounded fear that the extent of their savings may become almost common knowledge. In 1909 the society paid 35s. to the union—l5s. as fixed contribution and the balance as one- tenth per cent of the total turnover. A further payment of 12s. per day is charged for audit, which on the last occasion occupied 1} days. One share of £15 with £300 liability in the Union Cooper- ative Bank at Halle is owned by the society, which, on the basis of the liability of the shares of its members, is entitled to 2 maximum open credit of £500. It undertakes to deposit its surplus funds in the Central Bank and to obtain credit there only. The normal interest paid for deposits by the Central Bank is 34 per cent, while the normal interest for overdrafts is 4} per cent. The sale of feeding stuffs, manures, coal, and seeds, but not of machines, is carried on by the society, which, however, does not maintain a store. The members send orders to the secretary, who obtains the supplies from Halle and advises his customers of the date of arrival of their goods at the railway station. Two shares are held in the Central Supply Cooperative Society of Halle; they are of £15 each, with a liability of £100 per share, and each entitles the holder to order goods to the extent of £500 from the organization. Goods must be paid for by the society within a period of from 14 to 21 days of delivery. The Wallhausen Society also buys fruit from members for sale in North Germany. The committee of management is composed of a farmer, an innkeeper (who is also the village mayor), and a grocer, who acts as the secretary and treasurer. The board of supervision contains five farmers and one master joiner. The secretary alone is remunerated for his services, being paid at the rate of one-tenth per cent of the total turnover of the society. The position of the society at the close of 1909 was as follows: Membership, 53; paid-up share capital, £19; reserves, £10; savings deposits, £424; outstanding as overdrafts, £296; as fixed loans, £148; current-account deposits, £201. Sums paid out on current accounts during the year amounted to £998, and those paid in to £833; in loans for fixed periods £350 was paid out and £372 repaid; and savings deposits amounted to £150. Working expenses during the year came to £24. ZEMITZ SAVINGS AND LOAN BANK. Zemitz, a colony of small holders, settled in 1902, les in an isolated situation in Western Pome- rania close to the Baltic Sea, and six miles from the nearest town (Wolfgast). Previous to its occu- pation by the present settlers Zemitz consisted of one estate of 1,750 acres with the farm hands. Within 11 years the property was stated to have been held by seven persons, all of whom apparently were unable to make it yield a satisfactory profit. A colonizing company bought it and resold it in lots to 52 families, mostly drawn from Pomerania. Of the heads of these, 26 had previously been laborers, 19 artisans or tradespeople, and 7 farmers. The credit society was established at the same time as the settlement. The population of the area of the society, which extends over seven villages, one being 5 miles and the others 1 or 2 miles distant, was 1,326 in 1910. Zemitz included 276 of this total. The shares of the society were fixed at 4s., with a liability of £12 10s. The society commenced operations with 87 members, representing 142 shares, with £1,775 liability. The growth of the bank may be seen from the following table, showing the position at the end of each year so far as data are available: AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 163 1904 1907 1909 1904 1907 1909 Membership................ 93 101 107 || Balances on current ac- Liability on shares.......... £2,262 | £2,835 £3, 060 COUNTS A seme semnedaueeand £1,050 | £2,470 £3, 965 Turnover. ..-----.-...-.-- 7, 658 11, 530 14, 950 || Reserves...................|......22--/..eee ee eee 59 Balance at central bank... . 850 8, 400 3, 950 || Paid-up share capital. .....|..........|....00--6- 48 Savings deposits...........- 645 1, 500 1,710 Total liabilities........|........../.....2000- 5, 782 Debts on current account. .. 810 800 1, 840 Total assets... 2.2.0... |.0-- 22 eee lene eee eee 5, 808 The savings deposits are mostly from nonmembers; members of the society deposit usually on current account, as is the practice in the 380 credit societies with limited liability in Pomerania. Interest at 34 per cent is allowed upon all deposits, and on overdrafts 44 per cent is charged plus one-fifth percentcommission. Each member is entitled to an overdraft based upon the number of shares acquired, and if he requires a larger amount adequate security (sureties, scrip, or contingent mortgage rights) must be given. The members are obliged to take a certain number of shares, according to the amount of income tax paid, the maximum number being 25. Two members held 25 in 1910, but the majority had from 2 to 5 shares. Loans of definite sums for fixed periods are not granted, only current accounts being held with members. The committee of management consists of three persons, including the secretary (a teacher), who receives £15 annually. The other members, one a settler and the other a larger farmer, are paid 25s. The board of supervision contains six members and is composed of a large landowner, a medium farmer, two settlers, the pastor, and a teacher. In 1909 the total cost of management amounted to £25. The society does not sell farming necessaries, as the bulk of the members are attached to a large sale and supply society in a town some 8 miles distant. There is also a cooperative dairy in Zemitz with 48 members (1910), who received £2,199 for milk delivered in 1910. 2. CENTRAL COOPERATIVE BANKS. Funetion of central banks.—The business of a village bank is normally conducted upon the basis of the local deposits being adequate to meet local credit requirements and of the latter being approxi- mately sufficient to absorb the deposits. But if deposits tend to be abundant and demand insufficient or vice versa, an investment for idle money, or a source of credit, is essential. The rural society operating over a very limited area, and the bulk of its members deriving the main part of their income from agricultural pursuits, the supply of money and the demand for it are apt to occur to a great extent at different times of the year. To these drawbacks arising from limitation of area and similarity of occupation of members are added those of isolation or of inconvenient remoteness from banking towns. If societies are to fulfil their functions in a proper manner they must have within reach sources of support for enabling their legitimate requirements to be readily and effectively met. In the cir- cumstances cooperative societies have almost necessarily adopted the plan of forming combinations and creating central cooperative banks on a broad territorial basis, by which means local inequalities may be adjusted and the necessary financial assistance given by organizations which at once understood and took account of the peculiar structure and conditions of the various affiliated societies. When over 4,300 societies are combined for this purpose, as in the case of the Central Raiffeisen Bank, or 2,400, 900, and 800 as in the Bavarian, Halle, and Breslau Central Banks, respectively, or even in com- binations of fewer societies, as found in other parts of Germany, individual inequalities are likely to be more or less completely redressed within the groups. Of the societies constituting these central banks, some have reached a condition of permanent prosperity, others are situated in districts in which their members have the advantage of better soil, better means of transport, or better marketing opportuni- ties; in the case of others the principal crops or the time of their yield may differ; in still other cases the farming may be more mixed, with the result that returns may be more equalized throughout the year. In general on this broader basis the incomings and outgoings are likely to be almost balanced— the well-to-do societies are enabled to invest their deposits, and the needy (whether merely temporarily or continuously) to obtain loans on suitable terms. First beginnings of central banks.—Raiffeisen was quick to recognize the necessity for combina- tion among his first societies. Many found difficulty in investing their deposits and many others in procuring capital. As an illustration of the position of isolated unorganized village societies without a central bank may be cited the procedure of a Bavarian group of societies which is adduced by Prof. Wygodzinski. Their union made an agreement with a provincial newspaper to the effect that, in 164 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. return for the insertion of cooperative advertisements by the union, the newspaper should publish free of charge the monetary needs of its societies. Thus, when one village bank had money to invest the announcement ran: X hamlet offers £40; or, when another wished to borrow, Y village needs £50. In many instances no recourse was had to advertisement, but societies corresponded in order to ascer- tain their mutual needs. The present writer met with a society—in a district in which no central cooperative bank has beenregularly organized—which, when it had money to invest, inquired of its fellow societies whether they wished to borrow. These haphazard and irregular methods of conducting business were naturally most unsatisfactory. Ten years after the foundation of the first rural credit society of the Raiffeisen type at Anhausen (1862) Raiffeisen established a central cooperative bank at Neuwied under the title of the Rhenish Agricultural Cooperative Bank. There existed at that date about 100 rural cooperative credit societies; and in 1873, 21 of these were members of the bank, which had adopted the form of a cooperative society with unlimited liability. Two more central banks were founded by him—in Hesse and in Westphalia—and all were united in 1874 to form the German Agri- cultural General Bank, a registered society with unlimited liability. Opposition then arose on certain grounds, e. g., that the constituent societies thus undertook a double unlimited liabilty (their own as well as that of the societies composing the bank), and the organization was dissolved. In 1876 the Agricultural Central Loan Bank was founded by Raiffeisen as a joint-stock company, and this institution has continued to serve as the central bank for the credit societies (now numbering over 4,300) affiliated to the federation founded by him. Numerous other central banks were subsequently established, as will be seen later in this chapter; and at the present time almost all credit societies, and a considerable proportion of other societies, are affiliated to a central cooperative bank. Present number and membership of banks.—The North German cooperative societies act of 1868 contained no provision prohibiting corporate bodies, such as companies or cooperative organizations, from becoming members of cooperative societies, but after the failure of Raiffeisen’s attempt no efforts were made to found cooperative organizations themselves composed of cooperative societies. Subsequent to 1889, when limited liability was permitted by law, and one of the clauses of the act implicitly permitted the formation of societies composed wholly or partly of societies, numerous central societies were founded. On January 1, 1912, 36 central banks for rural societies were affiliated to the Imperial Federation, while outside it there were among others the two important central banks in Wurttemberg and in Treves, the former with about 1,200 and the latter with about 360 affiliated societies. The 425 rural credit societies in Baden have not established an independent central bank, but have made an agreement with a mortgage bank to act as their banker. The total number of rural cooperative societies organized in central banks (including those in Baden) on January 1, 1912, amounted to over 18,000. Statistics of the central banks in the Imperial Federation show that the membership of these banks at that date consisted of 15,745 cooperative societies, 75 other associations and bodies, and 662 individual members. Of the cooperative societies, 13,362 ! were credit societies, these constituting about 98 per cent of all credit societies attached to the Imperial Federation; there were 869 supply societies, 664 dairies, and 850 societies of a miscellaneous character, representing, respectively, 38, 31, and 39 per cent of such societies affiliated to the federation. Of the 1,186 members of the Wurttemberg Central Bank at Stuttgart on January 1, 1911, 1,125 were credit and 35 were dairy societies. Organization.—The central banks may be said to be organized by Provinces or States. The German Agricultural Central Loan Bank (founded by Raiffeisen) extends its operations indeed over the whole of Germany, but its 12 branches limit their business to fixed areas coextensive with a Province or parts of adjoining Provinces, a State, or congeries of small States, and form, in fact, provincial banks. The other provincial central banks in Prussia are attached to the Prussian State Bank,? which serves as their banker, and occupies in many respects roughly the same position in regard to them as the German Agricultural Central Loan Bank occupies toward its 12 branches. The scheme of organization for Prussian societies is therefore: (1) The local societies, (2) the provincial banks to serve as places of monetary adjustment between these local societies, and (3) larger organizations at Berlin (viz, the Prussian Central Cooperative Bank and the Central Loan Bank) to balance supply and demand, to obtain necessary credit, or to make necessary investments on the money market on behalf of the provincial institutions. 1 A total of about 300 credit societies in Bavaria and Posen hold membership in two central banks, but maintain business relations with one only (and about 2 per cent of the credit societies are not affiliated to a central bank). This explains how the total number of credit societies within the Imperiai Federa- tion at this date was 13,325, while there were 13,362 credit societies returned as members of central banks within the federation. 2 For this bank see under Agricultural Cooperation and Public Aid (pp. 292-307). «AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 165 The societies in Saxony, Bavaria, and Wurtemberg all have central banks which are subsidized by the State; the Bavarian Bank, in addition to permanent large advances at a low rate of interest, has the further advantage of preferential rates on a considerable open credit at the Royal Bank. The arrange- ment made by the Baden credit societies has already been mentioned; in addition the State grants a fixed credit to their organization as well as to another union (see p. 289). In Alsace-Lorraine the Government extends credits at a moderate rate of interest to two central organizations. The societies of the Raiffeisen Federation established in other than Prussian territory (e. g., in Alsace-Lorraine), are in direct relations with a branch of the German Agricultural Loan Bank. ‘“ Book” banks.—At an earlier period in the history of cooperative central banks there were numer- ous banks called Buchkassen; that is, banks whose functions were restricted to acting as interme- diaries for the deposit of money with the Prussian Central Cooperative Bank or other large bank, or for the transmission of money from such banks to individual societies affiliated to them. Such “book” banks, of course, had an independent legal status, being cooperative societies with limited liability; but they handled no cash, all cash business being carried out by those banks with whom special arrangements had generally been made. When the Prussian Central Cooperative Bank was created, in 1895, these “book” banks, although unsatisfactory, were almost a necessity—rural cooperation being in most parts of Germany still in the early stages of its development. At the end of 1896 their number was almost equal to those handling cash, about 12 of each being in existence. The “book” banks have now, almost without exception, been transformed into cash banks (Geldkasse). So far as the information of the writer goes, only two now exist, one with about 70 adhering societies, and the other with over 500; it is considered probable that these will soon undergo the same transformation. The increase in the business of the central banks and the necessity for them to maintain adequate cash in hand, and, therefore, to hold cash deposits themselves without having to refer, say, to Berlin—which involves for them a relatively considerable loss of time and increases their account keeping, postage, and other expenses—places ‘‘book”’ banks at so great a disadvantage that the continuation of business on such lines in a developed stage of cooperation seems quite impracticable. This system involves also a duplication of operations in some respects, and from the standpoint of the head central bank (e. g., Prussian Bank), this method of business can hardly be satisfactory owing to the amount of detail work imposed upon it by the receipts and payments of multitudinous small items. When the central coop- erative bank is a cash bank it is relieved of this work, and deposits and remittances are united in one account, viz., that of the central provincial bank. Legal form.—The central banks, with the exception of the Agricultural Central Loan Bank, the Imperial Cooperative Bank, and the Hessian Bank, which are joint-stock companies, are all organized as cooperative societies with limited liability. The Munster Bank, founded as a joint-stock bank in 1884, was transformed into a cooperative society in 1900. The position of the Prussian State Bank is fully set out in the special section devoted to it. The following table shows for the 36 banks within the Imperial Federation of Agricultural Cooperative Societies (including that of Windhuk in German Southwest Africa, which has only one affiliated society), for the two important banks of Wurtemberg and Treyes, and for the Cooperative Central Bank of the Agrarian League and of the Baden peasant asso- ciations, which are outside the federation, (1) the headquarters of the bank, (2) the year of foundation, (3) the par value of shares, (4) the liability attaching to each share over and above the share value, (5) the maximum amount of credit granted per share held, (6) the maximum number of shares that may be taken by any one member, (7) the number of credit societies attached, (8) the total number of all cooperative societies attached, and (9) the total of all members, whether cooperative societies, other organizations, or individuals. 166 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY... Agricultural central cooperative banks (Jan. 1, 1912). Maxi- . Total of . Amount | Maxi- mum Number : «ats Year of | par value| of lia- mum number | of credit oT coop* Total of Headquarters of organization. founda- | o¢ shares. | bility per| credit per| to be societies | erative all om. share. share. | held per | attached. ae members. member. . 1. Wrrain Imperiat FEDERATION, (a) Cooperative societies with limited liability. £ s. £ 6. WOPTDCIEES ions aco ce ea ah ea lalnle ceieienciennen 1892 75 0 £750 750 0 6 70 73 73 Konigsberg. -. me 1896 10 O 100 75 0 500 None. 27 31 INGUma RI oid iti concrrennianiacisite 1897 25 0 200 150 0 50 None. 16 19 DEN ccscies Uae ei tereeer eaten 1897 10 O 100 75 0 300 None. 73 112 Berhin tle seccis snlciehoareaaemecnnisie os 1894 2 10 75 50 0 300 493 557 567 Bern 1 cs cee reve eu sameterersarsictennyui es 1902 10 O 100 75 0 1, 000 None. 23, 28 Stettinxcceccoasex ese recesses: 1895 15 0 200 150 0 500 380 514 524 Posen I! 1895 2 10 25 25 0 500 303 395 400 Posen IT! 1899 10 O TOO} Iie ies cece 300 182 301 328 Breslau I ! 1895 2 10 50 50 0 300 755 834 847 Neisse 1890 50 420 500 500 0 50 319 366 372 Breslau II }......-. 1899 10 0 100 60 0 300 None. 80 93 Halle. ............ 1893 15 O 300 225 0 50 667 912 923 Erfurt 1899 10 0 100 75 0 200 None. 3 9 Welecuanieernsae ee ohio eases 1896 25 0 200 200 0 200 348 361 388 Man oVeRsascic's cecaissacetaeadeals ss 1890 25 0 300 500 0 60 466 506 532 Munster cies c corns sn anaacues 1884 25 0 250 (?) 20 537 540 566 Cassel De cies secec nee amen eds 1893 10 0 50 50 0 200 73 85 90 Cassel Ye re seae soca cue eeee 4 1897 10 0 100 75 0 1, 500 None. 14 21 Wiesbaden. .......--.--.--.------- 1894 2 10 50 33. 7 300 139 177 202 PROD Sth isa hs sss sa so dieicuaueydrsuciensecdyceonens 1892 5. (0 50 50 0 200 114 285 305 Cologne I 1892 50 (OO 300 750 0 50 548 712 723 Cologne II @ 1901 0 10 50 250 0 2, 000 8 10 23 Munich 1893 10 0 50 400 0 300 2, 259 2, 403 2,417 Landau 1907 25 0 500 (4) 20 271 290 294 Ludwigshafen...............-2------ 1899 10 0 100 BO! 0) |euseceeany None. 16 27 Dresd@hvendvorsasacencoueveee ase, 1897 5 0 100 500 0 50 267 437 442 Carleruhe sewieccsiccceascememansses 1900 5 (0 50 100 0 100 2 373 468 Gustrow............-22.-.-22.----.-| 1896 50 0 100 (5) 20 34 44 60 Olden burg e672 ve cuscensevewcescees 1897 12 10 125 250 0 50 66 85 91 Strassburg I.............---------- 1901 1 0 100 75 0 1, 500 None. ie 16 Strassburg IT }..........2..-...22.- 1904 5 0 100 150 0 500 183 194 234 Windhuk (S. W. Africa)............ 1907 12 10 250] 500 0 100 1 2 127 (b) Joint-stock companies. Berlin, German Agricultural (Raif- feisen) Central Loan Bank........ 1876 50 0 50 (S) love earners 4, 468 4, 468 4, 468 armstadt: Imperial Cooperative Bank......| 1902 50 0 50 200: Of} sceceeees None. 37 48 Darmstadt Hessian Bank. ...... 1883 50). 0: |rewsssieces (OE 9 We semeawiend 409 525 613 13, 362 15, 745 16, 482 2. OursipE IMPERIAL FEDERATION. Central cooperative societies with limited liability. Stutigart oo. ceeeieeiccecieecemeacess 1893 5 0 50 250 0 10 94,125 91,181 91,186 TRYCVESiwoseeas cesses Secu se meee 1895 50 0 DOO: |: sesaeecechonsinsteccev 345 10 369 10 363 Berlin, Cooperative Central Bank of | Agrarian League.......--.---.--- 1896 5 #0 BOS siecle hucelegree on (? 10 94) 10 949 Freiburg (Baden). .............-.-.- 1906 5 0 TOO sé xcrea ees lecoececeacoas {% 105 10 95 1 In each of these centers two distinct unions have each their central bank. 2 £1,000 for first and £500 for others. 8 This bank belongs to same organization as Cologne I. 4 £750 for credit societies. 5 £250 per share for first two, £125 for others. 6 See text. 7 £500 per share for first five, £250 for others. 8 Assesses credit at £5 per member of societies seeking credit, but latter must take up one share per £250 of credit thus extended. ® On Jan. 1, 1911. On Jan. 1, 1910. It will be observed in the table that the German Central Loan Bank has only credit societies as members; by the articles of the company only credit societies established on Raiffeisen principles (unlimited liability, restricted area, etc.) may be accepted as shareholders; that is, as members. It may also be noticed that 10 banks show no credit societies. Eight of these banks have been founded by the Raiffeisen Federation to serve as central banks for the affiliated societies not eligible (that AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 167 is, noncredit societies) to join the German Central Loan Bank; one bank only, the Imperial Cooperative Bank, does not accept local societies as members, while the Neumark Bank is composed only of other than credit societies. Membership.—The membership of a central bank is generally open (1) to all registered societies situated in the area covered by the particular union to which the bank is attached, (2) to individuals elected to the committee of management and the board of supervision of the bank, (3) to individuals resident in union area who find it impossible or inconvenient to join a local society, (4) to public or benevolent institutions, associations, etc., connected with agriculture, such as the chambers of agri- culture and district agricultural associations. Individual members are not, however, important elements in the actual membership; on January 1, 1912, out of 16,482 members in the 36 banks of the Imperial Federation only 662 individuals, of whom 127 were members of the single South-West African Society, and the bulk of the others were officials of the banks. Corporate bodies other than - registered cooperative societies numbered only 75, of which 19 were the small district associations in Alsace-Lorraine, and the remainder are mostly composed of the cooperative unions themselves, chambers of agriculture, and agricultural associations. The average number of members in the central banks of the Imperial Federation in 1911 was 484, the corresponding figures for each of the years 1905-1910 being 280, 275, 287, 301, 305, and 332. It will be noted in the table on the previous page that the range in membership is great. Excluding the banks that contain no credit societies, the Raiffeisen Central Loan Bank, the Imperial Coop- erative Bank, which is mainly composed of central trading associations, and the African Windhuk Bank (one society), we find that for 24 banks the average was 478, while five of these show a far greater membership. The 12 provincial branches of the Raiffeisen Central Loan Bank, which may be regarded for all practical purposes as provincial central banks, had in January, 1912, an average of 354 societies, the four branches showing the largest numbers being at Breslau (502), Berlin (485), Erfurt (458), and Strassburg (456). Shares and lability—The par value of the shares shows extremes of 10s. and £75. The law fixes no limit, whether maximum or minimum, in this respect, only providing that the liability over and above the share value must not be less than the share value. The amount of the share is, there- fore, fixed according to the particular circumstances. Although for German cooperative societies the essential basis of credit is constituted by the liability per share undertaken by the members, all banks now aim at making the share capital as high as possible, without deterrmg membership, in order to have an adequate owned capital and to increase their credit. The same general influences, as explained when dealing with the local credit societies, are at work toward the raising of the share values of the central banks. Among the banks that have raised their shares since 1897 may be mentioned: Neumark, from £2 10s. to £25; Berlin (Brandenburg Union), Posen (Provincial Union), and Breslau (Provincial Union), from £1 to £2 10s.; Stettin and Halle, from £5 to £15; Hanover and Kiel, from £5 to £25; Cassel, from £1 to £10; Bonn, from £1 to £5; Oldenburg, from £1 5s. to £12 10s.; Gustrow, from £5 to £50; Darmstadt, from £10 to £50; and Munich, from £5 to £10. The shares are usually paid up in full upon the admission of the societies to membership. In some cases they may be paid up by fixed installments, which are generally four in number extending over a period of one or two years. The imperial cooperative societies act provides that further shares may not be taken in a society with limited liability until all previous shares have been fully paid It is a not uncommon practice, especially in the case of newly founded societies, for the central bank to which they attach themselves to debit the amount of the share or shares taken up to the account of the society as a loan at the rate of interest charged for loans. When further shares are taken by societies the same procedure is often followed. Such debts are subsequently paid off at the convenience of the societies concerned. The average number of shares held by 34 provincial central banks in the Imperial Federation at the end of 1911 was 5,082, and the average amount of paid-up share capital per bank was £37,758; for 1909 the same averages for 35 banks were respectively 4,317 and £30,675. At the former date the paid-up capital in many of these banks was more than double the average (£37,758). In the bank of the Hessian Union at Darmstadt it amounted to £125,000; in the Kiel bank to £116,875; in the two Posen banks to £97,172 and £86,000 respectively; in one Breslau bank to £93,116, and in another (Neisse) to £81,570; in the Stettin bank to £86,985; in the Halle bank to £81,666, in one Cologne bank to £82,240, and in the Munich bank to £73,090. Two more banks in Berlin and Hanover, respectively, had a paid-up capital of over £44,000. 168 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The paid-up capital of the two cooperative banks whose operations extend over the Empire, and not merely over a State or Province, viz, the German Agricultural Central Loan Bank, established by Raiffeisen, and the Imperial Cooperative Bank amounted, respectively, to £430,925 and £250,000. Tiability attached to shares.—The liability incurred in respect of each share held in the central banks organized as cooperative societies is observed from the above table to be in several cases very great; and occasionally appears to be almost tantamount to unlimited liability. In two cases it reaches 100 times, in one case 30 times, in eight cases 20 times the value of the share, and in 18 cases have made it 10 times the amount of the share value. (See table on p. 166.) The object of such high liability is to increase credit capacity. The Prussian State Bank (see section thereon) gives credit mainly upon the basis of the liability represented, making certain deductions. To obtain sufficient credit, therefore, it became desirable to assume a liability of adequate dimensions. It is not always practicable to secure the payment of large sums by way of share capital, and accordingly a lability, large in proportion to share capital, is often assumed, this requiring no additional payments unless losses occur. The law limits to a certain extent the danger incurred by members of societies with a proportionately large habilty by the provision that bankruptcy proceedings must be com- menced by the committee of management when the debts exceed one-quarter of the amount of the accepted liability of members. The final lability is thus limited, in effect, to one-fourth of the amount nominally accepted, so that a nominal twentyfold liability practically means a fivefold lability. How far the liability undertaken is excessive —In the table (pp. 172-173) it will be noticed that 545 members in one Berlin bank undertook a total liability of £1,229,550, 832 members in one Breslau bank a lability of £1,753,600, 890 members in the Halle banks a liability of £1,566,900, and 489 members in the Stettin bank a liability of £1,093,400; and there were five other cases in which the lability incurred exceeded £500,000. The question thus arises, from the point of view of a bank’s depositors, bankers, and other creditors, whether these immense liabilities are really tangible, and whether in the event of great losses the central societies are good for such amounts; and in general the answer is in the affirmative. These members undertaking such labilities are not individuals; they are societies, and over 70 per cent of them are credit societies. The bulk of the members of all kinds of societies are landowners, whose liability for the debts of their societies is amply secured. The societies affiliated to the banks already cited (Berlin, Breslau, Halle, and Stettin), which undertake the largest absolute liabilities among the German central banks, are just those which include, to a greater extent than other such groups, both medium and large landowners. The business of the banks with their societies is carried out upon safe lines and gives rise to little danger of rash investment. Even in the last resort, in the event of the full liability being recoverable owing to great losses, a state of affairs which is almost impossible under the cooperative societies act, the realization of the amount due is absolutely certain. Taking the banks already cited, we find that the average liability per member (that is, in effect per cooperative society) in the Berlin bank amounted in 1910 to £2,256, in the Breslau bank to £2,107, in the Halle bank to £1,761, and in the Stettin bank to £2,236. The gross liability under- taken by members in 1910 amounted to £13,993,575, which is equivalent to a liability per society of £884. The average number of members in over 14,000 rural credit societies in 1910 was ascertained to be 97, so that the average liability undertaken by individual members of societies in respect of their central banks amounted on this reckoning to about £9 2s. Remembering that with few exceptions the central banks are cooperative societies with limited liability, which are bound by law to commence proceedings in bankruptcy when the annual (or other) balance sheet discloses losses amounting to one-fourth of the lability, the effective lability works out at less than £2 10s. per individual member. It may be here observed that the amount of liability attached to shares of the agricultural central banks has not been increased, and that the tendency is to limit this liability to ten times the share value, unless the share value is placed at a very low figure. Shares tend to be of higher value, and a tenfold liability may be regarded as the present standard for new societies. The new provincial central banks of the Raiffeisen organization for other than credit societies have adopted this principle. Thus, while the assumption of excessive liability is at present deprecated, the share values incline to higher amounts. Working capital—The working capital of the central banks is composed of their paid-up share capital and reserves, the deposits of members, and their credit at their banking center (that is, for the majority, at the Prussian State Bank). Deposits are also taken from nonmembers, who, however, are not eligible for loans. Deposits of large amounts are usually accepted at three or six months’ notice of withdrawal, but most deposits are placed at interest on current account. 169 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Form and extent of loans.—Credits are for the most part given in the form of overdrafts on current account. Each member is allowed a certain credit which is based in most cases upon the number of shares held in the central bank. The details of the maximum credits thus measured may be seen in the table given above, where it will be observed that the banks show considerable difference in this respect. The Raiffeisen Central Loan Bank applies a different method from other cooperative central banks in assessing the credits to be allotted to single societies. There are at present twelve provincial branches of this bank, and its shareholding societies in each branch district must send in an annual return showing the collective assets of the members, as attested by the committees of management and the boards of supervision. In Prussia and in other States where the supplementary property tax is in vogue the amount paid by each of the members must be stated, while elsewhere (e. g., in Bavaria and in Alsace-Lorraine) a valuation of the property of each member of a society as estimated by the managers of the society must be furnished. With these particulars and other supplementary infor- mation of a general kind as basis a maximum limit of credit is allotted. In States in which the sup- plementary property tax is not payable, and exact data are not therefore to hand, a normal credit of 5 per cent of the assets of members is granted and a supernormal credit of 10 per cent, while for societies whose members pay the supplementary tax a normal credit of 10 per cent and a supernormal credit of 15 per cent is accorded. Each branch bank is authorized to advance the normal credit, but the issue of a supernormal credit requires the authorization of the central office. Credit in excess of the regular supernormal credit can only be granted on the authority of the council of supervision of the central bank. For every £250 credit taken societies are expected to take up one share in the bank, but this course is not rigorously enforced. All credit business between a branch bank and the societies within its area of operations is transacted, as a rule, on current account. Eaclusive banking relations.—The societies affiliated to central banks must undertake not to maintain banking relations with any other banking institutions either for the deposit of money or for the obtaining of credit. For the purchase of stocks and shares they are also expected to make use of the services of their central bank. Credit.—(1) For fixed periods: Although normally credit is accorded on current account, many of the central banks advance capital for fixed periods for building (e. g., of dairies and warehouses) and for other purposes (e. g., advances for property purchases), but in such cases the right to foreclose is retained and fixed repayments by installments are obligatory. Indeed, in all cases the central banks retain the right to withdraw credit at short notice when due cause is shown. (2) On current account: In 1911 less than one-half of the central banks granted loans otherwise than by way of overdrafts on current accounts; and the proportion of business in this form is very much greater than that in loans for fixed periods. The sums borrowed in the latter way from the central banks by their affiliated societies amounted at the end of the year to £535,500, while their borrowings on current account totaled £14,598,300. Nine banks only had advanced money for fixed periods. As to deposits by societies with their central banks for fixed periods, the disproportion is considerably less. At the same date the deposits of the members on current account at about 20 banks (exclusive of the central loan bank) amounted to £8,632,800, while those for fixed periods reached £6,842,600. There is an increasing tendency on the part of central banks to allow more attractive rates of interest on deposits for periods of over six months. Business done.—The business done by the central banks has reached enormous dimensions. In 1910 the turnover of 36 banks (34 provincially organized banks and 2 whose operations extend over the Empire) within the imperial federation of agricultural cooperative societies amounted to £324,000,000; in 1911 their turnover was nearly £400,000,000. The average turnover per provincially organized bank was £7,312,400 in 1910 and £9,326,400 in 1911, while the turnovers of the Raiffeisen Central Agricultural Loan Bank and of the Imperial Cooperative Bank in 1911 amounted respectively to £59,130,000 and £30,501,000. The position of these banks, which are provincially organized at the end of the years 1906-1911, are shown in certain respects in the following table: Balances of | Indebtedness‘of| Balances of | Indebtedness of Year. societies at societies at | central banks at | central banks at central banks. | central banks. other banks. other banks. ADO ets sect eh ce ta years eave beietavaneceteea reais £9, 831, 550 £11, 108, 250 £1, 203, 000 £2, 584, 000 QO Ze ocd secs hse Sess pS ORO BE 8 Baa mr 9, 946, 350 12, 364, 150 631, 901 3, 533, 800 DOB coche bb avdscdnnwathinliie ainyareiadiees 4 SSeS RSGER wma eee 11, 918, 350 12, 669, 400 932, 724 - 1,331, 050 1909... ee eee ene eee eee ee eee eee eeerces 18, 882, 350 13, 394, 000 1, 351, 450 1, 283, 150 DOU pesca re cic cchat chat cha ennstcesevavsierer doce rangi atesfiaaseass, oe REE 15, 633, 250 18, 071, 550 2, 158, 250 944, 950 DOT serie aed hte etait ie tstotceteesiataee Homer eee SS 15, 475, 500 15, 133, 900 1, 365, 700 1, 375, 200 170 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Of the money employed by these central banks in 1910 the deposits of the affiliated cooperative societies represented 94.3 percent. The percentages in 1908 and 1909 amounted, respectively, to 89.6 and 91.6, but in 1907, a year of severe financial crisis, it declined to 72.6 per cent. The percentages for the years 1896, 1898, 1900, and 1902-1906 were, in due order, 34.5, 61.5, 68.2, 87.9, 91, 92.1, 81.8, and 79.2. Payments to and deposits by affiliated societies —The payments made to and the cash deposited by cooperative societies affiliated to the banks of the Imperial Federation, excluding the Raiffeisen Central Loan Bank and the Imperial Cooperative Bank, in each of the years 1902-1911, in their business with these banks, are shown in the following table: Payments to Deposits of Payments to Deposits of Year. cooperative cooperative Year. cooperative cooperative societies. societies. societies. societies. 190225 ees cter enneaein £14, 327, 200 £15, 138, 126 || 1907....-.....22.222220-2- £28, 533, 500 £27, 178, 587 NOS a is:c: css tardin..s.cdeielevnrerencinsaie 15, 026, 700 15, 560, 676 || 1908.........---.......2-- 32, 230, 800 32, 557, 717 N90 4 snrsidscvarsiavhiasenasueteretine 17, 802, 600 17, 741, 040 |) 1909.......2...........22. 36, 635, 800 37, 556, 500 WG ton iceicchesmaiaceane 22, 190, 400 21, 196, 768 || 1910. 36, 314, 100 36, 760, 441 W906 vinrinsvemgecine- eat 25, 832, 700 25, 895,900 I 1911. cseceiewebensn ces s's¥e 44, 016, 500 42, 530, 300 Rates of interest on deposits and loans.—The principal reason for a local society belonging to a central bank being to secure a permanent center at which depositing and borrowing may be advantage- ously transacted, it is of interest to observe the rates of interest. charged or allowed by central banks to their members. It may be noted, respecting these rates, that alterations are normally made only quarterly or half-yearly. Central banks pursue the policy of maintaining the greatest possible stability in their rates; in 1910 and 1911 about two-thirds of their number made no changes. The following table shows these rates at the beginning and end of 1910 and 1911 for the banks within the imperial federation and for the organizations in Baden and Wurttemberg: Rates of interest of centrul cooperative banks. Rates of interest on deposits. Rates of interest on loans. Commis- sion Headquarters of organization. et ne ae pete yearl (or half- Janu- |Decem-| Janu- | Decem-| Janu- |Decem-| Janu- | Decem- yearly). ary. ber. ary. ber. ary. ber. ary. ber. 1. Wrreww Imperiat FEDERATION. (a) Societies with limited liability. Per cent.|Per cent.|Per cent.\Per cent.|Per cent.|Per cent.|Per cent.|Per cent.| Per cent. Wormditt...-...-...-22 222222 eee eee ee ee 4 4 4 4 4h 44 4h 43 vy Konigsberg............22-000e cece cence eee 4 3} 3} 4 44 | 44-44) 43-43] 44-53 ta Newmark: -o.2 0 stiecctiscnccecacs ceesceans 3 3 3 3 43 43 43 5 wo Dan gigs. ccarsiwinsansnadecececacs ses 34 4 4 4 44 5 5 5 ty Berlin Tica sasitae se ecronaniniew eens ennai 3. 6 3.6 3.6 3.6 4.2 4.2 4.2 4.2 vo Berlin ITs. eccscipncamrasaeeeee terse aces AR oghsedeoa| Agee: 3344 | 54-6 4D5 4b5 43 ty Bie Wil ere nena gece a! 3t4t | 3E4b | 3E-42 | BE4b] 4t5 | 4b53] 4h55| 42-54 3; Posen I... ss seusescesesemenracsssds sxeens 4-44) 4-44 4 4h | 43-5 44-5 44-5 44-5 zo Posen. U0 eo cviacocc acne caaeuee ews spake ue 4 4 4 4 44-5 44-5 445 44 yo Breslau I.....-..------+-----0 eee ee eee eee 344 344 344 34-4 1/4, 44,5 4-5 4-5 4-5 oy INGIBBE.g. o0 oe ancl eaiarstasdieinuaiaiiesd 4 Seles alate eid 3}4 334 334 8}4 4-44] 4-43) 4-44] 4-43 ty BreslauAl sc. cscnaesecwsomeddes eeceennane 34 | 3433] 3437 3} 44 44 4} 43 a Halle. 2c. ss cchoeewencieeeceicdidec dans 3} 34° 34 4 44 44 44 43 te CHUTE aio visiets) a eisitaicied yeas oe alias 34 34 34 34 42 5 5 Bt Mtr oa Lee Kiel ovsc tees guievinasusdarsavee' ses et oo¥ 33 34 33 3} 4} 5 5 BF eG esac Hanover. 34 37 32 4 4 44 4} 44 ts Munster.. 34 | 34-37 | 34-32] 334 4 4 4 44 iy Cassel I.. 34 34 34 34 44 4} 44 44 dy Cassel IT.... Be ew eretaheia | neice Sha | AERAE [occ ewe. dea cave 4}-54 to Wiesbaden scien. dnc cemeacanrnaiedieds seas 3h 3 3 3} 4h 4} 44 | 445 ty BOND oii2 350s eo2cetdccmbieasecoeeress 34,34 | 23-34 | 24-33 | 24-33] 4 4} 4 4 4 vo Cologne Dae 222 jcbke Sere tevteawac cacats' shel! 38 3. 6-3. 8 |3. 6-3. 8 |3. 7-3. 9 Ay eeeioe a] idee Seve 4} dy Cologne. Wo .2 2 yenesgenceenccagess 2 34-4 344 344 344 5 5 A ai Shree | ead Ae Munich ssa ecrsiees dec eancasenenanses oe 34,33 | 34-32] 34:33] 344 4 4 4 Aes (| ikea tcpetthes Vanda ssccswes 13223 seers easewenuteees 344 34-4 344 344 4} 44 4} 4} t AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Rates of interest of central cooperative banks—Continued. 171 Rates of interest on deposits. Rates of interest on loans. Commis- sion Headquarters of organization. 1910 ey 1910 trl yearly : (or half- Janu- |Decem-| Janu- |Decem-| Janu- |Decem-| Janu- | Decem- yeatly): ary. ber. ary. ber. ary. ber. ary. ber. 1. Wirsin Imprriat Fepreration—Contd. (a) Societies with limited liability—Contd. ‘Per cent.|Per cent.\Per cent.|Per cent.|Per cent.|Per cent.|Per cent.|Per cent.| Per cent. Ludwigshafen................... peaesanen 4 4 4 4 5 5 5 5 a Dresdette:. osc nesasesecea sss cess cise sieeee 32 32 32 32 4} 4} 4} 4} ao Carlsruhes.¢ ssesgingeckwescx tes eeeueceteea 4-44] 3344] 324}] 3244 44 44 44 4} dy GUBIOWS censuses ceecsacs oo spunseasmeaases|| Be 34 3-4 34 44 44 4} AAW sete wie sae se Olden DUPE c)e.o scenes soe cece edaiceciociae 4-44 | 4-45] 4-44] 4-44 5 5 5 44-54 do StrassbUlg Low sciceiss cicrcic cei otssidrecarespiciaislerciars 34-32 | 34-32 | 34-33 | 3344 44 44 44 44 iy Strassbire Ws dca eees cieieiavenrcsere ercundann 3} 33 3} 4 44 44 4h AP Ve ceccios Se Wind bulk. cies. iccieee ces cesecaincccevesne 2-3 Bo lessees 8 8 8 leckewves| ae esos Joint-stock companies. Darmstadt: Imperial Cooperative Bank..........| 3-34 | 34-32] 343}] 8 -34 | 344,5|] 345 33-5 4-5 ay Hessian Union Bank................- 4 4 4 4 5 5 5 5 to Berlin, Raiffeisen Central Loan Bank......) 34-33 | 34-32] 344 344 44-44] 4444] 44-44) 4443 vo 2. OursipE IMPERIAL FEDERATION. Stators Ynsistbers Central Coopera- se tive Banks nce ccsccnasmrecupenscces soe 34 34 34 34 4} 4} 4} 44 Mannheim, Baden Credit Societies as per agreement with Rhenish Mortgage Bank. 4 4 4 4 44 4} 44 44 ty It is seen that cooperative societies were able to obtain generally 34 to 4 per cent for deposits— the latter rate is usually allowed for deposits at six months’ or more notice—and to borrow for the most part at the rates of from 4} to 5 per cent. The averages for the 33 banks, leaving the African Bank (Windhuk), out of account, organized on a provincial basis, were 3.63 for deposits and 4.71 for loans at the beginning of 1910, and 3.40 and 4.55 at its end; in 1911 the corresponding percentages were 3.40 and 4.55; and 3.67 and 4.57. It may be added that the average German Imperial Bank rate in 1910 was 4.35 per cent, and in 1911 4.40 per cent, 172 The following table, published by the Imperial Federation of Agricultural Cooperative Societies, affords a detailed survey of ae position AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Ft bet bat het et et et pt BRSGRSSKS cms SHR ONE RSSRESBRNSRESS 86 ank, for as ‘10 Year of Number Niimbher satel Total ‘capital Total |Deposits by pests by Trannies ts pu is of mem- aid wy liabilit owned b: members | members | m Headquarters of bank. cae bers at. | of shares Pha. | iacurret. | Hanke” barrowed mtn for fixed. | on current | for fixed ‘| tached. | ®¢@™'ree.) canital. | on shares. | (Paid-up | C@P!t@- at call. periods. | account. | periods. capital and reserves.) 1 2 8 4 5 6 7 8 9 10 11 (¢) Regional or provin- cial banks (1910): 73 122 £9,075 | £91,500] £12,122] £100,019 | £752,027 |......------ £51,698 |.......04. : 31] 2,298 23,100 | 229300 27,056 | 187,718 ; 088 S007 | aecensee 23 220 3, 162 44, 4,159 17,518 2,229 |. 9,619 |..------+- : 102| 1,489 15,270 | — 148,9 20,783 | 257,121 80, 903 | H65°476 (0 cecum 545 | 16,394 41,907 | 1,229)550 49,621 | 576,873 | 556,098 |. 393,688 |.....----- 7 713 7,135 71,3 8,923 79, 956 32 | 2s 83,812 22222222. 489 | 5,467 83,085 | 1,093,400} 101,209 | 1,111,435 | 432,646 | £526,650] 615,724 |.......... 392} 35,007 89,255 | 875,175 99,065 | 319;115| 218,638 | 195, 705 143 | 3,007 32,298 | 800,700 47,550 | 384,409 20,758 |....-2-2---+ e ¢ 832 | 35,072 87,578 | 1,753,600} 103,106 | 984,071] 506,339 | 455, 572 Neisse.......-.- +--+ 1890 365} 1,535 76,955 | 760,750 82,605 | 403,462] 296,204] 106,870 1899 BI asec acas 7706 | — 246,900 27,838 | 134,764 1899 S| 300] “tare | t0%000| 2 gae |” Sa8 dar 1896 377| 4,120/ 103,550 82,400 | 1123698 | 388) 463 1890 516} 2;048 40,365 | 614,400 45,269 | 399, 659 1884 564] 1,817 36,977 | 454° 250 50,018 | 970, 127 | Ste) ce) Se) Bel Ge tee | da] am AME] BES | | ate 99: 495 | 340, 44) 245 67,77 1892 722| 2 084 72, 515 625, 200 86, 40 841, 81s 1901 50 35. 27,9 i 1893 2,216 | 6,509 65,090 | 325,450] 101,205 | 1,765,834 Landau (Pfalz)........- 1907 9 602 8,662} 301,000 14,359 | |" 448,713 Ludwigshafen....-..-.- 1899 35| 4,108 6,313 | 410, 800 11,713 | 178, 664 Dresden.....-.-2------- 1897 426 | 3, 258 19,290 | 325,800 22) 534 | 466,987 Garlsruhe......--------- 1900 439 | 13362 5,387 68, 100 7,644 | 134,209 Darmstadt 1883 606 | 3,380 | 125,000 | 125,000} 150,000} — 760,039 Gustrow...-- 1896 61 295 1,318 500 1,828 40, 595 Oldenburg 1897 81 800 L 145,000 3,236 | 111,249 Strassburg I......-...-- 1904 209 723 3)845 72/300 5,842 | 171,067 Strassburg IT... 22.22... 1901 16| 1,930 13930 | 193,000 2) 566 7, Windhuk.......-..-.--- 1907 125 125 1,007 31, 250 1,757 37,349 MRObal seisacerace eects 11,319 | 155,878 | 1,136,079 | 13,312,925 | 1, 400, 413 | 13,062, 108 (b) Imperial Cooperative 1902 5,000 | "250,000 | 250,000 | "255, 712; 105 543,961 |.........- ank, Darms' f Germ ant Agricultural 1876 4,463 | 8,613 | 430,650 | 430,650} 459,199 | 4, 583, 883 3,187,607 | 105,817 entra! an Bank. Grand total in 1910]........ 115,830 | 169,491 | 1,816,729 | 13,993,575 | 2,115,345 | 18,358,046 | 6,760,558 | 4,426,007 | 12,573,101 | 498, 485 y 1911. (a) Total, banks |........ 11,966 | 172,796 | 1,283,768 | 15, 414,575 | 1,589,976 | 14,769,285 | 6,399,796 | 4,270,631 | 10, 492,605 | 406, 993 (b) Imperial Cooperative |........ 4g | 5,000 | 250,000] 250,000] 256,700} 662,350] 209,560 | 375,762 | 518,076 |.......... ank. German Agricultural Urs Sass 4,468 | 8,634] 430,925 | 430,925 | 465,198 | 4,263,534 | 2,023,466 | 2,196,286 | 3,587,667 | 118,572 en an bank. Grand total in 1911|........ 116,482 | 186,430 | 1,964,693 | 16,095,500 | 2,311,874 | 19,695,169 | 8,632,822 | 6,842,679 | 14,508,348 | 525,565 Warttemberg Central | 1893 1,186} 2,654 10,595 | 132,700} 160,029) 402,089 | 339,857 |........0... 185,355 | 14,999 ank. individuals; in 1911 the corresponding 1 In 1910 the membership was a of 15,107 registered cooperelive societies (of which 12,832 were credit societies), 163 other organizations, and 560 gures were 15,745 (13,362 cre it), 75, and 662, AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 173 and yes of German central cooperative banks for 1910 (end), with totals for these banks, as well as for the Wurttemberg Central 1911 (end). ad at Im: | Liabilities Boerative|tLmperial ank, Ps Bar _ Cost of ae “Priselsn Liabili. | Balances} Liabili- Total moneys [Al'moneys| rotai | atenin | istran” Caer Central Co-| Balances] “(30 o;" | with in- |tiestoin-| Total liabili- aid ibs | Paid to | jienowak’ | astras || tion toa | operative | atother | Gino. |dividuals|dividuals) assets of | tits og | Profits. members | Members | “Giney tion : : Bank, and| banks. and cor- | and cor- | societies. ei i during 8 ; pe = . German banks. orations.| porations societies. during ear year. during | cent of and Ger-| Gontral P |p : year. yee year. | turn- roc yend Agricul- over. rat Astl-| tural Loan cultural Bank. Bank ank. 12 18 14 15 16 17 18 19 20 21 22 23 24 25 £20, 297 £112,693 | £112,141 £551 | £278, 493 £217,073 | £1,141,316 £272 | 0.023 1 65, 938 216, 367 214, 769 1,597 | 1,309,992 | 1,297,633 | 6,304,786 968 .014 2 21, 882 21,678 204 66, 671 65, 776 960, 656 109 -011 3 , 280,551 | 277,905| 2,646 |_.........-|----.-- 200. 13,044,500} 1,575 |.......- 96, 921 629, 887 626, 494 3,392 | 1,249,173 | 1,709,214 | 5,547,618 2,014 - 036 ), 899 84, 879 1,029 91,093 94,315 | 2,028,746 533 . 026 25, 459 | 2,786,422 | 2,487,133 | 12,384,584} 3,218| .025 206,166 | 2,161,943 | 9,495,110} 2)396| .025 1,750,011 | 1,742;925 | 12}127,546| 3/208} .028 2} 086,639 | 2) 011, 937 | 11,168,064} 3,161] .026 i ”671| 4,033,362] 1,964] .049 189°840 | 201,165] 3,147,968 958 |........ 3,685,489 | 3,646,554 | 22) 488,820] 3,342] 014 1 54,813 | 332) 477 5 016 2,896,867 | 2,895,418 | 18,923,251 | 1,924] 010 2) 518,054 | 2) 449,549 | 16,979,973 | 2°684| .015 2} 348, 184 | 2) 480,353 | 20,046,409 | 2'415] .012 , 99,892 99, 268 464,245 |.....-2--[-------- 392, 430 362,569 | 1,425,000 |........-]..------ DH xcctne aeaorsjerars|esinrorancre ateresele 2, 138, 890 1,097 -051 2,002) 297 |" "2,015, 134] 7,965,339} 1,255 | 015 2). 999) 992 | 2) 187,150 | 12,760,945 2,747 2021 2; 982, 461 | 3,157,560 | 29,432,626 | 3,395] 012 115,705 | 6,721 | "464,62 : 539, 537 511,298 | 3,742,756 | 1,805] .048 3,986 | 30,393] 190,966! 189,877| 1,088] 67,758 39,327 | "417,676 253] .061 SSSESSRNSRRSRRSSERSAEERES om cH 491,374 | 489,522] 1,851 | 1,043,621} 1,011,089 | 4,675,892 164| .034 142)571 | 141,854 717 | "167,422 | 7159}179 | 1, 284, 796 325 | 1025 917,695 | 910,040} 7,655 | 2,304,477 | 2,177,573 | 15,790,793 | 3,457) 041 42,538 | 42, 424 Where. chr, eecgseenes 254) 556 78 | 031 114) 766 | 114 480 286 | 708,340 | 702,687 | 3,872,899 472| 1012 177,520 | 176,909 6: 0634) a2dcse nae fedawadecanee 2,390, 663 906 | 038 60,374 | 60, 186 188 | 38, 416 36, 493 260,773 123 | 047 40,056 | 39,106 950 | 24,316 31,293 | 1,144,113} 1,048] :090 14, 550,343 [14,463,111 | 87,232 |36, 760, 441 | 36,312,098 |248,667,106 | 52,541 | 021 bee ae ote ear eran 5,279 | 47,298 978,513 | 967,837 | 10,675 |..-........|.-.+-.--.-.-| 30,501,042 | 7,021 | .023| 35 1, 206 4,676 | 679,671 |.........- 5,055,994 | 5,043,432 | 15,462 |...........)..2.0.2.00-- 35,030,000] 34,949] .078| 36 629,558 | 790, 969 |1, 528,720 | 153,985 | 556,915 |1,305,827 |20, 587,351 |20, 473,982) 113,369 |..........- Hct acuosees 324,198,148 | 94,511 |........ 549,561 | 1,021,650 | 401,861 | 310,210] 811,666 |1, 758,050 |16, 445,029 [16,359,261 | 85, 768 [42,530,327 | 44,016, 514 |317,099,109 | 60,480| .020 2,701 | 42,305 |.....2.2..)e.e..e ee. 928,253 | 919,050| 9,202 |.. 22,973,972 | 3,499] .015 $11, 631 1,058 |.......... 32,691 | 4,749,796 | 4,728,733 | 21,063 59,130,000 | 38,559] 065 reduna tare MaPainama ate 816,193 | 353, 568 . .{22, 123,078 |22,007,044 | 116,033 |...........|.........--.[399, 203, 081 | 102,538 |........ eictatslte | ce tatace Aa 3] 61,379 ceseeceteesfeceeecceee-] 2,635 | 1,144,985 | 1,290,048 | 11,188,147 976 |........ 174 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Cost of management.—The cost of management of 33 central banks in 1911, excluding the Raif- feisen Central Loan Bank and the Imperial Cooperative Bank, amounted to £60,480, an average of £1,833 per bank; or 0.02 per cent of the total turnover. The expenses of the Raiffeisen Central Loan Bank were £38,559 (0.065 per cent of the turnover) and of the Imperial Cooperative Bank £3,499 (0.015 of the turnover). The ranges of percentage of turnover for the 33 provincially organized banks are wide; the lowest is 0.009 and the highest 0.098. For their actual cost of administration, and the percentage which such cost bears to the turnover of each of these banks, the reader is referred to the table showing for 1910 the principal results of the operations of the banks. It may be remarked, however, that the figures purporting to represent cost of management often include considerable voluntary contributions to the unions of the societies with which these central banks are connected. These contributions sometimes amount to £300 per annum, and often to higher sums. Profits —The central banks are not profit-making undertakings in the strict sense of the word. Dividends are paid upon the share capital, but it is generally provided in the articles of association, or in the company agreement, that such dividends may not exceed a moderate percentage, usually 4 or 5 per cent. The actual rate paid in most cases range from 3} to 5 per cent. For 1910 and 1911 every bank showed a profit on the year’s trading. (See table.) The total profits for 33 banks pro- vincially organized—the Windhuk Bank is excluded—amounted to £86,282 and £84,788, respec- tively, showing an average per bank of £2,615 and £2,569. The total paid-up share capital of these banks was £1,135,072 and £1,282,496; the profits for each of these years represented, therefore, 7.6 and 6.6 per cent of the total paid up capital. The banks devote a large proportion of their profits to strengthening their reserves. The average owned capital (that is, share capital and reserves) of all banks within the federation has continuously increased. In 1900, 1905, 1910, and 1911 the average of owned capital for 21, 35, 34, and 34 (including Windhuk) central banks were, respectively, £6,800, £20,011, £41,200, and £46,764. The table on pages 172-173 sets out a full statement of the position of the central banks within the imperial federation for the year 1910, together with the total for the 34 banks previously organ- ized, the separate figures of the Raiffeisen Central Loan Bank and of the Imperial Cooperative Bank, and for the Wurttemberg Central Bank, for 1911. Special accounts of five of the largest banks are added: AGRICULTURAL CENTRAL LOAN BANK FOR GERMANY. Founded by Raiffeisen: History—tThis bank, founded by Raiffeisen in 1876, is at once the oldest and—apart from the Prussian Central Cooperative Bank, which is a State institution—the most important of the German Central Cooperative Banks. It has already been noticed in treating of the central banks that Raiffeisen founded in 1872 a bank for the Rhenish credit societies at Neuwied, and in 1874 two more banks to serve for the Westphalian and Hessian societies, respectively. Almost immediately after the creation of the two latter banks it was decided that all three should combine in one institution to be called the Agricultural General Bank, of which they should constitute the sole shareholders. With the bank was to be connected the ‘Arminia German Mutual Life Insurance Society for Agriculturists,” in order to acquire funds to carry on the banking business and for the further development of the cooperative organization, as well as to make the advantages of life insur- ance more accessible to the rural classes than was possible by any other means. The original plan of Raiffeisen was, in his own words, “to found such a bank in each Province of the two largest German States (Prussia and Bavaria), and in each medium State to include the societies in smaller States in one of these banks, and by this organization to meet the need for personal credit on the part of the rural population in the whole Empire.” Without having commenced business this bank was dissolved by the courts in 1876 as a result of an interpellation in the Reichstag by Schulze-Delitzsch, who pro- tested against the long credit granted by Raiffeisen societies, the absence of shares, etc. The bank for the Rhenish societies, which had been then working four years, was transformed from a cooperative society with unlimited liability into a joint-stock company under the name of Agricultural Central Loan Bank; the other two banks ceased at once, or shortly after, to exist. For the first 23 years of its existence the bank served as the banking institution for the rural credit societies of the Raiffeisen Federation, but in 1899, when it took over the business of the trading: company of Raiffeisen & Co., it extended its operations to the purchase and sale of agricultural require- ments and products, not only for the credit societies but also for the others. In 1909, however, it. was resolved at the general meeting held in Breslau that all trading business should be discontinued. and only banking business should be henceforth carried on. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 175 At the present time the head office is in Berlin, to which city it was removed in 1910, and the 11 branches are in Breslau, Brunswick, Cassel, Coblence, Dantzig, Erfurt, Frankfurt-on-Main, Konigsberg, Ludwigshafen, Nuremberg, and Strassburg. The business of the branch of the bank established in Berlin has been amalgamated with that of the central office since the latter was removed to Berlin. The capital of the bank was originally £12,500, but was raised in 1881 to £25,000, in 1892 to £250,000, and in 1900 to £500,000. The shares, which have a nominal value of £50, must be paid up in full on being taken up, or in installments covering a short period, and are all held by credit societies attached (or at one time attached) to the Raiffeisen Federation. They may be transferred from one society to another only with the assent of the supervisory board; and the bank only accepts the return of a share when another society is willing to become its purchaser. Only credit societies adopting the strict Raiffeisen principles (unlimited liability, small area, honorary management (save for the secretary), accumulation of indivisible reserve or foundation fund, no payment of dividends, furtherance of the moral as well as the material welfare of members) are eligible for membership. Although a company it is not an ordinary profit-seeking organization; it does credit business only with its members, and dividends may not exceed the percentage charged to members for loans. It was recognized by the federal council of the Empire in 1901 as an institution serving objects of public social welfare; the Prussian ministry of agriculture allotted to it annual grants for a long term of years for purposes of rural social welfare; and the Emperors William I and William II made donations of £1,500 and £1,000 to its funds. The working capital of the bank is constituted, apart from its paid-up share capital, of its reserves; the deposits of the credit societies; loans taken up for considerable periods; and the issue of bonds irredeemable by the holders. The articles of the company provide that, after meeting the cost of management of the bank, and any deficits arising in the cost of administration of the Raiffeisen Feder- ation, 20 per cent of the profits shall be placed to reserve, as well as any sum remaining after the pay- ment of a dividend, such dividend not to exceed the interest paid by borrowers for loans from the bank and only to be paid upon the shares actually paid up. Present position.—At the end of 1910 the deposits of the 4,165 societies affiliated to the bank amounted to £4,266,000, as compared with deposits of £3,898,000 by 4,154 societies at the end of the preceding year. At both dates the amount deposited on current account was £2,300,000, the balance of deposits being at six months, or longer notice. In 1909 and 1910 the societies deposited a total of £7,339,400 and £7,660,900, respectively, on current account and withdrew a total of £6,817,900 and £7,478,900, respectively. At the end of 1911 there was a total of £4,220,100 on deposit, of which £2,023,000 was at call, and £2,034,600 at six months’ and £162,500 at a year’s notice. Loans out- standing at the end of 1909, 1910, and 1911 amounted to £2,500,000, £2,900,000, and £3,400,000, respectively. The aggregate turnover of the banking department was £39,350,000 in 1909, £45,300,000 in 1910, and £59,130,000 in 1911. Administration.—The committee of management of the bank, which represents the company judicially and otherwise, formerly consisted of the heads of the central office and of the branches. In 1909 (and until 1911) there were 13 branches. A standing subcommittee of four persons chosen from the larger body conducted the current business. In 1910 the committee was reduced to two persons and in 1911 to one, and the directors of the existing 12 branches are now constituted into an advisory council to the committee of management—that is, at the present time, to the general director. The council holds two regular meetings each year. The board of supervision, which must be convened at least once in each year, comprises repre- sentatives from each of the branch districts. At the end of 1910 five districts each had their delegates— five had 2, two had 4, and one had 1. As to occupations exercised by the 34 members, there were 14 clergymen of various denominations, 14 landholders, 2 public officials, 2 persons of independent means, 1 manufacturer, and 1 estate manager. By a still more recent arrangement each branch area appoints two delegates to the board, half of whom at the present time are clergymen. The articles of associa- tion of the company provide for the payment to members of the board of out-of-pocket expenses and daily allowances only, except in so far as attendance at board meetings entails direct monetary loss, in which case compensation to the extent of the loss may be made. Each union (that is, branch) area has its own advisory committee, which is comprised of the members elected to the.supervisory board from the particular area, other representatives of the socie- ties situate in the district, the director of the branch, and his colleagues on the committee of management of the branch. 176 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY, By virtue of this representative system the central bank is enabled to supervise and obtain all necessary information as regards the general conditions obtaining in each of the branch areas, and the branches are enabled to keep close touch with their subdistricts by a similar representative organization. An account of the method by which the bank assesses the maximum amount of credit to be allotted to affiliated societies is given in the chapter dealing with central banks, and its relations to the Prussian State Cooperative Bank are described in that on the State and cooperative credit. A full translation of the most recently published articles of the bank is printed in the appendix, to which the reader is referred for further information. The following table affords a general view of the development of the bank from its transformation by Raiffeisen in 1876 down to the end of the year 1911: Table showing the development of the Central Bank (Agricultural Central Loan Bank for Germany) founded by Raiffeisen in 1876. Num- Rate of interest. ber of | Num- | amount | Divi Com- si Reserve Year. asso- | ber of | ai9 dend mis- | Turnover. | Assets. | Liabilities. |Profits.| capi- cia- | shares. ba ee : On On sion. tal. tions. ereons deposits. | loans. Per ct. | Per cent. | Per cent.| Per ct. £1,220 |_....... 4 53 t J, 240 ioe vessel 4h 4 3 1, 290 5 43 5 4 1, 540 5 4h 5 3 1,960 5 43 5 a 2,515 4 4h4 5}-5 3 2, 550 4 4 t 2,575 4 4 5 3 142, 133 32, 833 32, 552 2,980 4 4 5 ; 168, 139 36, 632 36, 308 323 | 2,622 3, 430 4 33 43 t 159, 464 43, 749 F 360 | 2,854 3, 867 4 33-34 43-44 i 199, 708 50, 881 50, 435, 446 | © 3,231 4, 4 34 4s 3 198, 395 53, 886 53, 250 636 | 3,772 4,550 4 34 4 t : 52, 950 52, 108 842| 4,507 5,000 33 33 43-4) ts 72, 226 71, 426] 4, 5,000 34 33 4t ty 495, 640 103, 206 102, 788 468| 5,170 11, 965 34 3} 4h ts 598, 943 148,919 147, 934 984| 6,002 29, 305 3h 33 4 ts 788, 224 233, 499 231,904] 1,594] 7,705 31,117 3h 3} 4h4: ts | 1,031,835 270, 423 268,271 | 1,647] 8,344 56, 092 3h 3 44-44 ps | 1,393,115 331, 364 327,305 | 4,054| 9,817 65, 812 3 33-3 3y%;—44 vs | 3,157,943 779,073 777,161] 1,912] 9,520 75, 202 3 Be ts | 6,713,956 892, 209 890,150] 2,054] 10,485 85, 790 3 { se 3 32 vs | 4,613,383 | 1,264,301] 1,261,422] 2,969] 10,757 101,72 3 3h 3a vs | 5,870,618 | 1,591,001] 1,588,659] 2,341] 11,496 246, 002 4 3 \ 3yey-4t vs | 7,584,614] 1,929,199] 1,923,342] 5,758] 12,966 266, 337 4 ant ra zs | 8,900,000} 2,059,099 | 2,045,499 | 13,100] 15,091 316, 485 4 4 43 dy | 11,500,000 227,041 | 2,196,334} 11,257] 17,926 383, 600 33 4 at ts | 13,000,000 } 2,681,102 | 2,668,653 | 12,449] 21,039 408, 750 3 { a ae i ds | 15,350,000] 3,240,603} 3,228,560 | 12,032] 24,049 422, 725 |... 34 4 vs | 17,450,000 | 3,648,679 | 3,671,441 |.....--. bee A 427,262} 3h 33 44] as | 19,400,000 | 3,671,907 | 3,652,270 | 19, 632 |{ P4437 63h] 64-4) 11, 284 427, 612 33 { ral] at “i i #e | 17,950,000 | 3,879, 280 | 3,858, 906 | 20,383 Hy 14’ 369 et |} 24h 16, 658 90 Tiree spoons vie tae cerers Be ners 4,240 | 8,586 | 427,800 33 z a 2 45-5 Yo | 18,650,000 | 4,349,102] 4,327,615 | 21,477 ho 19" 799 M4 5h-54 ‘ 10 19085. soccetyesicvacnceserees seSeues: 4,272] 8,596] 427,800] 33} i gt] asghe’ |} av | 37,900,000 | 4,095,643 | 4,078,658 | 17,034 |{ 20+ 917 7 : 1900). : cie- cie- shares | accepted ties. bers. ties. bers. ties. bers. ties: bers. taken | liability. up.} From 1867 to 1888........---------2++-- 257 | 28, 667 256 | 28, 238 |......].....- 1 429 745 £8, 805 From 1889 to 1894..........--..-------- 276 | 37,915 198 | 20, 688 1} 199 77 | 17,028 | 36, 747 658, 754 From 1895 to 1903...........-.--------- 785 | 70, 497 367 | 29, 733 1| 149 | 417 | 40,615 | 60, 227 | 1, 437, 405 From 1904 to 1908...........0---------- 601 | 43, 685 241 | 15,400 |....../...... 360 | 28, 285 | 14, 076 620, 652 Total Jan. 1, 1909........------- 1, 919 |180, 764 | 1,062 | 94,059 2| 348 | 855 | 86,357 |111, 795 | 2, 725, 616 1 By the terra “additional shares’’ is meant all shares held by members beyond the single obligatory share. y ry 95273°—S. Doe. 17, 63-1——13 194 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Shares—The nominal value of the shares of cooperative supply societies is for the most part small. In 1908 the shares adopted by 1,841 agricultural supply societies were in 54.6 per cent of the societies under 10s., 27.8 per cent returning their shares at between 2s. and 5s., 3.7 per cent shares at between 1s. and 2s., and 4.6 per cent shares of under 1s. Twelve per cent of the total had shares of from 10s. to 20s., 14.9 per cent shares of from 20s. to 50s., and 13.9 per cent shares of from 50s. to £5. In the case of societies with unlimited liability, with shares of over 10s., only a portion of the sum, generally one-tenth, is paid up; societies with limited liability with low shares often require their members to take more than one in given circumstances, and the latter are legally bound to pay a previous share or shares in full before they may acquire additional shares. In 1908, 1,023 supply societies (55.5 per cent) were subject to unlimited and 816 societies (44.3 per cent) to limited lia- bility, the few remaining having adopted unlimited contributory liability. Of the group with limited liability 45.5 per cent returned their shares at values not exceeding 5s. 16.3 per cent at over 5s. but not exceeding 10s., 6.9 per cent at from over 10s. to 20s., and 13.8 per cent at from over 20s. to 50s., while 8.9 per cent showed ranges from over 50s. to £5, and 5.8 per cent from over £5 to £10. Sharesin societies with unlimited liability showed a considerably higher level: In 28.6 per cent of the socie- ties they were of not more than 5s., in 20.4 per cent from 5s. to 10s., in 16 per cent from 10s. to 20s., in 15.8 per cent from 20s. to 50s., and in 17.8 per cent from over 50s. to £5. The model articles for supply societies issued by the Imperial Federation recommend that the shares in societies with either form of liability should be made as high as possible, in no case less than £5, with the payments so arranged that the full value of the share should be paid up within 10 years. As to societies with limited liability, which may require members to take up more than one share, it is further suggested that members might be placed under obligation to take a number of shares in accordance with the area of the cultivated land held by them, or with the amount of goods pur- chased by them through the society. The society at Stolp, in Pomerania, which is the largest non- central agricultural cooperative supply society in Germany (having over 3,000 members), requires all landholding members to take one share, which is fixed at 1s. for every £10 of the combined taxable assessment of their land and buildings. Another very successful Pomeranian society at Anklam imposes upon landholding members the taking of one share (which amounts to 10s.) per £15 of such taxable assessment; upon members that are societies or companies with limited liability, one share per £2,000 (or portion thereof) of collective liability represented by their members, and for other cooperative associations one share per £2,000 of their annual turnover. Amounts paid up.—The average sum paid up in respect of shares per member at the end of each of the six years 1905-1910 were in due order 13s., 16s., 18s., 21s., 23s., and 19s., these figures being based upon returns made to the Imperial Federation from 1,815, 1,925, 1,983, 1,970, 2,081, and 2,120 societies in these years, respectively. The average paid-up share values show, therefore, continuous increase down to 1909. Analyzing the position at the end of 1909, it is found, however, that, out of these 2,081 societies, with 230,737 members, 1,549 societies with 134,639 members showed an average paid-up share value per member of not more than 9s., while in the case of 214 additional societies, with 17,458 members, the average does not amount to the general average of 23s. In Baden, for 53,325 members, in 662 societies, there was an average of 3s.; in the Palatinate, 4s. for 15,292 members, in 136 societies; in Oldenburg, 2s. for 5,024 members, in 54 societies; in Hanover, 6s. for 16,108 members, in 169 socie- ties; in Schleswig-Holstein, 4s. for 4,717 members, in 92 societies; in one Silesian Union, 7s. for 6,469 members, in 60 societies; in Hesse, 9s. for 13,601 members, in 168 societies; in the Bonn Union, 20s. for 11,075 members, in 138 societies; and in the Wiesbaden Union, 21s. for 5,344 members, in 66 societies. In some districts, on the other hand, comparatively high averages were reported; in the Kingdom of Saxony the amount was 59s. for 5,267 members, in 84 societies; in the Province of Saxony, 31s. for 3,786 members, in 43 societies; in one East Prussian Union, £5 17s. for 558 members, in 7 societies; and in another East Prussian group, £9 7s. for 2,269 members, in 9 societies; in Pomerania, £2 12s. for 11,920 members, in 22 societies; in one Posen group, 65s. for 3,104 members, in 15 societies; and in a second Posen group, 43s. for 16 societies with 4,381 members. Nature of liability adopted.—Both limited and unlimited liability have been adopted by supply societies, but of late years it has been more usual to select limited liability. (See table above showing period of establishment and liability of societies.) In 1911, 45 per cent of these societies were regis- tered under the latter form, which has been almost exclusively chosen in the Provinces of Pomerania, Saxony, Posen, Silesia, Rhenish Prussia, Westphalia, and the Kingdom of Saxony, but in Schleswig- Holstein, Hanover, Nassau, Hesse, the Palatinate, and Baden unlimited liability is predominant. In East Prussia the former system has been adopted by the societies in the Konigsberg, and the latter in AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 195 those of the Insterburg Union. The percentage of societies with limited liability had increased to 46.2 of the total in 1912. In general, unlimited liability is found in the west, south, and northwest of Germany, and limited liability in the north and east. This circumstance is largely due to the fact that in the west and south the societies were either founded previous to 1889 (when limited liability was first made legally possible in the case of cooperative societies) or in districts where unlimited liability was the generally accepted form for cooperative undertakings. In the eastern Prussian Provinces, the supply societies being wont to include larger districts within their area of operations, and to maintain warehouses, limited liability is more readily acceptable than unlimited. On this point the Imperial Federation holds that limited liability is in general adequate, and “under given conditions merits the preference. In selecting limited liability—the advice of the union should be obtained—it is recommended that the liability of the individual members should be graduated in accordance with the extent of his holding (e. g., up to 24 acres, 1 share; from 2} to 5 acres, 2 shares; from 5 to 7} acres, three shares, ete.; each share bearing, of course, a fixed amount of lia- bility). Graduation upon the basis of goods to be purchased is less to be recommended.” Amount of liability attached to shares.—The amount of the liability attached to shares in societies with limited liability follows no uniform plan. In 1908, out of 816 such societies, 366 (44.8 per cent) showed a liability per share of from 1 to 10 times the nominal share value, 180 (22.1 per cent) of over 10 up to 50 times, and 270 (33.1 per cent) of over 50 times; the averages of the number of times in the three groups were 4.78, 20.83, and 123, respectively. Such multiplication of share liability as in the last group seems, on the surface, extraordinary and even dangerous, but in fact the shares are low in this group, the share values being almost exclusively from a penny to 10s., with an average (1908) of 2s. persociety. In the first and second groups the average share values were much higher—being £3 4s. and 12s., respectively. When the shares of a supply society are of 10s. and over, it is unusual to make the liability more than 10 to 20 times the amount of the share. Number of members.—There were 2,417 registered cooperative agricultural supply societies in June, 1912; and there were 2,241, about 5 per cent of which appear to be unregistered, which were attached to unions within the Imperial Federation. The average number of members per society, as shown by the figures for those societies (over 90 per cent) furnishing reports, has steadily increased. In the years 1892, 1895, 1898, and 1900 to 1910 the averages in consecutive order were, respectively, 78, 77, 77, 97, 100, 100, 103, 106, 101, 106, 109, 112, 112, and 114. In 1908 and 1909 the greatest number of members in a single society was shown by the Stolp Society in Pomerania, with 3,064 and 3,095 members in each year; respectively. In common with the other 21 Pomeranian supply societies, this society extends its business over several districts each of the approximate size of an English rural district. Societies covering similar areas are also found in East Prussia, Posen, and Alsace-Lorraine, but the greater number of supply societies have under 150 members. In 1908, according to the official statistics, the average number of members in 1,841 societies was 91; in 1909, 95. The following table shows the range of membership of the cooperative supply societies which fur- nished reports to the Imperial Federation in 1900, and in each of the six years 1905-1910. For all the years indicated its affiliated societies represented about 90 per cent of all registered supply societies, but the figures also include some unregistered societies. Members. 1900 1905 1906 1907 1908 1909 1910 3 10 10 10 6 10 8 19 29 32 31 29 27 24 29 52 62 55 39 °39 46 95 155 172 159 142 152 151 129 175 193 204 190 220 217 141 236 226 226 234 239 234 118 215 218 217 215 232 230 90 157 167 173 177 186 182 77 114 124 137 145 146 168 66 114 104 109 108 131 130 54 87 96 103 112 94 162 169 253 276 294 301 315 299 46 83 92 102 110 124 130 25 59 69 78 78 92 104 10 18 22 29 30 38 36 9 8 13 13 14 ll 17 21 32 35 41 38 20 39 1,101 1, 797 1,911 1, 981 1, 968 2, 076 2,177 196 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Area of operations.—The operations of most German supply societies are confined to small areas not exceeding one, two, or three parishes and correspond roughly with those adopted by the village banks. Their tendency is, however, to extend over slightly larger areas than the latter, restrictions of area of operations applicable to credit societies not being so imperative for supply societies, espe- cially if cash payments or only short credits are permitted. Unduly large areas mean more complex business, imply the employment of a permanent paid official or officials, and probably the necessity for maintaining a warehouse, and in general give rise to fixed establishment charges that may only with difficulty be met unless a large and constant business is assured. It is, of course, essential that the area be large enough to allow of a membership capable of furnishing orders of sufficient impor- tance to obtain the advantages of purchase upon a large scale as regards price, cost of transport, etc. In some districts, and, as already observed, to a noteworthy extent in Pomerania, East Prussia, Posen, and Alsace-Lorraine, supply societies extend their business over considerable areas. In Pomerania there are 22 societies, each usually serving one or more of the 28 rural administrative dis- tricts (Kreise) into which the Province is divided. The area of Pomerania is 7,500,000 acres, or about twice the size of Yorkshire. The smaller landholders very often obtain their goods from these socie- ties through their village banks, most of which are members of these supply societies, while the more considerable landholders, being directly attached to them as members, purchase without any inter- mediary. These larger associations for supply offer special advantages by reason of their large mem- bership, which includes large landholders and societies giving large orders; by the fact that their business is able to support experienced or expert staffs; and that their members furnish a basis of liability that enables them to command adequate working capital at moderate rates when needed. Collection of orders and delivery of goods.—Sosieties adopt different methods of collecting orders. In most local societies the committee of management gives notice at the annual (or other) general meet- ing of members that orders must be sent in for certain commodities by certain dates. Orders are then given by members at the office of the society or are collected at the homes of members by a messen- ger, or printed slips are circulated, to be returned within a certain period. On receipt of orders the committee communicates with the central society, provided that the quantities ordered are of suffi- cient amount. In the case of manures orders for less than 10 tons or of coal for less than 20 tons are not sent forward. As the majority of local societies maintain no store, only the quantities stated to be required are usually ordered.- On arrival of the goods the society selects samples, which are sent to the central society or to an experiment station to be tested. Each member takes delivery of his supplies at the place, generally the railway station, designated by the committee. Should the purchaser not remove the goods ordered on his behalf, the committee reserves the right either to sell to another or recover their value from the defaulter. Stores—When a store is kept by a society it is usually small, and the member of the society appointed to act as storekeeper attends, as a general rule, at the store once or twice each week at fixed hours to sell commodities. In only comparatively few cases is the business of a supply society sufficiently important or regular to justify the employment of a man for his whole time. In the large supply societies in Pomerania, East Prussia, and Posen warehouses are maintained and more or less constant stocks of most agricultural requirements are kept. But even these societies usually request their members to send in orders in good time so that they may be in a position to take advan- tage of any movements in the wholesale market. Value of purchases per member and per society.—The average value of the purchases made per member and per society in 1910 amounted to £27.9 and £2,929, respectively; in the years 1904-1909 the averages per member were £13, £18, £22, £23, and £27.7, and per society £1,434, £1,375, £2,054, £2,390, £2,696, and £2,772. The following table shows the extent of the purchases made by supply societies attached to the Tmperial Federation for each of the 10 years 1900-1910: AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 197 Table showing the extent of the purchases made by local supply societies in the 11 years 1900-1910. Percentages. Value of purchases. 1900 | 1901 | 1902 | 1903 | 1904 | 1905 | 1906 | 1907 | 1908 | 1909 | 1910 ; 1909 | 1910 UD 0 £125 5. a2 coeeviee ose s seen 266 | 297] 298} 324] 319] 321] 210] 219] 163] 147] 180} 7.35} 9.00 From £125 to £250..........2..... 195 | 197 | 244] 213] 292] 286] 268] 290] 257} 283} 259 | 14.15 | 12.94 From £250 to £500.......22.2..... 158 | 201] 218}. 230} 213] 269) 305] 283) 329} 284] 317 | 14.20] 15.84 From £500 to £1,000............... 169 | 200] 221] 242] 282] 274] 312] 323] 335] 382] 360] 19.10] 18.00 From £1,000 to £2,000............ 132 | 172} 198| 237] 253] 262] 304| 296] 337] 424] 379] 21.20 | 18.94 From £2,000 to £3,000............ 67| 79; 84] 101] 99] 115] 139] 139] 153] 144] 173] 7.20] 8.65 From £3,000 to £4,000............ 13} 29} 40] 39] 57{ 73] 81] 77) 78] 83] 81] 4.15] 4.05 From £4,000 to £5,000. ........... 10 10 16 23 21 28 39 52 52 60 55 | 3.00] 2.75 From £5,000 to £12,500. . ----| 20] 22) 29} 34] 43] 53] 71] 93] 108) 109} 117] 5.45] 5.85 From £12,500 to £25,000. -.--| 10} 13] J1] 5] 22] 24] 26] 29) 21] 36] 37] 1.80] 1.85 Over £25,000........00..0-000-02, 6 8 71 10 6| 20} 23} 33] 29} 48] 43] 2.40] 2.13 1, 046 |1, 228 |1, 366 |1, 468 |1, 607 |1, 725 |1, 778 |1, 834 |1, 862 /2, 000 |2, 001 |100. 00 |100. 00 Nature of goods purchased.—In 1909 and 1910 the supply societies within the Imperial Federa- tion sold to their members: Manures, 11,768,000 hundredweight and 14,269,000 hundredweight; feeding stuffs, 6,135,000 hundredweight and 7,549,000 hundredweight; seeds, 215,000 hundredweight and 235,831 hundredweight. Thus, as regards weight, chemical manures represented over 64 per cent of the total for these three groups of commodities, which together constitute about 80 per cent of the value of all commodities supplied. Per member the average amount of manures and feeding stuffs sold was: Manures, 1909, 67 hundredweight; 1910, 73 hundredweight. Feeding stuffs, 1909, 36 hundredweight; 1910, 39 hundredweight. Obligation upon members to purchase.—For the success of a supply society it is of great importance that members should purchase all their requirements through its agency. Moral obligation being apt to prove rather ineffective, many societies have introduced regulations binding all members to purchase either all their agricultural requisites, or all of certain kinds, through them alone, but such compulsion is by no means universal. Dealings with nonmembers.—The sale of agricultural necessaries by such societies to nonmembers is not prohibited by law; the cooperative societies act specifically exempts “agricultural distribu- tive societies which, not maintaining an open store, supply goods destined from their nature for the business of farming,” from the prohibition applicable to other distributive societies. It is not, how- ever encouraged by the societies, as new members are not likely to be attracted if the advantages of membership without its duties are thus obtainable. When societies have a surplus of stock, hav- ing obtained more than their members ordered or bought, they often dispose of it to nonmembers. Fixing of prices.—Prices are fixed by the committee of management with the assent of the board of supervision. It is usual to add to the total cost price a small percentage to meet expenses of man- agement and to build up a fixed reserve and a working reserve. Many societies, however, charge current prices, and at the end of the year, after making suitable appropriations to reserve and for working expenses, divide any surplus among members in proportion to the value of the goods pur- chased by each. This method has the advantage of tending to stimulate purchases by members; and, further, it enables small losses on particular sales to be distributed over the annual business. Many societies pay no other dividend apart from this ‘‘ goods dividend.” - Payment for goods by members.—Members are usually allotted a fixed amount of credit, within the limits of which they may be supplied with goods. Many societies provide in their rules of business that payment must be made within 20 or 30 days from date of receipt of goods; but a very large number appear to allow payment for most articles to be deferred for 3 months; and, after the lapse of that period, to charge interest at the rate of 5 per cent, or at a higher rate, should they happen to be obliged to pay abnormal rates for their own accommodation. To stimulate speedy payment it is a not unusual practice to allow a discount of 1 to 2 per cent to members settling their accounts within 30 days. The great majority of societies insist upon full settlement within 9 months. The congress of the Imperial Federation passed the following resolution in 1894 respecting prompt payment by members for goods: It is to be recommended to agricultural supply societies to lay the greatest stress upon the ‘ibs cotta of cash payment for goods. If credit is required by members for goods supplied, it should not be accorded for a period longer than three months. When members of these societies need longer credits, it is recommended that:a savings and loan bank be established, to be joined by such members as are in need of credit. 198 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. It is, of course, open to purchasers who are already members of a credit society to borrow there- from in order to pay for goods of the kind furnished by supply societies; credit societies have as their main purpose the provision of capital for immediately productive purposes, and, in fact, modern farmers find a very large part of their circulating capital is needed for commodities such as are furnished by these societies. In many cases when supply and credit societies exist in the same locality, the former receive payment in a lump sum from the credit society in respect of members of both, the amounts being duly debited to their accounts with the latter. The cost to the farmer of postponed payments for goods, whether in account, with a supply or credit society, is, however, less than it would be for credit with merchants who charge a rate of interest higher by 1 or 2 per cent; and in the former case no surrender of absolute independence is liable to be involved. Payment for goods by societies —The financial foundations of cooperative societies are the paid-up share capital and reserves together with the collective liability undertaken by the members. In the course of time, when the share capital is fully paid up, and considerable reserves are accumulated, a society may be able to work with its own immediate resources. The majority of German supply socie- ties are affiliated to the central supply association and to the central bank of their cooperative union. Particulars of the shares to be taken by local societies, the value of goods that are supplied per share taken, and other details will be found in the section dealing with central supply organizations on page 203, and similarinformation respecting central bankson page 166. When societiesare affiliated to both organizations they usually settle their account by order upon the central bank, which makes payment out of the balance of the society in question, or otherwise out of the credit allocated to such society. In the case of unattached societies payment is made by it directly to the supplier out of its own funds, or, if necessary, it obtains an advance from its banker. Profits —In cooperative trading the amount of profits actually obtained on a year’s working can not be regarded as a complete test of the efficiency and success of the particular undertaking. A cooperative sale society aims in the first instance at supplying its members with the best goods at the lowest possible prices. Large profits, therefore, are not sought. The fact that relatively’considerable sums are fre- quently appropriated to reserve tends to reduce the apparent profit on the year’s working. Further, a very large number of societies make a practice of allocating bonuses to their members out of profits, the specific amounts being based upon the purchases made by the members concerned during the year. In the case of the 92 societies showing neither profit nor loss in 1910, it may be assumed that any balances were thus paid out or written to reserve. The following table shows the financial position, at the end of 1901, and of 1908-1910 of those local supply societies that reported to the Imperial Federation for these years, together with the values and quantities of goods supplied in these years: Local agricultural supply societies. 1901 1908 1909 1910 Number of societies: . .......--- 2-2. eee eee eee eee eee cence 1, 094 __ 1,970 2, 081 2, 120 Membershipises < : o4dncisganactmesetenees Pontes: peli etle eee 125, 590 220, 728 230, 737 241, 022 Paid-up share capital £48, 883 | £173,182 | £203,572 £216, 954 Reserves: coe... k coerce mah eiseeeee ress sdecieeces £92, 142 £279, 228 £315, 335 £349, 094 Total owned capital £141, 025 £452, 410 £518, 907 £566, 048 Cae re amen a £899, 170 | £3, 235, 633 | £3, 318,105 | £3,539, 224 WMGRO tSiscaecert a Drrevsnosieee see £930, 482 | £3, 299, 766 | £3, 385, 820 | £3, 608, 492 Cost of administration £41, 188 £141, 046 £151, 773 £166, 016 Book value of property. .......---2--- 2-22-22 e eee eee eee eee £82,294 | £463,053 | £428, 686 £426, 162 Profits: - Number of societies. .....- 22... 2-022 0-ee eee eee ee eee 970 1, 675 1, 787 1,777 Amoutibee cx anciiaaauaiseredudorien tree caidas nn oe aan aban osie ao anebeant £31, 517 £69, 692 £82, 100 £85, 245 Losses: Nuniber Of s0CLOteS'. = 2c: cece we asleies veces ev ence cecine eens 70 260 217 251 AMOUUb 4 <-iccacoucnnet ime o2 eee epee 5 a asl ne seicaeaeeetights £1, 135 £5, 559 £14, 325 £16, 625 Neither profits nor losses... ...-..- 2-2-2220 ee eee eee eee cee e ee eee eee 52 35 17 92 Value of goods supplied... . 2.2... 22.202. eee eee eee eee eres e eee ee £1, 632, 614 | £5,051, 978 | £5, 544, 852 | £5, 863, 294 Quantity of manures supplied.............-------++-- hundredweight..) 5,001, 000 | 11, 252, 349 | 11, 768,000 | 14, 269, 000 Quantity of feeding stuffs supplied............-.-----2-e-2e- eee do....| 2,339,700 | 5,967,357 | 6,135, 000 7, 549, 000 Quantity of seeds supplied... .... 2... 2... ee eee ee eee eee eee eee do.... 129, 118 205, 408 215, 271 235, 000 Sale of agricultural produce by supply societies —In the first paragraph of this section it was noticed that, apart from certain districts there specified, the sale of agricultural produce was not generally undertaken by German supply societies. The returns obtained by the Imperial Federation from its AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 199 affiliated societies year by year, with respect to the quantities of corn and potatoes sold and their sale prices, indicate a development of this business in these districts, but no general growth elsewhere. In 1910, 222 societies reported sales of these commodities amounting in value to £3,152,365 ; of this total 19 Pomeranian societies accounted for £1,228,436, 7 East Prussian societies for £390,767, 84 societies in the Kingdom of Saxony for £368,824, and 14 societies in Posen for £256,280, or a total for 124 societies in these four districts of £2,244,407. The following table shows the value of those products sold by supply societies in the Imperial Federation, together with the number of societies concerned, in the years 1901, and 1908-1910: Number of Year. sociation: Value. WOOD wierd. s wets a ca meine caters is coz vate vena wate bess aussi iatiaie &-6-ghrei mnie eteehas Wslaw's & eka Re eee 64 £418, 982 LOOS 'screea tasers xine a Sis seeibira datmace habeas setae wai Sey Rede STG Pau. Pasen ob nyc Fanaa soe oe eta wie ac ep ewanchend ae 234 2, 518, 364 EQ 9 a3 trees aysna;ssana)d cars: Grdeanersisoates noche .o Sa eiladd vellesa (aievwneitedncss yoo Seah ain tS ond autbanats tarlete GiSha aE Wis Wien melee etree 205 2, 999, 147 DD. ais Assess cao aetna ok penaat zat ope cy ee eae aca aba dshebal it chse ta can oul dso ea eeO Te SO Ieee an ete das ant 222 3, 152, 365 The following note relating to one of the local supply societies visited by the writer is appended. Gross-Umstadt Supply Society—Only farming necessaries—manures, seeds, foodstuffs, coal, machines—are handled by this Hessian society, which does not maintain a warehouse or office; it is, in fact, simply an agency for the collection and transmission of orders. The secretary, or his deputy, makes regular rounds of the farmhouses—in Hesse the farmhouses always lie together in the village, not scattered upon the separate holdings—and the orders collected are dispatched to the central supply society. The goods are removed from the railway as soon as possible after their arrival by the members themselves, who are advised beforehand of the exact date. The working capital of the society was composed in the first instance of the shares of the members, but the society subsequently became a member of the local cooperative bank, which opened a credit for it.of £1,500 on current account on the basis of the liability of the members. At the end of 1909 the share capital amounted to about £80 in shares of £1 each, and the reserves to £22. The members are mainly, of course, farmers, with a sprinkling of men of other occupations who joined to obtain coal, or, having a few pigs or cows, to get feeding stuffs at cheaper rates. During a year some members buy cattle foods up to the value of £100 or £150, others perhaps only up to 20s. or 30s. Payments for goods obtained must be made within three months, after which time 5 per cent interest is charged, this being the same rate as is paid by the society for overdrafts on the coop- erative bank. The society charges a small commission—§{d. per hundredweight of coal, 13d. per hundredweight of manure, etc. In 1909 the sales amounted to £1,116, and the expenses of manage- ment to £13, of which the secretary, who was also secretary of the cooperative bank, received £7 10s. All goods delivered are tested by the State experimental station at the cost of the sender, and compensation is given by the manufacturer if they are not of the quality specified in the invoice of consignment. The society does not buy from its members produce for sale. Such a business, as the secretary remarked, requires considerable working capital, as deliveries must be paid for and a ware- house and employees must be maintained. The members, unless bound to bring all their products— a difficult obligation to enforce—bring only their inferior or middling wares to the society, selling the better quality to the dealers; and, he added, for the inferior wares brought they demand high prices. (2) CENTRAL SOCIETIES. Advantages of combination of local societies—The advantages of cooperating for the purchase of agricultural requirements can only be realized to the full when the local societies unite to form larger organizations. German rural credit societies find the services of central banks practically essential for their efficient working, but this need for more comprehensive organization makes itself even more. imperatively felt in the matter of local supply societies. With producers of many very important commodities required by agriculturists combining to maintain prices, either by limiting production or by other means, wholesale merchants by similar agreements levying a further undue profit, and finally with retail dealers obliged to secure their margin, the single farmer or even the single society, unless of considerable magnitude, is powerless to influence prices. Local societies have, therefore, formed large organizations covering Provinces or States that purchase on a large scale for their constituent societies and members. These central agencies have been further organized for the purchase of 200 AGRICULTURAL OREDIT AND COOPERATION IN GERMANY. certain articles required by most farmers into bodies which extend their operations over all Germany; and thus representing an effective demand of great magnitude, they are enabled to exercise considerable influence upon the determination of prices as well as upon the quality of commodities required. Special advantages of such further organization—German combination of over 1,000,000 farmers.— Apart from the general advantages already noticed as accruing to German landholders from their forma- tion of local organizations for the purchase in common: of agricultural requirements, further benefits resulting from their combination in central associations may be mentioned. A local society only making purchases in limited quantities is not in a position, as a rule, to enter into direct relations with manufacturers or wholesale merchants dealing in the particular commodities required. The average total sales of goods by 7,231 credit societies in 1908 and 7,217 credit societies in 1909 amounted to £544 and £616, respectively; and in the same year the corresponding averages for 1,968 and 2,076 supply societies were £2,696 and £2,772, respectively. The average total values per supply society may appear not unimportant, but since these societies sell various kinds of manures, feeding stuffs, seeds, etc., their purchases of individual commodities or kinds of commodities are apt to be relatively inconsiderable. In respect of the credit and other societies, which include supply business as a sub- sidiary part of their work this remark applies, owing to the inferior volume of their purchases, with even more force. But the concentration of the demand of several hundred societies for each of these articles enables a central association to purchase in bulk at favorable prices; and when, as is the case respecting the purchase of certain articles, over 40 large associations counting a membership of over s million farmers are united, their influence upon prices is substantial. In one year the Supply Asso- ciation of German Farmers, of which the Imperial Federation is a shareholder, has purchased at pref- erential rates 620,000 tons of basic slag; and the Potash Supply Co., founded by the same federa- tion, which is 1911 made a five years’ contract on very advantageous terms with the potash syndicate, purchased in the year 1911, 120,000 tons (as against 105,000 tons in 1910) of purified potash salts. Purchase of machinery.—As to the purchase of machinery the advantages secured have also been very great. Large commissions, usually payable by manufacturers to district and local agents, and other costs, being saved, orders for considerable quantities being given and cash payments made, central associations are able to obtain machinery at very reduced prices, and sell to members on correspond- ingly favorable terms. Quality is guaranteed. Expert advice as to the suitability for local conditions of any particular machinery is also readily procurable by the local societies from their central organization. Local societies safeguarded in various respects.—The central organizations, being conducted by Per- sons with special knowledge devoting their whole time to the business, are able to safeguard local societies, which are for the most part managed by persons who only in rare cases possess special knowl- edge of such commodities or of general commercial practice in respect of prices, quality, transport charges, etc. As a result of their intimate acquaintance with the conditions of their business, central associations are able to profit fully by favorable junctures for the purchase of articles subject to wide fluctuations and to conclude contracts extending over long periods on exceptional terms. Further, they are able to secure a high standard of quality in their purchases. Being large dealers they can, without incurring an undue proportion of expense, have their deliveries tested. For this purpose many retain their own analysts or machinery experts, and all are in regular communication with the experiment stations maintained either by the State or by the chambers of agriculture. As has been shown in reference to the local societies (pp. 190-191) the submission of agricultural requirements supplied to scientific tests appears highly desirable in the interests of the farmer. More impartial attention to special requirements—Educational efforts—Not aiming merely at obtaining large profits the central societies have less interest in selling commodities irrespective of their suitability for special districts, and endeavor to further the employment of feeding stuffs and manures advantageous, for instance, for special breeds of cattle or particular soils. The educational work effected directly or indirectly by these bodies is considerable. By means of addresses by their own officials or those of the unions whose affiliated societies they serve as central trading organiza- tion, by the distribution of leaflets and the frequent insertion of articles in the cooperative newspapers issued by unions and federations, they stimulate the employment of the most suitable goods and machinery. For some time four traveling instructors were attached to the Imperial Federation, whose functions were to spread in country districts by means of lectures and experiments a knowledge of the efficacy of potash salts as a fertilizer; and that stimulation on the part of central cooperative organi- zations has not been ineffective may be assumed from the striking growth of their own sales of this commodity; the sales of purified potash salts in 1911 showed an increase of about 15 per cent over those of 1910. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 201 Area of operations.—The area covered by central supply associations corresponds with that of the union to which they are affiliated, unions having in most cases created them to serve the societies within the union area. At the beginning of 1911 only two German agricultural associations of this kind were unattached to any union. Their organization is therefore, with few exceptions, upon a provincial or a State basis. In many Prussian Provinces, and in Bavaria, there is much overlapping. For the Rhine Province there are four central organizations, at Bonn, Cologne, Coblenz, and Treves; for Silesia and Brandenburg three, with headquarters at Breslau and Berlin, respectively; and for west Prussia, Posen and Pomerania, two each. Baden possesses two, at Carlsruhe and Freiburg; and there are four conducting business in Bavaria. The German Agricultural Central Loan Bank for- merly undertook the supply of many commodities for its societies spread over Germany; but in 1909 the establishment of independent central supply organizations for each of the union areas within the Raiffeisen Federation was voted by the Raiffeisen Congress at Breslau, and at the end of 1911 seven such bodies (at Coblenz, Erfurt, Berlin, Cassel, Dantzig, Brunswick, Breslau) had been created. The Imperial Cooperative Bank also embraces the whole of Germany as its area of operations. The Agrarian League also supplies its members throughout Germany. In 1901 was founded the Supply Association of German Farmers, which includes among its shareholders the Imperial Federa- tion, the German Central Loan Bank, the German Agricultural Society (this body has the same general aims as the English Royal Agricultural Society, but extends its functions to supplying agricultural requirements and to other objects), and the Agrarian League; it purchases basic slag on a large scale for sale to its shareholders throughout Germany. As noted above, a similar organization has been formed for the purchase of potash salts. A central machinery purchase office, one of the institu- tions of the Imperial Federation, similarly extends its operations over the Empire. Membership—Membership in a central supply association may, as a rule, be acquired only by cooperative societies and persons who are appointed to its committee of management and its board of supervision. Many admit, however, individuals to direct membership, but only agriculturists who are precluded from, or who show adequate reasons for not, joining a local supply or other society undertaking this business. The composition of the membership of those central societies for supply, particulars of which are available, may be seen from the following table: Table showing membership of central supply societies, Jan. 1, 1912. (1) WITHIN IMPERIAL FEDERATION. A : Other co-| Indi- Total : Credit Supply Dairy : : Head office. Area of operations. societies. | societies. | societies. eintboran ee iar (a) Cooperative societies with limited liability. Insterburg..-.....-..-----| tuast Prussia...............---|-.-------- tL stecstata ba pices 2 300 309 Mehlsack.......:.------- 58 2 leweas vwestlee sees eee 113 173 Neumark..........-..---| West Prussia...........,.....-|...-.-.--- 1 4 3 386 394 Berlin I..........-------- 234 2 5 4 104 349 Berlin IT.........-------- 10 7 10 24 1, 063 1, 114 Btettin. .....--.--------- 4 22 5 4 3 38 Posen [ia jeie cineecase-ctiesees 33 Os pale ede sie 6 119 173 Posen Wises ioxeseces ss Sctronetatsgaceispe | cei uesertia <2 | Pedatie Soci 147 99 246 Breslau I. ....---.------- B20: | ites oc eag cece 2 168 495 Breslau II. ........------ 156 72 5 3 50 286 Halle.............------- Saxony (Province) and Thu- 598 42 lll 13 10 774 __ ringia. Prfarts 2: scecceeineslcnee + Thuringia ai [ce aicgscesi) siacsenianteeel cnahepouceey deere dl eedee euarenue 25, 000 |...--...- 30 days....... s BiG oc ccna cclanqacd: 1895 | 25 0 50| 50 0] (4) 1,081 | 27,850} 54,050 | Varies....... 3} Breslau II........-.....-- 1890 | 15 0 100 | 75 O|.......... 712 | 11,055 | 53,400 | 30 days and 5 3 months. Halle.....................| 1890 | 15 0 10 | 100 0 500 0} 1,130] 16,695 | 113,000 | 14-21 days... 5-53 Brien ee re 1909 | 25 0 10} 100 0 250 0 829 | 20,775 | 82,900 | 30 days....... 5 lels.swos -| 1898 | 10 0 50} 50 0 250 Of} 1,272) 12,720] 63,600 | 14 days....... 5 Osnabruck..........-.... 1891} 10 0 10 | 100 0 500 0 ” 262 2,740 | -26, 200 | 30 dave eisieisiois 5 LATO VER. oo on: nieicinnesosoieisisce 1893 | 10 0 100} 50 0 100 0} 3,371} 33,710 | 168,550 | 14 days....... 6 Munster...........-..--- 1399 | 010 10} 50 0 (°) 1, 055 543 | 52,500 | 30 days....... 6 Wiesbaden............-... 1898 210 20| 50 O|]-.........- 102 252 5,100 | 1, 3, and 6 5 months. BOUT es scacneacsrecesnisiojaincevapvecitnees 1898 210 200 | 100 O}.........- 220 547 | 22,000 | Varies....... 7) Cologne.......-..--.----- 1882 | 10 0 100 | 100 0 500 O/; 1,119 2, 820 | 111, 900 | 30 days......- ( 5 Morice disiereeidinaeacnvcratyle’y = -1893 |} 50 0 300 Be 0 |. “gags 7,309 | 73,090 | 365,450 | Varies....... 4 eustadtiveccneccincseenss 1891 | 10 0 10 | 250 0 500 0 316 2,828 | 79,000 | 30 days and 5 4 months. Dresdetices ccscwcesncvee ss 1893 | 10 0 15 | 200 0; 1,500 0 453 4,550 | 90,600 | 30 days and 42 3 months. Darmstadt. Semeiecceiisa as 1890 5 0 10} 25 0] °500 0 216 1, 074 5, 600 | 4 weeks.....- 5 Friedberg in Hesse........ 1903 5 0 100 | 250 O].......... STi saseacetersectere 9, 250 | 1-3 months... 5 Oldenburg..........-....- 1891 210 20 | 100 0 250 387 967 | 38,700 | 4 weeks...... 5 (b) Joint stock or limited lability companies. Dan Zip soso ssc psicewaw see Berlin (Raiffeisen)........ Breslau III.............. Brunswick Berlin (Raiffeisen) 4... ._. (German Agricultural Cen- tral Loan Bank.) (c) Unions. 1882 1900 3, 858 2, 200 3 months. Cooperative societies with limited liability. . 11 per cent above current bank rate so long as this does not exceed 5 per cent; from 6 per cent onward at market rate only. 2 teaver e monthly credit exceeds £100 one additional share to be ta. 31 above bank rate. 9, 192 en; over £500, two; over £1,000, four. 41 share for every 250 acres of agricultural land owned by members or per £500 value of goods purchased. 51 above market rate. 6 Individuals who are members must acquire one share and societies two shares for purchases up to £1,000 value; up to £2,500, three; up to £4,000, four, ete. 7 Varies. 81 share to be taken up to £500 worth of goods purchased; for each further £1,000 another share. 91 share up to £500, 2 up to £1,000, and an additional share for eve: 10 Market rate. For each credit of £250 for goods supplied 1 share to be taken. 12 Figures for 1910 (Jan. 1). ry further £1,000 up to £5,000 worth of goods supplied. 204 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Exclusive dealing by societies with: central organizations.—In this as in practically all branches of cooperation the success of a society depends to a large extent upon the loyalty of its members in regard to exclusive dealing with their central society. In many societies members undertake to purchase only through the latter. But this obligation very often extends only to certain commodities (e. g., basic slag, potash salts). Such an ordinance when adopted is not always easily insisted upon in cooperative organizations. Local societies are frequently led to purchase elsewhere by an apparently cheaper price being offered; they do not pay sufficient heed to the fact that they obtain from their central organization only guaranteed goods of the best quality, whereas no such security usually exists in the case of outside purchases. Most central societies have stipulated for analyses to be carried out at the cost of the supplier, and such analyses are regularly made; but the right of free analyses is not usually accorded to single societies by those from whom they may purchase. As regards prices, apart from the question of quality, single societies are not often able to obtain better terms from wholesale or retail merchants, but it seems clear from the reports of the central societies that a great deal of business is independently done by them. In the interests of cooperation, and in the real interests of the members, their lack of loyalty is regrettable; it lessens the volume of business of the central societies and weakens their influence in the market, while members expose themselves to the risk of obtaining less satisfactory goods. Payment for goods.—In order to obtain favorable rates, central institutions must be in a position to settle with their suppliers either by cash or short-term payments and must accordingly require prompt settlement from their customers. As owned working capital they possess their paid-up share capital and their reserves. Most central societies oblige members to pay up all shares taken; and in 1910 and 1911 the reserves of the central societies in the Imperial Federation totaled over half of their share capital. But their borrowed capital amounted to about two and a half times their total owned capital. This capital is obtained from their union banks or other central cooperative banks to which they are attached and which allot to them fixed credits based either upon the amount of the collective liability of their members or upon some other standard (e. g., amount of paid-up share capital held in such banks, etc.). Some central societies also accept deposits from members and obtain advances in case of need from other than cooperative banks. The length of periods for settlement allowed to purchasers often depends upon the kind of commodity sold; as for certain manures, for instance, the conditions of payment imposed upon the central agencies by their suppliers may require payment within 14 days or perhaps within three months. But in some cases payment for all commodities may be deferred for from three to six months by the local societies; in others 10, 14, 20, 21, 30 days or combinations of these periods are fixed (see above table). In 1910 the rate of interest charged upon accounts after the lapse of such periods by 16 out of 29 central organizations reporting was 5 per cent, four charging between 5 and 6 per cent and four under 5 per cent. In 1911 (see above table), 14 organizations charged 5 per cent, six over 5 per cent, and five under 5 per cent. The rates cited compare favorably with rates charged for similar credit allowed by ordinary business firms, while the periods of grace correspond closely, as a rule, with those accorded by the latter. The following table shows for the central supply associations attached to the Imperial Federation the amounts due to them at the end of the years indicated, in their accounts with their customers, and the amounts due by them to their suppliers: Due from purchasers to central Due to suppliers from central Number of supply organizations. supply organizations. central End of the year. ea Per cent of | : Per cent of | Per cent : value o er cent 0. value of of total reporting. Total. goods total assets, | Total. goods liabilities. supplied. supplied. V8 9G eid cbihcda cinerea 14 £86, 726 13. 90 56. 60 54, 429 8.70 35. 20 NW90056 ct nemo Sneentnn oaseecenckes 18 230, 677 16. 60 55. 90 98, 512 7.20 25. 40 NOOB wets safeties wxrwicex icici Reiaie ataseee 23 836, 135 20. 67 63. 30 397, 763 9. 80 31. 90 TOO G wpaescdnish tne ea cin satan 24 991, 252 20. 69 64. 00 320, 329 6. 70 21. 56 907 ria aecs-aiae = 0 cn eamee wtih cs 26 | 1,377,517 22. 03 62. 86 836, 386 13. 37 39. 50 W908 step he ceca cc tnt el Gstgaa es ae 26 | 1,576, 265 22.12 60. 62 953, 113 8. 92 35. 03 NGO D ice screrases avers eed a aces Seaceenssnous 26 1, 497, 788 14. 23 54. 43 948, 971 9. 02 35. 56 AON: coe Melton dar cei sce 34 | 1, 857, 379 15. 32 55, 32 945, 867 7.80 28. 78 ONT ce cieye acid fe sine rns Nevalalaltes 33 | 1,902, 142 12. 96 55.58 | 1,070, 351 7. 29 34, 28 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 205 The accounts outstanding for goods supplied to members in 1910 and 1911 were especially high in the case of those central bodies to which a large number of individual landholders are directly attached. Agriculturists usually require credit for the purchase of such commodities, and through these organizations they are able to obtain it on as favorable terms as possible. It may be remarked in reference to the above figures that in the last quarter of the year the purchases of manures, feeding stuffs, etc., tend to be exceptionally heavy, and this circumstance affects balance sheets, which relate to the last day of that quarter. The following table shows the most important figures respecting the central organizations attached to the Imperial Federation at the end of each of the years indicated: Central supply organizations affiliated to the Imperial Federation. 1892 1897 1902 1908 1910 1911 Number of central organizations in the Imperial Federation (exclusive of the distribution by the Central Agricultural Loan-Bank) 2.0226 6i0: snseieaaieimemeince eo 7 16 22 27 34 33 Total of societies and individual members Affiliated <..ewescs cess scene eess 1, 181 2, 785 7, 659 10, 384 12, 764 12, 738 Total shares held..........--..---.-------- 1, 607 3, 838 10, 100 32, 260 25, 148 27, 867 Total share liability................2.....-. £56, 750 | £262,750 | £649,700 £1,733,155 | £1,825,125| £1,993, 525 gi Mahe tlie 3 rurcigaulnurmmctuacdevae ees 103,663 | 189, 309 890, 066 2, 804, 032 3, 357, 578 3, 245, 273 Total liabilities.....................-----.-| 101,701 | 173, 798 866, 390 2, 721, 046 3, 287, 096 3, 121, 740 Prolite eis os weaiehewissaniee tak sie se wees 4, 868 15, 511 23, 675 82, 985 70, 482 128, 379 DOORS 5. is ape ecicseralesicre eaainraiarniniers meets hee ODS ADOC! [ies epee eid seiareisyareieieves is 3, 821 20, 681 4, 845 Composition of assets: Cash, bills, and effects........... eee 25, 705 25, 723 45, 934 155, 505 224, 786 209, 168 GOOS) o.cecomsie cae ccdnisantmnienn acacs 18, 134 27, 539 124, 437 370, 214 486, 323 375, 396 Real and movable property............ 7, 753 9, 442 101, 872 388, 654 414, 439 411, 588 Various outstanding agsets.............. 52,071 | 126, 605 617, 823 1, 889, 659 2, 232, 030 2, 249, 120 Composition of liabilities: aid-up capital of members............. 18, 406 22, 629 43,990 372, 992 566, 089 637, 063 BELVO las = conan aceon uearn rads t :.| 3,622] 11,970 34, 201 108, 379 121, 002 110, 410 Working reserve..............-..------ 1, 888 7, 867 32, 521 174, 730 215, 131 212, 389 Total owned capital..................--| 23, 916 42, 466 110, 712 656, 101 902, 222 959, 852 Borrowed capital.................--.-- 77,785 | 131, 330 755, 677 2, 064, 994 2, 384, 873 2,161, 877 Relation of owned to borrowed capital. .| 100 : 325 | 100 : 309 100 : 683 100 : 315 100 : 264 100 : 225 Goods supplied during year: Tons. Tons. Tons. Tons. Tons. Tons. Manure. c..j.5 5 -oiccc obit owetigss tae 110,620 | 194, 258 476, 928 1, 240, 167 1, 382, 680 1, 613, 000 Feeding stuffs...................------ 35, 329 62, 840 127, 907 436, 128 445, 742 639, 520 Bed ate art Pua Lene eee 5, 056 2, 103 3,019 9, 362 12, 701 26, 844 Coal co rants Patesarceny anes 44,004 | 63,793 326, 731 893, 534 803, 815 1, 220, 000 Othe scisaisseenesisdcigheset sa esse yee eae 3, 208 6, 183 33, 073 118, 067 67, 600 107, 000 Total value of goods sold. ..........--...-- £410, 151 | £824, 083 | £2, 424,393 | £10, 682,599 | £10, 430, 514 £14, 681, 680 Expenses of management.—The central cooperative organizations conduct their business at a low cost. The*average expenses of management for 27 of such bodies, which reported to the Imperial Federation for 1910, amounted to 1.34 per cent of their total purchases and sales; in 1911 the corre- sponding figure was 1.31. In the former year the highest percentage was shown by the Strassburg Association, which was 4.6 per cent, or £7,590; in two cases (Kiel and Wiesbaden) it was slightly over 3 per cent, or £6,270 and £725, respectively; and in five cases it exceeded 2 per cent, being in one Berlin society 2.75 per cent, or £4,755; in the Regensburg society 2.37 per cent, or £11,256; in the Inster- burg society 2.23 per cent, or £1,881; in the Bonn society 2.10 per cent, or £6,050; and in the Neumark society 2.05, or £1,964. There were eight organizations whose expenses did not amount to even 1 per cent: Cologne, 0.70 per cent, or £4,066; Carlsruhe, 0.70 per cent or £2,415; Munich, 0.74 per cent, or £3,200; Hanover, 0.75 per cent, or £5,785; Mehlsack (Kast Prussia), 0.9 per cent, or £169; Stettin, 0.90 per cent, or £13,984; Dresden, 0.95 per cent, or £3,993; and Oldenburg, 0.94 per cent, or £1,315. Profits —Out of 30 central bodies reporting to the Imperial Federation for 1910, 28 showed a profit upon the year’s working, their total profits amounting to £91,164, or 164 per cent of their paid-up share capital at the end of the year. The total losses of the remaining two central associations that made returns amounted, respectively, to £19,876 and £805. The results of 1911 were still better; profits totaling £128,379 were reported in 31 cases, losses (£4,846) being reported by only one organization. Sale of agricultural products by central supply organizations.—Corn and potatoes are sold by the majority of the provincial organizations; in 1911 those to which the above table relates disposed of a total of 500,000 tons of corn and 34,000 tons of potatoes on behalf of their members. The sale of corn is especially noteworthy in the eastern Provinces. The total value of the corn sales in that year was 206 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. £4,240,217; of this total £1,109,641 fell to the Stettin (Pomerania) society, £860,026 to that at Dantzig (West Prussia), and £522,175 to two associations at Posen (Province of Posen). As regards other districts, the society at Hanover (Province of Hanover) sold corn to the value of £262,838; the Halle (Province of Saxony) society, £162,523; the Dresden (Kingdom of Saxony) society and the Carlsruhe (Baden) societies, each £125,000; and the Munich (Bavaria) society, £174,123. On the other hand, the sale of potatoes is carried on mainly by the societies in the West. In 1911, out of total sales of £100,936 effected by 13 central bodies, Friedberg (Hesse) returned £26,855; Coblence (Rhine Province), £22,574; and Cologne (Rhine Province), £11,760. Of the remaining societies that at Erfurt (Thuringia) showed the highest figure (£11,678). As compared with 1911, when the combined sales of corn and potatoes amounted to £4,390,408, the totals for 1909 and 1910 were, respectively, £3,286,090 and £2,702,887. 2. Darry Socretizs. (1) LOCAL SOCIETIES. Extent of movement.—Although cooperative dairying has not attained the same relative propor- tions in German as in Danish agriculture, it has become second in importance only to credit as a branch of agricultural cooperation. Its development in the last 20 years has been remarkably rapid; the number of registered cooperative dairies has increased from 639 in 1890 to 3,482 in 1912 (Decem- ber 1). The membership of 3,193 registered dairy societies on January 1, 1910, was officially returned as 288,699. In addition to these registered societies there are large numbers of dairy associations which carry on business on the same principles, but under a different legal form. Such organizations are especially numerous in Bavaria, Wurttemberg, Schleswig-Holstein, and Oldenburg. The general secretary of the Imperial Federation of Agricultural Cooperative Societies estimated their total in these parts of Germany, in 1908, at between seven and eight hundred. The value of dairy products sold by 1,525 cooperative societies, which reported to the Imperial Federation for 1910, amounted to £11,651,450. This number, however, represented less than one-half of the total number of registered dairy societies; and less than one-third of the societies of all kinds, both registered and unregistered; the total sales may therefore be conservatively estimated at about £20,000,000. Causes of its growth.—The causes of this success of cooperative effort are not far to seek. The growth of great cities and of industrial areas with concentrated masses of population has, within the last 30 years, intensified the problem of the supply of dairy products in Germany, as in other European States, and has led to fundamental changes in the organization of the dairy industry. It has necessi- tated, among other things, increase in production, more efficient utilization of the raw material, and more perfected systems of marketing, this latter being due to the distance of markets and of the refinements of market demands. Dairying upon a factory basis has replaced home dairying. The discovery of the centrifugal milk separator in 1876, with other mechanical and scientific improve- ments in the handling of milk and in the making of butter and cheese, resulting from the improvement in machinery and advance of bacteriology, has changed the economic scale of production from small to large; and the isolated small or medium farmer has been placed at a serious disadvantage. He can only carry on this branch of his business with profit by combining with other producers. Before cooperative dairy societies were formed in Germany a number of so-called collecting dairies were established by capitalists in many country districts, and farmers in these districts bound themselves for a period of years to deliver there all milk not used on their own farms. They had no responsibility for the collecting dairy and no share in its profits. The cooperative ideas which spread, especially after the passing of the act of 1889, and the difficulties which arose between the dairy owners and the farm- ers, as well as the circumstance that, when such dairies ceased operations, the farmers found it irksome or unprofitable to produce butter or retail milk themselves, led to the gradual widespread establishment of cooperative dairies. The predominance of small holders in Germany and the con- centration of the farmhouses in villages, instead of being situated upon the farms, are factors that have aided the movement in no slight degree in many parts of the country. Advantages of cooperative dairying, especially for small holders, as regards (a) equipment.—The essential technical and economic advantages of such combination or cooperation are manifold. The cost of purchase and of working dairy machinery, and the inadequate employment that the ordinary farmer is in a position to give it, prevents him from procuring it; and he is not, therefore, able to obtain the best results from his raw material. By combination there is a saving in all the means of production. The relative cost of buildings or necessary room for handling dairy produce, of machinery and imple- ments, of fuel, salt, and other requisite materials, is less when a hundred, two hundred, or perhaps eight hundred farmers (as one finds in Germany) are united for this purpose. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 207 (6) Saving of time on the farm.—But for the small working farmer, or, in view of the increase in the cost of labor and its diminishing supply, for other farmers also, the saving of time and of labor on his farm is highly important. When the milk is sent to the cooperative dairy, the farmer or his wife is free for other work. Hand centrifugal machines may extract an equal or a slightly higher percentage of fat than the large separators, but the time occupied, the trouble and expense of marketing, and the inferior prices generally obtained, materially reduce this problematical advantage. When no centrifugal machine is used on the farm, the yield of fat from a given quantity of milk is far inferior to that obtained by the large modern dairy separators. It is asserted that, previous to the introduction of separators from 3 to 4 gallons of milk were required to produce one pound of butter, while in a dairy of to-day less than two-thirds of that quantity is sufficient. (c) Better product.—Dairy-made butter is also likely to be superior. It is produced under better conditions; the staff is composed of skilled hands with all necessary appliances and materials, and the proper environment (e. g., cleanliness, good air, space, and measures for preservation) is secured. Small and medium farmers have a score of other things to which they must give their personal atten- tion, their space is limited, and their daily milk supply not sufficiently large to devote time each day to butter making, so that the milk or cream is liable to be kept too long and in unsuitable places until sufficient quantity for working is accumulated. Herr Pittius (quoted by Dr. Grabein) gives an interesting picture of the situation on a small holding where the butter is made on the premises: When the milk supply is not sufficient to allow of daily butter making, the farmer’s wife is ina state of constant perturba- tion aa to how to keep it. In summer she is at her wit’s end what to do owing to the heat; if she puts the cream in the cellar it will not get thick, while in warmer places it will quickly turn sour, and cheesy butter would be the result. In winter the cream is placed generally in the kitchen—where the butter is also mostly made—and there it absorbs the odors of cooking, of the smoke of the fire, and of tobacco smoke, and transmits them to the butter. If the cream is placed in the living rooms, it suffers the same fate—its aroma is lost and the butter is distasteful. When butter is made, perhaps twice a week in summer, and once a week in winter, the cream becomes too stale, bitterish, and rank, and the most capable housewife can not succeed in making table butter out of it. We thus see what labor and anxiety is continuously involved in producing good butter on a small holding. Moreover, in the thunderous weather, so frequent in summer, and when all hands are engaged in harvest and other work, hours must be spent in butter making at the cost of great exertion. Often the churning is overdone; and if the right Moment has been missed, no butter at all is obtained. The general result is that the products are likely to be inferior, and therefore to obtain a lower price than butter made under better conditions, with materials in a sounder state, and with better mechanical appliances. (d) Better prices with saving of time spent in marketing.—Not only is time saved in the making, but also in the selling of the product. The journey to the market town, the time spent at the market, as well as perhaps the other expenses incidental to the journey, enters as a considerable factor in the cost of production. The quantity being small and the quality not the same as other butters on the market, -the butter is not readily graded; or it may be sold to a dealer in return for goods in kind, or against a running account, in which case the profit of the farmer is unlikely to be considerable. Even if the time is saved by regular visits of purchasers to the farm, the prices are apt to be lower than market prices. By membership in a cooperative dairy such losses of time are saved, and experience has shown that better prices are obtained. The dairy with a large production and managed by persons with full knowl- edge of markets and of market prices can dispense with unnecessary intermediaries, and has an immeas- urably stronger position than the isolated small farmer. The relative cost of production being lower and the sale price being higher, the net profits accruing to the members of a well-managed and well-sup- ported cooperative dairy exceed those obtainable by isolated operations. In remote districts it may well be the case that only by bulking their milk products or fresh milk can any regular sales be effected. (e) Economy of milk.—The milk produced is also likely to be more economically employed when there is the knowledge that it has an immediate money value at the cooperative dairy. It is hardly necessary to remark that farmers should not push economy to the extent of stinting their families or of injuring their growing farm stock by depriving them of their requirements. (f) A source of steady income.—Cooperative dairies are particularly advantageous to small farm- ers with little capital. A regular income—the dairies settle their accounts monthly—extending through the year is obtained from their dairy. Other branches of their business, such as crop raising, market gardening, and poultry keeping, bring in returns only at certain periods of the year, but the supply of milk is more or less constant throughout. The value of a dairy to small holders in this respect was frequently illustrated in the course of this inquiry. Ina Pomeranian colony of small holders created in 1902 the writer found a telling exam- ple; the payments made by the dairy for milk in 1909 amounted to £1,650, while the rents and sink- ing fund of all the new holders delivering milk totaled £900. The property in question previous to 208 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. its division had been occupied by seven different tenants, none of whom succeeded in making it yield a profit. It is worth adding that on the creation of a “colony” of small holders the State in Posen and West Prussia, and the other agencies for colonization elsewhere, generally set apart land free of charge for the erection of a cooperative dairy. (g) Influence on breeding and maintenance of stock.—Indirectly the dairy may also exercise a great influence upon the maintenance of cattle and upon their breeding. Each gallon of milk bringing in a rapid return, and being paid for generally according to fat content, members seek to increase the productivity of their cows as well as the quality of the milk. Dairy societies encourage milk control societies, and often provide the necessary organization for this purpose. Most cooperative dairies have fixed rules as to the feeding of the cows, their cleanly and proper maintenance, and their housing. Suitable fodder is also frequently stocked by societies for sale to their members. - Types of cooperative dairies.—There are three principal kinds of cooperative dairies in Germany. The kind most numerously represented and forming about 80 per cent of the whole are those in which the cream is separated and butter made, the separated milk (and buttermilk in most cases) being returned to the suppliers in fixed percentages of milk delivered. The latter, small holders or the most part, require the separated milk for feeding their calves and pigs. Dairies which sell the new milk, or which utilize the new milk for making butter and full and half cheeses, and the separated milk and buttermilk for making other cheeses and as fattening for pigs, are fewer; out of 1,405 and 1,487 socie- ties which reported to the Imperial Federation on this point for 1909 and 1910, respectively, only 212 and 224 were of this kind. They necessitate larger capital outlay upon buildings, storerooms, machinery and appliances, and more skilled and expensive management, while the commercial side of the undertaking is rendered more complicated and difficult. The third kind of coop- erative dairy, which is comparatively rare, is found in thinly populated provinces, such as Pome- rania, where the farms often lie scattered, where a sufficient volume of milk can not be guaranteed, and where, owing to this insufficiency, fully equipped dairies lying close together would carry on an unremunerative business. These establishments, which are known as cream depots, and which are either independent societies or merely branches of a dairy, only separate the cream, which is forthwith dispatched to the central dairy or to the towns. The sites chosen for these depots are invariably close to a railway or within easy distance by road of the place to which the cream is consigned. Farmers resident in rather isolated, thinly populated districts, apart from the advantage of a regular market for their milk, are able by this means to obtain the return of separated milk in a very fresh condition. Territorial distribution of cooperative dairy societies.—The distribution of registered cooperative dairies in Germany in 1890, 1901, and 1912 is shown in the following table. The dairy societies affili- ated to unions within the Imperial Federation at the same dates amounted, respectively, to 31, 48, and 63 per cent of the total number in the Empire. The societies in Wurttemberg, where the dairies are for the most part quite small, and where many unregistered dairy associations exist, are not attached to the federation, and a few smaller groups of societies or isolated societies also hold aloof in Hanover, Pomerania, and other districts. Registered cooperative datries in Germany in 1890, 1901, and 1912. : July 1, | July 1, | June 1, July 1, | July 1, | Junel State or Province. 1890. 1901. 1912. State. 1830 1901. nai East Prussia............--------- 27 72 77 || Mecklenburg-Schwerin........... 50 80 137 West Pruasia.............-.------ 30 88 125 |) Mecklenburg-Strelitz............ /.20..2.. 10 13 Brandenburg.......-...-.------- 23 255 135 || Saxe-Weimar-Eisenach.......... 5 11 29 Pomerania. . sees 39 104 216 || Oldenburg................. 30 43 59 Posen.... rewiaeee ss 29 68 101 || Brunswick.............2.... i 70 89 SIlGSIR 22 seks amciea ceils ecctee esses 26 44 112 || Saxe-Meiningen.. << 1 5 7 BaXONY sc 5.508 sadeececsnuicig dee 2 26 178 266 || Saxe-Altenburg.. AAT | sort 3 Peblesyig Holston: Busi uals At 84 139 163 262 || Saxe- -Coburg-Gotha... Li ate el 1 4 2 a nOy CF se ec dere ioccaseecercdselees 91 271 351 || Anhalt....-....2.22-........0..- 1 5 13 Westphalia... pte try Ses poke 28 93 108 || Schwarzburg-Sonderhausen....... 9 2 5 Hesse-Nassau. . sat nedibe tds edie cage i Mat 12 35 44 ae ee ries eet (eyanar \ { Dede ceten 1 Rhine Province...........---.---- 7 226 225 |) Waldeck... Sara ea all det od gts 10 12 Hohenzollertiicc:: occcs cascccawwsse ieee sis eesenee 3 || Reuss Older Line... Gls pees scald atic 0 Gaited wb ehatainnel Reuss Younger Line.. Erucwlewa eee |Mi sand so 2 ee ra otal in Pruasia.....-..----. 477 | 1,597 2, 025 Schaumberg-Lippe............... { toteeee : a Palatinate. . pears | ” { 2 2 Lubeckscccsesecec gos acs ca gence 4 6 2 Right of Rhine..........- 158 519 || Bremen...................22..2.. 5 2 4 Saxon yen 2s'c: exacts eeeece 5 23 24 |) Hamburg...............2.2.22.... 1 1 Wurttemberg . : 23 139 338 |} Alsace- Topalne. enthiscuteninaecevle 1 9 34 Baden : 4 30 84 : T6666 occ sane eas a 12 29 41 German Empire............ 639 | 2,245 | 3,475 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 209 There is a tendency for these societies to be most numerous in predominantly agricultural regions, where market conditions do not favor the regular dispatch of fresh milk to the towns. Of the Prus- sian Provinces small and medium farmers predominate in Hanover, Westphalia, Hesse-Nassau, and Rhine Province; in the other Provinces medium and large farms. (See table, p. 120.) In Bavaria, Wurttemberg, Baden, Saxe-Weimar-Eisenach, and Hesse small holdings prevail, while in Brunswick the holdings mostly range from medium to fairly large; in Oldenburg and Mecklenburg medium and large landholders predominate. Cooperative authorities are of opinion that the participation of small and medium farmers in coop- erative dairy production in Germany has in proportion far exceeded that of the larger in the last 15 years. It is also asserted that the value of the butter production of dairies cooperatively organized, including those with another legal form, such as the free unregistered dairy associations, is at the present time approaching in the aggregate to the combined products of the dairies upon large prop- erties, of the dairies managed as private business concerns, and of the small individual farm. Dairy societies have especially flourished in Schleswig-Holstein, Oldenburg, Hanover, and in the low-lying districts of north Germany, such as Mecklenburg and those parts of West Prussia which are watered by the Vistula. In these districts the cattle-rearing industry was highly developed when the cooperative dairy movement began. It is stated that in 1890, 735 out of 931 cooperative dairies organ- ized under different legal forms were in Prussia, of which 340 were in Schleswig-Holstein, the bulk of the remainder in Hanover, West Prussia, and the other regions just cited. Membership and hability—The following table shows the range of membership and the kind of liability of registered cooperative dairy societies according to the official returns for January 1, 1910: Table showing membership and liability of cooperative dairy societies Jan. 1, 1910. Total With unlimited | With unlimited con- With limited " liability. tributory liability, liability. Range of membership. Societies. | Members. | Societies. | Members. | Societies. | Members. | Societies. | Members. 18 1121 15 E00} | evstovaretetevevave ieee dareyseca 3 21 73 673 41 QOL! loSarsaeisa | slassienees 32 291 386 5,914 278 4, 250 4 66 104 1, 598 649 19, 570 444 13, 383 9 256 196 5, 931 553 27, 684 392 19, 612 5 252 156 7, 820 366 25, 572 239 16, 749 6 405 121 8, 418 235 21, 000 139 12, 395 5 444 91 8,161 217 24, 427 118 13, 157 6 675 93 10, 595 157 21, 503 88 12, 002 5 |. 716 64 8, 785 100 16, 243 63 10, 232 2 328 35 5, 683 98 18, 308 59 11, 044 5 897 34 6, 367 214 51, 944 110 27,031 19 4, 469 85 20, 444 63 21, 576 40 T3710: eideeeceierss | poayrerckves! 23 7, 866 37 16, 440 20 8, 954 7 3, 088 10 4, 398 27 17, 724 22 14, 902 3 1, 676 2 1, 146 Totals noscssseccssccunseees 3,193 | 288, 699 2,068 | 177,903 76 13, 272 1, 049 97, 524 1 Four societies returned a membership of less than 7. Forms of liability adopted.—The form of liability adopted by the 3,475 societies existing in June, 1912, was: Limited liability, 1,118 (32.2 per cent); unlimited, 2,288 (65.8 per cent); and unlimited contributory liability, 69 (2 per cent). There has been a tendency among the societies established in recent years to adopt limited liability to a greater extent than formerly. The question is not in itself of essential importance. On the constitution of a dairy society, capital is required for the erec- tion or purchase of buildings and machinery, and perhaps for the purchase of a site. If the under- taking is large the sum required may range from £1,500 to £2,500. To raise this amount adequate security must be given. Many German dairies now borrow from the central bank of the provincial union to which they become affiliated, and the conditions for credit laid down by such banks usually provide that loans may not exceed a fixed percentage of the liability incurred. For example, if the bank lends up to 60 per cent of the liability, and the society requires to borrow £1,500, the members of the society must guarantee a liability of £2,500. Thus in the case of a limited liability society with shares carrying a liability of £25 each 100 shares must be taken up. It is usual to provide that mem- bers must take one share per so many cows held; in this way the liability is divided fairly equally 95273°—S. Doc. 17, 63-1——14 210 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. among the largest, medium, and small farmers in proportion to the services rendered to them by the society. When unlimited liability is chosen each member may take one share only. The capacity for credit may be increased under this form, but if the shares are fixed at a high nominal value the immediate individual payments may well approach those required from the larger farmers under the - limited liability form. In order to secure, however, a fair division of the risk it is frequently fouad that societies, neglecting the basis of liability in ordinary circumstances, provide in their articles of association that the allotment of profits and losses shall be made among members in proportion to their milk deliveries. Shares of cooperative dairy societies in 1909.—The following table shows the nominal value of the shares of all German registered dairy societies on January 1, 1909: Table showing the nominal value of the shares of German cooperative dairy societies on Jan. 1, 1909. . se With unlimited Solel pane | a ented. || cemetery With limited liability. y liability. Graduation of shares. : ‘ e Coopera- Additional] Total po Members. poe Members. ong Members. five 80- sel shares collective : es. ies. cieties.| PT | held. | liability. Up tod8. nccccce ss cesieee 207 16, 905 134 11, 230 5 619 68 | 5,056 21, 523 | £150, 019 Over ls. up to 2s.......-. 123 9, 825 102 7, 803 2 670 19} 1,352 3, 881 37, 352 Over 2s. up to 5s.......... 459 47, 941 225 21, 149 7 805 227 | 25, 987 52,481 | 808, 765 Over 5s. up to 10s......... 671 50, 546 301 24, 675 16 3, 283 254 | 22,588 40,659 | 682, 153 Over 10s. up to £1....... 197 15, 843 97 6, 934 5 893 95 | 8,016 26, 420 315, 200 Over £1 to £2 10s......... 562 54, 745 385 36, 355 10 1, 289 167 | 17,101 19, 122 659, 026 Over £2 10s. to £5....... 501 37, 989 401 80, 113 18 8,157 82} 4,719 6,628 | 269, 383 Over £5 to £10........... 135 7, 937 97 5, 204 3 1,118 35 1, 615 2,395 82, 923 Over £10 to £15.......... 84 7, 933 61 6, 711 7 261 16 961 774 45, 295 Over £15 to £20.......... 11 593 10 DLB: |eaierterccceeeideteeies 1 15 21 1, 440 Over £20 to £25.......... 59 6, 735 48 5, 768 2 449 9 518 108 40, 425 Over £25 to £30.......... 11 729 10 (alec 2 teh 2a ispahevetapsreyeieie 1 17 59 4, 560 Over £30 to £40.........- 4 63 3 Dad: I nvesesataesdhen yovousiolere iaianaiat 1 10 65 18, 750 Over £40 to £50.......... 32 1, 373 25 W222 | avcisiessoseccl aasisraiessytiorcde 7 151 131 37, 205 Over £50 to £100......... ll 287 b QOGA ansen icvarces eeeeracmssveriione 4 80 85 14, 205 Over £100 to £250........ 9 334 8 2) bivawpeddnawaucaee’ 1 NO} o-cencpertraverece 1, 500 Over £250 to £500.......- 2 55 2 DO; |avecievedsrerel| cisveve-gecvacolstel| raravehw ire [Soe eeee.s |wettwer nero benaenats Total... ..........] 2,978 | 259, 833 1, 916 159, 093 | 75 12, 544 987 | 88,196 174, 352 |'31,781,61 1 Total as printed in British report. | Corrected total is 3,168,201. With the object of raising the owned capital to as high an amount as possible the Imperial Feder- ation recommends in its model articles for cooperative dairies that the shares should be fixed at not less than £50, and that methods of payment should be adopted by which the full amount of the shares shall be paid up within 10 years from the acquisition of membership. To prevent the inconvenient withdrawal of share capital by the resignation of members, who are entitled to take away their share capital, the dairy societies usually make the period of notice for withdrawal 18 months or 2 years. The latter period is the maximum permitted by law. This measure is especially necessary for new societies which have not had time to accumulate sufficient reserves or pay off the capital borrowed for building and equimment. Reserves.—The formation of adequate reserves is of especial importance in the case of dairy societies, where the whole business may be brought to a standstill by the resignation of a considerable body of members, who by such action would not only withdraw their share capital and liability or guaranty therewith associated, but would also deprive the dairy of the necessary raw material, namely, their supplies of milk. When reserves are adequate, the possibility of calls upon members to meet temporary losses, a proceeding which is apt to shake the credit of a society as well as to alienate the goodwill of members, is reduced to a minimum. Reserve funds are of two kinds— special reserve and working reserve. The former is derived from entrance fees, which are not gen- erally charged upon the formation or during the first year of the society, but which are often made as high as £5 or even £25, when new members join a flourishing society, and from appropriations out of profits. The Imperial Federation recommends the placing to reserve of at least 10 per cent of the net profits until 20 per cent of the total working capital has been accumulated, or at least until the total value of the nominal share capital has been reached. The same recommendations are made with regard to the working reserve. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 211 Preliminary requisites for establishment of dairy society—The decisive question concerning the establishment of a cooperative dairy is whether the prospective members are in a position to insure the regular delivery of a sufficient quantity of milk. Many cooperative unions refuse to collaborate in founding a dairy society when less than 300 cows are notified, as a smaller number would not prob- ably yield sufficient milk throughout the year to realize working expenses and interest upon capital. Members are obliged, under penalty of fine, to deliver all milk beyond what is required for their house- hold or farm, and not to make butter or to sell milk. The situation of a dairy being of great impor- tance, sites are chosen in close proximity to the main traffic routes, the post office, and the railway station. Nearness to the railway means saving of expense both for the transport of produce and for the receiving of their milk, coal, and other necessaries. Other factors to be considered in choosing the site are a liberal supply of cool water, freedom from dampness, and means for the effective disposal of waste matter. Delwery of milk at dairy—The transport of the milk to the dairy is effected either by the society or by its members. In western and southwestern Germany, where the members are small holders with from 2 to 10 cows, as well as in Hanover, it is usual for the society to undertake the delivery. The area of the dairy is divided into sections, and the society employs members living in these sections to collect the milk, the farmers leaving the cans usually upon the roadside nearest to their farm. One dairy in Hesse, visited by the writer, had 850 members distributed over 14 villages, 12 of which were over 2 miles distant, and employed 14 carriers, all of whom were small holders. The vans were provided by the society, but the horses were the property of the carriers. The latter are, as a rule, paid at a fixed rate per liter (1.76 pints) collected, according to distance. This payment covers not only the collection of the milk but may also include the return to the members of the separated milk, as well as butter or cheese, when purchased by the latter. When the society does not under- take the delivery, it is usual, when the members are small or medium farmers with a limited number of cows, for those living in the same village or locality to arrange that each in turn undertakes the carriage of the milk to the dairy for a week, fortnight, or month. In Pomerania, Schleswig-Holstein, and other Provinces, in which the farmers keep large numbers of cows, the members deliver their own milk. One delivery daily is the rule, the milk vans arriving between 7 and 11. Except in the case of large farmers the evening and morning milkings are not usually dispatched in separate cans. Methods of payment for milk.—There has been a change in the method of payment for milk. It was formerly paid for either by weight or by measure, but at the present time the predominant practice of the dairy societies is to pay according to fat content alone, or to allow a fixed payment per liter (1.76 pints)—usually less in amount than half the normal price for good milk—and a further pay- ment based upon the fat content. Payment by weight or by measure had the disadvantage that bulk alone counted, irrespective of the quality, and farmers had an incentive to adulterate with water or to skim their milk, or to supply their cattle with less expensive and less nutritive feeding stuffs. This procedure was not so disadvantageous when the milk was destined for direct consumption as when butter had to be produced. Regular tests of milk supplied.—In practice the supplies of each member are periodically examined by the Gerber test, but regular alcoholic tests are made three or four times per month, and the price accorded to the member for his milk for each month is based upon their average. When low per- centages are found frequently, daily tests are made, samples from several successive deliveries being submitted to the Gerber test. The bulk of the dairies settle accounts with members every month, but in many this is done every fortnight. Ancillary businesses—Many German dairy societies have added with advantage subsidiary branches to their main business of butter and cheese making and of milk selling. Apart from the tendency to enter more into the profitable business of supplying towns with fresh milk, which is dealt with below, a considerable number sell feeding stuffs, manures, and other farming requisites, gen- erally in places where there is neither a supply or sale society, nor a credit society which engages in this business. At the end of 1911, 393 cooperative dairies were attached, as members or shareholders, to central supply organizations ; of these 111 belonging to the Halle union, 119 to the Munich union, 72 to the Carlsruhe union, and 17 to the Cologne union, while two Berlin unions and the Bonn union had 10 each. The actual sales to 118 dairy societies in 1909 and 119 societies in 1910 for which particulars are available amounted to £401,160 and £392,000, respectively. Dairy societies, of course, very frequently obtain their supplies of feeding stuffs, manures, etc., in the open market. The Imperial Federation mentions various other subsidiary sources of revenue ae its affiliated dairies, and, although 212 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. the particulars are by no means exhaustive, it can be seen that their minor activities are most diver- sified. In 1910 there were 179 with grist and crushing mills, 36 with bath establishments, 20 with flour-milling machinery, 11 with bakeries, 3 with combined mills and bakeries, 25 with potato steamers, 14 with wood-chopping plants, 28 with egg-selling stations, 5 with corn-thrashing machines, 6 with electric-power stations, 32 producing fattening for pigs, 5 with public weighing machines, and a few others which had distilling plant, ice machinery, etc. ; Some dairy experts engaged in German cooperative work strongly recommend that at the time of establishment provision should be made for the carrying on of by-industries either by the dairies or by independent societies. The same mechanical power and the same skilled staff required for its operation can be more fully utilized at little, if any, extra cost, especially as in most dairies proper dairy work is finished early in the afternoon, and the dairy wagons and carriers may also be brought into requisition for subsidiary services. Thus, carriers might collect eggs simultaneously with milk or deliver cattle cake, seeds, etc., at the same time as the milk cans are returned. The additional space or building necessary can be also provided on comparatively more advantageous conditions when the main establishment is being built. It seems without doubt that dairies might be utilized very frequently as the headquarters of egg and poultry societies, of societies for the sale of farming requirements, and of cattle-selling societies, if the dairy society itself is unwilling to add any of their responsibilities to its own business; while many other activities of a more restricted kind and involving little departure from the scope of their operations, such as have been enumerated above as actually undertaken by German dairies, may become a source of profit. Sale of fresh milk.—The sale of fresh milk is under certain conditions more profitable for cooperative dairy societies than butter making, and more attention is being devoted to this branch of dairying. Of the 2,000 societies which reported to the Imperial Federation for the year 1910, 57.2 per cent sold fresh milk or cream; in 1908 this percentage was 52.2. The proportion of the total milk delivered to that sold in a fresh state by the reporting dairies is, however, inconsiderable; for the six years 1905- 1910 the percentages were respectively 4.2, 6, 6.1, 5.9,6.8, and 7.1. In the Frankfort on the Main and Berlin districts, in the Provinces of Saxony, Hanover, Westphalia, and Silesia, and in the Kingdom of Saxony the cooperative societies have developed this business to the greatest extent; in all of these cases large towns having good railway connection with the dairies afford valuable markets. In the Frankfort area in 1909, 84.9 per cent of the milk delivered to the two cooperative dairies reporting was sold as fresh milk; in the Kingdom of Saxony, 37 per cent of the milk delivered to 19 dairies; in the Province of Saxony, 6.4 per cent to 237 dairies; to 42 dairies in Silesia, 12.1 per cent; and in Westphalia, 13.6 per cent to 52 dairies. But in the great towns like Berlin, Dresden, Leipzig, and Hamburg little progress has been made in this direction, the markets being dominated by large private undertakings. It is a prerequisite of success that the cooperative societies themselves further combine to concentrate their supplies, otherwise the working expenses are too high in proportion to their sales. In some cases good results have been obtained when the societies have been able to establish business connections with the smaller dealers in large towns and have been saved the cost of main- taining offices, delivery vans, etc., as well as the expense of securing customers. Milk-selling societies.—In some districts special societies have been established which undertake the sale of milk only. Such societies are generally constituted by combinations of milk producers of all kinds either for the purpose of sending milk to a central cooling station or for the establishment of urban central sale stations. In the former case the object is to secure the production of pure milk on the individual farms, to collect this milk in local cooling stations where it is thoroughly cleansed and cooled, and to dispatch this milk of a guaranteed standard quality to the towns. The members of the society undertake to adopt prescribed measures in regard to the equipment of cow sheds, the main- tenance, feeding, and giving to drink of their cows, their milking, and the treatment of the milk. They also agree to submit their arrangements to the supervision of the officials of the society, which provides the necessary collecting and cooling station and subsequent suitable method of transport and sale. For small dairy farmers the advantages are very great; the milk is better cleaned and better cooled and is preserved for a longer time; the farmers are saved the cost and trouble of marketing and obtain generally higher prices. These societies of a local character tend to join or form urban societies which establish a central dairy with branches in some large city. Such central dairies require to be adequately equipped and demand large fixed circulating capital. The Hanover society is a successful example of this organi- zation of milk producers. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 213 Another form of cooperative milk-selling society aims at combining as many as possible of the milk suppliers of a large city with a view to introducing a uniform (and higher) price for their prod- ucts. A large society of this kind was formed in 1900 in Berlin, but did not achieve success. It com- prised over 200 milk-selling associations and some 500 individual producers. It also aimed at the utilization of unsold milk. A similar society exists in Munich. Taxation of cooperative dairies—Dairy societies are exempt from income and trade taxes if they handle only milk supplied by members. If supplics from nonmembers are not merely temporarily but continuously accepted by them they are liable to both taxes. The income tax payable to the State is assessed upon the net profits, whether such profits are appropriated to reserve or divided among members, and the levy is made upon the total amount and not merely upon the percentage of profits derivable from the supplies of nonmembers. Deductions are only permissible in respect of the sum paid as interest upon share capital. In fixing the amount the average profits for the previous three years are taken as basis. The communal income tax is a multiple of the State income tax. The trading tax for dairies is limited to a levy upon the supplies received from nonmembers and the pro- ceeds of sale of products thereof. Upon establishment cooperative dairies must pay a stamp duty of 5s. upon their articles of association if the business is limited to members, but if it extends to non- members, one-twentieth per cent of the paid-up business capital apart from the liability, or a minimum of 20s. A stamp duty of 5s. is also payable upon authorization to set up or to alter boiler plant. Growth and present position of societies within the Imperial Federation—(1) Number and average membership.—The development of the German dairy societies has been distinctly satisfactory. No figures have been published giving a complete view of the history and present position of all registered dairy societies, but the statistics of those which have reported to the Imperial Federation during the last 20 years may be regarded as representative of the general development. The data relating to the two groups of cooperative dairy and cooperative milk-selling societies are not, however, sepa- rated in the annual reports of the federation. The number of dairy societies affiliated to the federation has increased from 334 in 1892 to 2,193 in 1912, representing at the latter date 63 per cent of all regis- tered dairy societies. The following table shows the number of societies and the average number of members per society in each of the years indicated, in so far as they are available: | Average Average Year. Rae number of Year. eee number of 7 : members. . members. 334 44 1, 736 101 600 60 1, 850 98 1, 034 91 1, 914 104 1, 081 96 1, 960 106 1, 152 TO2: |) V9IO creck newie warts eawoe ds bates oe 2, 028 109 1, 264 TOO POUT sec ereecuaicrscateiecicaunccereusicccisic' sarees 2093 Wc. < 49, 476 55, 898 60, 385 62, 918 79, 380 95, 874 Deposit business..............---0-02ee-00+- 50, 780 66, 976 86, 295 117, 688 104, 659 98, 849 Other business..............2.22-2-.---00---- 209, 520 215, 512 133, 899 200, 215 212, 915 236, 242 Total business (cooperative or other). . - 595, 623 664, 091 560, 795 759, 890 772, 327 819, 904 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 303 Extent of cheap credit.—The bank has succeeded in affording cheap credit even in difficult times, such as in 1907-8, so far as its credit on current account was concerned, but for bills and for loans against pledged securities its rates more or less conformed with those ruling in the open market. Its cheap credit (that is, at 34 per cent) amounted in 1910 and 1911 to 27.5 and 24.5 per cent of the total allotted to central banks. As a rule, when the maximum credit of £250,000 is granted to a society, about one-third will be given on current account at the cheap rate, and the rest on bills at one-half per cent less than the imperial bank rate (which is itself higher than the real market rate) if both declarations of exclusive business (already referred to) have been made. In 1911, 38 central societies had signed this twofold declaration, while two others, which signed only the declaration regarding the deposit of surplus funds, were accorded one-fourth per cent less than the imperial bank rate. Loans on effects are given at the current bank rate. The central societies, especially those which have become strong, complain that they can obtain credit by discount in the general market at as cheap, if not cheaper rates, now that the banking world has become familiarized with the principles of cooperative banking. To obtain the preferential rates for a limited proportion of their credit, they are obliged to do all their banking business through the Prussian bank and to deposit all their surpluses with it. Central societies, like the Raiffeisen Central Loan Bank (down to 1911), those existing in Pomerania, Saxony, and elsewhere, working with their own resources, as a rule, and requiring overdrafts for perhaps only one or two months in the year, may find it disadvantageous to accept the low rate of interest paid by the State bank on balances. They receive 3 per cent, but they them- selves may have to pay higher interest to the local societies. On the other hand, societies in some Provinces, especially certain eastern Provinces, find connection with the bank advantageous as a source for the credit of which they stand in frequent need. Rates of interest.—The bank has from the beginning endeavored to preserve stability in its rates of interest, more particularly for current account business, though as regards rates for bills and loans- on-effects business, it is not possible for the bank to escape the influence of the general market. From October 1, 1895, to September 30, 1898, it paid 24 per cent for balances on current account and required 3 per cent for loans to those central banks which gave the declaration of exclusive dealing both for deposits and loans; in 1898, 2} per cent was given for balances and 3} per cent charged for loans, but since 1898 the rates have remained unchanged at 3 and 34 per cent, respectively. Since 1902 the preferential rates were introduced; ordinary rates (that is, for central banks not dealing exclusively with it) in general follow the rates of the imperial bank. The following table shows the rates of interest of the Prussian cooperative bank, of the Imperial Bank, and of the Berlin Exchange for the last 10 years: Average rates of the Average rates of the Prussian bank. imperial bank. Preferential rates of interest. iverese Apr. 1 to Mar. 31— Rate of : P interest for Loans on market On current accounts. loans on Bills. effects rate. . effects (Lombard). Bills. (Lombard). Balances. Loans. s 34 3. 33 4.42 3. 42 4. 42 227 3 34 3.70 4.91 3.91 4.91 3.17 o 34 3. 82 5.13 4.13 5.13 2.96 3 34 3. 89 5. 20 4. 20 5. 20 3. 23 3 34 4.38 6. 41 5. 41 6. 41 4.35 a 34 5. 38 7.01 6.01 7.01 5. 02 g 34 3. 67 5. 17 4.17 5.17 2.94 3 34 3. 66 5.07 4.07 5. 07 3.07 3 34 3. 97 5. 38 4. 38 5. 38 3. 58 3 34 4.09 5. 50 4.50 5. 50 3. 69 Profits of bank.—For the years 1895-1899 the full rate of interest upon the share capital as fixed by the act, which was 3 per cent, was not paid, the total divisible profits for each of these years hay- ing amounted, respectively, to 1.79, 1. 46,3. 73, 0.61, and 1.52 per cent of the capital. Since 1899, except for the years 1906 and 1907, when 1.09 and 1.49 per cent were paid as dividends, the statutory dividends have always been met out of profits, the total divisible profits for the 12 years 1900-1911 being 4.61, 4.78, 4.83, 4.70, 4.39, 3.80, 1.36, 1.86, 4.59, 4.57, 5.01, and 4.42 per cent of 304 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. the share capital. The nature of the business of the bank to a certain extent handicaps it in the use of its capital. In this connection it is stated that, owing to its system of open credit, based on lia- bility, the bank deems it prudent to invest about three-eighths of its owned capital in securi- ties of the first class, which are realizable or pledgable, but which only yield about 3 per cent net profit. The general reserves formed from profits since 1895 amounted in 1911 to £375,000. Cost of administration.—The expenses of administration have been kept at a low figure. In the 12 years 1900-1911 they amounted to the following per centages of the foundation capital: 0.45, 0.53, 0.65, 0.80, 0.88, 0.97, 1.06, 1.18, 1.82, 1.21, 1.08, and 1.22. The actual sums thus expended in 1909, 1910, and 1911 were £34,953, £41,047, and £46,226; in these amounts were included in their respective years sums of £1,459, £2,703, and £6,444, which were paid in taxes. c. ATTITUDE OF COOPERATIVE ORGANIZATIONS. The Imperial Federation —The relations of the two great agricultural federations with the bank have undergone changes. In 1894 the congress of the imperial federation of agricultural coopera- tive societies discussed the question of a central banking institution, and a motion was proposed that the Imperial Bank should be approached with a view to the establishment of a special account for the central banks, into which the latter should pay their surpluses and from which they should borrow. But the Imperial Bank being judged unsuitable, a resolution was passed calling upon the federation to take steps to create a special central bank. A memorandum published later by the federation suggested the establishment of a German agricultural bank under the legal form of & cooperative society with limited liability. As regards the Government proposals, which were produced about this time, the federation expressed the view that it would be preferable for the State to participate, as a sleeping partner, with £250,000 in 3 per cent bonds in a central bank, to be created by the existing central banks, under the form of a cooperative society with limited labil- ity. Upon its establishment, however, the Prussian bank was welcomed by the federation, which sug- gested that its sphere of operations should be extended to include the Empire. Three years later dissatisfaction arose. The previous regulations concerning business with the central societies were replaced in April, 1898, by a more stringent evaluation of the credit bases and of the allotment of credit; these new regulations were stated to have been drawn up by the bank without consultation with its cooperative advisory committee. In the same year, to the chagrin of the central banks, the rate of interest for loans was raised to 4 per cent. Discontent found loud expression at the congress held in Carlsruhe, where it was asserted that the bank adopted the attitude of a supervising official authority toward the central banks, and a resolution was adopted by a large majority to the effect that the federation recommended the central banks to enter into negotiations with a view to creating their own banking center and called upon the president to take the necessary step for the foundation of a German central cooperative bank. This central institution, under the title of the Impe- rial Cooperative Bank, was founded in 1902 by the transformation of a supply society into a bank, which was to combine banking with supply and sale business. The Prussian bank thereupon gave the Prussian central societies the option of doing either all or none of their business with it. Owing to the comparative weakness of capital of the new bank, the societies could not hesitate in their decision, and the Imperial Cooperative Bank agreed to renounce all banking and credit business with Prussian societies. The latter have availed themselves largely of the services of the Prussian bank down to the present time. At the end of the financial year 1911, 32 rural central banks were accorded credit on current account by the bank, 20 receiving preferential rates, while of 29 which were granted credit for bill discounting 25 obtained preferential rates. -Of the more important Prussian central banks serving agricultural societies all are subscribers to the agreement as to exclu- sive dealing except those of Halle and Kiel; the latter never signed the agreement and the former has since renounced its acceptance of it. Raiffeisen Federation.—The second great agricultural federation, founded by Raiffeisen, and known as the General, or Neuweid, Federation, declared in 1895, with reference to the State bank then about to be created, that ‘‘the Raiffeisen societies of the Neuweid Federation have established out of their own resources a clearing center, a central loan bank, which is fully equal to the needs of the societies. For this reason the Raiffeisen societies observe a noncommittal attitude toward the proposals of the Prussian Government to create a State central bank for the regulation of personal credit for agriculturists and artisans. (See explanation of ‘middle class’ above.) The general council of the central loan bank is instructed, in the event of negotiations with the Gov- ernment, to safeguard first and foremost the complete independence of its own existing organization.” AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 805 The federation was unwilling that the business of its central bank should be subjected to the inspec- tion of the State bank or that it should become merely an agent for the transfer of moneys between its societies and the bank. In November, 1895, the Prussian bank, in a letter to the central bank, declared that ‘‘the interest of the Prussian Central Cooperative Bank in the organization, govern- ment, business operations, and supervision of the union banks is limited to the safety of the credits granted. In this respect the regular transmission of the official balance sheets by the central loan bank will suffice. No influence shall be exercised by the bank upon the application of the credit obtained from it nor upon the amount of interest charged by the central loan bank. The Prussian bank notes that the agricultural central loan bank reserves to itself the right to maintain business relations with other banks. Taking into account this reservation on the one hand and the assets of which we have taken cognizance on the other, we accord an open credit of £75,000 on cur- rent account; if suitable securities are deposited an additional credit corresponding with their value will be granted.” The open credit was afterwards successively raised to £120,000, to £200,000, and later to £300,000. Its credit obtained by lodging of securities, etc., reached, in addition, large amounts. In 1898 the new business regulations applied to the Raiffeisen Central Loan Bank as to all other central banks, and in 1902 the present business regulations came into operation. The next important alteration in their relations was the agreement made in 1905, which arranged for the participation of the central loan bank in the capital of the State bank to the extent of £100,000, only one-quarter of which was to be paid up, until such time, as provided by an amendment of the act of 1895, as a dividend of 34 per cent should be paid on capital; from April 1, 1905, the cash and credit business of all the Prussian central banks formerly carried on by the central loan bank was to be transferred to the Prussian bank, in so far as it might be found feasible. During such time as the central loan bank held part of the capital of the State bank—an arrangement which might be dissolved by mutual consent—the Prussian bank was to accord a credit of £200,000 on current account at preferential rates, but it was provided that the amount of the total credit on current account was, in general, not to exceed £300,000. Although the central loan bank gave the double declaration of exclu- sive dealing with the Prussian bank, it was agreed that so long as there was to its credit an excess of £100,000 over the amount of credit on current account which had been exhausted, the loan bank was free to invest the excess elsewhere. It was also stipulated that the central loan bank, as well as all suitable affiliated credit societies, so far as their own districts were concerned, should undertake to conduct the business of clearing and collecting bills and checks. In 1907 the central loan bank pledged itself not to carry on any business with the imperial cooperative bank either directly or indirectly. In 1910 there was a change in the administration of the Neuweid organization, its seat of business having already been moved to Berlin for the purpose of being closer to the money market; and differences arose. The main points of difference which emerged related to (1) the investment of balances in the regular business of the central loan bank, (2) the execution of its stock exchange business, (3) the collection or clearing of checks and bills by its affiliated local cooperative societies, and (4) the business relations of the central loan bank with other cooperative organizations. The Prussian bank only allows interest at the rate of 3 per cent upon balances, and the central loan bank complained that this was not so high a rate as was obtainable on absolutely secure invest- ments elsewhere, contending that such conditions might not be unfavorable for needy banks, but were disadvantageous for banks which, like itself, worked in the main with good balances. It was, in fact, a question of existence for the central loan bank; it could not afford to pay continuously 3 to 34 per cent to its depositors and to receive only 3 per cent on its own deposits. Negotiations lasted from November, 1910, till April, 1911. The central loan bank asked that its special position as a society with 4,000 cooperative societies as members and extending over the whole of Germany should be recognized, and requested more favorable terms. Rupture of relations.—Finally, upon the proposal of the State bank to place the central loan bank in the category of noncentral organizations, which would have given them a position even more unfavor- able than the ordinary central banks, and to charge 1 per cent on the larger side of their account, which the central loan bank declared would mean a charge of some £5,500 per annum, the central loan bank withdrew from all business relations with the State bank. The latter had also required, as a condition precedent to the continuance of business relations, that the central loan bank should sign a specific declaration drawn up by it which, in the judgment of the management of the central loan bank—the same view was publicly expressed by other independent cooperative organizations—was a clear violation of the independence of the Raiffeison organization as regards the conduct of its internal affairs. 95273°—S. Doc. 17, 63-1——20 306 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Financial arrangements have since been entered into with the Dresdner Bank (by which the central bank of the Schulze-Delitzsch societies had been absorbed in 1904) to take the place of the Prussian bank as a powerful banking institution to which recourse might be had in case of need. The withdrawal of the societies of the Raiffeisen organization reduces by about one-third the number of agricultural cooperative societies doing business with the State bank, and removes some of the oldest, most efficient, and prosperous credit societies from its connection. Other cooperative organizations.—The other larger cooperative organizations, of which there are three, the General Federation of Cooperative Societies based on self-help (founded by Schulze-Delitzsch), the Central Federaiton of Cooperative Industrial Societies, and the Federation of Distribution Societies (i. e., the German Cooperative Wholesale Society) adopt divergent attitudes toward State credit. The general federation has always been opposed to it, as contrary to the spirit which is expressed by its own title, though a few individual sections such as those in East Prussia and Schleswig-Holstein (which are in predominantly agricultural districts) maintain relations with the State bank. Apart from every other cause, the banks of the Schulze-Delitzsch connection do not, in fact, need such assist- ance as the Prussian bank would afford. They are established in towns; they generally have large shares, large reserves, abundant deposits, and skuled management, and therefore are in an independent position in the market. United to a provincial central bank, and through it to the Prussian bank, they would be liable to be hampered in their business; to gain any advantage they must, when credit was required, undertake to deal exclusively with the provincial central bank for loans and deposits, and at the same time such credit obtained through the provincial central bank would be hardly cheaper than the ordinary credit open to them, as highly developed credit organizations, in the business world. The Federation of Cooperative Industrial Societies works in close relations with the Prussian bank, and an official of the bank is one of its leading directors. It included in 1910 some 380 credit societies with 70,000 members. A large number of these societies have been created to promote the interest of special trades, such as those of bakers, butchers, and shoemakers, while others, such as the building societies, exist for other definite special purposes. But the principle of narrowing the range of potential members and forming water-tight compartments in banking matters is against all experience; abun- dance or stringency are likely to occur at the same time for the same trading classes. This is a marked characteristic of agricultural societies, even though they embrace not only agriculturists but all kinds of trades people within the particular rural area. All the credit societies in this federation are not, however, restricted to special trades, and there are some large banks affiliated, which, working, as a rule, on the principles of Schulze-Delitzsch, utilize the Prussian bank. The Federation of Distributive Societies, which has its headquarters at Hamburg, is not in business relations with the Prussian bank. Attitude of State bank.—The general attitude of the State bank appears to be that the central banks should be organized on the basis of provincial independence and that they should be in direct relations with itself. The existence of any such central bank as the Reiffeisen Central Loan Bank is looked upon as involving a duplication of functions, and the interposition of a superfluous body between the Prussian bank and the provincial central bank. Such a central institution it regards as a sort of competitor, which, if allowed to gather sufficient strength, would eventually render the State bank superfluous. That such a consummation was not in harmony with its views came to the surface in 1911, when the central loan bank—the strongest of all the central banks—made a provisional arrange- ment with the imperial cooperative bank. The State bank at once declared that it would cease busi- ness with the central loan bank if any such arrangement were made. The relations contemplated between the two banks even for minor purposes appeared to contain the germs of a large central co- operative bank extending over the Empire, and perhaps finally leading to the supersession of the Prussian bank, in so far as cooperative business was concerned. Grounds of complaint.—Incidental references to the grounds of complaint alleged in various quar- ters have already been made, and from such references it will be gathered that there exists in a large part of the cooperative world a certain dissatisfaction with the Prussian bank. The central banks which have grown strong complain of the low rate of interest which they receive for balances, and that if they desire to obtain preferential rates—which alone offer any advantages over current market rates— they must transact all business as regards depositing and borrowing with the Prussian bank. They must deposit, therefore, their balance at 3 per cent, whereas they could get perhaps 4 per cent else- where. This circumstance is obviously disadvantageous to central banks which have considerable capital and reserves. These banks are in a position to obtain credit on as good terms as other sound banks, and now that the principles and practice of cooperative banking are fully understood in com- mercial circles, ordinary banking institutions are quite willing to deal with them. Agricultural credit AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 307 societies tend to receive considerable supplies of money for four or five months, though perhaps in need of it during the other months of the year; during the months of abundance they only receive 3 per cent interest from the Prussian bank, whereas they might obtain 4 or at times even up to 5 per cent elsewhere. The weaker central banks, on the other hand, find the State bank of immense service. Being in more or less constant need of money they have a not inconsiderable credit always open to them at a low rate of interest; and they have little occasion to complain of low interest on deposits. It is also felt that, as a result of the foundation of the State bank, the sovereignty over Prussian cooperative credit has been taken out of the hands of cooperators; that office has been assumed by the State. It is sometimes urged that the State bank is too bureaucratic in its methods; that it is not sufficiently elastic in its administration; and that it requires extremely minute and detailed informa- tion as a basis for its granting of credits. Finally, there is the fact that the banking profits of a suc- cessful great central cooperative bank would return to cooperation, whereas under present conditions any resultant profits accrue to the State. How far these objections are valid it is impossible for a foreign inquirer to say, but in some instances, at all events, their justification will be dependent upon the point of view. As to the minuteness and fre- quency of the information required by the bank, it does not appear that it exceeds in this respect the practice of ordinary banks which are bound to examine thoroughly the security offered by their bor- rowers. As this security in the case of the cooperative societies rests mainly upon a collective liability, the unit values of which‘are subject to change (e. g., by retirement of members), and as it is not an imme- diately realizable security, additional circumspection is to be expected. The question of a low rate of interest for deposits is, of course, closely bound up with that of low rates for credit, and the more pros- perous central banks needing few or no credits are sacrificing some advantage for the benefit of the weaker sister institutions. From a purely business point of view the State bank is distinctly advan- tageous to the former for two principal reasons; in the first place, their connection with the State bank procures for them of itself a certain measure of confidence among the country population and helps to attract deposits, which constitute the largest part of their working capital; and, in the second place, while in ordinary times they may be able to work with little or no outside capital (or could, if not in connection with the Prussian bank, obtain equally good terms from ordinary banks), they wish to be able, in times of financial stringency, to avail themselves of that amount of credit allotted to them by the bank at preferential rates, when their own resources would be insufficient, or not realizable without considerable loss, and when ordinary market rates would be far higher. In course of time, however, there is no reason why the majority of central banks should not amass sufficient capital and reserves to be capable of forming a great central bank and of asserting eventually, without danger, their complete independence of State aid. D. SERVICES OF THE BANK TO AGRICULTURAL COOPERATION. No single factor has perhaps more signally contributed to the spread and internal development of agricultural cooperation in Prussia, and, indirectly by its example and influence, in the rest of Ger- many, than the Prussian bank. It was created at a most opportune period—when the profits of agriculture had been greatly reduced and general depression was severely felt. It systematized for credit purposes the principle of liability upon which the whole cooperative structure of credit was built, and made all societies eligible for credit upon this basis. Being an efficient institution, with capital and with prestige in the money market, it constituted for cooperative societies a channel for credit, and by its facilities it accelerated their increase. Through its principle of dealing on special terms only with unions of societies, the formation of central provincia] banks was stimulated, and their foundation or strengthening exercised a strong influence upon the increase and development of local societies. Proper business methods were impressed upon the central societies (it is a constant source of difficulty in cooperation that its leaders are apt to have much enthusiasm but little expert knowledge or business thoroughness, while the conditions often do not permit the payment of the wages of ability) and through them upon the affiliated societies. The bank has thus been instrumental in no small measure in securing supplementary working capital for small and medium farmers on the same terms as for traders. But its greatest economic success consists in the fact that it has served to collect and concentrate the monetary returns of agri- culturists and to employ them profitably on their behalf while providing for their redistribution at need. As a result of Prussian cooperative organization for purposes of agricultural credit, with the Prussian bank at its head, the circulation of money, which tends to pass from the country into the towns and to be brought back through several profit-seeking intermediaries, is effected to a great extent within the district in which the value is created, to the advantage of the industry producing it. 308 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY, II. OTHER GERMAN STATES. Although Prussia alone has created a special State bank to serve as a central banking institution for cooperative societies, other States in the Empire have given no inconsiderable support in other forms to central cooperative banks. In this respect Bavaria has been conspicuous; the Government has advanced to the Bavarian Central Loan Bank a total of £200,000 at 3 per cent as working capital, has obtained for it, at very favorable rates from the Royal Bank, a constant credit on current account up to £50,000 (against proper security), and has given grants toward expenses. Advances up to fixed amounts at specially low rates, or grants toward expenses, or both, have also been accorded to the agricultural central societies by the State in Baden, Saxony, Wurtemberg, and Alsace-Lorraine. For details upon this point for these States the reader is referred to the section in this report which deals with the general question of public aid to agricultural cooperation. LIVE-STOCK INSURANCE. Two main branches.—There are two main branches of German cattle insurance—life insurance and slaughter insurance. By the former is meant the insurance of cattle owners against loss of their stock by death or by compulsory slaughter. The whole question of cattle life insurance in Germany, as well as in other countries, has been immensely simplified in recent times by the veterinary measures adopted by the State to prevent the introduction and extension of cattle disease, as well as by the fact that compensation is paid by the State for losses incidental to the execution of these measures. Under the imperial cattle-diseases act, which came into force in 1912, compensation for cattle slaughtered on account of tubercular disease is, under certain conditions, to be paid by the State. Cattle life insurance is, therefore, now concerned with compensation only for the less serious risks to which cattle are exposed. By slaughter insurance is meant the insurance against loss arismg through the condemnation of the whole or of part of carcass as unsuitable for food. This branch of insurance has assumed increased importance as a result of the stricter modern requirements as to the suitability of meat for human consumption. In many part; of Germany it is becoming more common for local societies to unite the two kinds of insurance in the same policies. Agencies.—There were in Germany in 1910 only 23 registered cooperative insurance societies; their total membership was 10,616. No indication is given in the official returns either as to the object of insurance, or whether the societies were agricultural or urban in character. The provisions of the imperial insurance act of 1901, respecting private insurance undertakings, have prevented the creation of registered cooperative societies; for the formation of mutual insurance organizations only the legal form of the mutual insurance association, and not that of the registered cooperative society, is permissible. The number of mutual cattle insurance societies in Germany is, however, very great. Thirty years ago (1883) 4,021 cattle insurance societies with 399,401 members insuring 1,025,193 animals of a total insured value of £7,111,000 were returned as existing in Prussia alone, and since that date Prussian societies appear to have increased in number. Taking the figure for Prussia, how- ever, at 4,000, and adding the recently ascertained or estimated figures for Bavaria (2,000), Wurtem- burg (910), Baden (1,024), Hesse (300), and Alsace-Lorraine (171), a total of over 8,400 societies is obtained for these States. The majority of these are small local organizations, which, with the important exception of most - of the Bavarian, Baden, and Wurttemberg societies, have no written articles of association, and easily dissolve when losses are too heavy. Their existence is stated to be traceable back to the sixteenth cen- tury, and at the present time many are reported only to undertake to buy at stipulated prices the sound flesh of animals which die or are compulsorily slaughtered. Occasionally these societies extend their business over several communes, and even over political districts (Kreise), receiving from the district authority regular or occasional subventions in money, and being sometimes admin- istered at the office of the district authority. No figures are procurable respecting the bulk of such associations as restrict their membership to cattle owners living within one or two adjoining parish areas. Under the act of 1901 only associations with written statutes or articles of association, and with written insurance conditions, are obliged to require authorization to carry on their business or to publish their accounts. Insurance undertakings are, moreover, only subject to the imperial super- visory office for private insurance when they carry on their business beyond the limits of the Federal State in which their registered office lies. There were in 1910, 27 mutual societies for cattle life insurance in Germany which were subject to the imperial supervisory office for private insurance. At the end of 1909 these societies had policies outstanding which covered 464,858 head of cattle, at an insured value of £10,333,000 for AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 309 premiums aggregating £388,300; and in 1909 they had paid compensation amounting to £343,600 in respect of 19,753 animals. Most of these societies are stated to require an advance premium from the insured, and reserve the right to levy a supplementary premium. Two societies established in Saxony are, however, stated to require only fixed premiums. Small and medium holders do not insure to any noteworthy extent with these large societies, which charge high premiums and whose conditions have been framed more to suit the requirements of large owners. Nine large mutual societies, 8 of which are included in the 27 societies mentioned in the last paragraph, also undertake cattle-slaughter insurance; and there are 7 commercial undertakings under various legal forms which also deal with this branch of insurance and are subject to the imperial supervisory office. The former group insured in 1909, 1,838,548 animals of a total value of £16,344,658 for premiums amounting to £156,951, and paid compensation amounting to £231,836 in respect of 98,274 animals, while the second group insured 880,403 animals for £5,615,872, receiving premiums of £44,327 and paying £55,531 in respect of 17,439 cases of compensation. But the greater part of slaughter-insurance business is done by the local or district trade organizations of cattle salesmen and butchers; in Berlin the salesmen are stated to have established a cattle-insurance bank. State action.— Details are given later in this section concerning the part taken by various States in the organization of cattle insurance. Cattle insurance is far more highly developed in the South of Germany than elsewhere; and this is mainly due to the measures adopted by certain States, notably Baden and Bavaria. As regards slaughter insurance, however, in the Kingdom of Saxony, com- pulsory State-aided insurance has been in force since 1900. It may be added here that the move- ment to establish an imperial cattle-slaughter insurance organization in connection with the imperial meat-inspection legislation did not meet with success. Extent of catile insurance.—It is roughly estimated that, as regards life insurance, the local societies insure a total of about one and a half millions of large cattle and horses; and at the end of 1909, 464,858 animals were insured by the 27 large mutual societies. But compared with the total of large cattle existing in Germany, which was returned in 1910 at about 22,000,000, it is seen that the percentage of insured animals is small. Herr Ehrlich, the first authority on cattle insurance in Germany, has estimated that of the total value of horses and donkeys only 9 per cent, of that of cattle 8 per cent, and of that of pigs 3 per cent, were insured. And it is generally asserted that, although small and medium holders have the greatest interest in insuring their stock, yet it is this class which makes the least use of insurance. Importance for small holders—The importance of live stock insurance for farmers may be said to be in inverse ratio to the size of their stock or holdings. Large cattle owners may dispense with outside insurance and spread the risk over their flocks and herds, occasional losses being unlikely to affect their general financial position; but the loss of one or two head of large cattle may seriously embarrass the small owner, not only by the loss of the value of the stock, but also by the loss of income from milk or loss of manure, and in many parts of Germany, by being deprived of his beast of burden. Difficulties of insurance—As a commercial enterprise cattle life insurance in Germany appears to offer little attraction; it is stated that there is no joint-stock company engaged in this branch of insurance. Its difficulties are considerable, more especially as regards insuring the stock of small and medium holders. The honesty of the insured has to be relied on to an unduly great extent, owing to the difficulty of proving that loss has not been occasioned by intention or through negligence. Farmers tend to employ domestic remedies in order to avoid the expense of veterinary assistance which, especially in the case of young pigs, may be out of keeping with their value, and through fearing that any report of disease may lead to their farms being isolated. Examination by an insurance com- pany into the causes of the growth of the evil and its monetary valuation may entail unduly great expense. Special difficulties arise on account of the nature of the insured object; for instance, as regards identification of the insured with the dead animal, increase in number, alteration of value by reason of passing, say, from calf to large head of cattle, or decline in value by a comparatively slight increase of age. The risk of loss is also increased in the case of smaller farmers by the fact that their stalls tend to be inferior to those of large owners, their animals harder worked, and possibly not so well fed and generally caredfor. The expenses of management caused by the preparation of numerous and constantly recurring policies, and by the necessity for regular inspections, are also liable to be out of proportion to the insurance sum. As a result high premiums become necessary, and owners often prefer to take therisk. Thus, it was stated to the writer by a competent authority, that the premium payable in the case of horses usually ranged from 6 to 8 per cent, of cattle 4 to 6 per cent, and of pigs from 6 to 12 per cent, while the maximum compensation rarely exceeded 75 per cent of the insured value. 310 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Local organizations with reinsurance most suitable—It is generally recognized in Germany that cattle insurance, as regards life insurance at least, is most suitably undertaken by local organizations of a mutual or cooperative character. The members of such organizations can, among other things, observe and supervise the care given to insured animals and the action taken when anything occurs; and it is to their interest to do so. They are also in a position, without incurring any appreciable expense, to estimate correctly the value of the animals both upon insurance and in case of loss. The German agricultural council and other great agricultural bodies have been unanimous in recommend- ing this form of organization. Its drawback consists in the fact that the risk is covered by too small a number of animals and in a too restricted area. Should numerous losses occur more or less simultaneously, local associations may not be able to meet their obligations. It is therefore advisable for local societies to establish schemes of reinsurance either by combining among themselves or by arrangements with large imsur- ance undertakings, or, as has been done in Bavaria and Baden, with the State. The following notes are added with regard to the organization of cattle insurance in the principal Federal States: Prussia.—No attempt has been made on the part of the State to organize cattle insurance in Prussia, where about 4,000 cattle insurance societies, with about 600,000 members, were estimated to exist in 1909. These societies are mutual insurance associations, the majority of which extend over small areas and have no written articles of association, although in some cases, where all cattle owners within a political district (Kreis) are eligible for membership, they assume definite importance and are organized in a more regular form. In most cases the societies insuring cattle and horses do not levy fixed premiums, but raise the necessary funds by contributions based on the value of the insured animals, while the pig clubs or associations generally levy fixed rates. Several chambers of agriculture have adopted special measures to promote the organization of cattle insurance within their areas. The Prussian-Saxony chamber introduced a few years ago a system of reinsurance for the local associations scattered through the Province. A number of these associations were formed into a union, and all with excess of receipts over expenditure pay the bal- ance to the union for the purpose of covering the losses of those associations in contrary case. More recently the East Prussian Chamber of Agriculture has proposed to establish a similar union. There were in that Province in 1910 about 600 to 800 cow clubs (Kuhkassen), and it is intended to transform these clubs gradually into larger associations, with written articles and rules. Members are to pay from 14 to 2 per cent of the value of their stock to their associations as a fixed premium, and a small contribution for the cost of management, based on the actual expenses incurred. No cattle owners with holdings exceeding 125 acres are eligible for membership of these local associations, which pay compensation up to three-quarters of the insured value. The chamber is to form and administer a union of these associations, which will retain 60 per cent of their premiums, together with 1 per cent toward cost of administration, and pay 39 per cent to the union. The Province was to make a grant to the union, and the chamber of agriculture, besides undertaking the administration of the union business, was to make a grant equal to half of that granted by the Province. In Pomerania there are numerous cow clubs (Kuhkassen) as well as 80 insurance associations, most of which insure pigs only. The chamber of agriculture has formed a union, which had been joined by 27 of the latter in 1911. This union does not undertake reinsurance, but affords advice, technical and other, free of charge. The bulk of the cow clubs have been formed by the workpeople employed on large Pomeranian estates, and they are usually presided over by their employers. The chamber of agriculture undertakes to pay 20s. per animal in case of death, provided the employer gives the same amount and that Is. per animal insured has been paid by the owner to the chamber. Bavaria—State organization of cattle insurance—Since 1896 the State has undertaken the organi- zation of cattle life and slaughter insurance in Bavaria. In that year the cattle insurance act pro- vided for the establishment of a public cattle insurance institution and the organization of cattle insurance upon the following lines: (1) The institution to be a mutual insurance undertaking, whose management was to be intrusted to the royal insurance chamber; (2) the institution to be formed of those local mutual cattle insurance societies throughout Bavaria which have adopted the model arti- cles of association approved by the institution and voluntarily attach themselves to the latter; (3) only the insurance of cattle and goats to be undertaken; (4) the institution to take over the payment of half the losses as duly established, the funds for this purpose, so far as other funds were not available, to be distributed over the affiliated societies in proportion to the amount of the value insured by them; (5) an annual State grant to be made to cover partially the annual expenditure, in addition toa single foundation grant to be written to the reserve fund of the institution. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 311 State grants—The State made a grant of £25,000 in 1896; and since 1899 the annual grant has been fixed at £5,000. In addition (since 1900), asum of £1,250 has been placed at the disposal of the ministry of the interior for assistance to local societies, especially those whose payments to the insti- tution regularly exceed the compensation received by them. Administration of cattle insurance institution—The administration of the institution has been intrusted to a newly constituted department of the Bavarian Fire Insurance Institution, which receives, under the act, an annual payment of 14d. per £5 of the total insured value from the societies concerned. The fire insurance institution—fire insurance is obligatory and universal in Bavaria—undertakes on the same terms the administration of the Bavarian Hail Insurance and of the Bavarian Horse Insur- ance Institutions. As regards cattle insurance, the sum paid under this head to the fire insurance institution in the year 1908-9 amounted to £861. On the expiry of the insurance year, which is fixed, for the sake of convenience, as November 1 to October 31, the proportion of all expenditure falling to ‘each society is determined and is collected by the inland revenue by the same procedure as that for the collection of ordinary taxes. Compensation.—The institution, after examination and approval, pays in the first instance to insured persons the full amount of the compensation as established and recovers later from the societies in whose behalf the payments were made. The local societies estimate the amount of compensation, and any dispute is finally decided by the arbitration board of the insurance chamber. Supervision.—The institution is subject to the supervision of the minister of the interior, within whose competence Bavarian agricultural affairs lie. The local societies are in turn supervised by the institution, which must control their bookkeeping and is entitled to issue any regulations required for the execution of the act or of the model articles. It is authorized to summon witnesses, to impose fines not exceeding 10s. for neglect to carry out its instructions, and to exclude offending societies from membership of the institution. Representation of societies —A committee of 10 members (with two deputies for each), of which 9 are to be chosen for six years among insured persons, 1 from the district committee of the agricultural association in each administrative district, and the tenth from the Bavarian agricultural council, must be constituted and summoned at least once a year. Without the assent of the committee no change may be made in the model articles of association nor any society excluded from the institution. The audited annual accounts of the institution must be submitted to the committee for examination and remark. Arbitration board —The arbitration board is composed of three members (with three deputies), who are elected for one year from among the members of the committee. Cases must be submitted by the institution within two weeks from the date of receipt of objection. Privileges.—The institution and its affiliated societies are exempt from all fees, judicial or other, payable to the State, including receipt stamps and all postal charges, with the exception of charges for the dispatch of money. Banking —The banking business of the institution is undertaken by the Bavarian Royal Bank. The former is empowered to obtain from the fire insurance institution advances at the same rate of interest as the latter obtains from the Royal Bank on its deposits. Local societies —As already observed, Bavarian cattle insurance is organized upon a voluntary basis with State reinsurance, on the condition of adoption by the local societies of the approved model articles of association. Under the terms of the act of 1896 the area covered by local societies could not extend over more than one or more adjoining communes, but by an amendment of 1912 societies may cover larger areas. The preamble to the amending act states that by this means it is sought to afford the opportunity of insurance to cattle owners who may reside in areas for which no local society attached to the institution may exist. Tf the cattle owners of a communal or other area do not combine to form a society, the act empowers (and on request by at least 10 cattle owners obliges) the local authority to summon a meeting and to propose the establishment of a society. Their organization and their relationship to the insured members must be regulated by the articles to be drawn up and approved by the institution. Up to 1912 all societies had to adopt the same articles without variation, but the amended act allows, with the approval of the institution, variations to be adopted, on the ground that many prosperous societies held aloof from the institution, as they were unwilling to reject their own articles, which suited their local conditions, in order to conform to one rigid set of articles drawn up for the whole of Bavaria. Present model articles.—Reference may be usefully made to the more important regulations con- tained in the articles of association approved by the institution. 312 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Membership.—aAll cattle within the area of a society, including those of cooperative societies for common pasture and breeding societies, are entitled to insurance, except animals of professional cattle dealers, of those who have animals insured elsewhere, and of those who have been guilty of defrauding or attempting to defraud the particular society. Retirement can be notified only half-yearly, and takes effect at the conclusion of the following half year. Insurance.—All cattle owned by members must be insured, but those under 3 months are not eligible nor those over 12 years (but those already insured do not cease to be insured by exceeding this age limit), while animals diseased or suspected of disease may be refused pending the receipt of a veterinary certificate, as well as those obviously badly fed or overworked. Valuation.—The examination and valuation of cattle must be carried out by three members of the committee of the society. Current market rates are to be taken as standard, having due regard to the actual condition of each animal. If a member is dissatisfied with their valuation, he may, within three days, apply for a second and final valuation by the arbitration board of the society. The insured sum, to be stated in round sums of 5s., is entered in the book with other particulars, and the cattle owner may have a copy of entries on payment of 3d. Every year, in spring and autumn, three members of the committee must visit the farms of members to ascertain if (1) all insurable animals have been notified; (2) all insured animals are actually held; and (3) any alteration has occurred in their value. But the committee is entitled to visit the farms of members at any time; and members are obliged, under pain of a fine not exceeding 3s., to report within three days any addition to or reduction in their insured stock or any removal of the latter from the farm where they had been inspected. For all points connected with insurance arising between a society and its members, action at law is debarred; disputes concerning valuation are finally decided by the arbitration board of the society, and those concerning the grant or refusal of compensation by the arbitration board of the institution. Insurance payments.—Upon joining a society every member must pay an entrance fee of 4d. per 5 shillings of the insured value of his animals; but in case of death or of the transference of a holding of -a paember to a nonmember the new possessor of cattle already insured is not lable to this payment. All entrance fees must be paid over to the reserve fund of the institution. Societies may, in addition, by resolution of a general meeting, levy 14d. per head of cattle admitted to surance; the receipts under this head are to be devoted to meeting the cost of management. The average of the insured value, as determined at the spring and autumn inspections by the committee, forms the insured value upon which contributions are due to the society. With respect to animals which become insured after May 1, or which pass out of insurance before May 1, only half the contributions are payable. At the end of each insurance year the institution sends to each society a statement of the amount due by the latter. This amount includes the proportional contribution of the society toward the expenditure of the institution and half of the compensation paid by it in advance on behalf of the society. ‘To this total the latter adds its working expenses over the same period, and apportions the contribution due by each member in accordance with its articles of association. Until November 1, 1912, it was obliga- tory under the act to assess this contribution at a percentage of the insured value of the animals insured by a member, but the amended act of 1912 permits societies to fix in their articles‘their own principles of contribution. Benefits—Insurance takes effect eight days after entry in the books, and lapses upon the with- drawal of a member from the society (which is only permissible as from Noy. 1). Compensation must not exceed seven-tenths of ascertained value, or four-fifths in the case of animals condemned for slaughter, when the sum recovered from the sale of such animals amounts to at least one-fifth of the ascertained value. No compensation is payable (a) when death, injury, or sickness is due to war, fire, or lightning; (6) when compensation is due to owner out of public funds; (c) when the loss is due to want of care, neglect to obtain veterinary assistance, or any violation of the articles of association. Notification— Veterinary assistance—Immediate notification is obligatory upon members. The committee must then examine and give necessary orders as to treatment; if necessary, veterinary assistance is to be obtained. The insured must pay for the prescribed treatment as well as for the first visit of the veterinary surgeon, unless the society, by resolution of a general meeting, undertake to defray wholly or partially this expenditure. Owners may not slaughter their animals without AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 313 instructions from the committee, except in very urgent cases, and its necessity must be subsequently recognized by the committee before compensation is paid. Valuation for compensation.—The valuation is carried out by three members of the committee and is based upon the current market price of animals of the same class, taking into account their age and con- dition. In the case of animals up to three years or of those in calf the computed value, when an increase in value is recognized, must not be returned at more than 10 per cent of the value as registered after the last valuation. Any owner may appeal with 24 hours against the valuation of the committee to the arbitration board, whose decision is final; and if the amount of compensation appears insufficient, or if all compensation is refused, he may appeal to the arbitration board of the institution. All compensation paid by the institution.—The local society forwards all necessary documents to the institution at Munich, which pays the amount due within eight days, but which is entitled to obtain further information and, if expedient, to send a commissioner to report upon any case. Disposal of animals.—The committee of the society must sell the animals for which compensation claim is allowed and remit half of the net price to the institution. Management of local societies —For each society a committee of at least six must be appointed by the general meeting of members to hold office for a period of three years. No member may refuse to serve on the committee unless he has already served on it for three years. With the exception of the secretary, whose remuneration is fixed by the general meeting, its members hold honorary office, but they may receive compensation for service outside the area of the society. The committee must forward each year to the institution at Munich the annual statement of accounts, with vouchers for the purpose of audit, and on their return they must lay it before the general meeting. The board of arbitration is comprised of three members, one appointed by the insured person and one by the committee, while the chairman is chosén by these; in case of failure on their part to agree, he is to be appointed by the local communal council. Like the committee, they receive no remunera- tion, except they are called upon to adjudicate outside the area of the society. Slaughter insurance.—When any insured animal is found upon slaughter after sale to be unfit for consumption or to have depreciated considerably in value, compensation not exceeding four-fifths of the depreciation may be paid to its owner; the compensation, inclusive of receipt from the sale of the animal, must not, however, exceed four-fifths of value. The same compensation is payable when any animal, slaughtered for the exclusive use of the owner and his household, is found to have similarly depreciated or become unfit for consumption. The owner must at once inform the committee of the rejection of the slaughtered animal, for- warding particulars of sale price, of the cause of rejection, and of the loss incurred; on these two points the opinion of a licensed veterinary surgeon must be appended, or, if such a person is not available, of a meat inspector and of another meat expert. Compensation is not payable: (1) In cases already mentioned in connection with cattle life insurance; (2) when the animals are not slaughtered within 14 days after their departure from the area of the society or is not slaughtered in the empire, or when the insured person is in no way legally liable for the loss; (3) when notification of the objections to meat is not lodged and all the necessary documents furnished within a reasonable time; (4) when the insured had intentionally failed to exercise all necessary care in selling the utilizable portions of the carcass. Appeal against refusal of the society to grant compensation may be made to the institu- tion, and final appeal to the arbitration court of the institution. In other respects the general regu- lations relating to life insurance are applicable. Results of State action.—It is generally recognized in Bavaria that, although cattle insurance is still far from being as widely practiced as is desirable in the interest of Bavarian farmers (only about 10 per cent of their total stock being insured), the majority of which are small holders, yet the insti- tution administered by the State has greatly contributed to the spread of insurance. In 1894 there were 542 local societies in Bavaria with which 126,400 animals, valued at £1,310,000, were insured; in 1911, 1,661 societies were affiliated to the institution and insured 294,246 animals of a total value of £4,190,677. In addition to these societies there were, in 1911, 370 cattle insurance societies which have not become affiliated; a large number of the latter are small associations whose members under- take mutually to buy the sound portions of animals which die or are compulsorily slaughtered. The table following shows the most important figures respecting the institution since its establishment. 314 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Bavarian State Cattle Insurance Institution. Percent- Compensation. ot Number of} age of age oO: ear Number of/ Member- permet Insured compen- pa to ; total net : societies. | ship. asd value. sation | number of iepnaan payments : cases. animals Paid. e ae to insured insured. mene: value. VSO7 ole eee canes 814 | 39,201 | 194,402 | £1,974, 908 4,614 2.3 | £32,809 | 22, 353 1.2 BOB ca sisi cast teu ooe 1,008} 50,523 | 238,774 | 2,478, 077 6, 336 2.6 43,202 | 28,527 1.2 D899 eas wie eras peta 1, 270 62,967 | 285,138 | 2,995, 280 7, 804 2.7 53, 706 35, 871 13 DQ Qi o5c © aa smartrveesiignitgs 2s 1, 500 72,705 | 326,570 | 3,415, 426 9, 420 2.9 68,389 | 46, 207 L4 TOOT caste tees tine cee 1,551] 74,020] 326,214] 3,402,020 10,080 3.1 73,679 | 49, 978 1.5 W908 2 os etesteme ca 82 1,552} 74,829] 307,760 | 3,326,221 9, 855 3.2 71,694 | 47, 295 1.4 W903. coz cauceidentenie oe 1,537 | 74,673 | 292,545 | 3,360, 881 8, 879 3.0 68,543 | 45,410 14 1904 rc censeetiesnsitarse 1,530 | 75,945 | 297,855 | 3,508, 233 9, 205 3.1 73,927 | 50,618 L5 1905.2... eee eee eee 1,553 | 78,142 | 307,751] 3,739,745 | 10,407 3.4 86,008 | 58, 667 1.6 NQOG 2 9.2 es ccesecaatete 1,572 | 79,113] 305,769 | 4,006,275) 10,502 3.4 90,702 | 59, 247 1.5 1907 oni rate ceteae o 1,614 | 81,552] 320,776 | 4,274,478 | 10,330 3.2 99,264 | 65, 209 16 W908). x consntatannenes 1,646 | 83,982 | 332,432] 4,337,089] 12, 082 3.6 | 115,606 | 79,487 1.8 T90 Qe ore eecnya tage cate 1,689 | 85,117 | 329,774] 4,271,334] 12,550 3.8 | 120,033 | 82,007 1.9 AOU rex eyxnce tee maa 1,692 | 83,062] 306,851) 4,221,812 | 12,292 4.0 | 115,884 | 75,914 1.8 AQT Teen eee date 1,661 | 80,734 | 294,246] 4,190,697] 12,888 4.38 | 123,453} 82,096 19 1 That is, expenditure after deduction of net receipts from disposal of animals. The net payments as compensation have not reached 2 per cent of the insured value in any year, although the tendency in recent years appears to be toward a higher percentage than in earlier years. Since 1897 the institution has paid a total of £1,113,551 in 154,356 cases of compensation. The insured have had to pay no contribution toward the cost of its management; the grants of the State sufficed to cover this expenditure, which was cheaply and efficiently carried out by virtue of the coop- eration of the fire insurance institution. The Bavarian scheme affords an excellent and successful example of State cattle insurance, resting on a basis of local societies grouped voluntarily for the purpose of providing reinsurance to the extent at least of half of the amount of compensation payable to the insured. Horse insurance in Bavaria—Bavaria appears to be the only German State which has passed special legislative measures in respect of horse insurance. Proceeding upon the principles already put into practice in 1896 for the organization of cattle insurance, the Bavarian Government introduced and passed a horse insurance act in 1900. As a result of the imperial act concerning insurance agreements this act was amended in 1910; and in 1912 some further amendments were incorporated. In 1911, of the total number of horses existing in Bavaria about 24 per cent were insured under this act. It is unnecessary to go into detail regarding the provisions of this act, as the general organization and pro- cedure formulated follow very closely what has already been detailed as regards Bavarian cattle insurance; but certain points may be noticed. State aid—The institution received upon its foundation a capital of £25,000 from the State, which also undertook to provide a yearly grant of £2,000. The latter sum was subsequently raised to £3,000, and the State budget places at its disposal a further annual sum of £2,000 to be ‘employed for making extraordinary grants to individual overburdened horse insurance societies for the purpose of reducing the contributions” of their members. The interest of the capital is to be applied to the formation of a reserve fund, into which is also to be paid the entrance fees of members of local societies. In 1909 this fund already stood at £19,418. Toward the cost of administration a levy of one-fourth penny per £5 of insured value is authorized to be made upon the societies. Horse insurance institution.—The institution meets half of the compensation due to insured horse owners; like the cattle insurance institution it pays, however, such claims in full, and recovers from the societies concerned at the end of the insurance year, October 31. These societies are subject to inspection by the institution, which may examine all their books and documents, may impose fines up to 10s., and may exclude them from the institution. The committee and arbitration board are elected on the same lines as those attached to the cattle insurance institution. Similarly all corre- spondence in insurance matters is post free, and no fees payable to the State are leviable on insurance transactions. Local societies.—The local societies may cover similar areas to those of the local cattle insurance societies, and all horse owners within their areas are eligible for membership, except professional horse dealers, horse slaughterers, and those who hold policies with other insurance undertakings in respect AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 815 of any horse. No horse valued at over £75 is insurable by a society; otherwise, all sound horses of over 8 months and not exceeding 15 years owned by a member must be insured. Upon admission each member must pay an entrance fee at the rate of 1d. per pound sterling of the insured value of animals then insured, and for every animal insured at a later date a fee at the rate of 14d. per pound sterling. Amounts received under the former head are payable to the institution; those under the latter are applicable toward the cost of management of the local society. Valuation is carried out by the committee, but any dissatisfied owner may appeal to the arbitration board of his society. Insur- ance takes effect 14 days after registration thereof in the books, and ceases either on withdrawal (which is only permissible as from October 31, after notice given in the preceding July), or on exclusion from the society. Inspection of all stables must be made by the committee every spring and autumn, but further inspections may be made at any time. The average of the two returns as to the value of horses, made after each regular inspection, forms the insured amount upon which contributions are due; but horses withdrawn from insurance before May 1, or entered after that date, are reckoned, for the purpose of contributions, at only half of their value as registered in the books of a society. At the end of every year the institution, which has already paid the full compensation due, sends to each society a state- ment of its account for that year. Under the act any necessary contributions of members are to be levied according to the insured value, with additional proportional payments by owners of animals which are employed in certain kinds of work. Thus, for example, a standard rate having been established, on cab or post horses an additional three-tenths becomes due. In 1909, out of 80,811 insured horses, for which returns on this point were made, no additional payments were levied on 60,216. The following table affords a survey of the development of the institution from its establishment down to the year 1911, inclusive: Bavarian State Horse Insurance Institution. Number of Number of | Percentage Percentage Venn Number of/ Number of horses Insured compensa- | of claims to | Compensa- | of compen- : societies. | members. Pipes value. tion claims | number of | tion paid. | sation to in- ; paid. animals. sured value. 296 12, 254 32, 635 £930, 118 926 2.8 £17, 195 1.8 363 18, 773 47, 673 1, 382, 304 1, 723 3. 6 30, 469 2.2 401 24, 366 60, 021 1, 771, 632 2, 390 4.0 43, 752 2.5 414 27, 759 66, 028 1, 974, 365 2,773 4.2 51, 960 2.6 428 29, 010 70, 016 2, 133, 592 3, 101 4,4 58, 183 2.7 436 30, 139 71, 612 2, 249, 909 3, 378 4.7 64, 511 2.9 450 31, 406 73, 541 2, 396, 587 8, 742 5.1 72, 518 3.0 462 33, 248 77, 294 2, 591, 435 3, 796 4.9 74, 792 2.9 477 34, 991 80, 811 2,772, 004 4,148 5.1 83, 572 3.0 480 37, 574 84, 753 2, 999, 823 4,717 5. 6 97, 009 3.2 487 39, 017 89, 068 3, 275, 403 5, 426 6.0 115, 057 3.5 Baden.—(1) State scheme: Baden was the first German State to undertake the organization of cattle insurance. Under the act of 1890, as finally amended in 1910, every communal (that is roughly, parish) authority is obliged to establish and administer a mutual cattle insurance institution, when at a meeting of those cattle owners resident within its area two-thirds of those present vote therefor, and the district authority subsequently gives its approval. All cattle owners within the area of the com- munal authority may then be obliged to insure their stock. These communal institutions form a central institution or union, which (since the amended act of 1898) undertakes responsibility for half of the amount due as compensation. Local insurance societies existing previous to January 1, 1891, and whose articles and rules conform to those approved by the union, are eligible for affiliation to the union. It is also provided that if the requisite two-thirds majority just alluded to be not obtained for the establishment of a communal institution, the ministry for home affairs may sanction, for affilia- tion to the union, a society covering the same area, if it be formed within one month and comprise at least one-third of the cattle owners of the area. The amount of compensation payable is fixed at seven- tenths (or eight-tenths in case of compulsory slaughter) of the value of animals, taking as basis the current market prices of their class. Compensation is also payable in respect of animals discov- ered unsound after slaughter. To meet this expenditure the union levies contributions upon its constituent communal institutions, but when such annual contributions exceed 23d. per £5 of the total insured value the balance is made good by the State treasury. 316 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Union of communal cattle insurance institutions: The State made a grant of £10,000 to the union upon its establishment for the purpose of forming a reserve fund, bears the expenses of the adminis- tration of the union, and, as already stated, covers any deficit remaining after the levy of a maximum rate of 23d. per £5 of insured value. It appoints its committee of management, issues its business regulations, and exercises supervision over the conduct of business. The act confers on all the insurance institutions freedom from all court fees and other payments to the State in connection with insurance business, as well as free postage. The union, like the Bavarian Cattle Insurance Institution, pays directly to the insured owners the full amounts due as compensation, and recovers later from the local institutions; all insurance moneys are raised by the same procedure as that obtaining for the collection of communal taxes. Powers of audit and supervision over the accounts and management of the local institutions are accorded to the union. The interests of the insured are represented by a permanent committee elected from among the members of the local insurance institutions. Communal institutions: The local institutions are administered by the communal authorities under the direction of the mayor or the deputy mayor of the commune. Money grants may be made by the central authority to those communal authorities which have established insurance institutions for the purpose of meeting part of the expenditure in connection with veterinary assistance. Although there is the important difference between the Baden and Bavarian systems of cattle insur- ance as organized by the State that the one is built upon mutual local insurance institutions with limited compulsion, and the latter upon mutual local insurance societies voluntarily formed, the general regulations and procedure bear the very closest resemblance. Details of the Bavarian scheme, which was drawn up some years after the Baden system had been in operation, and was modeled in the light of the Baden experience, have already been given. The following table shows the most important figures relating to the operations of the Baden Cattle Insurance Institution from its foundation down to the year 1911, inclusive: The Baden Cattle Insurance Union, 1898-1911. Per- Average pre- Xramber of com: | centage Expenditure covered | uum pet £8 of i = Net " Number pensa- | Com- paid by— Year of local cee Number | Insured tion pensa- returns . organiza-| owiers. | of cattle. value. cases to tion ealeof tions. an number paid. cattle. By levy Tooal nee - oe 4 ae had a 3 By aa organi-| Union. vod a . gal * | Srant. | vations. insured. tions. Pence. | Pence. 87 9,396 | 29,231 | £310, 120 846 17 2.84] £7,695 | £2,176 2,322 1,240 2,100] 8.4 4.8 111 11,642 37, 449 497,051 1,101 26 2.87 11, 207 3, 893 3, 756 3,485 2,000 8.4 8.4 118 12, 466 43,174 618, 798 988 26 2. 29 12,071 4,126 4,421 3,712 2,150 8.3 7.2 118} 12,544] 44,407 598, 909 1, 224 20 2.76 | 14,072 4,344 4,597 5, 450 1,750] 8.6 10.9 123 12, 803 44, 827 600, 137 1,411 14 3.15 15,276 4,786 7,395 1, 200 4,000 14.0 2.5 124 12, 749 , 142 625, 076 1,276 24 2. 82 13, 837 4,719 7,107 1, 250 3,300] 13.0 2.5 125 17, 238 62, 832 934, 946 1,506 37 2.40 17,718 6,777 8, 820 1, 869 3,750 10.5 2.5 202 18,948 67, 297 999, 802 1, 809 LY: 2. 69 21, 128 8,511 9, 806 1,999 4,600 | 11.7 2.5 236 22, 254 74,877 | 1,135,860 2,156 20 2. 88 25,145 10, 320 11,628 2,271 5,500 | 12.25 2.5 258 22,769 80, 523 1, 284, 682 1,994 13 2. 48 24,218 10, 344 11,544 2, 569 4,810; 10.8 2.5 281 24, 868 91,584 | 1,497,278 2, 083 38 2.27 26, 902 11, 654 12, 568 2,994 5,050 9.9 2.5 321 27,599 107, 811 1, 793, 281 2,499 36 2.32 34,171 14, 616 16,556 3,586 6, 700 11.0 2.5 341 | 29,758} 118,282] 2,052, 450 2,903 30 2.45] 40,004| 17,556] 18,561 4,104 7,800 | 10.8 2.5 363 31,336 | 123,396 | 2,243, 781 3,144 33 2.54 44,389 19, 139 20, 393 4, 485 8,640 | 106 2.5 880 33, 183 132,591 | 2,531,340 3,440 32 2.59 51, 906 21, 857 23,985 5, 062 10,375 11.3 2.5 400 34,528 | 139,605 | 2,638, 659 3, 731 50 2.67 55, 745 21,915 26,319 5,277 11,870 | 12.0 2.5 417 36,370 | 144,477] 2,742,423 3,998 40 2.76 59, 414 24, 368 27,779 5, 484 12,340 | 12.1 2.5 426 36,950 | 143,570 | 2,841,739 3,915 61 2.72 60, 522 25,364 28, 769 5, 683 11,915 12.1 2.5 436 37,934 | 148,045 | 3,142,193 4,565 57 3.08 75,472 30, 215 34, 514 6, 284 16,105 | 13.2 2.5 The percentage of compensation cases to the number of animals insured has remained fairly uniform. Taking the year 1909, 87.8 per cent of the animals for which compensation was paid were compulsorily slaughtered, 5.6 per cent died, and 6.6 per cent were found diseased upon slaughter after sale. It may be noted that in the same year 41 per cent of the amount paid as compensation was recovered by the sale of carcasses; in 1910 and 1911 it was, respectively, 42 and 40 per cent. (2) Outside State scheme.—In addition to the communal cattle insurance institutions there are very numerous private cattle insurance undertakings, all of which are, however, subject to super- vision by the Baden ministry of home affairs (as the department responsible for agricultural affairs). As regards their membership, and the number and insured value of cattle, these undertakings are more important than the communal institutions. The majority are local mutual insurance associa- tions, but in many cases they have no written rules or articles of association, the cattle owners of a locality simply mutually agreeing to make good losses incurred by cash payments, and in some cases partly by cash payments and partly by purchasing sound portions of the carcass for their own consumption. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 317 The following table affords information concerning these cattle insurance undertakings from 1894 down to 1910, inclusive: Compensation cases. Number of Amount of Under- Number of : : moe takings. | cattle owners. oo a Percentage Hantcaid Surges Number. | of animals pale insured. 1894 2 es seocinteaecae say xeon 534 51, 521 151, 468 2, 821 1.76 £29, 302 W808 nas 2anadamneneeers Sy eesuee de. 563 54, 540 170, 372 2, 665 1. 56 28, 290 DS OG ec su aes rer steratas Fah wih wx arwinisvareiate 572 57, 009 185, 950 3, 282 1.76 32, 424 MSO Bis eesie Scsice dxdsee pene and ded Sete Eee eSeap eas loiosecl Pe 589 58, 736 195, 083 3, 571 1.83 35, 624 NBS = siete eee She aco evarekelne 583 59, 910 196, 678 3, 185 1.59 32, 820 S90 ss cp Asarsjevintvassdicie need cAnenaeree ord 566 58, 029 193, 589 3, 286 1.69 34, 074 900. scracracnaeemnsena niente ane 565 57, 571 190, 065 3, 426 1.80 33, 269 TOON 5 sichreuiinnaarsate ex cies slaainetevie sue 544 56, 665 185, 823 3, 371 1.81 34, 287 552 56, 764 185, 851 3, 205 1. 67 33, 436 547 56, 495 189, 654 3, 115 1. 64 35, 391 557 57, 496 198, 089 38, 529 1.78 43, 981 538 56, 426 196, 599 3, 680 1.87 38, 246 522 54, 255 188, 661 3, 506 1. 86 40, 627 536 55, 930 192, 659 3, 741 1. 94 44, 246 529 54, 328 191, 829 4,018 2.09 46, 879 527 53, 519 186, 441 4,111 2.15 48, 129 529 53, 273 184, 792 3, 997 2.16 49, 872 The percentage of compensation cases to the number of animals insured has been lower than that which has resulted for the communal institutions. That both groups of insured persons are composed mainly of small holders is clear from the fact that the average number of cattle insured per cattle owner—and all cattle must be insured by them—is less than four. There were also in Baden in 1910: (1) 26 horse insurance societies with 1,847 members who insured 3,004 horses; in that year compensation was paid amounting to £3,329 in respect of 172 horses; (2) 7 cattle slaughter insurance societies, with 448 members, who insured 32,306 head of cattle, total compensation of £5,018 being paid in respect of 7,553 animals; (3) 5 societies with 507 members who insured horses, cattle, and goats, a total of £1,035 being paid as compensation in 1910; and (4) 21 goat insurance societies with 1,265 members who insured 2,668 goats, compensation amounting to £128 being paid in respect of 129 animals. Wurttemberg.—State action.—Several proposals to organize insurance upon a plan similar to that adopted in Bavaria or in Baden have not been realized. The State has, however, in various ways encouraged cattle insurance. Since 1902 the central office for agriculture, which is a semiofficial institution of the same kind as the Prussian chambers of agriculture, makes grants for establishment expenses and for the formation of a reserve out of funds placed at its disposal for the promotion of cattle insurance. In some years the total thus allotted has amounted to over £250; and all local societies formed under the imperial private insurance act are eligible. When, in 1900, the Wurttemberg Diet rejected by a majority of 2 (38 to 36) a proposal to establish an insurance organization upon the Bavarian model, it passed unanimously another motion by which the Government were to consider by what means the activity and number of local voluntary societies might be promoted by direct grants. Asa result sums totaling from £500 in 1902 to £2,500 in 1908 and 1909 were granted to the central office for this purpose. Method of distribution of State grants.—Since 1902 all societies are requested, by public announce- ment made at the beginning of each year, to send in their claims for a State grant based on the expendi- ture of the previous year. In 1908, 781 local societies (out of a total of 910 then existing) sent in claims, and received a total of £2,337, or an average of about £3 per society. In estimating the State grant regard is had in the first place to the number of cases of compensation im which no sum could be realized upon the carcass, it being unfit for consumption; in the second to those in which animals were compulsorily slaughtered, although the carcasses were utilizable; and, apart from these circum- stances, there is taken into account the financial position of the societies, the number of insured animals, and the expenses incurred on account of veterinary assistance. Number and business of societies—There were 910 local insurance societies in Wurttemberg in 1908; and certain details are available respecting 781 of these societies with 75,266 members. Only cattle were insured by 708 societies; only horses by 23; only goats by 25; and the remaining 25 insured, in 318 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. addition to cattle, horses and pigs or goats. The total number of cattle insured amounted to 304,133, and the compensation to £12,794 in respect of 6,986 head of cattle (2.29 per cent of the total number insured). The great majority of the Wurttemberg local societies do not include insurance against losses arising through condemnation of meat after slaughter of animals. In 1908 only 30 out of 172 societies which adopted the model articles had included this branch within their scope. Grand Duchy of Hesse—Attempts to found a State cattle insurance institution on the Bavarian model have not succeeded, but the local insurance societies, which are estimated to number over 300, receive State grants. Alsace-Lorraine.—Three groups of cattle insurance organizations may be distinguished in Alsace- Lorraine. The first group comprised in 1909 70 societies (of which 65 are local and 5 are district societies) which belong to the insurance union established under the act of 1896. The object of the union is to aid societies which accept the model articles of association by grants to meet current liabil- ities and to strengthen their reserves; the Baden organization was closely followed in most particulars by the authors of the act. The second group consisted of 101 societies not affiliated to the union; while in the third group are 11 mutual insurance companies which insure mainly horses (in 1909 out of 9,160 animals insured 8,889 were horses). The following table affords information as to the business of these three groups in the year 1909: Compensation. Number| Number | Number Ex- Insured i of of of Per- enditure organi-| insured | insured ee or ae centage | 4 t PaNtng Theome, zations.| owners. cattle. Canes a of the ae year. ; ae animals pales * | insured. Societies in the Union: 1. Local societies .....-- 65 3, 686 8, 536 £129, 150 262 2.07 £3, 679 £4, 643 | £7,870 2. District societies ..... 5 5, 946 11, 879 192, 013 352 2. 96 4, 853 5, 840 8, 025 Societies outside the union...- LOM, |eevieccnte es 27, 547 355, 239 521 1. 89 6, 376 7,528 8, 192 Mutual insurance companies - 11 4, 851 9, 160 351, 458 534 5. 82 12, 849 13,635 | 15, 522 1 For management. Kingdom of Saxony.—In accordance with the Saxon act of 1898, obligatory insurance for cattle against loss through the total or partial rejection of carcass after slaughter has been in force since 1900. All Saxon cattle and pigs over 3 months old which are slaughtered in Saxony are subject to insurance. Compensation to the amount of 80 per cent of the value is paid, and the State undertakes one-fourth of the payment. The administration of cattle insurance is intrusted to the fire insurance chamber; no local decentralization exists. In 1909 and 1910 the following fixed premiums were paid: For bullocks, etc., 2s. 6d. and 3s.; for cows, 5s. and 4s.; and for swine, 7}d. In 1910 compensation was paid in respect of 4.34 per cent of the insured male cattle, 13.64 per cent of female cattle, and 2.14 per cent of the pigs; and the average payments in respect of each of these classes were £5 14s., £4 13s., and £1 18s., respectively. In 1909 and 1910 the State contributions, inclusive of cost of administration, amounted to about £30,000. APPENDIXES. Laws: Page. Imperial cooperative societies act, 1889-1896....... 02.00... cece eee ec ec cee cece ccc cecccccecccceccecceecssneeeses 321 Acts relating to Prussian State Central Cooperative Bank....2.......202 00002 c eee e cece eee cece cece e ce eeeeees 332 Imperial mortgage-bank act, 1899....... 0.000 cece ee eee cece eee c cece eee c cece ceecereeeenceecncvceeceeus 334 Hessian mortgage-bank act, 1902. 0.2.2... cece ccc cece eee cee cee eee ene ene eee e eee e cece bee cessereceeeeees 340 Prussian land improvement annuity-bank act, 1879.........2220 022202 e eee eee ee eee ee eeeeee 340 Mortgage (long-term) credit institutions: Articles of association (statutes, company agreement) of— (1) Westphalian Mortgage Credit Association (Landschaft)............... 2000000 c cece eee cece cence eee e sees 347 (2) Bavarian Agricultural Mortgage Bank.....-.....22 20.002 cece eee ee cee ee cence enter eeeeeeeee 359 (3) Hessian State Mortgage Bank............ 00. o eee ee ee nee eee eee eee nese cee eeeee 361 (4): AcPrusslaneavinps Dan le oiscisi ei scitennlZ hoe a 2 208 «Syn yebverciapstcinisiasa G2 S55 5 oe ayaa eee aleiced Be aed ac Reayeeeapovaiala 366 (5) Bavarian savings bank regulations (extract).......2..222.2..2002 2202 e eee ee eee eens 373 (6) Land Improvement Annuity Bank of Silesia. ..... 2.2.2... -2 0220-2 e eee eee eee eee eeeeee 375 Agreement of Baden Government with the Rhenish Joint-Stock Mortgage Bank as to rural mortgage loans.......-.--.- 379 Personal (short term) credit institutions: Model articles of association— (1) As issued by Raiffeisen Federation........2..- 220-222 eee eee ccc ec cence ene eee e cence ceneeees 381 (2) As issued by imperial federation for— (a) Societies: with unlimited, Habilityi.. 025.005 oe seca eeeceeasu bess eee a ees oi MickSalee be ésece acer 390 (6) Societies with limited liability.......... 22.0.0. .2 cece cece cee ee ee tener e cece eeeee 396 (3) As issued by Schulze-Delitzsch Federation (extract).........-..-. 0.0 eee eee eee eee ee eee eee eee cee eee eees 396 Model service instructions and business rules for credit societies issued by imperial federation...............-+------- 398 Model business rules (Prussian Saxony union)...........22-.- 220-222 eee ene e eee 403 Model savings deposit regulations (Pomeranian union)...........2..20. 22020222 e eee eee cee eee eeeee 406 Model current account regulations (Pomeranian union). ........--.---2-- 2-20 e eee ene eee eee eee 407 Prussian Central Cooperative State Bank— Recommendations respecting maintenance of liquidity by societies..............2.22--- 0.22.2 e ee eee eee ee eee 414 Credit by Prussian State Bank; its importance..............222. 20-2022 2 eee eee nee eee eee eens 415 Inquiry. forty. esc ieate od eave eoeaeaecunc ae gag see eee cae ee lee lone wane an Datei Denes cergaaeasdere 416 Raiffeisen Central Agricultural Loan Bank...............2. 0220200 c ee eee eee ee eee eee eee eres 417 Wurttemberg Central Bank— (General reculations:<00'. cs.neneatiedwcee ss sey texan: vee theese det se waren eamemicais 423 (2) Regulations respecting business on current account. ........-.-2- 2... eee eee eee eee 424 Agreement between Baden union and Rhenish Mortgage Bank. ................-2 22220. e eee eee ee eee eee eee 425 Regulations of Baden Central Bank. .....-.-.-.-.-- 2202.22 e eee eee eee eee ee eee e eee 425 Agricultural cooperation (other than for credit): Supply and sale societies’ model ATtIC IES Aid PUTIES: 3 3.5s45-5 2 sestcecscwtrhyete lalelab leas ceased biaed dated cacshed eb sayeeics genset owen 427 Dairy societies’ model articles and rules.........-.-.------ 2-2-2222 e eee cee eee eee ee eee eens 431 Cattle-selling' societies’ model rules si... 01s cecwceewsuene cc. enciendonaaneue ees ees eenetGek es epee esac 433 Egg-selling societies’ model rules.....---...--...---+- +22 +2252 22 eee eee eee eee eee eee eee ee 435 Thrashing-machine societies’ model rules. .......-------------- eee eee e cece eee ee teen eee eee eee 436 Federations of cooperative societies: Articles of association of— (1) The Imperial Federation of German Agricultural Cooperative Societies............+2.2-+---20222-2e200s 438 (2) General (or Raiffeisen) Federation of German Rural Cooperative Societies. ............2.------222.220585 442 Miscellaneous: Specimen audit report......------ +22 e eee ee eee eee ee eee ee ee eee eee 445 Scheme iol dud ltosscesews hdc seaeiwee choo nsckineeetst 222 meen eee eee ot eee Seek Gaeeceielee 447 Forms for statistical returns— (1) Credit societies........----------+ 2-2 sees eect e eee eet eee teeter erence cece eens 448 (2) Supply and sale societies....--...------- 222-22 e eee eee eee ee ete eee 449 (83) Dairy societies.......------++---- seer eee eee eer e tect cette rete ere eee cere ee eee 449 (4) Others. ... 2.2.22. - 22 -ee ee eden ee eee ee tre eee eee een ete eee eee eee eee 450 Contributions to unions by affiliated BOCLETES...ci-05- so es eceeeetewecedenee dense. Gas egegstepd cicieearaeetee Ses conch Serena raastele 450 List of agricultural requisites supplied by a central trading organization.............-..+222+2..e- eset scene eee 451 Notes on visit to beet-sugar factory...-.--------- 0-2-2022 22 eee ee eee eee ence eens 451 Land Bank, Berlin......-...------ 2-22 e cece ete cen eee eee eee ene e eee eee eee ee 452 Bibliography.....--.....0.s0 222 eee nce ee ne eee teen eee cece n eee e ence eee cence nent n eee n eee e eee nee een eee ee 455 LAWS. Imperial cooperative societies act, 1889: 1896. Acts relating to Prussian State Cooperative Central Bank. Imperial mortgage bank act, 1899. Hessian mortgage bank act, 1902. Prussian land improvement annuity bank act, 1879. THE GERMAN COOPERATIVE SOCIETIES ACT, 1889, AS AMENDED IN 1896.! CHapteR I.—Formation of the society. Section 1. Societies which do not limit the number of their members and have as their object the promotion of their eco- nomic welfare by carrying on business in common—especially (1) loan and credit associations; (2) associations for the purchase of raw materials; (3) associations for the sale in common of agricultural or industrial products (sale societies, warehouse asso- ciations;) (4) associations for the production and sale of goods for the common account (productive societies); (5) associations for the wholesale purchase in common of articles of food or of household requisites and the retailing of the same (cooperative stores); (6) associations for the acquisition of implements or materials for agricultural or industrial purposes and for their use in common; (7) associations for the construction of dwelling houses—acquire the rights of a ‘‘registered cooperative society” under the provisions of this act. ‘ Sec. 2. Cooperative societies may be established (1) of such a kind that the individual members assume direct liability to the society and to its creditors to the full extent of their property for the engagements of the society (registered cooperative society with unlimited liability; (2) of such a kind that the members are liable to the extent of all their possessions, but not directly to the creditors of the cooperative society, being only obliged to pay to the latter the contributions requisite for the satisfaction of the creditors (registered cooperative society with unlimited contributory liability); (3) of such a kind that the direct liability of the members, to their society and to its creditors for the engagements of the cooperative society is restricted beforehand to a fixed sum (registered cooperative society with limited liability). Sec. 3. The designation of the society must be derived from the objects of the undertaking, and, in accordance with the kind of cooperative society contemplated in section 2, must include the further definitions therein set out. The names of members or of other persons may not appear in the designation of ‘the society. The designation of each new society must be clearly distinguishable from that of every other registered cooperative society in the same place or parish. Src. 4. Seven members at least are essential for the constitution of a society. Sec. 5. The articles of association must be set down in writing. Sec. 6. The articles of association must contain (1) the style and title and the business address of the society; (2) the object of the undertaking; (3) regulations as to the form for the summoning of the general meeting of the members and for the authen- tication of their resolutions and as to the chairmanship at such meetings; (4) regulations as to the form in which the public notices issued by the society are to be executed and as to the newspapers in which they are to be published. Sec. 7. The articles of association must further lay down (1) whether the members are to be subject to unlimited liability, to unlimited contributory liability, or to limited liability; (2) the maximum amount which-individual members may subscribe as shareholders, as well as the amount to be paid up by the individual member (the amount to be paid up must be at least one-tenth, and the limit of time, as well as the amount of each payment till the sum is reached, must be defined); (3) the principles on which the balance sheet shall be prepared and verified; (4) the formation of a reserve fund which shall serve to cover losses as shown in the balance sheet; the method of formation of this fund, and especially the portion of the yearly net profit which is to be placed to reserve; and the lowest amount that such reserve must attain before such payments to reserve may cease. Sec. 8. The articles of association must further contain regulations which determine (1) whether the society is limited toa fixed period; (2) whether the acquisition and continuance of membership shall be dependent upon residence within a fixed area; (3) whether the financial year, especially the first, shall be reckoned by a year not coinciding with the calendar year, or whether it shall be reckoned for a shorter period than a year; (4) whether, with reference to certain matters, the general meeting shall have the power of deciding, not by a simple majority of votes, but only by a larger majority of votes or in some other manner; (5) whether business may be carried on with nonmembers. Societies having as their object the granting of loans may not extend their business, so far as the granting of credit is con- cerned, to nonmembers. Loans having as their sole object the investment of funds are not affected by this prohibition. Business transactions with persons who have already signed the declaration of membership and have been admitted by the society are also to be considered permissible. Distributive societies (sec. 1 (5) ) may only sell goods in the ordinary course of business to members or their representatives. This limitation does not apply to agricultural distributive societies which, without keeping an open shop, deal in goods which from their nature are exclusively for use in agricultural operations. Suc. 9. The society must have a committee of management and a board of supervision. The members of both bodies must be members of the society. Should the society have registered societies as individual members, or should the society consist exclusively of registered societies, members of such constituent societies may be elected on its committee of management or board of supervision. 1 The present translation is in accordance with the amended text as published in the Imperial Law Gazette of June 14, 1898. 95273°—S. Doc. 17, 63-1 21 321 322 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Sc. 10. The articles of association and the names of the members of the committee of management must be entered in the register of cooperative societies at the court within whose jurisdiction the society lies. The register of cooperative societies shall be kept by the court responsible for the maintenance of the commercial register. Sec. 11. It is the duty of the committee of management to report for the purpose of registration. The notification must include: (1) The articles of association, which must be signed by all the members, and a copy of same; (2) a list of the mem- bers; (3) a copy of the records concerning the appointment of the committee of management and the board of supervision. The members of the committee of management must at the same time sign before the court or forward their signature duly authenti- cated. The copy of the articles of association shall be certified by the court and returned with the certificate of registration. The other documents shall be retained by the court. Sec. 12. The registered articles of association must be published in abstract by the court. The public notice must contain: (1) The date of the articles of association; (2) the designation and the address of the society; (3) the object of the undertaking; (4) the form in which the notifications of the society are issued and the newspapers in which they will be published; (5) the period of duration of the society in case this is limited to a certain time; (6) the financial year, in case it is reckoned for a period not corresponding with the calendar year; (7) the names and addresses of the members of the committee of management. It must also be notified that the list of members of the society is open to examination by the public at any time during the business hours of the court. If the articles of association contain a regulation concerning the form in which the committee of management make known their acts and sign on behalf of the society, such regulation is also to be published. Sec. 13. The society does not possess the rights of a registered society until it has been entered in the registry of the district court. Sec. 14. Each branch establishment must be notified at the court of the district in which it lies, for the purpose of regis- tration. The notification must contain the details prescribed in section 12. Two certified copies of the articles of association, and one copy of the list of members attested by the court having jurisdiction in the place of business of the head office, must be appended. The committee of management must also sign before the court or transmit their signatures duly authenticated. The court shall return one copy of the articles of association with the certificate of registration, and shall inform the court within whose jurisdiction the head office lies of the entry in the cooperative register. Src. 15. After the articles have been notified at the registry of cooperative societies, it is necessary for intending members to sign a declaration of unconditional adherence. In the event of the admission of the applicant by the committee the declara- tion must be sent to the court for the purpose of registration in the list of members. The registration shall be made without delay. Through such registration, which takes place by virtue of the declaration and its transmission, the applicant acquires membership. Tue court must notify the member and the committee of the registration. The original declaration of adherence shall be retained by the court. Should registration be refused, the court must return the declaration and inform the applicant and the committee of management. Src. 16. A change in the articles, or in the continuance of a society limited to a fixed time, can only be effected by resolution of the general meeting. Any alteration affecting the object of the society or the increase of the individual share requires a ma- jority of three-fourths of the members present. The articles may lay down further conditions. For other alterations of the articles a majority of three-fourths of the members present is necessary, unless the articles of association contain other conditions. The provisions of section 11 of this act are duly applicable to the notification and registration of such resolutions, but two copies of the resolution must be handed to the court at the same time. The publication of such resolutions shall only take place when they have reference to regulations mentioned in section 12, subsections 2 and 4. Resolutions have no legal value before regis- tration in the local register of cooperative societies. CuapTerR II.—Legal status of the cooperative society and of its members. Sxc. 17. The registered cooperative society has, as such, independently, its rights and duties; it can acquire property and other real rights over land, can sue and be sued before a court. Cooperative societies are considered as traders in the sense of the commercial code, so far as this act contains no prescriptions to the contrary. Sxc. 18. The legal status of the cooperative society and of its members are settled by the articles. The articles may vary from the provisions of this act only in so far as this act expressly authorizes such variation. Sec. 19. Profits or losses disclosed at the time of the approval of the yearly balance sheet are to be divided amongst the members. For the first year this division takes place in accordance with the proportion of the amount of share paid up by the member, for each succeeding year in accordance with the proportion of the amount paid up at the close of the previous financial year, such amount having been credited with any profit or debited with any loss which occurs. Profits shall be written to the accounts of members until the shares are fully paid up. The articles may lay down other rules for the division of profits and losses, as well as decide to what extent profits are to be distributed to members before the shares have been fully paid up. When the amounts paid to the credit of the shares have been reduced by losses, no profits are to be paid out until the previous value of the share capital has been again attained. Sec. 20. It may be laid down in the articles of association that the profits be not divided but be placed to reserve. Sec. 21. Interest of fixed amount shall not be paid on share-capital paid up, although 2 member may have made higher payments than he was obliged. Members who have made more than the necessary payments can not in case of losses claim against other members on the ground that the latter have only made the necessary payments due. Sec. 22. Reduction of the amount of the share or of the installments due on shares, or an extension of period fixed for such payments, is only permissible when the provisions obtaining for the division of the assets of the cooperative society in case of liquidation are observed. The sum paid up with respect to shares of members may not, while membership lasts, be paid out by the society to members, nor accepted as security in its business with members. Arrears in installments must not be per- mitted. Members can not have the value of their share taken into account in the settlement of accounts with the society. Sxzc. 23. Members incur liability for the engagements entered into by the society to the extent determined by this act. All persons becoming members incur liability, also for the engagements contracted previous to their entry. Any contract in disaccord with these provisions is null and void. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 323 CrarTer III.—Representation and management. Suc. 24. The cooperative society shall be represented legally and otherwise by the committee of management. The latter shall consist of two members and shall be elected by the general meeting. The articles may fix a larger number of members as well as another method of appointment. The members of the committee may be either paid or unpaid. Their appointment may be canceled at any time without prejudice to claims for damages arising out of existing contracts. Sc. 25. The committee must notify its acts in the form fixed by the articles and sign on behalf of the society. If no regu- lation exists on the point the declaration and signature must be executed by all members of the committee. At least two mem- bers must be appointed for this purpose. The signatories must countersign the designation of the society or of the committee by their own signatures. Sec. 26. The society obtains rights and accepts obligations through all legal transactions completed in its name by the committee. It is immaterial whether the transaction be completed expressly in the anme of the society or whether the cir- cumstances disclose that it was to be completed for the society according to the intention of the contracting parties. An attestation of the court (sec, 10) that the persons mentioned are registered in the cooperative register as members of the committee of management is sufficient proof of their identity as such before the authorities. Sxc. 27, The committee is bound, as regards the society, to observe the limitations imposed either by the articles or by resolution of the general meeting as to the extent of their authority to represent the society. As regards third parties no limi- tation of the authority of the committee to represent the society has any legal effect. This applies especially in cases where the powers of the committee are limited to certain business or to a certain class of business, or for a certain time or for certain areas, or where the approval of the general meeting, of the board of supervision, or of any other organ of the society, is required. Sec. 28. Any alteration in the composition of the committee, or the termination of the authority of any member thereof, is to be notified by the committee for registration in the cooperative register. A copy of the documents concerning the appoint- ment or the termination of the authority of a member of the committee is to be added to the notification and will be kept at the office of the court. The members of the committee must sign before the court or forward their signatures in duly certified form. Sec. 29. Any alteration in the composition of the committee, the termination of the representative authority of any member thereof, or the alteration of the articles as regards the form for acts of the committee, can not be pleaded by the society against a third party, if such changes have not been entered in the cooperative register and been published, unless it be shown that such third party was cognizant of the change. After registration and publication a third party must admit as against himself such alterations or termination of authority, unless he show that he neither knew nor could have known of the same. As to business with a duly registered branch of a society, the registration of such provisions and their publication by the court in whose jurisdiction such branch lies is decisive as to validity. Sec. 30. The committee must maintain a list of members and keep it up to date. Sec. 31. The committees of management of distributive societies which keep an open shop must, for the purpose of assuring the observance of the regulation of section 8, subsection 4, notify the manner in which the members of the society or their repre- sentatives are to prove their identity to the sales people, and must send without delay a copy of the notification to the higher local government authority which has jurisdiction in the locality. The higher local authority is authorized to constrain (by fine of not more than £15) the committee of management to transmit the notification, and if necessary to alter or amplify it. Appeal against the orders and fines of the higher local authority may be made within two weeks to the national central authority. Sec. 32. Distributive societies or tradespeople who are in relations with distributive societies for the delivery of goods to members may not give checks, or other orders not payable to persons by name, or tokens which as a substitute for cash give the members a right to obtain goods. Sec. 33. The committee is bound to take precautions for the regular keeping of the necessary account books of the society. Within six months after the expiry of each business year the committee must publish the balance sheet, the number of members who have joined or left in the course of the year, and the number of adhering members at the end of the year. The notice is to be sent to the registry of cooperative societies. Sxc. 34. The members of the committee of management must exercise the prudence of ordinary men of business. Mem- bers who neglect their obligations are liable to the cooperative society severally and collectively for any loss thereby caused. They are, in particular, liable for the repayment of sums which they have paid out of profits or share capital contrary to the regulations in sections 19 and 22. Claims against them by reason of the preceding regulations lapse after a period of five years. Src. 35. Regulations affecting members of the committee of management hold good also for their deputies. Szc. 36. The board of supervision consists of three members, to be elected by the general meeting, unless the articles fix a larger number. The articles shall lay down the number requisite for passing resolutions. The members of the board may not draw any remuneration (commission) based upon the business results of the society. The appointment to membership of the board may be canceled by the general meeting even before the lapse of the period for which the election was made. The resolution of the general meeting requires a majority of three-fourths of the members resent. Sc. 37. The members of the board must not be at the same time members of the committee of management or their per- manent deputies, and they must not be occupied as regular officials in the conduct of the society’s business. Only for a period, to be fixed beforehand, the board may appoint individual members from its body to represent members of the committee unable to act; during this period, and until he has been formally discharged from this duty, such member may not exercise his office as member of the board of supervision. If members of the committee of management retire, they may not be elected members of the board until their formal discharge from the committee of management. Sec. 38. The board of supervision must supervise the committee of management in its conduct of business in all branches of administration, and to this end must keep itself informed of the position of the affairs of the society. It may at any time require a report from the committee upon the state of business, and may itself, or through members deputed by it, examine the books and papers of the society, as well as verify the cash in the till and the stock of securities, bills, and goods. It must examine the yearly statement, the balance sheet, and the proposals for division of profits and losses, and, before the passing of the balance sheet, report to the general meeting upon these points. It must summon a general meeting when such action is required in the interests of the society. Further duties of the board shall be fixed by the articles of association. The members of the board may not delegate the exercise of their functions. 324 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Sgc. 39. The board is empowered to represent the society in making contracts with the committee of management and to institute such suits against members of the committee as the general meeting may determine. The assent of the board is necessary for any loan granted to a member of the committee, provided that the articles have not laid down further requirements or distinctly prohibited it. The same conditions apply when a member of the committee of management is put forward as surety for a loan. In actions against the members of the board the society is represented by persons with powers of attorney who are chosen at a general meeting. Sxc. 40. The board is empowered, exercising its own discretion, to suspend members of committee provisionally pending the decision of the general meeting to be convened forthwith, and to take the necessary steps for the temporary conduct of business. Sec. 41. The members of the board must exercise the prudence of ordinary business men. Members who neglect their duties are liable severally and collectively for any losses that are caused thereby. In particular, they are liable to make good any payments wrongfully made in the circumstances mentioned in section 34, subsection 3, if these payments have been made with their knowledge and without their interference. Claims made on the ground of the preceding regulations lapse in a period of five years. Src. 42. The conduct of business of the society as well as the representation of the society in relation to the carrying on of such business may be intrusted to other persons provided with powers of attorney, or to officials of the society. In such cases the authority of such persons is fixed according to the powers delegated to them; in case of doubt these powers extend to all legal transactions which are associated with the execution of the special kind of business. The appointment of agents with general powers of attorney for the conduct of the whole business is not permissible. Sxc. 43. The rights which belong to members with regard to the affairs of the society, especially in relation to the conduct of business, the examination of the balance sheet and the division of profits and losses, are exercised at the general meeting by resolution of the members present. Each member has one vote. A member can not vote upon a resolution which discharges him from liability, or releases him from an obligation. This regulation holds good in the case of a resolution affecting a legal question between a member and the society. Members may not exercise their right of vote by proxy. This regulation is not applicable to persons incapable of voting in person, such as corporations, commercial companies, cooperative societies or other combinations of persons, and women, if the the articles exclude women from participation in general meetings. A proxy can not represent more than one member. Src. 44. General meetings shall be summoned by the committee of management, unless the articles or this act authorize other persons to do so. Apart from circumstances expressly indicated in the articles or in this act, general meetings must be summoned when the interests of the society appear to require it. Szc. 45. A general meeting must be summoned without delay if one-tenth of the members or a smaller proportion (if so laid down by the articles) require it; the demand signed by them must state the object and the reasons therefor. Members are likewise entitled to demand that matters to be submitted to the decision of a general meeting be notified in advance. In case of noncompliance the court (sec. 10) can empower the members who have made the demand to call a general meeting or to give notice of the subject or motion. The authorization of the court must be published together with the summons for the meeting or the notification of the matter for decision. / Sc. 46. The summons for a general meeting must be issued in the manner fixed by the articles with a notice of at least one week. The summons must at all times state the object of the meeting. Resolutions may not be voted upon relating to matters, the consideration of which has not been announced at least three days before the meeting in the manner provided by the articles or by section 45, subsection 3. Resolutions, however, concerning the chairmanship of a meeting, as well as pro- posals for the summoning of a general meeting, are excepted from this provision. Previous notification is not required for the bringing forward of motions or for transactions not involving a vote. Sec. 47. The resolutions of general meetings must be entered in a minute book which must be open for examination to each member and to the State authorities. Sec. 48. The general meeting must pass the balance sheet by resolution and determine the amount of profit or loss to be distributed among the members. The balance sheet, as well as the statement setting forth the profits and losses of the year, must be exhibited at least one week before the meeting, either in the office of the society or in some other suitable place to be made known by the committee of management, for examination by members, or they must be otherwise brought to the notice of the members. Each member is entitled to demand a copy of the balance sheet as well as of the yearly account, to be made at his own expense. Sec. 49. The general meeting must determine: (1) The total amount which the loans contracted by the society and the deposits with the society must not exceed. (2) The limits to be observed in the granting of credits to members. Src. 50. If the articles oblige members to pay installments upon their shares without fixing either the amount of the instal- ment or the periods, the decision on this point must be taken by resolution of the general meeting. Sec. 51. The resolution of the general meeting may be impugned by way of civil action on the ground of infringement either of the act or of the articles of association. The suit must be entered within one month. Any member present at the general meeting is authorized to bring suit provided he has declared his dissent from the reso- lution for entry in the minutes of the meeting, and any member who was not present may bring a suit on the ground of being unjustifiably excluded from the meeting, or because the meeting was not regularly summoned or due notification of the subject of resolution was not given. Moreover, the committee of management and if the resolution has as object a measure through which the members of the committee and of the board of supervision would incur a fine or render themselves liable to the creditors of the society, each member of the committee of management and of the board is entitled to bring an action. The action must be instituted against the society. The latter shall be represented by the committee of management, unless this body be itself the plaintiff, and by the board of supervision. The county court in whose district the society is situated is alone competent to take the plaint. The hearing can not take place before the lapse of the period mentioned in the above paragraph. When there are several plaints they must be united for simultaneous hearing and decision. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 325 The entrance of the suit and the date of hearing must be published without delay by the committee in the papers fixed for the public notifications of the society. If the judgment declares the resolution to be legally null and void it is effective also as regards members who are not parties to the action. Ifthe resolution has been entered in the cooperative register, the judgment must be transmitted by the com- mitte of management to the court for registration; and the public notification is made in so far as the registered resolution was publicly notified. Sxc. 52. For any damage caused to the society by groundless action against the resolution the plaintiffs are collectively liable, and are chargeable with vexatious procedure in bringing the plaint. Cuaprer IV.— Audit. Src. 53. The organization of the society and the conduct of its business in every branch must be submitted in every second year at least to examination by an expert auditor who is not a member of the society. Sec. 54. When societies belong to unions which satisfy the conditions which follow hereafter, the unions are to be given the right of appointing the auditor. Sec. 55. The union must have as its object the auditing of the accounts of its affiliated societies, and may also have as its object the common care of their interests mentioned in section 1, in particular the maintenance of mutual business relations. The union may not pursue other aims. Sec. 56. The objects of the union must be indicated in its articles. The content of the articles must suffice to show that the union is in a position to fulfill its duty of auditing. The articles must define especially the area covered by the union; the maximum and the minimum number of societies that it may receive as members; the regulations concerning the selection and appointment of auditors; the nature and extent of their audit; the address and powers of the members of the committee of management; and regulations concerning the other organs of the union. Ssc. 57. The granting of the right to appoint auditors rests with the central authority of the federal State, except when the area of the Union extends over several federal States, when it rests with the federal council. Alterations in the articles of the union must be transmitted to the respective authorities mentioned in the preceding sentence. Src. 58. The committee of the union must send the articles of association with the certified copy of the order of appoint- ment to the courts in whose district the affiliated societies are situate and also to the higher authorities in whose district the committee has its office. A list of the affiliated societies must be sent in the month of January of each year to the courts and the above-mentioned authorities. Sgc. 59. General meetings of the union can take place only within the limits of its district. Notice of such meetings witha copy of the agenda must be sent at least a week beforehand to the higher authorities in whose district the committee has its office as well as to the hither authorities in whose district the meeting is to be held. The latter authority is entitled to send a representative to the meeting. Sec. 60. The right of appointing auditors may be withdrawn from the union: (1) If it be guilty of illegal acts by which the common welfare is endangered, or if it pursue other objects than those indicated in section 55. (2) If the union be not equal to its duty of carrying out the auditing. Such withdrawal is pronounced after a hearing of the committee of management of the union by the authority that gave the concession. The courts mentiozed in section 58 are to be informed of the withdrawal. Szc. 61. The court (sec. 10) shall appoint the auditor for societies which do not belong to a union (secs. 55-57). The committee of management of the society must ask for the appointment to be made. A nomination takes place after the higher authority has given its opinion regarding the person proposed. If the authority concurs with the proposal made by the society such person is to be appointed as auditor. Sec. 62. The auditor has a claim against the society for reimbursement of reasonable expenses and for remuneration for his work according to the time taken. The expenses and remuneration of an auditor appointed by the court shall be fixed by it when an agreement can not be reached between the parties on the point. ; Sec. 63. The committee of management of the society must allow the auditor to inspect the books and papers of the eociety and to investigate the cash in hand, the stock of securities, bills and goods. The board of supervision is to take part in the audit. The committee must transmit to the registry of cooperative societies a certificate of the auditor to the effect that the audit has taken place and must notify the report as to the audit as a subject for resolution by the next general meeting at the time of its summoning. At the general meeting of the board of supervision must make a statement concerning the result of the audit. The auditor appointed by a union must forward a copy of the report to the committee of the union. Sgc. 64. The imperial chancellor is authorized to issue general regulations for the drawing up of auditors’ reports. CuarrerR V.—Retirement of individual members. Sc. 65. Every member is entitled by giving notice of withdrawal to announce his retirement from the society. Such notice only takes effect at the end of a business year. It must be given at least three months previously in writing. The articles of association may fix a longer period of notice, but such must not exceed two years. Any agreement contrary to the above provisions is null and void. Sxc. 66. The creditor of any member who, having attempted without success during six previous months to exercise process against the assets of such member, has obtained the attachment and the assignment to himself of the sum accruing to such member if he were settling his account with the society, may, with a view to satisfying his claim, exercise in the place of the member the right to give notice of withdrawal, provided the debt bond is not merely provisionally executable. A certified copy of the debt bond and of the documents touching the unsuccessful attempt at execution, must be attached to the notice of withdrawal. 326 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Sec. 67. If membership is dependent according to the articles upon residence within a certain district (sec. 8 (2)), a member who ceases to reside therein may declare his withdrawal from the society at the end of the business year. Similarly the society may inform the member in writing that he must retire at the end of the business year. The cessation of residence must be shown by certificate of a public authority. Szc. 68. A member may be excluded from a society at the end of a business year if he has lost his civil rights or become a member of another society which carries on a similar business in the same locality. Exclusion from a loan or credit society may also take place on account of membership in another such society, although the said society does not carry on business in the same locality. The articles may also prescribe other reasons for exclusion. The resolution which excludes a member must be communicated to him by the committee of management by registered letter without delay. From the moment of dispatch of the letter the member is excluded from participation in the general meeting, and can not be a member of the com- mittee of management or of the board of supervision. Sec. 69. The committee of management is bound to transmit to the court for entry in the cooperative registry, at least six weeks before the end of the business year, the notice of withdrawal of the member or of the creditor, and also a written assurance that the notice of withdrawal was given in proper time. In the case of a notice of withdrawal by a creditor, such notice must be accompanied by the documents mentioned in section 66 (2), as well as by a copy of the order for attachment and assignment. Similarly in the case of withdrawal under section 67 the committee must transmit to the court the certified notice of withdrawal of the member or copy of same issued by the society, and, in case of expulsion, a copy of the resolution. These papers must be dispatched within the time mentioned above, and, if the declaration of withdrawal or the resolution be made later, they are to be forwarded without delay. 2 Src. 70. The motive of the retirement of the member and the year as ascertained from the documents, are to be at once entered in the court list of members. As a consequence of the registration the member retires at the end of the year marked on the list. If, however, the entry is only made in the course of a later year, then at the end of that year. Sec. 71. Upon the motion of the member, or of a creditor when section 66 is applicable, the court at once notes in the list of members the motive of the retirement and the year for which it is to be reckoned. If the committee of management acknowledges the claim to withdrawal in a certified form, or if they are condemned by the judgment of a court to recognize it, such a fact must be added also to the statement when such recognition of withdrawal by, or judgment of a court against, the committee of management is transmitted. As a consequence of this, retirement or expulsion is considered as registered on the day when the note was made. Src. 72. The court must inform the committee and the member, and, in the case arising under section 66, the creditor, of the registration, as well as of the note inserted, or of the rejection of the demand. The documents forwarded to the court for the purpose of registration of retirement or of the insertion of the note remain in its keeping. Sec. 73. The settlement of a past member with the society is determined according to the assets of such society and the number of members at the moment of his retirement. The balance sheet is taken as the basis of the settlement. The share value due to the retiring member must be paid over within six months; he has no claim upon the reserve fund or other assets of the society. When the assets of the society, including reserves and all share capital, are insufficient to cover its debts, the retired member must pay his share of the deficit; such a share, if there be no other regulation in the articles, is to be reckoned at so much per member. Sec. 74. The legal claim of a retired member to the payment of the share capital due to him lapses in two years. Sec. 75. If the society is dissolved within six months after the retirement of a member, such retirement is null and void. Sec. 76.—A member may, by written agreement, transfer his share to another at any time, even in the course of the business year, and thereby leave the society without making a settlement with the society, provided the other person becomes member in his place, or if already member, that his previous share capital, with the additional sum, does not exceed the full nominal value of the share. The articles may preclude such transfers or attach other conditions to them. The committee of management must at once forward the agreement to the court, and in case the transferee is already a member, they must give a written assurance that his previous share capital united to the additional sum does not exceed the full nominal share value. The transfer is to be registered at once in the list of members against the name of the transferring member; from the day of entry the transfer takes effect. If the transferee is not yet a member, the registration may only be effected at the same time as his registration as a member. The regulations of sections 15, 71, and 72 are applicable. If the society is dissolved within six months after the retirement of a member, the latter must, in case of bankruptcy pro- ceedings, make good the supplementary payments for which he would have been liable to the extent that the transferee may be unable to do so. Src. 77. In case of death a member is considered to have retired from the society at the close of the business year in which he died. Till that date the heir of the deceased continues his membership. When there are several heirs the right of vote may be exercised by power of attorney. The committee must send to the court without delay a notice of the death of the member for registration in the list of members. The provisions of sections 70 (1) and 71 to 75 are applicable CuaptER VI.—Dissolution and extinction of the society. Src. 78. The society may at any time he dissolved by a resolution of the general meeting. Such resolution requires a majority of three-fourths of the members present. The articles may lay down further conditions. The dissolution must be notified without delay for the purpose of registration in the cooperative registry. Sc. 79. Societies whose period of existence is limited by the articles cease to be on the lapse of that fixed period. The provision in section 78 (2) is applicable. Sxc. 80. When the number of members falls below seven, the court must, upon the request of the committee of manage- ment, or if such request be not made within six months, itself, by virtue of its official status, pronounce the dissolution of the society after hearing the committee of management. The order must be served upon the society, and immediate action at civil law against such order is open to it. The dissolution takes effect from the date of the legal validity of the order. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 827 Szc. 81. Ifa society be guilty of illegal acts or neglect of its obligations, as a result of which the general welfare is imperiled, or if it pursues other business objects than those indicated in section 1, it may be dissolved without any claims for indemnity arising therefrom. The procedure and the competency of the authorities is determinable in accordance with the provisions obtaining in the particular States for contested administrative acts. If the procedure in such cases is not applicable, the provisions in sections 20 and 21 of the industrial code come into force with the prescription that the decision in the first instance is taken by the higher administrative authorities in whose district the society is situated. The authority in first instance taking the decision must inform the court (section 10) of the dissolution. Sec. 82. The dissolution of the society must be at once entered by the court in the cooperative register. The liquidators must publish the fact in three issues of the papers in which the notifications of the society appear. Creditors are also to be requested in the notice to send in their claims to the society. Sc. 83. The liquidation is to be effected by the committee of management unless by the articles or by resolution of the general meeting it is intrusted to other persons. At least three liquidators must be appointed. Upon the proposal of the board of supervision or of at least the tenth part of the members, the appointments may be made by the court. The revocation of their appointment may be effected by the court under the same conditions as those under which it appoints them. Liquidators not appointed by the court may be relieved of their appointment by the general meeting before the lapse of the period for which they were appointed. Sec. 84. The first liquidators must be notified by the committee of management for entry in the cooperative register, while any change in persons appointed or expiry of any of their powers must be notified for the same purpose by the liquidators. A copy of the papers concerning the appointment of liquidators or changes in their body is to be added to the notification and is retained in the custody of the court. ; The registration of appointment or revocation of appointment by the court is effected by the authorities. The liquidators must personally give their signatures before the court or transmit them duly certified. Sgc. 85. The liquidators must signify their acts in the form fixed at the time of their appointment, and must sign for the society. If no decision has been taken upon the point, statements and signatures must be executed by all liquidators. Not less than two may be appointed for the purpose. Such decision is to be notified in the cooperative registry at the same time as the notification of their appointment. Their signatures shall be effected in such form that the names of the liquidators are signed below the title of the society, to which the words ‘‘in liquidation ’”’ shall be appended. Sec. 86. The provisions in section 29 concerning the relationship to third parties hold good in the case of the liquidators. Sc. 87. Till the close of the liquidation, notwithstanding the dissolution of the society, the legal status of the society and of its members is regulated according to the provisions of Chapters II and III of this act, in so far as no fresh status arises out of the provisions of the present chapter and the nature of the liquidation. The position before the courts, which the society held down to the date of its dissolution, remains unchanged until the complete partition of the assets. Src. 88. The liquidators must terminate current business, fulfill the engagements of the dissolved society, recover the debts due to it, and convert the assets of the society into cash. It is their duty to represent the society legally and otherwise. In order to close pending business the liquidators may also enter into fresh engagements. Src. 89. The liquidators have the rights and duties of the committee of management which arise out of sections 26, 27, 32 (1), 34, 44-47, 48 (2), and 51, and they are subject to the supervision of the board of supervision. They must immediately at the beginning of the liquidation and later in each year draw up a balance sheet. The first balance must be published and the public notification thereof sent to the registry of cooperative societies. Szc. 90. A division of the assets among the members may not take place until the amortization of the debts or provisions for their payment, and not before the lapse of a year from the day on which the notice to creditors has been published for the third time in the papers fixed upon for that purpose. If a creditor known to the society does not report the amount of the debt must be set aside for him, if the right to set aside exists. In case the settlement of an engagement is not at the time feasible, or the engagement be matter of dispute, the division of the assets may only take place if security is afforded to the creditor. Liquidators who act contrary to these provisions are individually and collectively liable not only to the society but to the creditors for the making good of resultant loss. The same obligation rests upon the members of the board of supervision if the infractions occur with their knowledge and without their interposition. The liability toward creditors is not removed by the fact that such infraction rests upon a resolution of the general meeting. Sec. 91.’ The division of the assets among the members is carried out up to the total amount of the share capital arrived at on the basis of the first balance sheet issued by the liquidators, in proportion to their share capital. In arriving at the indi- vidual share capttal the payments made thereon since the last annual balance sheet are not to be regarded for the purpose of dividing profits or losses which arise for the period between the last annual balance sheet and the first balance sheet drawn up by the liquidators. Profits arising in this period are to be written to the share value up to the amount of its full value. Surpluses which exceed the total of this balance are to be divided per capita. The division of the assets may be forbidden in the articles or some other proportion fixed for their division. Sec. 92. Any indivisible net assets remaining at the dissolution of the society fall to the commune in which the society is situated, unless the articles had allocated it to an individual or to a corporation for a fixed object. The interest of this fund is to be applied to objects of public utility. Sxc. 93. After the close of the liquidation the books and documents of the dissolved society are given into the care of one of the late members or to a third party for a period of 10 years. The particular member or the third party is appointed by the court in the absence of regulation in the articles or of a resolution by the general meeting. The court may authorize the members and their legal successors, as well as the creditors of the society, to examine the books and documents. , Sxc. 94. If the articles do not contain the essential provisions on the point, or if one of these is invalid, any ordinary member, and any member of the committee of management and of the board of supervision, may move by way of civil action that the society be declared nonexistent. 328 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Szc. 95. In the meaning of the last section the provisions indicated in sections 6, 7, and 131, with exception of those con- cerning the authentication of the resolutions of the general meeting and the chairmanship thereof, and the principles for the drawing up and examination of the balance sheet, are considered ‘essential.’ A deficiency in the articles of such necessary provision may be remedied by a resolution of the general meeting, passed in accordance with the provisions of this act con- cerning alterations of the articles. The summoning of the general meeting, in case of the deficiency relating to the form in which the general meeting is to be summoned, ensues through insertion in the public newspapers which are appointed for the publication of the registrations in the cooperative register of the seat of the society. Should the deficiency have reference, in the case of a society with limited liability, to provisions concerning the liability, the total amount of the liability undertaken by the individual members must not be lessened by the measures adopted by the meeting to remedy such deficiency. Src. 96. The procedure for a suit for declaration of extinction and the legal effect of the judgment are regulated by the provisions of section 51 (3-5) and section 52. Ssc. 97. If the extinction has been registered in the cooperative registry, the provisions which obtain in case of dissolution are applicable to the winding up of its affairs. The validity of the legal proceedings undertaken in the name of the society with third parties shall not be affected by extinction. To the extent that the members have undertaken liability for the engagements of the society, they are obliged to pay the amounts required to satisfy the creditors in accordance with the provisions of the following chapter. CuapteR VII.—Proceedings in bankruptcy and liability of members. Src. 98. Proceedings in bankruptcy ensue in case of suspension of payment; also after the dissolution of a society when there is excess of debts over assets. After the dissolution of a society, proceedings in bankruptcy are open so long as the division of assets has not been completed. Sec. 99. Immediately upon suspension of payment the committee of management must move that proceed ngs in bank- tuptcy be opened. They.must take the same step when in the course of or after dissolution it is found from the annual balance sheet, or from a balance sheet drawn up in course of the year, that there is excess of debts over assets. The committee of management is responsible to the society for the repayment of any sums paid out after this date, as laid down in section 34. Claims based on these provisions lapse in five years. Sec. 100. Not only creditors-but every member of the committee of management is entitled to propose the opening of proceedings in bankruptcy. If the proposal is not made by all members of the committee, it is only to be admitted when the facts that motived the proposal are authenticated. The court must hear the remaining members in accordance with the regulations of the bankruptcy code. The opening of proceedings may not be rejected on the ground that the bankrupt estate does not suffice to meet the costs of the proceedings. Szc. 101 The society is dissolved by the fact of the opening of proceedings in bankruptcy. Sec. 102. The opening of bankruptcy proceedings must be at once entered in the cooperative register; the registration is not published. Sxc. 103. On the opening of the proceedings a committee of creditors must be appointed by the court. The meeting of creditors votes whether it will accept those appointed or choose others. In other respects the provisions in section 87 of the bankruptcy code are applicable. Sec. 104. A general meeting must be at once summoned (secs. 4446) to decide whether the actual members of the com- mittee of management and of the board of supervision are to be retained or others appointed. Sxc. 105. If the creditors are not satisfied with the extent to which their claims have been met at the final division out of the assets available at the time of the opening of proceedings in bankruptcy, the members are obliged to furnish sup- plementary payments to the estate. Such supplementary payments are to be made upon a per capita basis, unless the articles have fixed another proportional contribution. Contributions, which individual members can not meet, are to be distributed over the remaining members. Payments made by members beyond the amounts due from them according to the previous provisions are to be returned to them out of the supplementary payments after the creditors have been satisfied. Members may put in a claim against the society as against the supplementary payments, provided the circumstances are such that they are entitled as creditors in bankruptcy to satisfaction of their claims out of the supplementary payments. Sec. 106. The receiver must at once, after the deposition of the balance sheet with the court (sec. 124, bankruptcy code), proceed to calculate the amount of contribution requisite from the members to cover the deficit as shown in the balance sheet. In the account drawn up (advances account) all members are to be described by name, and the contributions to be distributed among them. The amount of contribution is to be estimated, however, in such a way that a deficiency in the total amount to be raised may not result through the inability of individual members to pay their share, such inability to be taken into account beforehand. The account must be sent to the bankruptcy court to obtain a declaration of execution. If the coopera- tive registry is not kept at the bankruptcy court, a certified copy of the statutes and of the list of members is to be attached. Sxc. 107. The court fixes a date, which may not exceed two weeks from that of the application, for its decision upon the account. The date is to be publicly announced, and the members mentioned in the account are to be especially summoned. The account must lie at the latest three days before the date in the office of the court for the inspection of the parties. This fact must be alluded to in the published notice and in the summons. Sc. 108. On this date the committee of management and board of supervision, the receiver, and the committee of creditors must be heard, as well as any others of the parties with objections to raise. The court decides the objections raised, adjusts as far as necessary the accounte, authorizes such adjustment and declares it executable. The decision is to be published on that day or on a date to be at once fixed, and which should not be fixed AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 329 for later than a week thereafter. The account, with the decision declaring it executable, is to be deposited in the office of the court for inspection by the parties. The decision is not open to appeal. Sec. 109. Once the account has been declared executable, the receiver must without delay collect the contributions from the members. Distraint against a member takes effect in accordance with the civil procedure code by virtue of a copy of the decision authorizing execution and of an extract from the account. Sxc. 110. The payments effected must be deposited or invested as the meeting of creditors shall determine. (Bankruptcy code, 182.) Sec. 111. Each member is entitled to bring a civil action as to the account which has been declared executable by the court. The suit lies against the receiver. It may only be brought within a month after the notification of the decision and only if the plaintiff has raised his cause of objection at the hearing (sec. 107), or if his omission to do so was due to no fault of his own. Judgment of the court operates for or against all members bound to make contributions. Src. 112. The suit must be brought solely in that court which declared the account executable. The hearing may not take place before the lapse of the above-mentioned necessary period. If there be more than one action against the account, these must be jointly heard and decided. (Remainder of section relating to competence of certain German courts is omitted.) Sec. 113. In so far as the want of means of individual members has prevented payment of their contributions, and the total is insufficient or the account has to be altered in accordance with the judgment or for other reasons, the receiver must draw up a supplementary account. In respect of such account the provision in sections 106 to 112 are applicable. If necessary a further supplementary account is to be prepared. Src. 114. As soon as a commencement is made with the execution of the final division (bankruptcy code, 161), the receiver must estimate how much has to be paid by the members in accordance with section 105 as a supplement or in correction of the advances already reckoned and of the payments actually effected. The account (supplementary account) is subject to the provisions in sections 106 to 109, 111 to 113, 106 (2), with the condition that contributions shall not be distributed over members whose inability to make payments has been proved. Sec. 115. The receiver must, as soon as the supplementary account has been declared executable, immediately divide among the creditors the money held according to section 110, as well as the contributions still to be levied as they come in in adequate amount. These payments to creditors are made as supplementary dividends. (Bankruptcy code, 166.) In addition to payments falling to claims mentioned in section 168 of the bankruptcy code, such payments upon claims which were expressly contested by the committee of management before tbe court at the examination must be withheld. The creditor is entitled to remove the opposition of the committee of management by way of suit; if the grounds of opposition are recognized to be valid, the payments are free to be divided among the other creditors. Surpluses not required to satisfy creditors are to be paid back by the receiver to the members. Sec. 116. A suspension of the proceedings in bankruptcy by compulsory composition with creditors is not permissible. A cessation of the proceedings is only allowable after the commencement of the actual execution of the final division. The concurrence of all creditors whose claims were taken into account at the last division must be produced. The bankruptcy court is free to decide how far the cessation requires the assent or the guaranteeing of creditors whose claims have not been settled. Sec. 117. The committee of management is bound to aid the receiver in his duties as imposed by sections 106 (1), 109 (1), 113, 114. Sec. 118. The provisions in this chapter affecting members of the committee of management are also applicable to liquidators. Cuarter VIII.—Special provisions. I.—FOR SOCIETIES WITH UNLIMITED LIABILITY. Sec. 119. In societies with unlimited liability members may only hold one share. Sec. 120. The declaration of adherence as member must expressly state that the individual members undertake liability with their whole property for the engagements of the society, both as toward the society and as toward its creditors within the scope of this act. Src. 121. Immediately the business shows that the assets of the society, inclusive of the reserve and the share capital paid up, do not suffice to cover the debts, the committee of management must summon a general meeting to decide whether the society is to be dissolved. If the meeting votes for dissolution, a vote must at the same time be taken as provided in section 104. Sxc. 122. In case of bankruptcy, the society, as well as the individual members, are collectively liable with all their prop- erty to the creditors for the loss which the latter suffer at the final division of property with regard to claims that have been allowed. (Bankruptcy code, sec. 161.) After the lapse of three months from the date on which the supplementary account is declared executable, the creditors, if they have not been satisfied, may proceed against individual members. Established claims which have not been expressly contested during the period of examination by the committee of management or by the liquidators, can not be contested by members against whom proceedings are taken. Judgment of the court which is given either for or against a claim contested by the committee of management or the liqui- dators binds all members. In reference to a claim which has remained contested in the bankruptcy proceedings, the members are not condemned to pay as long as the claim remains unproved. Sec. 123. Right of action of creditors against individual members lapses in two years from the end of the term fixed in sec- tion 122 (2), unless a shorter period of limitation is applicable according to the character of the claim. The period of limitation in favor of a member is interrupted by legal proceedings taken against the society or by the society itself; it is not interrupted by legal proceedings which are taken against another member or by another member. Szc. 124. Members who pay off creditors in accordance with section 122 become possessed of the rights of the latter against the society. on! Sec. 125. The provisions of section 122 to 124 are applicable to such members as have withdrawn from the society within the two years previous to the opening of the bankruptcy proceedings and who are not already liable according to section 75 for the 330 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. engagements entered into up to the date of their withdrawal; but they are applicable in such a way that the claims of the credi- tors can be levied only after the lapse of six months from the date in which the supplementary account has been declared exe- cutable. This claim extends to the engagements entered into by the society up to the day of registration in the case of death of a member whose retirement has been registered after the date mentioned in section 77 (1), unless the heirs prove that at the time of the engagement the death of the member was known to the creditor. II.—FOR SOCIETIES WITH UNLIMITED CONTRIBUTORY LIABILITY. Szc. 126. The provisions of section 119 concerning the limitation of participation to one share, and of section 121 concern- ing the convocation of a general meeting in case of overindebtedness, are applicable to societies with unlimited contributory liability. Sec. 127. The declaration of adherence (sec. 15) must expressly state that the individual members are liable with all their property to pay to the society the necessary supplementary payments for the satisfaction of the creditors. Sxc. 128. If in the case of the opening of bankruptcy proceedings the creditors mentioned in section 105 (1) have not been satisfied or guaranteed after the lapse of three months from the date in which the supplementary account (sec. 114) was declared executable, contributions still necessary are to be paid by members who withdrew within 18 months before the proceedings began, and who were not already liable to the supplementary payment. Sxc. 129. The receiver must without delay draw up an account of the contributions due by the retired members. In this account the individual names must be cited with the contribution to fall upon each, unless the insolvency of particular mem- bers is known beforehand. For the rest the provisions in sections 106 (3), 107-109, 111-113, and 115 are applicable. Sxc. 130. The provisions of section 128, 129 do not affect the recovery of the supplementary payments from the members remaining in the society. The payments made by retired members must be repaid out of the supplementary payments of the latter, as soon as the satisfaction or guarantee of all the creditors, as in section 105 (1), is effected. IlII.—SOCIETIES WITH LIMITED LIABILITY. Sec. 131. In societies with limited liability the sum for which individual members are liable must not be lower than the share value. The amount of liability attaching to each share must be fixed by the articles on the establishment of the society. The regulation or any alteration in same must be published. (Sec. 12 (16).) Src. 132. In order to raise the amount of liability attaching to each share a majority of three-fourths of those members present at the general meeting is necessary. The articles may lay down further conditions. Sec. 133. A reduction of the amount of liability attaching to each share may only be effected with due observance of the provisions which obtain for the division of the assets of the society in case of dissolution. (Sec. 82 (2), 90 (1-3).) The known creditors of the society must be requested by special notice to report their views. The notification of the vote of reduction is not made for entry in the cooperative registry before the lapse of the year as defined in section 90 (1). The public notices of the resolution must be handed in with the notification. At the same time the committee of management must deliver the written assurance that the creditors who have notified themselves to the society and have not concurred in the reduction have been paid or have received guarantees. Src. 134. The holding of several shares by members is permitted, but the maximum number to be held by one member must be fixed. The regulation, or any alteration in the regulation, must be published. (Secs. 12, 16.) Sec. 135. The liability of a member who holds more than one share increases in a proportion corresponding with the number of shares he holds. Sec. 136. Until the first share is fully paid up the holding of a second share by a member may not be permitted by the society. This provision also obtains as regards the holding of each further share. Sec. 137. A member who wishes to take up a further share must deliver an unconditional declaration signed by him. The declaration must be handed in to the court by the committee of management for entry in the list of members after per- mission has been given to the member to hold another share. At the same time the committee of management must give an assurance in writing that the previous shares held by the member have been fully paid up. The participation in fresh shares takes effect with the registration in accordance with the preceding paragraphs. In other respects the provisions of section 15 are duly applicable. Sec. 138. The transfer of the share value held by a member to another member in the case of section 134 is not valid if previous share value added to the share value so transferred exceeds the total sum corresponding with the highest number of shares that may be held. On this point the assurance of the committee provided for in section 76 must be given. In other respects the regulations in section 137 hold good. Sec. 139. With the balance sheet of each year there must be published, apart from the details given in section 33 concerning the number of members, the total amount by which the amount of the share liability of the members has been increased or diminished, as well as the total amount of the share liability for which all members are jointly responsible at the end of the year. Sc. 140. Proceedings in bankruptcy take place, apart from the case of suspension of payment, when the debts exceed the assets, in the sense that the debts are greater than the fourth part of the aggregate liability incurred by all the members. The committee must move for the opening of proceedings in bankruptcy if such overindebtedness emerges from the annual balance sheet or from a balance sheet drawn up in the course of the year. The provisions of section 99 (23) and section 100 are duly applicable. Sec. 141. The individual members may not be called upon to make supplementary payments beyond the sum of their liability, nor be claimed against by the creditors in bankruptcy. In other respects the regulations in sections 122 to 125 are duly applicable as regards the claims of creditors. Szc. 142. Apart from the provisions of section 90, the creditors of a society who can not obtain satisfaction may make good their claims independently for repayment by suing the board of supervision, the committee of management, or the liquidators in the case that, contrary to the provisions of sections 19 (22), the profits or share capital have been divided. The same pro- AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 3381 cedure is open to creditors against the members of the committee of management or the liquidators for reimbursement of such sums as have been paid out after the date on which the duty to propose the opening of proceedings in bankruptcy arose. The duty of compensating the creditors for such payments is not removed by a plea that the transaction rests upon a resolution of the general meeting. IV.—CONVERSION OF LIABILITY. Sec. 143. A society with unlimited liability may be transformed into a society with unlimited contributory liability only under observance of the regulations which obtain for the division of the assets of the society in case of dissolution. (Secs. 82 (2), 90 (1-3).) Thesame procedure is applicable to the conversion of a society with unlimited liability or unlimited contributory liability into a society with limited liability. The regulations in sections 133 (2) are duly applicable. Sec. 144. A resolution for the conversion of a society with unlimited deferred liability into a society with unlimited liability, or of a society with limited liability into a society with unlimited or unlimited contributory liability, requires a majority of three-fourths of the members present at the general meeting. The articles may lay down further requirements. Sec. 145. The conversion (sections 148, 144) is also binding upon members who have withdrawn from the society before the entry of the resolution in the cooperative register. When a society with unlimited contributory liability is converted, such members can not be made liable for the engagements of the society if their withdrawal took place more than 18 months before the date of registration. In the case of the conversion of a society with limited liability, claims against them are only valid to the amount of their previous liability. CHaprerR IX.—Penalties. Szc. 146. Members of the committee of management and of the board of supervision and liquidators are punishable by imprisonment and with fine not exceeding £150 if they wittingly act against the interests of the society. The penalty of loss of civil rights may also be declared against them. Szc. 147. Members of the committee of management and of the board of supervision and liquidators are punishable with imprisonment up to a period of one year and to a fine not exceeding £150 if they make false statements in the notifications, announcements, and assurances to be made to the court (sec. 10), knowing them to be false, or if they knowingly make false representations in their statements, in their reviews of the financial situation of the society, of the members, and of the liabilities undertaken, or in their address to the general meeting concerning the general position of the society. Punishment by deprivation of civil rights may also be imposed. If extenuating circumstances are admitted, punishment by fine alone shall be imposed. Sec. 148. Punishment by fine not exceeding £30, or with imprisonment not exceeding three months, or with both, may be inflicted upon: (1) The members of the committee of management and of the board of supervision and the liquidators if the society has been left more than three months without a board of supervision, or, if in the latter, the requisite number of members for passing resolutions was wanting. (2) The members of the committee of management or the liquidators if, contrary to the provisions of the sections 99, 118, 140, the proposal for commencement of bankruptcy proceedings is negelcted. This punishment is not enforced against those who prove that they were not responsible for neglect. Ssc. 149. Members of the committee of management are liable to a fine not exceeding £30 if they extend their operations to objects of a business nature other than those mentioned in section 1, or if they permit, or do not prevent, at general meetings. the decision of motions which relate to public affairs whose discussion brings them under the laws concerning the right of meeting and of association. Sc. 150. The members of the committee of management of an audit union are punishable by fine not exceeding £30 should they neglect to give notice of the meeting in accordance with section 59 (2). The fine is not imposed upon those who show that the omission was not due to their fault. Sec. 151. Whoever grants or promises special advantages to anyone for voting at a general meeting in a special way will be punished by a fine not exceeding £150, or by imprisonment for a period not exceeding one year. Sec. 152. Persons engaged in the sale of commodities in distributive societies are punished by a fine not exceeding £7 10s. if they knowingly, contrary to the provision in section 8 (4) or without observance of the notice issued by the committee of management according to section 31, sell goods to nonmembers. A like fine is imposed upon members who hand over their card of identity, by which they are entitled to purchase goods at a cooperative store or from tradespeople working in connection with the society for the delivery of goods to its members, to another person for the purpose of obtaining goods without being authorized. Third parties who use such cards of identity for the same purpose or who by other means undertake to bring about the delivery of goods without proper authorization, are punishable with the same fine. Src. 153. Persons are punishable by fine not exceeding £7 10s. who dispose to nonmembers for consideration either of a customary or trade character of commodities which they have obtained from the cooperative society, or from tradespeople working in connection with the society for the delivery of goods. This provision is not applicable: (1) If a member of a distributive society disposes of the goods purchased in his eating house or to persons boarding with him for their immediate personal use; (2) If a distributive society, being a member of another distributive society, disposes of goods bought from the latter to its own members. Sec. 154. Dealings contrary to the provision of section 32 are punishable by fine not exceeding £7 10s. CHAPTER X.—Concluding provisions. Szc. 155. (Deals with German judicial procedure.) Sec. 156. The provisions in sections 9 to 11 of the commercial code are applicable to the cooperative register. The entries must be published in the German Imperial Gazette. The court must decide upon publications in other papers; for smaller societies in one other paper only. 332 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Szc. 157. The notifications for the cooperative register must be effected personally by all the members of the committee of management or by all the liquidators or be presented in an authenticated form. The notifications and presentation of docu- ments prescribed in sections 16, 28, 33 (2), 51 (5), 63 (2), 84, 85 (2), must also be effected in the proper cooperative registry for each branch. Sc. 158. The registration of fresh members, the registration or the preliminary notification of the retirement of a member, the entry of the exclusion or of the death of a member, of the acquisition of additional shares in the list of members, must be communicated by the court (sec. 10) of the headquarters of the society to the court of each branch establishment for the due rectification of the list there kept. Similarly the registration of the dissolution of a society as well as of the opening of the proceedings in bankruptcy must be duly communicated to the cooperative registry of each branch establishment. Sec. 159. Fees are not charged by courts of first instance for the hearing and decision of the motions named in the preceding paragraphs, nor for registration or for preliminary notification. Fees for expenses incurred are charged in accordance with sections 79, 80, and 80 (b) of the court costs act. Sec. 160. The members of the committee of management are bound under penalty of fine by the court (sec. 10) to follow the provisions in sections 8 (2), 14, 23, 30, 61 (2), 63, 78 (2), 79 (2), 79 (2); a single fine may not exceed £15. In the same man- ner the members of the committee of management and the liquidators are bound to follow the provisions contained in sections 33 (2), 47, 48 (2), 51 (4 and 5), 84, 85 (2), 89, 157 (2). As to procedure, those provisions obtain which prevail for the enforcement of the notifications in the registry of commerce as ordered in the commercial code. Ssc. 161. The necessary regulations for the execution of the provisions concerning the cooperative register and the noti- fications for same shall be issued by the Federal council. The authorities to be understood under the description of State authorities (sec. 47) and as ‘‘higher administrative authority” (secs. 58, 59, 61, 81) in each Federal State shall be announced by the central authority in each Federal State. ACT OF 1895 ESTABLISHING THE PRUSSIAN CENTRAL COOPERATIVE STATE BANK. Act EsTaBLisHING A CENTRAL INSTITUTION FOR THE PROMOTION OF COOPERATIVE PERSONAL CREDIT, JULY 31, 1895. Section 1. For the promotion of personal credit (sec. 2), especially of cooperative personal credit, an institution with its seat in Berlin, entitled ‘‘ The Prussian Central Cooperative Bank,’’ shall be established. The institution shall possess the status of a legal person, and shall be placed under the supervision and direction of the State. Szc. 2. The institution shall be authorized to carry on the following business: (1) To grant interest-bearing loans to— (a) Such unions and union banks of registered cooperative societies (under the act of May 1, 1889) as may sue or be sued in their own name. (b) The loan banks of the mortgage credit associations which promote personal credit. (c) Similar institutions established by Provinces. (2) To take money at interest from organizations within the meaning of (1). For the accomplishment of these duties the institution shall be also authorized— (3) To take other moneys by way of deposit and transfer. (4) To accept savings deposits. (5) To utilize cash in hand for dealing in bills of exchange, loans against deposited security, and transactions in stocks and shares. (6) To sell and to accept bills. (7) To raise loans. (8) To buy and sell securities for organizations within the meaning of section 2 (1) and their affiliated societies, as well as for such persons from whom the institution has received money by way of deposit and transfer, deposits of savings, or loans. The sphere of business of the institution may be extended by royal ordinance so as to embrace, in addition to the organi- zations referred to in section 2 (1), certain kinds of public savings banks. Sec. 3. The State shall grant to the institution during its existence a share capital of £250,000 in 3 per cent bonds at par value. Src. 4.—The minister of finance shall be authorized to issue the bonds. He shall determine to what amount and under what conditions of withdrawal the bonds shall be issued. In other matters respecting the administration and redemption of the loan, and the lapsing of interest thereon, the provisions of the act of December 19, 1869 (collection of laws, p. 1197), are applicable. Sec. 5. The right of participation with share capital shall be reserved to the organizations within the meaning of section 2 (1), subject to provisions to be laid down by the supervising authority. Sxc. 6. The net profits at the close of the year shall be applied— (1) One-half to the formation of a reserve, the other half to the payment of interest at 3 per sent on capital (secs. 3 and 5); any remainder to be placed to reserve. (2) When the reserve amounts to one-fourth of the capital, the capital shall receive a maximum of 4 per cent as interest and the remainder shall be placed to reserve. Szc. 7. The supervising authority shall issue the business regulations for the directorate (sec. 8) as well as the service instructions for the officials of the institution, and shall order modifications as required. Sec. 8. The institution shall be administered by and shall be represented by a board of directors. The board shall consist of a president and the requisite number of members. Its decisions shall be taken by majority, but in its administra- tion the regulations and instructions of the supervising authority shall be observed. The president and the members of the board shall be appointed for life by the King upon the nomination of the minister of state. In the case of commissioners filling such office their appointment shall lie with the supervising authority. Sec. 9. The officials of the institution shall possess the rights and duties of full State officials. Their salaries, pensions, and other payments for services, as well as pensions and assistance at the death for their families, shall be borne by the institution which has also to provide for the current expenses of administration. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 333 The budget of the personal and current administrative expenses shall be presented annually, after April 1, 1896, before Parliament for sanction. Sxc. 10.—The accounts of the institution shall be subject to audit by the public audit office. The form in which the accounts are to be presented shall be determined by the supervising authority. Regulations in respect of such accounts shall be com- municated to the public audit office. __ Szc. 11.—The signature of the board of directors shall in all cases be binding on the institution, even in those cases in which the laws require a special power of attorney, when the signatures are made by two members of the directorate or by officials indicated as representatives of the directorate. Sxc. 12. A committee of experts shall be formed to assist by advice in the business of the institution. In the selection of such committee those organizations (sec. 2) which are in regular business relations with the institution, or which have par- ticipated with capital (sec. 5), are as far as possible to be taken into consideration. The committee shall meet under the presidency of the president at least once in each year, but may be summoned when necessary at other times by the president. Sec. 13. Cognizance of the whole position of the business shall be given to the committee, which shall be entitled on its part to bring forward motions concerning any measures that have been adopted. In particular the opinion of the committee is to be taken as to— (1) The principles on which credit shall be granted, especially as to the rate of interest, the term of loans, and the question of security. (2) The principles on which deposits of savings shall be accepted. (3) The balance sheet and the estimate of profit, which shall be drawn up at the end of the business year by the board of directors and which, together with the opinion of the committee thereon, shall be laid before the supervising authority for final decision. General directions for the conduct of business and instructions as to detail shall be brought to the knowledge of the committee as soon as possible after their issue. (Sec. 7.) Src. 14. Further instructions concerning the composition and the business scope of the committee shall be issued by royal ordinance. . Src. 15. The supervising authority within the meaning of this act is the minister of finance, who shall issue the necessary orders for its execution. Aw Act or Jung 8, 1896, AMENDING THE AcT OF JULY 31, 1895, EstaBLISHING A CENTRAL INSTITUTION FOR THE PROMOTION OF COOPERATIVE PERSONAL OREDIT. SgctTion 1. The sum granted to the Prussian Central Cooperative Bank by the State as capital shall, during the period of its existence, be raised to £1,000,000. The additional capital shall be paid over in cash or in bonds at the price of the day. Src. 2. Section 6 (1) of the act of July 31, 1895, shall read as follows: “(1) After paying one-fifth toward the formation of a reserve fund, four-fifths to the payment of interest on deposits (secs. 3 and 5) up to 3 per cent, any remainder shall also be paid into the reserve fund.” Src. 3. The finance minister shall be empowered, in order to raise this increase of capital, to issue bonds. He shall decide when, through what channels, and in what amounts, at what rate of interest, under what conditions of redemption, and at what price the bonds shall be issued. In other matters relating to the administration and redemption of the loan and the cessation of the interest thereon, the provisions of the act of September 19, 1869 (collection of laws, p. 1197) shall apply. Szc. 4. Instructions for carrying out the regulations of section 9, clause 1, of the act of July 31, 1895, especially those necessarily relating to the transfer of the legal prescriptions as to caution moneys, pensions, and provision for the families or dependents of officials on the State establishments, as well as those disciplinary laws relating to officials not on the judicial establishment, to the officials of the Prussian Central Cooperative Bank shall be issued as royal ordinances. Szc. 5. The finance minister is charged with the administration of this act. Act oF Aprit 20, 1898, INCREASING THE CAPITAL OF THE PRuUSSIAN CENTRAL COOPERATIVE Bank. SrctTIon 1. The sum granted to the Prussian Central Cooperative Bank by the State as capital shall, during the period of its existence, be raised to £2,500,000. The additional capital of £1,500,000 shall be paid over in cash or bonds at the price of the day. One million pounds shall be paid over at once and the remaining £500,000 shall be paid at such time as the finance minister shall determine. Src. 2. The finance minister shall be empowered, in order to raise this increase of capital, to issue bonds. He shall decide when, through what channels, and in what amounts, at what rate of interest, under what conditions of notice of redemption, and at what price, such bonds shall be issued. In other matters relating to the administration and redemption of the loan and to the cessation of interest thereon, the provisions of the act of December 19, 1869 (collection of laws, p. 1197), and of the act of March 8, 1897 (collection of laws, p. 43), shall apply. . : ; Src. 3. The finance minister is charged with the administration of this act. Act oF Juty 13, 1909, AMENDING THE Act oF JuLy 31, 1895. Szction 1. The participation by the State in the share capital of the Prussian Central Cooperative Bank for the period of its existence shall be raised to £3,750,000. The additional capital of £1,250,000 shall be paid over in cash, treasury bonds, or in bonds at the price of the day. Sec. 2. Paragraph 1 of section 6 of the act of July 31, 1895, shall read as follows: “From the resulting net profit of the institution at the end of the year, saving certain special placings to reserve: “(a) In the first place one-fifth is to be used for the formation of a reserve fund, the four-fifths as interest up to 3 per cent on the share capital (secs. 3 and 5). 334 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. “() Any contingent balance shall be devoted to the payment of further interest on the participation with capital by the union banks, etc. (sec. 5), as well as on the additional capital of £1,250,000 which the State, in accordance with the terms of this act, is prepared to advance, in both cases up to a maximum of 34 per cent. “(c) Any still remaining surplus is likewise to be credited to reserve.’’ Sec. 3. The finance minister is charged with the administration of this act. He is empowered, in order to furnish the additional capital, to issue State bonds. In place of State bonds treasury bills may be temporarily issued. The date of maturity of the treasury bills is to be stated. The finance minister shall be empowered to create the means of redeeming these treasury bills by the issue of fresh treasury bills and of State bonds to the necessary nominal amount. Reissues of treasury bills are permitted. The chief of the national debt office, under the direction of the finance minister, must hold ready 14 days before the date of maturity the treasury bills or State bonds allocated for the redemption of treasury bills falling due. Interest on the fresh issues shall not begin before the date at which interest on the treasury bills and State bonds to be redeemed ceases. The finance minister shall decide when, through what channels, and in what amounts, at what rate of interest and under what conditions of period of redemption and price the treasury bills and State bonds shall be issued. Further, in regard to the administration and liquidation of loans, the terms of the act relating to the consolidation of Prussian State loans, dated December 19, 1869, of the act relating to the liquidation of State debts, dated March 8, 1897, and of the act relating to the formation of a clearing fund for the railway administration, dated May 3, 1903, come into application. GERMAN MORTGAGE BANK ACT OF JULY 13, 1899. MORTGAGE BANKS. ’ Section 1. Joint-stock companies and joint-stock companies with limited partnership, the object of which is the lending of money against mortgages on land and the issue of bonds on the basis of mortgages so acquired, shall require for the exercise of their business the approval of the Federal council. If it be laid down in the articles of association of a mortgage bank that loans on mortgage can only be granted within the boundaries of that State of the German Federation in which the bank is situate, the giving or refusal of approval shall appertain to the central authority of such State. Every alteration in the articles of association of a mortgage bank shall require the sanction of the authorities of the State to which it belongs, in accordance with paragraphs 1 and 2. Sc. 2. Open-trading companies, companies with limited partnership, limited liability companies, registered cooperative societies, and individuals are prohibited from undertaking business of the nature indicated in section 1, paragraph 1. STATE SUPERVISION. Src. 3. Mortgage banks shall be under the supervision of the State. Such supervision shall pertain to that State of the Federation in which the bank is situate. The supervision shall embrace the whole of the business dealings of the bank and shall remain in force even after the dissolution of the same until its liquidation shall be completed. Src. 4. The supervising authority is authorized to issue all orders which may be necessary in order that the business of the bank may be conducted in accordance with the law, the articles of association, and any other regulations binding upon it. The supervising authority is authorized especially— (1) To inspect the books and documents of the bank and to examine the position of the cash in hand and of the securities held. (2) To require from the organs of administration of the bank information on all its business affairs. (3) To send a representative to the general meetings and to meetings of the organs of administration of the bank, to require the summoning of the general meeting, the fixing of the meetings of the organs of administration as well as the giving of notice of subjects for resolution, and, should these requests be not complied with, to summon, fix, or give notice of such meetings at the cost of the bank itself. (4) To prohibit the carrying into effect of resolutions or instructions which offend against the law, the articles of associa- tion and any other regulations binding upon the bank. The supervising authority may appoint a commissioner who shall exercise the duty of supervision under its guidance. It may decree that for the services of the commissioner a sum shall be paid as remuneration by the bank into the State bank, and shall fix the amount of such remuneration. SUBSIDIARY BUSINESS. Sxc. 5. Mortgage banks, beyond the granting of loans on mortgage and the issue of mortgage bonds, may only engage in the following branches of business: (1) The acquisition, sale, and charging of mortgages. (2) The grant of loans, not on mortgage security, to home public corporations, or on the full guaranty of such corporations, and the issue of bonds on the basis of the claims so established. (3) The grant of loans to home light railway undertakings on the security of the railway and the issue of bonds on the basis of the charges so established. (4) The purchase and sale of securities on commission, transactions of a speculative kind always excepted. (5) The receipt of money or other objects on deposit, with the provision, nevertheless, that the total amount of such de. posited money shall not exceed one-half of the paid-up share capital. (6) The collection of bills, drafts, and other similar papers. Disposable moneys may be put to use by the mortgage banks by deposit with suitable banks, by the purchase of their own mortgage bonds and of bonds issued in accordance with paragraph 1, Nos. 2 and 3, by the purchase of such bills and securities as may be purchased by the imperial bank under the provisions of the bank act of March 14, 1875, as well as by loan against securities in accordance with an instruction to be issued by the bank. Such instruction shall set out the securi- ties on which money will be lent and the amount permitted to be so lent. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY, 835 The acquisition of land is only permitted to the mortgage bank for its own protection against loss or for the provision of a site for business premises. In regard to such acquisition of landed property, those mortgage banks which, though they have their head office in one State of the Federation transact business in others, shall stand in the same position as the mortgage bank doing business only in its own State. ISSUE OF MORTGAGE BONDS. Sec. 6. The total amount of mortgage bonds actually in circulation must always be covered to their full nominal value by mortgages of at least equal amount and bearing at least the same rate of interest. The cover must, so far as it applies to agricultural land, consist, to the extent of at least one-half, of reducible mortgages in which the annual amount of the sinking fund paid by the debtor shall not be less than one-fourth per cent of the capital amount of the mortgage. The bank may, however, in case such mortgages should be paid off before the time at which they are due, make use of mortgages of another kind as cover in their place until the lapse of the normal period for redemption. If the bank have a mortgage on a parcel of land and must acquire it in order to prevent a loss on the mortgage, this shall not be brought into account as cover for mortgage bonds for more at most than the half of the amount for which it was brought into account previous to its acquisition. If, in consequence of the redemption of mortgages, or for any other reasons, the above-mentioned cover by mortgage.is not fully existent and neither the completion by other mortgages nor the calling in of a corresponding amount of bonds is immediately possible, the bank must replace the defective mortgage cover by the temporary purchase of imperial or State bonds or by cash. The bonds may be brought into account at a maximum of at least 5 per cent of their nominal value below their market price. Src. 7. Mortgage banks may not issue mortgage bonds to more than 15 times the amount of their paid-up share capital and of the reserve fund assigned exclusively to cover any deficit in the balance sheet or for the security of the bondholders. * Sxc. 8. In the mortgage bonds the provisions that are applicable to the legal relations between the mortgage bank and the mortgage bondholders, especially in relation to the possibility of their being called in, must be clearly set out. The mortgage bank may waive the right of calling in bonds for a period of at most 10 years. No right of redemption may be granted to bondholders. Sec. 9. The issue of mortgage bonds, the redemption value of which exceeds their nominal value, is not permissible. CONDITIONS RESPECTING MORTGAGE LOANS. Sec. 10. Only such mortgages may be employed as cover for mortgage bonds as comply with the conditions set out in sections 11 and 12. Sec. 11. Loans on mortgage are only permitted on Jand within the Empire and, as a rule, only loans must rank as first charges on such land. The loan must not exceed three-fifths of the value of the land. The central authority of a Federal State may permit the mortgage of agricultural land within the area of such State, or partially within such area, up to two-thirds of its value. Src. 12. The value of the land as taken for the purpose of mortgage should not exceed the careful estimate of its sale price. In fixing this value only the permanent properties of the land and of its yield are to be considered, i. e., such as the land might continue to give to any owner under ordinary husbandry. In so far as the land, previous to its mortgage, has been valued by one of the public authorities of the territory in which it is situate, the Federal council may decide that the value accepted at the time of mortgage may also not exceed any price based upon such valuation. Mortgages on building sites taken up as cover for mortgage bonds, as well as mortgages on such new buildings as are not yet completed and capable of yielding a return, must together not exceed the tenth part of the total mortgages assigned as cover for mortgage bonds nor the half of the paid-up share capital. Further, mortgages on land which does not yield a per- manent return, especially pits, quarries, are excluded as cover for mortgage bonds. The same shall hold good of mines. Mortgages on other rights to which the provisions relating to land apply are excluded from use as cover for mortgage bonds in so far as such rights do not yield a permanent return. Src. 13. The mortgage bank must under the provisions of section 12 issue a statement of the estimate of value as made. This statement requires the approval of the supervising authorities. If the bank take up 2 mortgage within the territory of a Federal State other than that in which its registered offices are situate, the statement of value is to be forwarded to the supervising authority of such Federal State. Any objections raised by the authorities, when a settlement can not be arrived at in any other way, shall be determined by the Federal council. Their decision shall, on request, be transmitted through the imperial chancellor. Src. 14. Loans on mortgage shall be paid over in cash. The payment of loans in mortgage bonds of the bank at nominal value is only permissible when allowed by the articles of association of the bank and the borrower at his option, either in cash or in mortgage bonds of the bank at nominal value, of the same kind as those in which he was paid, expressly assents thereto. In this case the right of redemption of the mortgage must be given in writing to the borrower. Mortgage bonds, which are not distinguished in the official list of stock-exchange quotations, are to be considered in the sense of this provision as always belonging to the same series. Src. 15. The fundamental conditions for the grant of loans on mortgage shall be fixed by the bank. These conditions require the sanction of the supervising authority. In the conditions must be particularly set out the loss which the borrower will suffer from failure to pay at the proper time, as well as the given conditions on which the bank is authorized to demand repayment of the mortgage before the time eed. ue Should the bank take up mortgages within the territory of a Federal State other than that in which its registered offices are situate, the supervising authorities of such State may require that the fundamental principles of the conditions on which loans are granted should be communicated to them. The provisions of section 18, paragraph 2, sentence 2, shall have corresponding application to the settlement of objections raised. The supervising authority of the Federal council mentioned in paragraph 2 shall be provided every year on its own request with a list of the loans against mortgage effected by the bank within the territory of the said Federal State. The Federal council may issue instructions as to the preparations and contents of such list. 336 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Sec. 16. In the prospectuses and loan-proposal forms issued by the bank all regulations as to the mode of paying off the loan, the deductions in favor of the bank, the amount and the dates at which interest falls due, and other obligations falling upon the borrower, the date of first payments to sinking fund, and the terms of calling in and repayments are to be given. Sec. 17. In case of the depreciation of a parcel of land or its appurtenances, not resulting from bad husbandry on the part of the owner, the provisions of sections 1133 and 1135 of the civil code, as to the rights of creditors to the immediate satisfaction of their claims out of the land, shall only come into operation in respect of the amount by which the value of the parcel of land has depreciated and to which extent it is no longer, either in accordance with the act or the articles of association, sufficiently covered. Over and above this amount the bank may not reserve for itself the right to demand repayment of the mortgage before the agreed time in the case of a depreciation in the value of the land. The bank in the event of the sale of a portion of the land and provided that such sale is determined by the competent authorities, in accordance with the State laws, not to prejudice owners of rights over the property, may reserve to itself no further rights than those legally appertaining to it for securing or obtaining settlement of its claims. It may not be stipulated that the bank in case of its dissolution can demand the repayment of a mortgage before the expiry of the term for which it was granted. Szc. 18. The debtor shall be granted the right, and the same shall be expressed in writing, of paying off the whole or a part of the mortgage on notice given. The right of repayment may not be delayed for a longer period than 10 years. This period begins with the payment of the money borrowed, and, should such payment be made in installments, with the payment of the last installment; in case there be an agreement as to the date of repayments, after the payment of the money borrowed, the 10-year period shall begin as from the date of such agreement. The term of notice may not exceed nine months, and in the case of mortgages which the bank may call in the term must not exceed that allowed to the bank. : In so far as the right of the borrower to repay the mortgage is not precluded by these provisions, the bank may not stipulate for a commission on repayment or the giving of surety when such notice of repayment is made. Src. 19. In the case of reducible mortgages a right of notice in favor of the bank may not be stipulated. An agreement giving to the bank the right to demand repayment of the mortgage before the agreed time, for special reasons connected with the circumstances of the borrower, shall not hereby be disturbed. The annual payments to be made by the debtor may only include the stipulated interest and sinking-fund payments. Sec. 20. The commencement of the amortization must not be delayed for a period exceeding 10 years. Ifin such cases, owing to the postponement of the amortization, an amount be due to the bank over and above the agreed interest, such amount shall be clearly stated in the contract of loan. From the commencement of the amortization onward annual interest may not be charged on any higher amount than that of the capital balance due at the end of the previous year. Any excess on the year’s transactions is to be written to the sinking fund. Sec. 21. The right of the borrower to make repayment of the mortgage loan by installments may be so limited, in the case of reducible mortgages, that the bank shall only be obliged to accept a payment when such payment is particularized and cal- culated to shorten the period for redemption by one or more years, in maintaining the previous amount of the yearly install- ments. This provision does not, however, apply if the amount of the payment reaches the tenth part of the remaining capital sum and the mortgagor requests that the subsequent annual payments shall be reduced whilst maintaining the original period for redemption; in this case when mortgages of the nature set out in section 6, paragraph 2, are in question, and the annual sinking-fund payment amounts to less than one-fourth per cent on the original capital, the bank shall prepare a fresh scheme of redemption. The bank may not beforehand relieve itself from the obligation which lies upon it in respect of the amounts redeemed, as regards the necessary correction of the registry of title, canceling of the mortgage, or the preparation of a mortgage bond for the balance as laid down in the provisions of the civil law. The bank must, after the publication of the annual balance sheet, communicate to each mortgagor, on request, the amount of his mortgage which has been paid off up to the end of the previous year. MORTGAGE REGISTER. Src. 22. The morgtages set apart as cover for mortgage bonds issued must be individually entered in a register. In the cases mentioned in section 6, paragraph 4, the securities set apart as supplementary cover mustalso be entered in a register; the entries must specify the individual parcels of land. Within the first month of every calendar year a copy of the entries in the registers made during the, :eceding half year, as certified by the fiduciary agent appointed according to the provisions of section 29, is to be communicated to the supervising authority. The copy shall be retained by the supervising authority. Src. 23. Within the second month of every half-calendar year the bank must publish in the German Official Gazette and in the newspapers selected for the announcements of the bank the total amount of mortgage bonds in circulation on the last day of the previous half year, the total amount of mortgages entered in the mortgage register after deduction of all repayments and other diminutions, and also the amount of money actually in the hands of the fiduciary agent as well as the total amount of the securities entered in the register at the same date. If securities or such mortgages are entered in the register as are not of a character to cover the full amount of bonds, it must be stated in the published notice to what extent the securities or mortgages are taken into account as cover. BOOKKEEPING, BALANCE SHEETS, REPORTS, AND OTHER STATEMENTS OF MORTGAGE BANKS. Szc. 24. The annual balance sheet of a mortgage bank must contain under separate heads— (1) The total amount of mortgage bonds and securities set apart as cover for the mortgages. (2) The total amount of arrears of interest on mortgages. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 337 (8) The total value of the land held by the bank, with a separate note as to the value of the bank buildings. (4) The total amount of the balances in cash, bills, and securities and under a separate head the amount of the mortgage bonds and.other bonds of the bank. (5) The total amount of the claims of the bank on loans on effects business (Lombard). (6) The total amount of balances at other banks. (7) The total amount of mortgage bonds in circulation according to their nominal value showing bonds at different rates of interest and the total amount of each kind. (8) The total amount of the liabilities of the bank from the taking up of money on deposit. Ssc. 25. Should mortgage bonds be issued below nominal value, a sum equal to four-fifths of this depreciation must be taken from the assets side of the balance sheet; the profit which the bank makes by buying in mortgage bonds below nominal value is to be subtracted from the depreciation. The corresponding entries on the credit side of the balance sheet must be written off to the extent of at least one-fourth every year. In no year may the credit entries made in the balance sheet in accordance with paragraph 1 total more than the double of the excess yielded by the interest on mortgages for the financial year, after the interest on bonds and, further, one-quarter per cent of the total of the mortgages, has been subtracted; the credit entries indicated must also not exceed the amount of the reserve fund exclusively set apart for the covering of deficit. The expenses of the issue of bonds, including the commission paid for their sale, are to be charged to their full amount upon the expenses of the year in which such issue takes place. Claims of the bank upon the annual payments of mortgagors falling due after the close of the financial year may not be en- tered on the credit side of the balance sheet. Src. 26. If mortgage bonds are issued above their nominal value and the bank have renounced the right of redemption at any time, the excess, provided it amounts to more than 1 per cent of such nominal value, is to be written to the debit side of the balance sheet. The bank may annually employ only a fraction corresponding with the number of years for which the repayment of these mortgage bonds is exceeded. Such use is not permissible so long as a minus difference of the kind set out in section 25, paragraph 1, appears on the credit side of the balance sheet; the plus difference may at any time be employed in canceling such minus difference as well as in covering the loss incurred by the bank in buying in bonds at above their nominal value. Src. 27. In the profit-and-loss account the following are to be set out under separate heads: The total amount of interest earned by the bank during the financial year on mortgages, commission on loans, and other supplementary payments by mort- gagors, as well as the total amount of interest on bonds to be paid by the bank during the financial year. Ssc. 28. In the report, or in the balance sheet, the following are to be made clear: (1) The number of mortgages assigned as cover for mortgage bonds, and their distribution in groups rising progressively by sums of £5,000. (2) The amounts which accrue therefrom, from mortgages on agricultural and other land, from mortgages subject to amorti- zation, and from other mortgages, from mortgages on building sites and on unfinished buildings not yet capable of yielding a return. (3) The number of forced sales by auction and also of compulsory administrations which have taken place during the finan- cial year on the initiative of the bank, and also the number of the same in which the bank was otherwise concerned. (4) The number of cases in which the bank was obliged to take over parcels of land for its own protection against loss, as well as the total amount of these mortgages with the loss of profit from the resale of lands so taken over. (5) The years which show arrears of interest due from mortgages as well as the total amount of such arrears in any one year. (6) The total amount of repayments effected on mortgages during the business year, distinguishing those paid off by amorti- zation and by other methods. (7) The limitations which the bank has imposed upon itself with regard to the repayment of mortgage bonds, and set out according to the different kinds of bonds. In the particulars indicated in Nos. 3-5 agricultural and other land is to be distinguished, as well as the principal districts over which the operations of the mortgage bank extended. In the report or in the profit-and-loss account the plus or minus differences resulting from the issue of mortgage bonds at above or below nominal value during the financial year are to be set out. LEGAL SECURITY OF BONDHOLDERS. Src. 29. To every mortgage bank a fiduciary agent and a deputy shall be appointed. The appointment rests with the supervising authority after consultation with the mortgage bank. The appointment may be canceled at any time by the supervising authority. Ssc. 30. It shall be the business of the fiduciary agent to see that the prescribed cover for the mortgage bonds is always existent. Itis not his business to inquire whether the established value be the real value or not in so far as such value of the land mortgaged has been established according to rules approved by the supervising authority. It shall be his business to see that the mortgages and securities set apart as cover for the mortgage bonds according to the pro- visions of section 22, paragraph 1, have been entered in the mortgage register. He must attach to the bonds, before their issue, a certificate as to the existence of the cover prescribed and of the entry of the same in the mortgage register. No mortgage entered in the mortgage register, nor any security similarly entered, may be erased from such register without the consent of the fiduciary agent. This consent must be given in writing and may be effected by the fiduciary agent affixing his signature to the mark of erasure in the mortgage register itself. Suc. 31. The fiduciary agent must retain in the joint custody of himself and of the bank the documents relating to the entry of mortgages in the mortgage register as well as those relating to similarly registered securities and the money set apart under section 6, paragraph 4, as cover for the bonds; he may only surrender them according to the provisions of this law. He is bound to surrender mortgage deeds, securities, or money at the request of the bank and to join in their erasure from the mortgage register, provided there still remain on the register sufficient registered mortgages and securities to cover the 95273°—S. Doc. 17, 63-1——22 338 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. bonds or the bank have provided some other prescribed cover. Ifthe bank be bound in respect of the mortgagor to hand over the mortgage deeds or to adopt the procedure laid down in section 1145 of the civil code, the fiduciary agent must also surrender the deeds provided the provisions referred to do not stand in the way; if the mortgage be redeemed, then in the last case the money paid over is to be handed to the fiduciary agent for safe-keeping as provided by paragraph 1. Should the bank require mortgage deeds for temporary use, the fiduciary agent must surrender them, nor shall the bank be bound to provide other cover in substitution therefor. Szc. 32. The fiduciary agent is authorized to inspect the books and papers of the bank at any time in so far as these relate to bonds or to mortgages entered in the mortgage register. The mortgage bank is bound to keep the fiduciary agent constantly informed as to the repayment of capital sums on mort- gages entered in the mortgage register as well as of all alterations, of importance to bondholders, which concern these mortgages. Src. 33. Differences between the fiduciary agent and the bank shall be settled by the supervising authority. Src. 34. The fiduciary agent may demand from the bank a suitable remuneration for his business services. The amount of the agreed remuneration is to be communicated to the supervising authority; in case of failure to agree the amount shall be fixed by the supervising authority. Sec. 35. If bankruptcy proceedings are commenced against the assets of the bank, the claims of the bondholders on the mortgages and securities entered in the mortgage register shall have precedence over those of all other bankruptcy creditors in respect of the settlement. The same holds good of cash in the keeping of the fiduciary agent as cover for bonds. All bond- holders shall, as creditors, stand on the same footing. In regard to any demand by the bond creditors for settlement of their claims out of the other assets of the bank, the pro- visions of the bankruptcy code, sections 64, 153, 155, 156, and section 168, No. 3 (Imperial Law Gazette, 1898, p. 612), applica- ble to preferential creditors come into operation. Bonds of the bank owned by it and which have been entered by it as securities and which belong to the estate in bank- ruptcy, shall, in calculating the share to be apportioned to each bond, be reckoned with the proceeds of the effects set out in paragraph 1. During the bankruptcy proceedings against the mortgage bank, the expenses of a meeting of the bond creditors, which shall be summoned as to the common rights of the bondholders, according to law, are to be met out of that portion of the estate in bankruptcy applied to the preferential settlement of the latter. Sec. 36. Fiduciary agents who intentionally act contrary to the interests of the bond creditors shall be regarded as guilty of breach of trust and punished as directed under section 266 of the penal code. Src. 37. Whosoever shall knowingly issue, on behalf of a mortgage bank, mortgage bonds in excess of the amount covered as prescribed by mortgages and securities entered into the mortgage register or by the existing funds in the keeping of the fiduciary agent, shall be punished by imprisonment for a term not exceeding one year, and a fine not exceeding £1,000. The same punishments shall apply to anyone who shall knowingly effect a sale or charge upon a mortgage entered in the mortgage register or on a similarly registered security, although the aforesaid registered mortgages and securities do not suffice as cover for the mortgage bonds, and also to anyone who shall neglect, contrary to the provisions of section 31, paragraph 2, clause 2, to hand over to the keeping of the fiduciary agent moneys received on the redemption of a mortgage. Should there be extenuating circumstances, the punishment may be by fine alone. Src. 38. Whosoever shall issue mortgage bonds on behalf of a mortgage bank without the certificates required by section 80, paragraph 3, shall be punished by a fine not exceeding £50 or with imprisonment for a period not exceeding three months. Szc. 39. Infringement of the provisions of section 2 shall be punished by a fine not exceeding £150 in amount. CHARGES ATTACHING TO LAND. Sec. 40. For the purposes of this act mortgages (hypotheken) and charges attaching to land (grundschulden) shall rank as the same. If the bank have caused a piece of land to be registered in its name as cover against loss upon an existing mortgage or charge upon it to the bank, such piece of land falling to the bank as the result of a forced sale, and the bank, in place of the canceled mortgage or charge, cause a charge upon the land to be registered in its name, the provisions of section 6, paragraph 3, shall apply in this case. ISSUE OF COMMUNAL AND LIGHT RAILWAY BONDS. Szc. 41. Should a mortgage bank issue bank issue not bonds on the basis of loans on mortgages, but bonds granted to public, home corporate bodies, or on the guaranty of such bodies, the provisions of section 6, paragraphs 1-4, and of sections 8, 9, 22, 23, 25, 26, 29 to 38 apply to such bonds and to the loan conditions on which they are based. Bonds issued by the bank in accordance with paragraph 1 may not, when added to the total mortgage bonds in actual circulation, exceed in value one-fifth of the amount fixed as the maximum for these latter by section 7. Src. 42. Should a mortgage bank issue bonds on the basis of a loan to a light railway undertaking secured by mortgage of the line, the provisions set out in section 41, paragraph 1, shall apply to such bonds, and the loan conditions on which they are based. The bonds issued by the bank in the manner indicated shall, under sections 7 and 41, paragraph 2, be regarded as equivalent to mortgage bonds. It may be declared by the articles of association of the bank that, against the claims arising out of loans granted according to paragraph 1, and against the claims arising out of loans granted to a light railway undertaking on the guaranty of a public, home, corporate body, bonds of one and the same kind shall be issued to serve as cover for claims in both cases. The total amount of claims of one or the other kind is to be clearly set out in the business report or in the balance sheet. Further, the bank shall fix standard terms for the grant of loans to light railway undertakings; such termsrequire the approval of the supervising authority. The provisions of section 13, paragraph 2, are applicable. FINAL AND TRANSITIONAL REGULATIONS. Sgc. 43. Section 17 of the act giving effect to the bankruptcy code shall be replaced by the following provisions: “The provisions of the laws of individual States, under which the holders of bonds issued on the security of mortgages by credit institutions which do not fall within the category of joint-stock mortgage banks, have a prior claim over all other creditors AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 339 in bankruptcy, so far as the settlement of the affairs of the institution out of such mortgages is concerned, shall remain undis- turbed. ~, ‘ “The provisions of the laws of individual States tyder which the holders of bonds issued by public corporate bodies, joint- stock companies, companies with limited partnership, companies with limited liability or cooperative societies issuing bonds against loans, may be granted a prior right over those nonpreferential creditors in bankruptcy whose claims arise later, to have such preferential claims registered in a public debt register, shall remain undisturbed.”” Sec. 44. This act shall come into force at the same time as the civil code, in so far as other enactments do not obtain by virtue of section 53. Sec. 45. The provisions of section 1, paragraphs 1 and 2, shall not apply to mortgage banks in existence when this act shall become operative. : The provisions of section 2 shall not apply to cooperative societies registered in the cooperative register, in so far as they, previous to May 1, 1898, according to the terms of their articles of association, have carried on business of the nature set out in section 1, paragraph 1, when this act shall become operative. Sc. 46. The mortgage banks existing at the time at which this act becomes operative shall not be subject to the provisions of section 5 in so far as they have not, up to May 1, 1898, carried on businesses according to the terms of their articles of associa- tion beyond the limits laid down in section 5. A mortgage bank which avails itself of the more extended scope of business provided for in paragraph 1 may only issue mortgage bonds up to 10 times the amount of its paid-up share capital and of the reserve fund as indicated in section 7. The authority to issue mortgage bonds is limited to double the amount of the paid-up share capital and of the reserve funds men- tioned in section 7, if, at the time of the entry of this act into force, the mortgage bonds issued by the bank do not exceed double the amount oi the paid-up share capital. The amount to which hereunder a bank may issue mortgage bonds shall be interpreted in the sense of section 41, paragraph 2, in place of the maximum amount as fixed by section 7. Src. 47. Should a mortgage bank, which under section 46 is not bound by the provision of section 5, resolve to submit itself to these provisions and to alter its articles of association accordingly, and should a reduction of share capital take place in connection therewith, the securing of creditors, contemplated in section 289, paragraphs 3 and 4, of the commercial code in respect of the holders of bonds, is not necessary, provided the bonds actually in circulation are fully covered by the mortgages registered in the mortgage register. Src. 48. A mortgage bank which at the date on which this act comes into force has the right of issuing bonds in excess of the amount fixed under sections 7, 41, 42, or 46, paragraph 2, clause 1, or paragraph 3, retains the right with the provision that the mortgage bonds and the bonds issued against loans to light railway undertakings shall not exceed 20 times the amount of the paid-up share capital and that in this sense the paid-up share capital is only considered in so far as it remains - within the limits established for the share capital of the bank by its articles of association on May 1, 1898. The bonds which the bank issues against loans not secured by mortgage to public corporate bodies or against the assumption of guaranty by such corporate bodies may not, when added to the mortgage bonds already in circulation and to the bonds issued against loans to light railway undertakings, exceed the amount to which the bank may issue mortgage debentures by more than one-fifth thereof. Mortgage bonds and other bonds issued on the basis of an increase of share capital entered in the commercial register sub- sequent to May 1, 1898, may only be so issued under the provisions of sections 7, 41, 42, and 46. The reserve fund then existing and which had reached the maximum permitted by paragraph 1 shall be omitted from the calculation. These provisions in the cases contemplated by section 46, paragraph 2, clause 2, shall not apply. Sxc. 49. The provisions of sections 6, paragraph 2, and of 10 to 12 do not apply to the covering of mortgage bonds by mort- gages which were owned by a mortgage bank in accordance with the provisions of its articles of association previous to the date on which this act comes into operation. The provisions of sections 17, paragraph 1, clause 2, and of paracraphs 2 and 3 and 18 to 21 are only applicable to agreements made after this act shall come into operation. Szc. 50. The provisions of sections 24-28 in the case of existing mortgage banks shall first apply to the balance sheet, profit and loss account, and to the business report for the financial year beginning with or during the year 1900. The provisions of section 25 shall not apply to the method of placing to account of the loss resulting from the issue of bonds at a price below their nominal value previous to the date on which this act shall come into force nor to the method of placing to account the expenses of issuing mortgage bonds before the stipulated time. The bank must, however, within at least five years, write off the entries on the credit side of the balance sheet which represents the cover for such loss or expenses, unless the retention of such entries is permissible under section 25. The same shall hold good in respect of claims on the future yearly payments of borrowers entered on the credit side of the balance sheet previous to the date on which this act shall come into operation. Src. 51. If at the date at which this act comes into operation a State commissioner be appointed to a mortgage bank charged with the supervision of the issue of the bonds, the obligations laid upon the fiduciary agent by sections 22, paragraph 2, and 30-34, 41 and 42 may be transferred to the commissioner appointed under section 4, paragraph 3. Sxc. 52. If a mortgage bank has issued special bonds against rent charges, which previous to January 1, 1899, were entered in the registry of title as charges on real property, the provisions of sections 6, 22, 29, to 35 and 37, paragraphs 2 and 3, section 41, paragraph 1, and of section 51, shall apply to these bonds and to the rent charges against which they are issued. Suc. 53. Existing mortgage banks must take in hand in proper time the establishment of the register prescribed in sections 22, 41, 42, 52, so that the register shall be opened on January 1, 1900. Immediately after this date they must advise the super- vising authority that the register is opened. CUETEN TAC COUT Be 2,555) wsciere nore sorcrcncicreccisi aimee wnevareinye tcrateea elect omewrnecis lng TIL. 5 Ill. 4 (8) Deposit). prc ajeie se cscintrneecieSaqsiemeciaatcntsaaeserentars 8 3: GoodssdepartMment cicwicnecse si eciciocivatet sistas caynomee cemoereter 4. Brinting depart en becca cei-roam ces dwar an bewiarndaereamcuice is (b) With members............-. (c) With nonmembers (d) For oN property, movables, investments, securities, etc. IV.5/ 7.8 ever Of BOOUS ease sate ateeaiot eat wes lautlenticiewelsismeeactas ae aeccet IV. 3 V5) || Se Salecoiarm: Produce cccccccauntactesenceakeaea lacie seseacsee se eeceuh veneers 3 V.3 TAT 9. UMP Ores bigs vie a a ooatemementie avian WaeieRalgeaiieseeeee SEereenes ogitiecaesenmn 1% II. 9 | 10. Commission—cost of administration. ..........0..02..2 2-2 ee eee eee eee ee eens ae Tit. 11 Es 12) Do Writing Off; AMG LOSS <-ayc/sccicjcisierstn en cia sleigh win aiSinie sees s Outils eles SANE Se idan Siesiee nlsdcisiec cisiewienemaininie’s III, 12 Totals Less payments. Plus receipts. Cash balance in hand.! Year’s turnover. 1To be carried over to assets. Summary of profit and loss. £3. d. . £84 1, Excess receipts for interest...........-..---+- 6. Excess payments for interest....<-........- 2. Excess receipts for commission As per journal. 7. Excess payments on cost of aa, As per journal. 3. Excess receipts from previous appropriations... 8. Excess payments on writing off and losses... 4, Other overdue receipts (interest, part-term interest, commis- 9. Other overdue payments (interest, part- -term interest, and sion)... -CAbstract-LL, 85.10, Vi.) goctccatsccnseiisiesereecieinat Seite costs of administration)...........-.......0.22-..00- 5. Loss as per previous balance sheet...... 10. Foundation fund as per previous balance sheet TY, Reserve tung cocci cain pceecsivnese we teicwen 12: COUUMGCY) .eiceemiscetenisiesinicuiewesresers Total Of NOSs1-5%,.sisccsag cece degesueee ss px weeeeeeentes oees Total of NoS.:6-12 2 ..cscsiaresteieon scion pivaires ee een eRe eeas Potaliot NOS:6-12. 5 can uedweneennee ny eevee ieee eses Total Of NOS. 1icciaag sepienide aw esieunislscenssaeawedemease Deduct total Of Nos. 3-8. 00. .ccecvecscnamenrncs se aekernniieetns wee Deduct total of N08..\6-122 scan sevsmeweijenanjasine datemniccercinas s DAS oc nda nichda eating aoa Gis niebanepyecebuened eR eeieees EROH Ley youn sn somen aaa Ree en ak oh le eee eae Deduct (if any) loss shown by previous balance sheet:......... Balance of profit.........-....... AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 411 Balance sheet, December 31, 19—. Voucher Voucher Assets. No. and Liabilities. No. and column. column. £ad. £3. d. 1. Cash balance at end of year........ 1. Farthing savings bank stamps not used < 2. Farthing savings bank.......... 2. Paid-up share capital of members..... 3. Loans and advances for the purchase 3. Moneys received: L6 PW CDOT ROS oc lelain diamine nmnein ns smnasiauiwarimsisonat 11.5 a) Savings deposits........ = a 4. Current account: D) DB BOSIS are couyeuacngumcesuniiawernninan (a) Balances with the German Central Ag- 4. Current account: ricultural Loan bank— (a) Balances of the German Agricultural 1. Payments on shares.............. Loan Bank: 2. Banking department.... 1. Banking department............- Current agcount. 2. Goods department...........--.- (b) Deposits........ Bl Printing: va: ccjsiecsesenweceexdcienc 101.7 3. Goods department...... b) Balances of members... ae b) Money in the hands of members. . c) Balances (other)......-.----+-+++-+--+-+ C): Os WILD cca. sjsiee-isa cesses cmretices co IIL.6 5. Sums overdue payable (interest, part term inter- ) Real property (land and buildings)..... est, and cost of administration).....-......-.... (e) Movables (safe, office furniture, machin- 6. Foundation fund from previous balance sheet..... ery, tools, etC.)...-..-......eeeeee eee 7. Reserve fund from previous balance sheet........ (f) Securities. ...........00. 0000 elec eee eee (g) Investments in cooperative undertak- ings and other. “3 5. Claims for goods delivered IV.6 Total liabilities 6. Value of stock in warehous IvV.6 7. Claims for farm produce... . V.6 Assets...-- 8. Sums overdue receivable (interest, part t terest, and commission)....-......-....2.2..... II.8 Liabilities 9. Loss shown by previous balance sheet........... 10,11 Prontfor19):cnvoscssiinaet sown ase LOsS 10RD sc:o:siecrascjocbietevatiaessaiceeenain TOtalaSsets a2 ccm sejet cece Appropriation of profits. Associations working according to the old articles of association account for || Associations working according to new articles of association account for the the appropriation of profits as under. appropriation of profits as under. 2 £3.d. Of the profits: £3. da, Of the profits: ‘ ‘i Two-thirds by the articles to foundation fund...........-... In iain el aaa 3 Of the remainder: | To foundation {and wwcces.o.bslecacsecaracssesseeenered 20 per cent written to reserve The balance of was appropriated by resolution of the general RO deavecrduceds dees seteheneassctcisc oe ee ee teaeeee raat meeting to Sil SP SEIS er eee See SS eect ear ae Tete Oar ease re riatineetes oe To be taken so account therefore in the next balance: Se seen Se eee sin ne eee eee eet rpriaty qriuy Noegean Caine te ened Reserve fund.. waite To be taken into account therefore in next balance sheet: A Foundation fund Houndation.tun TOSI V6 JUDO wa ccurenerieeerectetaenewanieeeee | Tee en ee Examined and found correct —th , 19—. The committee of management: 1, 22. +3, ; 4, ; 5, : ; The above statement of accounts, profit and loss summary, as well as the appropriation of profit, have been examined and found correct. : The board of supervision: 1, 2 2, ; 3, ed. ; 5, ; 6, Bas 8, 3 9, s MODEL STATEMENT OF YEAR’S ACCOUNTS,'! BALANCE SHEET,’ AND STATISTICS OF THE RURAL SAVINGS AND LOAN BANK OF RAKOW (POMERANTA) (REGIS- TERED COOPERATIVE SOCIETY WITH LIMITED LIABILITY) FOR THE YEAR 1909. [Issued by the Pomeranian Union of Agricultural Cooperative Societies.] Year’s accounts,! balance sheet, and statistics of the Rural Savings and Loan Bank of Rakow (Registered association with limited liability) for the year 1909. 1. The district covered by the association comprises the judicial district of Rakow, with a population of 2,500. 2. Number of members at the beginning of the business year, 8. New members admitted during the year, 1. Total, 9. Retired during the year, 0. Number of members at the end of the business year, 9. 3. The entrance fee is fixed at 3d. for each share, with a minimum of 1s. and a maximum of 3s. The amount of the share is fixed at 6s. . The liability on each share is £12 10s. . The highest number of shares which a member may acquire is fixed at 100. . The number of shares taken up by the whole of the members is 39. 8. The total liability of the society at the end of the business year amounted to £487 10s. 9. The total loan capital, inclusive of savings deposits, which may be taken up by the society, is fixed at £1,500. 10. The limit of credit to be granted to an individual member is fixed at £500. 11. The cashier has deposited £—— as caution money, and has received a sum of £2 10s. as remuneration. 12. The cooperative society is a member of the Union of Pomeranian Agricultural Societies and of the Agricultural Supply and Sale Society of Grimmen. 'The model tabular statements of turnover, of assets and liabilities, and of profits and loss for the year have been here omitted. NO ow 412 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 13. Rate of interest and charges: Interest. | Commission. Interest. Commission. 7 Per cent. Per cent. (a) Deposits on current account................. 34 (c) Overdrafts on current accounts exclusive of (b) Saviiee cone cranes carried forward from previous At Call ccscucsenseceorsee ze é VOOR: saciaceicmnpssicncisaieiatestniecateatites 43 ls. 5d. 0b) At three months’ notice ‘ aa (d) For anus cc} At SIX MONTHS? NOC so. 5.6. veiee aie ee Cece eieiveen.e (da): ‘On Sole: DIM coerce cece ve peswewe ce cine| eines sefonses set neiee (dd) Children’s confirmation savings (OB): ONSMOTtPaee se saci wcictae chisel lnppseaesewteigealiemenawemeaieers and savings deposits............ AP MNesses a asslaicieersceroee (e) Postage: Withdrawals from current ac- count half POSlALC.cesoeens verre we ean emomaat ol eeneaeeeee es 14. In the financial year— The following were supplied to common account: Disposed of on common account: * s. d. £ ss. d (a) Manures, 541 hundredweight.............- 10 8 0 (@) Grails Luis seus heed ex eeeee ee (0) Feeding stilfis:- och. ence cand neyxaaineinets (6) Cattle osc vs caeioec essere deedeneeeeets (OC) SCOR a Sisici descent detec es ey ie Ate oneacies (6) BeOS. wcrobind sr eats dhoed teeceacem ceca (d) Coal, 393 hundredweight.................- 19 12 0 (d) Fruit and vegetables................-.--.- (e) Agricultural machines and tools..........- (e)JOthercececuaseecc2ts cots seat oacseeeicel. Gf) Oth eriiais consis vise oe sleeveless aguicteies 15. The following outstanding credits were granted: Loans. On current — account. | For fixed | Subject to periods. notice. £8. d. Without special security, against deposit of sole bill only... 2.2.0.2... cee eee eee eee erect ee ee eee eee ees ees 23 #1 «0 With special security as under— (@) (ON Personal Surevies sss cca ciccd os mdaw seaeSiet Aemrasuewcea ent iemeiiat above eames onsets eee Leta dedeeee Someta ae 2 0 (b) On deposit of securities, goods, etc.............-.2....-..-- ‘ | (c) On deposits of mortgage bonds, securities on land, etc seis ws ree eee : 5 (@) Secured ino ther ways isre:casreissorss aieveissers arctevaleerarate hsanay election es aie shes ys overataectapetann Sams cqatleScaie eh anahaleh ta is eraleseane siamese sate ata 16. The journal shows for the last business year 38 receipt items and 39 payment items. The total business was divided amongst 3 depositors of savings, 1 child depositor, 5 persons with current accounts, and —— borrowers. Five members shared the goods supplied. Altogether 15 home money boxes were distributed, of which —— were handed in during the business year and yielded £—. 17. Number of meetings held in the year reported on: (a) Of the committee of management, 10; (b) of the board of super- vision, 4; (c) of both bodies jointly, 2 18. The affairs of the society were investigated (a) by the committee of management on May 8; (b) by a subcommittee of the board of supervision on May 3. 19. At the end of the business year the following was the general position of the several accounts: I Number. Savings accounts. be, ees, Accounts current. Number. Loans. Not exceeding £1. Not exceeding £210s. __ Not exceeding £2 10s. 1] From £1 not exceeding £2 10s. 1| From £2 10s. not exceeding £5. From £2 10s. not exceeding £5. From £2 10s. not exceeding £5. From £2 10s. not exceeding £15. From £5 not exceeding £15. From £5 not exceeding £15. 1} From £15 not exceeding £25. From £15 not exceeding £25. From £15 not exceeding £25. From £25 not exceeding £50. From £25 not exceeding £50. 1] From £25 not exceeding £50. ; 2 1| Above £50. Above £50. 1} Above £50. ‘ 20. Changes! in the committee of management—retired, ; newly elected, ———-; as The chairman of the committee is Johann Corswandt, of Rakow. The secretary, Wilhelm Dobbert, of Balok Changes in the board of supervision—retired, ; newly elected, The chairman of the board of supervision is Friedrich Steufert, Bretwisch. The nearest or most suitable railway station serving the society is Rakow, on the Northern Railway. Specimen Bonp with Surety (Bavarian UNION). The undersigned, Alfons Klein, small landowner in Auberg, in the commune of Grunau, and his wife, Anna Klein, nee Winkler, acknowledge hereby the receipt from the Loan Society of Grunau (registered cooperative society with unlimited liability) of a loan in cash of 1,800 marks, in words—eighteen hundred marks (£90). The said loan to bear interest at 4 per cent, and to be repayable in yearly installments of 180 marks—one hundred and eighty marks—the first on December 31, 1904, and the last on December 31, 1913. At the request of the society the whole amount of the loan shall be repaid even before the expiration of the term, provided a special previous notice of four weeks be given. The society to have the right to demand immediate payment in the event of failure to maintain the terminal payments or of cessation of membership. Arons KieIn, Anna Kern. GrRuNAU, February 15, 1904. 1 In case of reelection to the committee or board, no entry to be made here. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 413 The undersigned, Peter Brand, small landowner in Haid, and his wife, Sophie Brand, nee Maierhofer, bind themselves as sureties for the above-named debt, not only for interest, commission, and expenses, but as several and joint debtors of the Loan Bank Society of Grunau, until the complete redemption of the same, also for any period of extension, and expressly declare that they renounce any plea by which they may void their liability. Prerer BRAND. Sorwie Branp. Grunav, February 13, 1904. Seen and noted for payment according to decision of the committee. February 12, 1904. Marratas Hotrze, Grunau, February 13, 1904. Chairman. (Extension:) The period of repayment of the installment due December 31, 1907, is hereby extended to February 13, 1908, in accordance with decision of the committee of December 15, 1907, on payment of 90 pfennig (103d.) as commission. Atrons Kigin. Anna Kin. Peter Brann. Sorure Branp. Martrutas Hotrzez, Chairman of Committee. GrRunau, December 17, 1907. Mortcace Bonp. WITH SECURITY BY ASSIGNMENT OF A MORTGAGE (SO-CALLED CAUTION OR SECURITY MORTGAGE), {Issued by Hanoverian Union.] _I, the undersigned, acknowledge to have received herewith from the savings and loan bank (registered cooperative society with unlimited liability), in , upon my application this day, a loan of —— marks (shillings), or written in full marks, and engage myself— (1) to repay the loan in installments of marks each within — years, and I admit, nevertheless, the right of the society, at any time, on 30 days’ notice previously given, to call in the still outstanding debt; (2) to make a single payment of per cent of the money lent, and interest on the outstanding capital sum at the rate of per cent per annum in yearly amounts, to fall due at the end of each calendar year, and in so far as the society may decide according to rule during the period of the loan, to advance the rate of interest, I undertake to submit to their deci- sion. To pay the interest at latest within eight days of its falling due, or in default thereof for any period beyond the agreed time, to pay an increase of 1 per cent as interest by way of fine; (3) to make all payments on capital and interest in cash at my own risk and cost personally to the secretary of the society for the time being, at the office of the society, without taking into account any items to my credit with the society. The seat of the society shall be the place in which all obligations under this loan shall be fulfilled. For the security of the savings and loan bank (registered cooperative society with unlimited liability) in , against all claims against myself arising out of the above particularized loan for capital, interest, or charges, I hereby assign to the said society as agreed, a security mortgage, within the meaning of section 1184 of the Civil Code, on my landed property, situate , and set out in detail in the registry of title of , volume —, page —, together with all buildings thereon and all appurtenances thereof, against interest up to but not exceeding 6 per cent per annum. I undertake to register this security mortgage in favor of the savings and loan bank (registered cooperative society with unlimited liability) of , in the register of title named; further also to send notice of the registration when effected and a simple copy of the folio of the register of title relating thereto, as well as of this certificate of security, to the above-named coop- erative society, and the whole of the above at my cost. The , 19—. (The signature must be witnessed before either a court or a notary.) The above signature of is hereby certified by me, of On the loan granted the following installments have been repaid: =, 1955, 1 installment of marks on 19—. (Signature of secretary.) 2 installments of marks on 19—. (Signature of secretary.) 3 installments of marks on 19—. (Signature of secretary.) 4 installments of marks on 19—. (Signature of secretary.) 5 installments of marks on 19—. (Signature of secretary.) 6 installments of marks on 19—. (Signature of secretary.) 7 installments of marks on 19—. (Signature of secretary.) 8 installments of marks on 19—. (Signature of secretary.) 9 installments of marks on 19—. (Signature of secretary.) 10 installments of marks on 19—. (Signature of secretary.) In consideration of the repayment in full of the loan granted on 19—, this bond is this day returned. i= (Signature of cashier). N. B.—Bonds, provided the loan be repayable after the expiry of not more than one year, require an ad valorem stamp of one-fiftieth per cent. Such stamp duty is payable on every complete 20 pfennig of the amount. For all other loans, on each complete 50 pfennig. No stamp is required on the assignment of mortgage security. Bonds to the amount of 150 marks (£7 10s.), inclusive, are free of stamp duty. The stamping must be effected at the proper tax office within 14 days, reckoned from the date of the execution of the deed. 414 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. For the sake of simplicity and the avoidance of expense, a simple copy of the bond, together with the certificate of regis- tration, is to be presented at the royal district court. The copy, after registration, with the other documents, is returned to the society by the court. These are to be place! with the papers of the society as evidence. Bonp witH Surety For CREDIT oN CuRRENT AccouNT (BAvaRIAN Nationat Union). The undersigned, Johann Bohm, innkeeper, of Grunau (widower), hereby acknowledges to have received with Loan Society of Grunau (registered society with unlimited liability) an open credit on current account up to the amount of 2,000 marks (£100), or in words, two thousand marks, under the following conditions: 1. Interest on drafts, until further notice, to be at the rate of 4 per cent, and on balances 3 per cent. A commission of one-half per cent is to be paid over and above. 2. At the request of the society, repayment of the amount due must be made on four weeks’ previous notice, and, in case of cessation of membership, immediately on demand. Jouann Boum. Grunav, January 5, 1905. The undersigned, Peter Fichte, master carpenter in Grunau, and Rosa Fichte, his wife, nee Falk, bind themselves for all the liabilities of the debtor arising out of the above covenant, and all interest, commission and charges thereon, as several and joint debtors to the Loan Society of Grunau until the complete redemption of the same, also for any extension, and expressly declare that they renounce any plea by which they may void this liability. Peter Ficats. Rosa Ficus. Grunav, January 3, 1905. 2. CENTRAL COOPERATIVE BANKS. Prussian State Central Cooperative Bank—Recommendations respecting maintenance of liquidity by societies. Credit by Prussian State Bank—Its importance—Inquiry forms. Agreement between Baden Union and Rhenish Mortgage Bank. Company agreement of the Raiffeisen Central Loan Bank. Wurttemburg Central Bank—(1) General regulations; (2) Regulations respecting business on current account. Regulations of Baden Central Bank. RECOMMENDATIONS IssUED BY THE PRUSSIAN STATE CENTRAL COOPERATIVE BANK FOR MAINTAINING THE LIQUIDITY OF THE Funps oF Rurau CooPEeRATIVE SOCIETIES. To maintain the funds of the rural cooperative societies in a position of ready realizability, the following regulations appear necessary: A. FOR INDIVIDUAL SOCIETIES (ESPECIALLY COOPERATIVE CREDIT SOCIETIES). They must be able—taking into account their general financial position, especially the amount of their own assets, the nature of the investments in the district covered by their association, the conditions of notice of withdrawal under which the deposits are held (sec. A (e-d))—to realize in cash at the union bank at least 20-30 per cent of their deposits. Their open credit, therefore, together with whatever credit balance they possess at the union bank, must amount to 20-30 per cent of their deposits. Twenty per cent will suffice when all the conditions set out in paragraphs a-d following have been met. On the other hand, 30 per cent must be provided if they have not all been met. (a) At least 30 per cent of the deposits must be invested in claims which will fall due within the next harvest period. (b) The owned capital must be brought into a definite relationship with the borrowed or loan capital. With the object of accumulating reserves more rapidly, it is, moreover, desirable in the case of savings and loan banks that if dividends are paid at all they should be limited by the articles to 4 per cent. (c) Savings and other deposits of larger amounts are to be accepted only for longer periods, to be strictly adhered to in ordinary times, and at correspondingly higher rates of interest. (d) The societies must in all banking transactions deal with their union bank and with it alone. B. FOR UNION (I. E., CENTRAL) BANKS. TI. The union banks must make it their first duty to maintain the liquidity of the funds of their cooperative societies. They must see that at all times the following are fluid: 1. The credit balances held by the affiliated societies comprised in section A (liquid balance). 2. Other credit balances of the societies, as well as direct deposits by individuals with the union bank. 3. Credits which have been accorded to societies though not drawn upon by them. With regard to Nos. 1, 2, and 3, union banks must reckon with the necessity in serious cases of making fluid the whole amount or a very high percentage of it; with regard to No. 2, the withdrawals may not reach the same extent, and the amount (to be kept fluid) may perhaps be fixed at 30 per cent. II. The union banks have at their disposition for this purpose— (a) Their open credits with their banker (Prussian Central Cooperative Bank), for the realization of part of which they must procure bills from the borrowing societies. (b) Such bearer securities, especially treasury bills, which have been deposited in case of crisis with their banker (Prussian Central Cooperative Bank), but which in ordinary times are not demanded as security for credit. The union banks can not, in serious cases, rely on other sources of credit. Open credits and bearer securities must also be made to serve as cover for liabilities included under I. As account must be taken of the fact that in times of difficulty money. can only be raised on bearer securities up to two-thirds of their normal market value, the position may be formulated as follows: The union banks must hold sufficient margin on bearer securities, for the purpose of their deposit and pledging in time of crisis, that two-thirds of their value, plus the open (but unexhausted) credit, are adequate to make fluid (a) at least 75 per cent of the so-called ‘‘fluid capital” and of the open credits accorded to cooperative societies; and (6) at least 30 per cent of other loan capital received from clients. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 415 THE IMPORTANCE OF THE CREDITS GRANTED BY THE PRUSSIAN CENTRAL COOPERATIVE BANK. The Prussian Central Cooperative Bank was founded for the promotion of cooperative personal credit for business purposes. By section 2 of the act of July 31, 1895, it acquired authority to grant loans at interest to unions of cooperative societies (so-called union banks) and to accept deposits from them at interest. The intention of the legislature herein was to indicate the function of the Prussian Central Cooperative Bank as that of a place of adjustment of the supply and demand of money. As the development of the relations has shown, the amounts deposited with the individual societies frequently do not equal the amounts asked for in loans. The same conditions also prevail in the union banks with regard to the requests for loans and the deposits of the affiliated cooperative societies, and finally between the Prussian Central Cooperative Bank and the union banks. The function of the Prussian Central Cooperative Bank is, however, by no means to be restricted solely to forming the place of money adjustment for the cooperative organizations connected with it; it aims further at procuring access to the general money market for cooperatively organized industrial groups among the middle classes that are in business rela- tions with it. The Prussian Central Cooperative Bank thus forms an important member of the organs of public economy for the adjustment of capital among all the elements participating in the economic life of the nation. It is only natural that the formation of new cooperative societies and the vigorous growth of the existing onesshould make the need for money more strongly felt. If, in this connection, due consideration is also to be given to the cooperative credit organizations, it must be distinctly adhered to as a principle that the loans of the Prussian Central Cooperative Bank can only be granted to supplement temporarily the resources at the disposal of the cooperative organizations, and that, consequently, the credits granted by the Prussian Central Cooperative Bank can never be regarded as an endowment of the union banks or even of single cooperative societies. Under sound cooperative development and the development of the cooperative spirit, the members of individual cooperative societies will deposit all money at their disposal with their society, and pay off the loans taken up as far as their means permit, in order to secure or maintain as far as possible out of their own resources the efficiency of their society. The same must hold good of the union banks and, finally, of the Prussian Central Cooperative Bank. Only if the cooperative societies affiliated to the union banks, and also the union banks themselves, hand over to the Prus- sian Central Cooperative Bank the whole of the capital flowing into their hands either from members or nonmembers, in so far as it is not required for their own cooperative purposes, and if they, having regard to the common interests and to the advan- tages that arise out of the cooperation of all for the interests of the individual, renounce perhaps some small special occasions of profit which may, indeed, often arise, can the adjustment of needs which the act of July 31, 1895, had in view, be carried out for the cooperative organizations in the desired manner. The Prussian Central Cooperative Bank is able, therefore, in strict observance of the intentions of the legislature, to accord all the advantages at its disposal, and especially fixed and relatively low rates of interest, exclusively to such union banks (and to these only for such affiliated cooperative societies as also on their part give the same undertaking) as are willing to hand over all money not necessary for their own cooperative purposes to the Prussian Central Cooperative Bank. In no case, however, can it be tolerated that union banks, so long as they are still indebted to the Prussian Central Cooperative Bank, or that the cooperative societies affiliated to such union banks, so long as they remain indebted to their union banks, shall dispose of funds received except for clearance of debt. Any departure from this condition must, when proved, have as result the immediate withdrawal of the credit extended. In like manner the tying up of capital in securities by the union banks, the affiliated cooperative societies, etc., is to be deprecated. In so far as securities are pur- chased, or held to an amount in excess of the reserves of the particular cooperative society, a corresponding reduction in the credit otherwise usually accorded them on the basis of their liability must be put in force. Having regard to the ever-increasing list of problems which may be best solved by cooperation, the accumulation of an adequate owned working capital must be regarded as an indispensable duty of cooperative organizations. The act of July 31, 1895, authorizes the Prussian Central Cooperative Bank to grant only short-term credit for employment as working capital; and it is therefore not in a position to place at the disposal of cooperative organizations credits on relatively long terms of repayment, credits for investments of a permanent nature, etc. Since suitable organizations have been created for long-term or mortgage credit in the provincial mortgage credit associations, etc., and for personal credit for employment as working capital in the cooperative societies and the Prussian Central Cooperative Bank, it behooves the cooperative societies to make other provision for the satisfaction of that portion of the credit which lies in the borderland between credit secured by mortgages and proper working credit or capital. Further, the creation of an adequate owned working capital has an importance not to be undervalued for the economic inde- pendence of individual cooperative organizations, and for the application of independent rates of interest fitted to local circum- stances. The Prussian Central Cooperative Bank has not been founded as a substitute for proved self-help, but only to render possible and to promote the practice and full development of self-help. Bearing the foregoing considerations in mind, regard shall also be had in the fixing of credits, in keeping with the practice adopted hitherto by the Prussian Central Cooperative Bank, to the existence of adequate owned capital by the cooperative organizations, and to a reasonable proportion between the amount of the share and that of the liability thereto attaching, unless considerable reserves are shown to exist. The credit extended to a union bank, built up from its very foundation on the credit capacity of the individual members of the cooperative societies affiliated thereto, forms one gross credit for the union bank. The contribution of individual persons, cooperative societies, etc., to the putting together of the basis on which the credit is founded, is in no sense the standard by which the credit granted to the same in individual cases is to be measured. The credit which in individual cases is granted by the union banks to its affiliated cooperative societies, and by these to individual members, must in each case be governed by the special circumstances existing; and precautions must be taken in every separate instance for the security from the interested parties. It is not, therefore, necessary that the credits granted by the union banks should be in strict agreement in individual cases with the credit uf the Prussian Central Cooperative Bank, built upon the sum total of the individual liabilities. The granting of credits by the union banks need not depend on the security furnished to the Prussian Central Cooperative Bank by the individual societies, in that way, as it were, representing a simple subdivision of the credit granted, in proportion to the share of each society in the foundation of the credit, as a fixed standard (which is not the case). Such procedure can not, even in the interests of the union banks, be held to be judicious. It might have the effect that the services thus rendered to the indi- 416 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. vidual cooperative societies would be made, not on cooperative principles in accordance with actual immediately justified requirements, but by way of endowment with capital, with the result that the idea of a monetary adjustment within the coop- erative organization disappears, and that this latter is only regarded as the channel legally necessary for the utilization of the cheap credit of the Prussian Central Bank. Thus a development of the union bank on cooperative lines is rendered impossible. Inquiry Forms. PRUSSIAN CENTRAL COOPERATIVE STATE BANK. {Form B. (Sec. 7 (4) of the regulations.) For societies with unlimited liability (or unlimited contributory liability).] Province: Title of union bank to which the cooperative society belongs: District: Number on the lists of the union bank: INQUIRY FORM. 1. Title and seat of the cooperative society 2. Number of members on , 19—. 3. Amount of the share ———s. ———d. 4. Total paid-up share capital of members £ —3. d. on , 19—, 5. Amount of the reserve (including special and working reserve) on , 19—. 6. Information as to the means of the members. (a) Total amount of the supplementary property tax paid by members in the year: £ (b) Other information as to the means of the members. (Answer to questions 6a and 6) is optional. There is no obligation to do so.) , 19—. Title of the cooperative society (Signatures. ) 1. If Form D is not sent in it will be assumed that each member may be held good for from £5 to £15, so far as it may be deduced from the circumstances. 2. If Forms K and L are not sent in or corresponding liabilities be not undertaken, then section 8 (2) and (3) and sections 12, 22, and 40 (1) of the regulations of the Prussian Central Cooperative Bank for the conduct of business with union banks apply. The directorate of the Prussian Central Cooperative Bank. [Form C. (Section 7 (4) of the regulations.) For societies with limited liability. | Province: District: Title of the union bank to which the society belongs: . Number on the list of the union bank: INQUIRY FORM. . Title and seat of the cooperative society: . Number of members, on the ——-—, 19—. . Amount of the share £—. —s, —d. . Total of the paid-up share, capital of members, £— —s. —d. on LO . Amount of the reserves (including special reserve and working reserve), £— —s. —d. on ———., 19—. . Number of shares held and legally registered, on 5 10s, . Amount of liability attaching to each share, £— —s. —d. . Total liability undertaken by members, £— —s. —d. on members held 1 share each. members held 2 shares each. members held 3 shares each, etc. The — of , 19—. Title of the cooperative society: (Signatures. ) 1. When liability of over £15 per share is undertaken, a statement of the means of members (as per Forms E or F) must show its realizability, if regard is to be had thereto in fixing the credits. 2. (A repetition of 2in Form B.) The directorate of the Prussian Central Cooperative Bank. DN ooh wn Lo [Form K. (Section 8 (2) of the regulations.) Exclusive banking relations as regards deposits.] Province: Title of the union bank to which the cooperative society belongs: District: Number on the list of the union bank: We hereby expressly undertake that all moneys coming into our hands, whether from members or nunmembers (in so far as such moneys do not find employment according to the articles of association and rules of business), in regular business dealings with our own members, duly entered as such in the cooperative societies’ register, shall be transferred only to our union bank at , (here insert title of bank) or to the Prussian Central Cooperative Bank in Berlin. , 19. Title of cooperative society: (Signatures. ) To the Prussian Central Cooperative Bank in Berlin. Nots.—The above form holds good for societies affliated to union banks. For the union banks themselves the necessary alterations are to be inserted. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 417 Form L. (Section 8 (3) of the regulations.) Exclusive banking relations as regards credit.] Province: Title of the union bank to which the cooperative society belong: District: Number of members on the list of the union bank: We hereby expressly undertake to enter into business relations with no other bank than with our union bank at (here insert title of bank), or with the Prussian Central Cooperative Bank in Berlin, that is to say, to conduct our credit transactions, so far as our business, inclusive of deposits and savings deposits, including those of nonmembers, does not provide the means, as well as our dealings in security, discount business, etc., only with these banks. We further undertake neither to discount bills with the Imperial Bank, nor to take loans or moneys, etc., under any legal title soever as personal credit from savings banks or other sources of credit. We reserve to ourselves the right to engage in mortgage transactions elsewhere. 19s. Title of society: - (Signatures. ) To the Prussian Central Cooperative Bank in Berlin. Norr.—The above form holds good for societies affiliated to union banks. For the union banks themselves the necessary alterations are to be inserted. Company AGREEMENT OF THE CENTRAL AGRICULTURAL LoaN BANK For GERMANY (FOUNDED BY RAIFFEISEN IN 1876). ArticLE I.—Title, legal position, object, and seat. FOUNDATION, The joint-stock company under the title of Central Agricultural Loan Bank for Germany, with seat in Berlin, has for its object: A. The carrying on of banking and credit business, and especially the adjustment of temporary money scarcity or surplus among the affiliated societies. B. The purchase in common of agricultural requirements (artificial manures and feeding stuffs, implements, etc.) and the sale for common account of agricultural produce. Article II.—Share capital—Shares—Shareholders. SHARE CAPITAL. 1, The share capital of the joint-stock company shall consist of £250,000, divided into 5,000 nontransferable shares, each of £50. The general meeting on June 27, 1900, decided to increase the share capital by £250,000 by the issue of 5,000 nontrans- ferable shares of £50 each. 2, Any increase in the capital shall be subject to a decision of the general meeting.. SHARES, 3. Shares shall be made out to specified holders and signed by two members of the board of supervision and of the committee of management. The script shall be furnished with dividend coupons and talons. All claims due upon the coupons lapse, if the dividend be not claimed, within four years after maturity. Unclaimed dividendsare to be appropriated to the reserve fund. SHAREHOLDERS. 4, The following are eligible as shareholders: Persons who belong to the committee of management or the board of super- vision, and credit societies (loan bank associations) which— (a) Have been constituted, according to the terms of the German cooperative societies act, with collective unlimited liability ot their members. : (b) Strive by suitable means to promote the moral and material status of their members. (c) Only accept as members persons residing within a fixed area, such area to be small as possible consistent with the economic existence of the society, and provide that no person shall be a member of several societies. (d) Levy no entrance fee and, so far as the law allows, issue no shares, or if such are issued one share only shall be permitted to be held by each member, and on this only such dividend shall be paid as does not exceed the rate of interest charged on loans to persons so indebted to the society, but which grant no further interest. (e) Pay no salary to any official with the exception of the secretary (cashier), but only out-of-pocket expenses. (f) Accumulate all profits in an indivisible common foundation fund. (g) Accept and observe the instructions of the German General Federation of Rural Cooperative Societies as to the conduct of business and the keeping of books, which submit to control by the general federation or by an audit union affiliated thereto, and which permit at any time audits authorized by them. Shareholders shall be entered under their names, dwelling places, and occupations, as well as under the numbers of the shares held by them in the share list of the company. Transfer of shares may be made, with the consent of the board of super- vision, by simple indorsement to persons and to credit societies of the kind just indicated. The transfer shall be entered in the share list, the new owner registered therein, and the previous one deleted. All persons sharing in the undertaking and who possess shares, or to whom shares have been allotted, submit themselves to the present constitution or to any modification thereof and to the business regulations issued by the board of supervision. 95273°—S. Doce. 17, 683-1——27 418 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. TRANSFER OF SHARES. 5. It shall be the duty of the board of supervision to effect the transfer of the shares of retiring holders on their request, so far as due regard to the provisions of Article II (4) permits, and the shareholders in question have fulfilled all their obligations to the central loan bank. PAYMENTS OF SHARES. 6. Twenty-five per cent, i. e., £12 10s., must be paid at once at the time of signature on acceptance of the allotment note. The further installment shall be paid at intervals to be determined by the board of supervision. Against the payments, non- transferable receipts ad interim shall be issued. The receipts ad interim endow the holder with all the rights of a shareholder ‘ within the terms of this constitution until the issue of the actual shares, For the signature of the receipts ad interim the regulations set out under section 3 for shares have force. Shareholders who do not pay their installments on demand at the proper time are liable for the payment of 6 per cent interest for delay from the date on which it became due onward, and to the payment of a regulation fine of 10 per cent of the outstanding amount besides perpetual liability to payment of the latter. EXTINCTION OF SHARES. 7. Should payments of the installments demanded be not forthcoming after three demands made, according to the regula- tions laid down in the commercial code, the defaulting shareholder may, by a resolution of the board of supervision, be declared to have forfeited the rights he acquired on signature and of the installments on shares already paid. In this case the share in question is to be publicly announced as extinguished and a supplementary share issued in the interests of the company. / ArTICLE III.—Organization and administration. ORGANS. 1. The organs of the company are: The general meeting, the board of supervision, the committee of management, and the council of administration. (a) General meeting.—The rights which the shareholders have over the affairs of the company, especially in relation to the conduct of business, shall be exercised by resolution of the general meeting. All shareholders have a right to take part in a general meeting, and each share shall carry one vote. The adherent societies exercise their voting power by proxies appointed according to the constitution of the company. Every shareholder may be represented by another shareholder holding full power of attorney. The power of attorney of proxies of shareholders must be in writing, and in the case of representatives of one of the adherent societies shall be in the form laid down by the law or of the articles of their society. The proxy of a member representing a society has all the rights of a shareholder; he is also authorized to act as proxy for other shareholders. Other persons who are not shareholders may not act as proxies. The board of supervision shall decide on details as to the verification of authority to take part in a general meeting, and shall communicate their decision to the shareholders. (b) Board of supervision.—Members of the board of supervision are to be elected by the general meeting. From the dis- tricts covered by each adherent union two members are to be sent to the German General Federation of Rural Cooperative Societies in order to secure as comprehensive a knowledge as possible of the conditions of the neighborhoods in question. The general meeting is bound, at the holding of an election, to the list of persons proposed by the special committees of individual union districts; such lists shall contain double the number of names required to fill the places on the board of supervision. The elected members of the board of supervision must either be shareholders in the company themselves or members of adherent shareholding societies; they must also belong to the special committee of the union district in question. The board of supervision is to be elected every five years. It elects from among its members—on each occasion for one year—a chairman and a first and second deputy chairman. The existing board shall continue to hold office until the fresh elections, to take place at the ordinary general meeting of the year 1911. (c) Committee of management.—The committee of management shall consist of one or more—not more than three—members to be appointed by the board of supervision with the consent of the council of administration. One of them shall hold the official title of managing director. The managing director shall conduct the business of the company, and in so doing shall be supported and represented by the other members of the committee. The legal position of the members of the committee shall, so far as it is not determined by law, and in accordance with this company agreement, shall be regulated by agreements to be made between them and the board of supervision. (d) Council of administration —The committee of management of the company and the directors of the unions affiliated to the German General Federation of Rural Cooperative Societies (registered association) shall form the council of administra- tion, provided that their election has taken place in agreement with the committee and the board of supervision of the company. BRANCHES. 2. The central loan bank shall establish branches or business offices for individual provinces or States. A resolution of the board of supervision is necessary for this purpose. The branch managers are to be the heads of the branches. Their election takes place through the board of supervision after a previous hearing of the committee of management and of the members of the board of supervision of the district for which the election of a branch manager is to take place. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 419 SUMMONS AND NOTICE. 3. Every summons to a meeting of an organ of the company must clearly specify time, place, place of meeting, and the business to be entered upon. A summons to a general meeting, as well as all public notices, must be signed or issued by the committee and be published in the Agricultural Cooperative Journal of Neuwied, and so far as may be legally necessary in the German Official Gazette. In case it should be necessary the board of supervision may decide upon one or more other papers in place of, or in addition to, the one named. Any such departure from rule to be notified to the court at once and published. Summonses may be sent direct by circular, in which case a public summons is not necessary. ELECTIONS, RESOLUTIONS, TELLERS, MINUTE TAKERS. 4. The elections, which are held by the committee, the board, or the general meeting, if the open voting does not have a definite result, may take place by secret voting (ballot papers). In such case an absolute majority shall decide. If such a majority be not obtained on the first vote, in the second final vote only those two candidates shall be put forward for second ballot who have received the largest number of votes. In case of equality of votes lot must be resorted to, taken from the hand of the chairman. The resolutions of the meetings above mentioned (of the committee, the board, and the general meeting) shall always be taken by the absolute majority therein, whether by open or secret vote (show of hands, standing or remaining seated, roll call, or ballot paper). At elections by written paper in the general meeting the number of votes at the disposal of each shareholder must be unmistakably made known. For every vote taken in the general meeting the chairman shall appoint two tellers. The persons who are to take the minutes shall in all meetings be chosen by the chairman. At general meetings two minute takers shall be named. DOCUMENTS, AGREEMENTS, AND RESOLUTIONS AS TO THE COMMITTEB. 5. The signature of documents and agreements, as well as the drawing up of resolutions of the general meeting and of the board of spervision which concern the committee of management, are effected by the chairman or his deputy and another chairman. At general meetings two minute takers shall be named. MINUTE BOOKS. 6. There must be provided for the committee, the board of supervision, and the general meeting, a minute book with consecutively numbered pages, in which all resolutions of the meetings of any of these bodies shall be recorded. Resolutions of the committee and of the board of supervision shall be signed by the members present. After they have been read out and accepted resolutions of the general meeting are signed by the members of the committee and of the board present at the reading of the minutes as well as by the minute takers. Article 1V.—General meeting. ORDINARY AND SPECIAL SITTINGS. 1. The ordinary sittings of the general meeting are held in the first six months of each business year. Other meetings must be called, whenever the committee, the board, or the shareholders demand it in writing, with a statement of the reasons therefor; the persons so demanding a meeting must together represent at least the twentieth part of the share capital. AGENDA. 2. The fixing of the place of meeting in the agenda of the general meeting lies with the committee, with the concurrence of the chairman of the board of supervision. Every shareholder has the right to place a notice of motion on the agenda. Such notices of motion can only be considered at sittings of the ordinary general meeting of the current year if they are in the hands of the committee before March 1. Notices of motion received after this date or handed in at the meeting iteslf, and which are not on the agenda, with the exception of a motion for fixing another meeting, can only be discussed after a resolution of the meeting so to do; the taking of a resolution upon such late motions may be taken first in the next meeting, for which they are to be placed on the agenda. ELECTIONS. 3. The general meeting elects the members of the board of supervision at the ordinary annual sitting (III, 1 (6) ). Retir- ing members are eligible for reelection. SUMMONSES. 4. Summons to the general meeting is issued by the committee under the provisions of Articles III (3), VI (2), and X (2), if for ordinary business, two weeks, if for the purpose of alterations in the constitution, four weeks, if for the purpose of dis- solution, six weeks, and should a second meeting be necessary, two weeks, before the sitting in question. CHAIRMANSHIP. 5. The chairmanship and the conduct of proceedings at a general meeting falls to the chairman of the board of supervision or to one of his deputies, and in case of the inability of both to attend, to an ordinary member of the board of supervision, to be fixed upon by the board. COMPETENCE TO PASS RESOLUTIONS AND BINDING CHARACTER THEREOF. 6. Beyond the cases stated in Article X (2 and 3), the general meeting is competent to pass resolutions, independent of the members present, provided the summons, Article III (3), has been issued in the prescribed manner. The resolutions are legally binding on the whole body of shareholders. 420 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. COMMITTEE ON ACCOUNTS AND DISCHARGE OF THE COMMITTEE OF MANAGEMENT. 7. For the examination of the year’s accounts and the balance sheet drawn up by the committee, for granting release from liability, and the control of the conduct of the business of the committee the board must appoint a committee on accounts of at least three persons selected from its own body. According to the report of the committee on accounts to the board, and the report of the board to the general meeting, this latter allows release from liability to the committee, if no objection be found thereto. Articte V.—Board of supervision. SUPERVISION IN GENERAL, 1. The board of supervision must watch over the conduct of business in all branches of administration, and shall inform themselves as to the whole of the transactions of the company, and, if need should arise, they are to take part in the meetings of the committee. It may at any time demand from the committee a report on the transactions of the company, and them- selves, or by: one of their members deputed for the purpose, investigate the books and documents of the company as well as the position of the company’s funds, securities, and goods. AUTHORITY AND DUTIES IN PARTICULAR. 2. The board of supervision is under the following obligations: (a) To pass resolutions as to the election and appointment of the committee as well as the settlement of agreements with the same. (b) The drawing up of the rules of business for the whole conduct of business, and especially the scale for grants of credit to shareholders. (c) To approve the investments of money with regard to taking up, redemption of, and loan upon mortgages and money advances against purchases of land. (d) To examine the proposals for the distribution of profits and make a report thereon to the general meeting. (e) To decide upon the manner of testing the right of shareholders to take part in a general meeting. (f) To pass resolutions as to the founding and dissolution of branches and subbranches. (g) To approve the acquirement of real estate and the sale of the same. (h) The fixing of the scale of salaries and the general terms of agreements made with all officials. (i) To draw up an estimate of the expenses of administration. (k) To decide upon the bringing of all actions, with the exception of such as relate to the collection of outstanding claims and which arise out of transactions in goods. (1) To determine the extent of the credit to be granted to the union banks. BALANCE SHEET AND ANNUAL ACCOUNTS. 3. The board of supervision shall examine and determine the balance sheet and the annual accounts of each completed year at latest up to May 1 of the current year. It is the duty of the chairman of the board to see that the books made up to December 31, with the balance prepared up to April.1, are placed in the hands of the special committee. SPECIAL COMMITTEES AND AUDIT. 4, The board of supervision is authorized, for the exercise of its functions, to form temporary or permanent committees of its own body, whereby, however, the responsibility of the whole of the members of the company shall not be prejudiced. The committees shall meet on summons of their chairman. Resolutions shall be adopted by the majority of those present, entered in the minute book, and signed by all present. The board must, at least once in each year, permit a business and money audit of the accounts of the central office to be made by one or more members, and if really necessary with the collaboration of an expert appointed by them. The board must also undertake a thorough annual audit of the business and money transactions of the separate branches, this also, should it be necessary, with the help of a competent expert appointed by the board. Minutes must be made of the result of the audits showing accurately the position of the business and money transactions, and these shall be sent at once to the chairman of the board. MEETINGS—SUMMONS—COMPETENCE TO PASS RESOLUTIONS. 5. The board of supervision must hold a meeting at least once in the year, and beyond that whenever the chairman may think it necessary, and whenever at least three members of the board or committee shall make demand to this end of the chair- man or his deputies. The summons (Art. III, 3) to sittings of the board is to be issued by the chairman in writing at least eight days before the sitting; in case of urgent necessity shorter notice may be given. The board is competent to pass a resolution when at least nine of its members are present, with the provision, however, that the appointment, suspension, and discharge of embers of the committee can only take place when more than one-half of the total members of the board vote in support of it. AUTHORITY. 6. The company is to be represented by the board in agreements with members of the committee as well as in any legal process which may chance to arise against them. : The execution of the business lies with the chairman. In such cases he takes the place of the committee. The authority of the board is regulated in accordance with the minutes of the general meeting concerning the election of its members, and the authority of the chairman in accordance with the minute relating to his election. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 421. HONORARY OFFICE. 7. The members of the board hold their appointment as an honorary unpaid office, and shall only receive compensation for their expenses in the form of traveling and daily allowances, and compensation for loss of business should they claim this latter. ArticLE VI.—Committee of management. GENERAL DUTIES OF THE COMMITTEE. 1. The committee of management (Art. ITI, 1) superintends the administration, and, indeed, all legal and administra- tive transactions of the company which are not expressly by the constitution relegated to the board of supervision or to other organs. The committee represents the company judicially and otherwise, and so far as this representation, and especially its author- ity, is concerned, the regulations laid down in the commercial code as well as those of the present articles and of the business regulations (Art. V, 2 (b) are to be decisive. The committee is hereby expressly forbidden to enter upon any speculations in real property. REPRESENTATION OF THE COMPANY. 2. Externally the company shall be legally represented by the committee, so far as the committee consists of more than two members, then by two members of the committee, otherwise by one member of the committee, and a fully empowered agent. The committee has authority, with the concurrence of the board, to empower individual members of the council of admin- istration (union directors) to undertake business or specified kinds of business; the giving of receipts, the collection of amounts due on bills of exchange, the preparation of accounts, lists by price and number, as well as vouchers of receipt of securities on other matters, may be signed by two officials specially invested with authority for this purpose by the committee. The members of the committee, their fully empowered agents and holders of powers of attorney, are bound as regards the company in the exercise of their representative and delegated authority to abide by the limitations imposed upon them by the present constitution, their agreements as well as the regulations and instructions of the board of supervision or of the com- mittee, and the resolutions of the general meeting, and must render full compensation to the company for the results of any failure to observe such limitations. PROVISIONAL RELIEF FROM SERVICES AND FINAL RELEASE. 3. Members of the committee and of the council of administration in their capacity of directors of branches or of fully empowered officials can only be temporarily or entirely relieved of the duties of their office by the board of supervision—supe- rior officials only by the committee of management, with leave to appeal (in case of refusal) to the board of supervision. The removal from office of the higher officials may be effected by the managing director, that of members of the committee by the unanimous resolution of the chairman of the board of supervision and his deputies. Such dismissal is to be communi- cated within two weeks to the organ in question. The decision, however, of the competent organs must be obtained within two weeks. ARTICLE VII.—Council of administration. The council of administration shall support the committee of management in its conduct of business by the exercise of a deliberative voice, and especially also by upholding the objects of the foundation of the company and the broadening and deepening of its work. The council of administration, apart from any written advice it may see fit to issue, shall in general be summoned to meet twice in the year by the managing director as the chairman of the council. ArticLtE VITI.—Conduct of business. KEEPING OF THE BOOKS AND CASH—BUSINESS YEAR. 1. The keeping of the books and the dealing with the funds are to be conducted according to the business regulations issued by the board of supervision. The business year shall be coincident with the calendar year. BALANCE SHEET. 2. The balance sheet shall be drawn up by setting the assets and liabilities side by side. The following are to be set down as assets: (a) The cash in hand at the end of the year. (b) The effects—securities and goods in stock—these are to be set out according to their kind and to be brought into the account at not higher than their market value on December 31 of each year; should the market value be higher than the pur- chase price the latter is to be brought into account. (c) All claims divided according to their different kinds, with regard to their value at the end of the year. (d) Real property according to its value at the end of the year. (e) All movable property according to its value at the end of the year. (f) Credit balances at interest which only become payable in the next accountancy year are to be reckoned to the end of the year (partial interest). ‘ The following are to be set out as liabilities: (a) Liabilities in respect of capital without regard to the date on which they fall due. (b) Other debts and payments still to be made—set out according to their different kinds. 422 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. (c) Position of the reserve capital and of the paid-up share capital. (d) Interest due, which only becomes payable in the next accountancy year, to be reckoned to the end of the year (partial interest). The surplus of assets over liabilities constitutes the profits, the excess of liabilities over assets the loss of the company. ESTIMATE OF PROFIT AND LOSS. 3. The estimate of profit and loss brings the results of the year’s working of individual accounts together. The individual credit and debit entries of the last business year must be set against one another and the balances must be struck therefrom, so that there may appear a succinct statement of the successes and failures of the different branches of the business. Estab- lishment charges and reimbursements on transactions in goods (Art. IX, 4-5) are to be entered on the debit side of the accounts. ARTICLE 1X.—Business. SCOPE OF BUSINESS. 1. The undertaking is to be regarded as intended to serve public interests and not to satisfy the greed of gain. A maximum, therefore, of 4 per cent of the net profits obtained in accordance with Article IX, 4, shall be distributed in dividends. Neither in the event of retirement nor of the dissolution of the company shall the shareholders receive more than the nominal value of their shares. In the event of the partition of the reserve funds of the central loan bank, only those credit societies which have been particularized in Article II, 4 (a-g), shall be entitled to receive a share, namely, those societies which employ the common assets mentioned in Article II, 4 (f), for the purpose of calling into being undertakings of common utility for the improvement of the economic position of the members and appropriate the surplus of the net profits (after accumulation of profits up to the limits prescribed by the articles) to purposes of social welfare. The amounts falling to the share of such shareholders as are entitled to participate in the distribution shall be incorporated in the above-mentioned foundation funds of these societies (Art. II, 4 (f)) devoted to objects of common utility; when the accumulation of the last-named fund has reached the amount fixed by the articles, the amounts shall likewise be expended » purposes of common utility. Should a transformation of the central loan bank in respect of its legal organization be contemplated, and for this purpose a formal dissolution of the joint-stock company should become necessary, then any distribution of the capital of the company among the shareholders shall be absolutely prohibited. The capital in this case is to pass over to the new combination, pro- vided that this latter, in the manner and scope of its activity, especially also in regard to the possible later partition of the common assets, definitely and expressly lays down in its constitution the articles set out in the present Article IX, 1. In the general conduct of business all transactions which involve any risk of loss whatever are to be scrupulously avoided, and none such shall be entered upon by the organs of the administration. With regard to the details of the business, the board of supervision must insert in the business regulations the precautions to be observed, and all organs of administration are bound to confine themselves to the limits therein laid down. THE PROCURING OF FUNDS. 2. Money other than the share capital shall be obtained— (a) By deposits and loans (on which the longest possible period for calling in must be arranged) as well as commission and surplus interest. (b) By receipts from dealings in materials required for farming and the sale of farm produce, as well as from other business which may lend itself to the objects of the institution, and from incidental receipts. (c) By the issue of unredeemable bonds. The board of supervision shall have authority, through the medium of the committee, to arrange for the sanction of them by the State, so soon as they shall deem the moment for such issue to have arrived. EMPLOYMENT OF FUNDS. 3. Funds shall be employed— (a) In loans on current account to registered societies, which hold shares in the central loan bank, as well as to the union banks founded for (the assistance of) the productive cooperative societies of the individual States and Provinces. (b) For the purchase of materials required for farming and the sale of farm produce (Art. I). (c) In bill and exchange business according to the principles acted on by the Prussian Central Cooperative Bank in Berlin and by the Imperial Bank. (d) In investments in, purchase, extinction, and acquirement of interests in mortgages. (e) The acquisition of real property in case this should be necessary in the interests of the company. (f) By investment in bearer stock, issued by the German Empire or a German State, or by corporations or communes with the authority of such State, and which bear a fixed rate of interest. ESTABLISHMENT CHARGES AND REFUNDS ON TRANSACTIONS IN KIND. [Art. IX, 4 and 5.] 4. The net profit remaining after covering the establishment charges, including the expenses of the general federation, as well as after payments of the moneys refunded on transactions in kind in accordance with Article IX, 5, and carrying out the requisite writings off shall be devoted— (a) To the accumulation of a reserve capital. Twenty per cent of the net profit shall be first devoted to this purpose. Out of the surplus the dividends (Art. IX, 4 (b)) to shareholders are to be paid. Any balance still remaining shall be also added to the reserve capital. The primary object of this is the covering of possible deficits. Before the dissolution of the company this fund must be either entirely or partially divided amongst the shareholders. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 423 (6) To the payment of dividends to shareholders. Out of the profits obtained according to Article VIII, 3, and after deduction of the portion to be credited to reserve capital, the board of supervision shall annually fix a percentage dividend to be paid to the shareholders. This dividend must only be calculated on the amounts actually paid up on the shares; it must not, however, exceed the percentage rate of interest to be paid by shareholders for loans (Art. IX, 3 (a)). 5. In proportion to the purchases and deliveries of goods effected in the individual branch districts, in addition to the agreed amount of refund, further refund shall be granted in proportion to the net profits made in individual branch districts on their supply of goods. Net profit first arises out of supply business after the deficiencies and the federation expenses have been met out of its proceeds. The fixing of this refund may not be less than 33} per cent of the surplus and is effected by the board of supervision after hearing the committee of management. The division of the refund on transactions in goods made to individual branch districts among the societies that participate in the purchase of goods or other method of disposal is carried out through the advisory council of the branch. The granting of a refund is prohibited until losses on previous years (reckoned from January, 1902, onward) on the purchase of goods, inclusive of the making good of the deficit in the accounts of the federation, shall have been covered. ARTICLE X.—General regulations. COMPLAINTS. 1. Complaints of shareholders as to the conduct of business by the committee of management are to be settled by the board of supervision and seconded by the general’ meeting. ; MODIFICATIONS OF THE CONSTITUTION. 2. The present constitution may be modified by the general meeting; in so doing the following precautions are to be observed: (a) In general: With the exception of the cases hereinafter set out under (6) the general meeting called for the purpose is competent to make modifications of the constitution by resolution, if more than one-half of the votes provided for under the terms of Article II, 1 (a), are represented, and more than one-half of the votes of the total number of shareholders is given in support thereof. If the requisite number of votes be not represented at the general meeting summoned for this specific purpose a second general meeting is to be called, which shall be competent to pass a resolution without regard to the number of votes. This latter point is to be clearly expressed in the second summons. One summons only is to be issued for this second meeting, and this must issue two weeks beforehand. (6) In particular: For the modification of Article II, 4, as to the admission of shareholders, of Article IX, 4 (0), as to the amount of dividend, as well as of Article IX, 4 (a), as to the accumulation and indivisibility of the reserve fund, of the present regulations X, 2 (d), as to the modification of the constitution under particular circumstances, of the regulation X, 3, following, as to the dissolution, the canceling of the present constitution especially, and the enactment of fresh articles, the unanimous vote of the whole of the shareholders in the general meeting held in accordance with the prescribed provisions is necessary. DISSOLUTION. 3. The voluntary winding up of the company shall require the unanimous vote of more than two-thirds of all the share- holders in general meeting duly summoned. REGULATIONS GOVERNING THE BUSINESS OF THE AFFILIATED COOPERATIVE SOCIETIES WITH AN AGRICULTURAL COOPERATIVE CENTRAL BANK. THE WURTEMBERG AGRICULTURAL CENTRAL COOPERATIVE BANK. [Registered cooperative society with limited liability in Stuttgart.] 1. Regulations governing the business of the affiliated cooperative societies with the agricultural central cooperative bank. 1, All written communications addressed by the loan bank associations to the central bank, with reference to the trans- mission of money, advices of payments and receipts, must, by section 11 of the articles of association, bear the signature of the chairman or his deputy and of at least two more members of the committee of management. The central bank has a right to investigate the authenticity and validity of the signatures, but is not bound so to do. To inclosures with money payments the signature of the chairman of the association, or of the secretary, is sufficient; in other business these signatures will not suffice. 2. Quittances for money received are to be furnished immediately on receipt with the date, to be signed by the chairman or his deputy and by two further members of the committee, and returned to the central bank; counter signature by the secre- tary is recommended. If there be more than eight days’ delay in acknowledgment, the central bank shall have the right to procure these receipts at the cost of the defaulting society. 3. For the dispatch of money and orders for money, only the forms issued by the central bank should be employed. In those cases, however, in which the terms of the form do not suit, e. g., when the money of the society in question is not trans- mitted through the post, but is to be paid to a third party or to the bearer, the iorms must not be used, but special letters must be written. 4, Communications relating to money which, by reason of additions, erasures, etc., have undergone alteration, can not be considered. 424 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 5. At the end of each calendar year the state of their account shall be communicated to the societies. The properly pre- pared advice forms are to be signed as soon as possible in the manner directed under section 2 and returned to the central bank. These advice forms are not to be used for other communications. 6. The central bank, as a rule, executes at once all requests for the transmission of money. During the great pressure which exists at the end of each month, at Candlemas (Feb. 2), from the middle to the end of March or April, and at the feasts of St. James and St. Martin (Nov. 11), in order that all demands may be eatisfactorily dis- charged, it is absolutely necessary that all large amounts of money should be already ordered in such good time that between the receipt of the communication and the dispatch of the money at least three days (sums of £500 and over, five days) may elapse, Sundays and public holidays not to be included. The societies can not claim as a right the more speedy satisfaction of their claims. 7. Advices of payment to third parties are to be made in the same way as regards previous notice. (See sec. 6.) The delivery of such to strangers is to be promptly notified to the central bank, and at the same time the day is to be indicated on which the money is to be drawn. If the money is to be drawn from the bank personally by some appointed agent, the order to pay and the covering letter must always be so drawn up that the money shall be payable ‘to bearer.” Advices to named persons—unknown to the central bank—are not permitted; neither must payments be made subject to the fulfillment of conditions. 8. Orders for money by telegraph or telephone have no claim to execution. In so far, however, as such may, nevertheless, have been carried out in cases of necessity, the society giving the order is responsible to the central bank for any resulting loss and damage. 9. When a change takes place in the composition of the committee of management, the signatures of the whole of the mem- bers must be sent anew in a special letter to the central bank. 5 10. As regards other matters, the business regulations issued, and any supplements to them, shall apply. Resolution of the committee of management of March 1, 1907, and of the board of supervision of May 12, 1909. 2. Regulations for the handling of current accounts. 1. The central bank provides the means of money adjustment between the cooperative societies affiliated to it, and grants credit to them on current account. 2. The assessment of the credit to be granted to individual affiliated societies within the limits of the maximum fixed by the general meeting appertains to the committee of management of the central bank, subject to revision by the board of supervision. For cooperative societies with unlimited liability the following rules are applicable: (a) The credit amounts to so many times £5 as the credit-seeking society has members; the figure so obtained to be taken to the nearest £50. (b) For every £250 or further fraction thereof the society shall acquire one share in the central bank. (c) A cooperative society with more than 50 members, whith is satisfied with a credit of £250, is not bound to acquire more than one share. Provided the financial needs of individual cooperative societies can not be met temporarily by the ordinary credit opened to them, the committee is empowered to grant extraordinary credit, which, however, must not exceed in amount that of the ordinary credit, and must not be granted for more than one year. The rate of interest charged shall, as a rule, be somewhat higher than for ordinary credit. 3. The committee of management may order a temporary withdrawal of credit if a cooperative society regularly transacts money business with some other financial institution, or so soon as the committee has good reason for doubting its credit worth- ineas, or, if as a result of the audit, reports as to the irregular conduct of business by a society come to hand. The definite calling in of the credit shall be intimated by the board of supervision. In case of the calling in of credit, any outstanding debts to the central bank must be paid within four weeks. Should the committee think that there is danger in delay, they may require the immediate repayment of the credit granted. 4. In case of the general recall of money on deposit as the result of commercial or political crisis or other causes, the com- mittee is empowered to require four weeks’ notice of repayment of the deposits of the affiliated cooperative societies. 5. Payments to the central bank shall be credited with interest as from the next working day after receipt. Overdraits by the cooperative societies shall be charged with interest as from the day of dispatch. The rates of interest and commission shall be fixed by the committee of management and the board of supervision of the central bank, and from time to time announced ! in the organ of the union (Wurtemberg Weekly Agricultural Journal). Post- ages and similar disbursements are borne by the individual societies. 6. At the end of each calendar year the position of their accounts shall be communicated to the societies for their informa- tion. In this, the amounts due as interest and commission shall be written to capital, and the amount of their paid-up share capital in the central bank shall be communicated to each society. Objections must reach the central bank within four weeks. 7. Payments on shares are effected by debiting at the central bank the account of a particular cooperative society with the amount of each payment. When the shares are fully paid up, the payment of dividends thereon is effected by crediting the account of the society in question. 8. The cooperative societies must gave notice as soon as possible to the central bank of any alteration in the composition of the committee of management as well as of any change of secretary, and must send in again the signatures of the members of the committee. 1Noticz.—The present rate of interest on credit balances of cooperative societies is 3}, on debit balances of cooperative societies, 44. Commission is charged at the rate of one-tenth per cent on the heavier side of the account exclusive of sums carried forward, Stuttgart, Apr. 25, 1911. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 425 9. The yearly subscription to the ‘Union of Agricultural Cooperative Societies in Wurtemberg”’ shall be paid by debiting the accounts of the affiliated societies with the amount. 10. Other matters are subject to “the regulations as to the conduct of business between the central bank and its affiliated cooperative societies.’’ Resolution of the board of supervision of May 12, 1909. AGREEMENT BETWEEN THE UNION oF AGRICULTURAL CREDIT SocIETIES OF THE Granp DucHy oF BADEN AND THE RHENISH Morteace Bank at MANNHEIM. AGREEMENT BETWEEN THE UNION OF AGRICULTURAL CREDIT SOCIETIES OF THE GRAND DUCHY OF BADEN OF THE ONE PART AND THE RHENISH MORTGAGE BANK OF THE OTHER PART. 1. The Rhenish Mortgage Bank of Mannheim undertakes the function of banker to the agricultural credit societies affiliated to the union, with the conditions that the bank undertakes obligations or obtains rights as regards the societies of the union that enter into business with it either as depositors or as borrowers. 2, The committee of the union shall furnish to the bank through the director of the union the necessary information as to the credit capacity of the individual societies, on which the bank bases the amount of credit to be extended to each society. Each society is only liable for the credit it may itself take up. No collective liability of one society for others is involved. 3. The committee of the union is obliged, at the request of the bank, to investigate at any time, through an expert, the business position of the societies which have obtained advances from the bank, and to report the result in due course to the bank. 4, An account shall be opened in the books of the bank for every society belonging to the union. The bank shall also keep a special register‘of the transactions of the societies which are members of the union, inspection of which shall be open at any time to members of the committee of the union. 5. Interest shall be paid upon deposits by the union societies as a rule from the day next following that on which the deposit is made. Money paid into the bank on a Saturday will receive interest as from the following Monday. If the day following the deposit should be a holiday, it shall be credited for interest only as from the next working day following. Ifa society takes up a loan, interest shall become due on the day before the dispatch of the money in so far as the amount exceeds that of its own credit balance. The rate of interest for deposits shall be from time to time fixed by the director of the union in agreement with the bank in accordance with the financial position of the cooperative department of the bank. 6. If, owing to the withdrawal of money, the money in the cooperative department of the bank be exhausted, it is the duty of the bank to advance the further amounts necessary up to the limits of the money placed at its disposal by the sinking fund department. Such advances shall be charged by the bank at the same rate of interest as the bank itself has to pay to the sinking fund department. The committee of the union shall decide what rate of interest shall be paid by the indebted societies. 7. The bank shall furnish at the close of every calendar half year to each society, by means of an extract from its books, a statement of the position of that society’s account, which shall be acknowledged as correct by the signature of the usual (printed) form by the society in question. Objections in order to be valid must reach the bank within at latest four weeks of the presentation of the abstract of accounts. At the close of every calendar half year the bank shall also furnish the committee of the union, through the medium of the union director, and by means of extracts from its books, information as to the business done with the societies composing the union during the preceding half year. 8. The bank shall receive for its trouble a half-yearly commission of one-tenth of 1 per cent on the dealings of the societies with it (that is to say, the heavier side of the current account, exclusive of the balances carried forward from the preceding half year). Each society must, over and above this, bear all postal charges arising in its business with the bank. 9. Any profits arising out of money transactions with the societies (surplus of interest on the amounts taken up by the socities over interest to be paid to them on deposits) will be held by the bank at the disposition of the committee of the union. 10. The committee of the union will recommend the societies to send such funds as they may desire to send to the bank in such good time that they shall reach the bank the day before settling day, and in the case of funds which they may wish to withdraw from the bank, to make such withdrawals on any day between the 2d and the 29th of the month, also as far as prac- ticable to give the bank notice as to the extent of the (proposed) deposit or withdrawal. 11. This agreement may be terminated by six months’ notice on either side. Mannheim, July, 1898. : Tar Ruenish MortaaGe BANK. Tue CoMMITTEE oF THE UNION. (Signature.) (Signature.) REGULATIONS OF THE CENTRAL BANK OF THE AGRICULTURAL PURCHASE AND SALE CooPERATIVE SOCITIEES OF BADEN. CURRENT ACCOUNTS. Section 1. The central bank acts as agent for the adjustment of the monetary needs of its affiliated societies, grants them credit on current account, and accepts surplus cash from them, as well as from nonmembers, to any amount at interest. Src. 2. The measure of the credit to be granted to individual associations lies with the committee of management of the central bank within the maximum fixed by the general meeting, subject to examination by the board of supervision. The extent of the credit shall be measured according to the shares held and the form of liability adopted. Societies with limited liability obtain a maximum credit of one-half the liability undertaken by members. The societies must make an application for a maximum credit; such application must be signed by all the members of the committee of management. ; Suc. 3. For every £100 or part of £100 of credit a share in the central bank must be acquired. Szc. 4. Money paid into the central bank shall be credited with interest as from the day of receipt; money paid out to the associations as from the day of dispatch. 426 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. The rate of interest shall be fixed by the committee of management and the board of supervision of the central bank. The present rate of interest and until further notice is: Per cent. (a). Deposits on clirrent account, at.callic i... 2200520. bso eddcaceSownuerks vat Sie occa dldiedasien deen oes 14 (b) Deposits of above £50— (Ly) Wathdrawable at 3’months” notice.0.ic ecco auntie e pines cle wes oweeisavanrenise le eaioets's ceeeleseg etaesd ends 4} (2); Wathdrawable at 6:mon ths” notice sscciccccumarsiiriewe ns oe oa cde emenemse cea nee eee se yee ane eeceee sauces 44 (¢). On: loan-indebtedness of associations ...<.. <<: sy: s2ncacscescadauees se8e4 84 pene oNesise ee Reedee Eee c3 sd eeeeemencaeee 14h Postages and other expenses to be borne by the societies. Src. 5. All deposits transmitted to the central bank must be post paid. Sxc. 6. The central bank arranges money transactions with the suppliers of goods to the members up to the amount of the credit extended to the latter—e. g., an individual member has a credit of £100 or a nonmember affiliated to the distribu- tive union has a deposit of £100 with the central bank. Accounts are to hand for goods sold and delivered by one or more dealers. This society writes the central bank, ‘‘Debit our account (or our deposit with you, in the case of nonmembers) with the sum of £—— to Messrs. & Co.’’ Asarule the cost of transfer is relatively smaller than if the money be sent direct. Sec. 7. Loans will only be granted in proportion to the available funds, Sec. 8. Deposits of £500 and over are repayable at latest after one month’s notice. Szc. 9. Societies which exhaust the whole of the credit to which they are entitled and do not in the course of a year make repayments totaling one-fourth of such credits will be charged a commission of one-fourth per cent. The credit may be at the same time reduced or withdrawn. Sec. 10. In case of the wholesale withdrawal of deposits or of industrial or financial crisis the central bank has the right, on giving three months’ notice, to call in loans which have been granted. In case of retirement from the central bank, loans granted must be at once repaid. Sec. 11. Provisional closing of credit is effected by the committee when a society, without previous understanding with the central bank, transacts current money business with another banking institution, or so soon as the committee has doubts as to its financial solidity, or if, as a result of the audit, reports as to the irregular conduct of business by a society come to hand. The board of supervision pronounces the definite withdrawal of credit. In case of the withdrawal of credit, all debts to the Central Bank must be paid within four weeks. If the committee consider that there be danger in delay, they have the right to take all legal means to enforce their claim. Sec. 12. At the end of the calendar half year a statement of the position of their accounts shall be sent to the societies for their acknowledgment. Objections thereto must reach the Central Bank within four weeks. Unclaimed interest shall be written to capital in half-yearly installments. In the half-yearly accounts the amount of its paid-up capital shall be communicated to each society. Sec. 13. Payments of installments on shares are effected by debiting the account of the society in question with the amount due. If the shares are fully paid, the proportion of the profits due on them is paid by crediting the account of the society in question. 3 Sxc. 14. Any change in the composition cf its committee, as well as a change of secretary, must be notified at once by every society to the central bank, and the signatures of the members of the committee or of the secretary, as the case may be, transmitted afresh. ; Carlsruhe, July 1, 1907. 1 The rates of this bank in 1910 and 1911 are shown in the table, pp. 170-171 of report. AGRICULTURAL COOPERATION (OTHER THAN FOR CREDIT). Supply and sale societies’ model articles and rules. Dairy societies’ model articles and rules. Cattle-selling societies’ model rules. Egg-celling societies’ model rules. Thrashing-machine societies’ model rules. Norz.—In order to avoid unnecessary repetition, only sections and model rules which differ in some way from those already given in full for credit societies are printed. MODEL ARTICLES OF ASSOCIATION OF AN AGRICULTURAL SUPPLY AND SALE COOPERATIVE SOCIETY. [Registered society with unlimited liability. As framed and issued by imperial federation in 1910.] I. EstaBLIsHMENT OF THE COOPERATIVE SOCIETY. Sxctron 1. The undersigned establish, within the terms of the imperial cooperative societies act, a cooperative society to promote the economic interests of its members by means of business operations in common, under the trading title of Agri- cultural Supply and Sale Cooperative Society, registered society with unlimited liability. The society has its seat in Src. 2. The object of the undertaking is (1) the purchase in common of materials and appliances required in farming; (2) the sale in common of farm produce. II. MemBERSHr. Sec. 3. Membership may be acquired by all persons (also legal persons) who are capable of legally binding themselves by an agreement, and who reside in RETIREMENT OF MEMBERS. Ssc. 6. Every member is entitled, on giving notice, to declare his intention of retiring from the society. Such notice takes effect only at the end of the business year. It must be given in writing at least six months before. (Notz.—The legal minimum period of notice is fixed at three months and the maximum at two years. The period of notice chosen should not be too short, preferably not under 6 or 12 months.) Sec. 14. It is the duty of members: 1. To observe the articles and the rules of business issued in accordance therewith, which contain also the penalties in case of infringement. 2. Not to act contrary to the interests of the society and its resolutions. 3. Neither directly nor indirectly to take part in any undertaking with the same or like object without the assent of the general meeting. 4. To procure such materials and appliances as are required in farming as they may need, and which are supplied by the society only through the society. 5. To acquire one share in accordance with section 37 of these articles and to make the prescribed payments thereon. 6. On admission to pay an entrance fee, to go to reserve, the amount and method of payment of which is fixed by the general meeting. 7. To undertake liability to the full extent of their property (unlimited liability) for the engagements of the society directly to the society as well as directly to its creditors. (As regards shares, working capital, and reserve, the imperial federation makes the same recommendations as in the case of credit societies. See their articles of association.) Ssc. 43. The balance sheet must contain under separate heads— A. Assets: 1. The cash in hand. 2. The securities. 3. The stock of commodities in hand: Such securities as have an exchange or market price are to be valued at such price as a maximum at the time the balance sheet is drawn up. Commodities, so far as the price exceeds the purchase or cost of production price, are to be valued on the latter as a maximum. 4. Other assets are to be set down as a maximum at their purchase or cost of production price. 5. Outstanding claims according to their different kinds and their value at the time. 6. Land and houses at their book value less an annual depreciation of 24 per cent. 7. Machinery at its book value less a yearly depreciation of at least 10 per cent. 8. Tools and implements at book value less a yearly depreciation of at least 15 per cent. 427 428 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 9. The movable property of the society at its book value less 10 per cent yearly for depreciation. B. Liabilities: / 1. The paid-up share capital of the members; 2. The reserve fund; 3. The working reserve and other reserves; 4. The existing debts according to their various kinds; and 5. Contingent business expenses still to be met. The surplus of assets over liabilities constitutes the net profit; the excess of liabilities over assets the loss of the society. The profit or loss shown by comparison of the total assets and the total liabilities must be set out separately at the end of the balance sheet. : Src. 45. Out of the net profits 10 per cent is to be allocated to the reserve fund, as well as to the working reserve, provided these have not already reached the fixed limit, and then, after crediting the profit and debiting the loss on the working of the previous year, to interest not exceeding 4 per cent of the paid-up share capital of the members. The balance remaining is to be allocated to the reserve fund and to the working reserve in the proportion of one-fourth to each. The disposal of the remainder rests with the general meeting. A fixed proportion of this is to be distributed among the members according to the amount of goods taken by individual members (goods dividend). No cash payments to members out of profits before the amount of the share value has been paid up is permissible. (Norre.—If before the shares have been fully paid up profits are to be paid out to members, the articles must in this part of the text contain provisions—it is not permissible by provisions of the articles to leave the decision of this matter to the vote of the general meeting.) Sxc. 46. If there be still deficits after any deficit resulting from the year’s working of the business has been covered by the working reserve accumulated for the purpose and such working revenue be exhausted, this is to be covered out of the still existing society funds (reserve fund and paid-up share capital), and the general meeting must decide the question whether, and to what extent, the reserve fund or the paid-up share capital, or both, shall be drawn upon to cover the loss. In covering the loss by requisition of the share capital, the amount written off from the share capital must be effected in proportion to the purchases (and sales) during the year by individual members. * The model articles of association of an agricultural supply and sale cooperative society with limited liability ssued by the federation differ from those of a society with unlimited liability in the following particulars: Section 1. Substitute the words “limited lability” for ‘unlimited liability.” Src. 14 (5). Should members be obliged to acquire more than one share the following form is given to this subsection: “To acquire the number of shares fixed by the articles of association, section 37, and to effect the prescribed payments thereon.” Src. 14 (7). The liability incurred on each share may not be less than the nominal value of such share. Src. 37. Members are permitted to hold more than one share. (It isrecommended to fix the shares at as high a value as possible, in no event under £5; it is further recommended to fix the amounts and periods for installments in such a way that the share is fully paid up in 10 years.) The highest number of shares which a member may acquire is fixed at ——. (Nots.—Should the acquisition of more than one share be authorized, a provision to that effect should be inserted here; e. g., the number of shares that a member must acquire is fixed in accordance with the extent of his annual dealings with the society in the following way: Above £—— up to £——,, one further share; above £—— up to £——,, two further shares, etc.; or each member must acquire a share per fixed number of cultivated acres comprised in his holding.) MODEL RULES FOR THE CONDUCT OF BUSINESS OF AN AGRICULTURAL SUPPLY SOCIETY. {Agricultural Distributive Society. Framed and issued by the Halle Union.] Section I. ApmiTTaNcE oF MEMBERS. 1. Persons seeking admission must sign in duplicate the prescribed declaration on entry in the presence of a member of the committee of management. 2. At the next meeting of the committee the director shall read out the applications for resolution as to their admission. 3. A copy of the articles and of the business regulations, on payment of the price if such has been fixed therefor by the committee, shall be handed to the accepted person. A person admitted must, immediately on admission, pay to the treasurer the entrance fee fixed by the general meeting. 4. If the candidate be rejected, the form of declaration on entry must be struck through and given back to the candidate erannulled. 5. The entry of the name on the list of members and all further formalities must be carried out by the manager without delay. Section II. ReTirEMENT oF MEMBERS. 6. A copy of the prescribed declaration on retirement shall, on the retirement of a member, be sent in duplicate to the manager, to be laid by him before the next meeting of the committee, and must be presented in good time at the office of the court. 7. Should a member ask to retire in the course of the business year and another become a member in his place, the latter shall sign the declaration on entry, and both shall sign Form No. 24 (transfer of share capital). The committee must then lay the matter before the board of supervision, and, when this latter shall have given its assent, shall send the documents, together with Form 27, to the court for registration. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 429 Section III. Conpuct oF Business IN GENERAL. 8. Business must be conducted within the limits of the objects of the undertaking. 9. The business consists, in the first place, of the purchase in common of materials and appliances required in farming, and especially special feeding stuffs of all kinds, artificial manures, seeds, and seed corn, as well as coal, agricultural machines and implements. 10. It is the duty of the committee to execute orders given by members for goods which may be purchased through the society according to resolution of the general meeting as soon as those orders reach such an amount that a supply in common through the society is likely to be to its interest or that of the members. 11. On the other hand, it isethe duty of members, in accordance with the articles of association, to procure through the medium of the society as far as possible such requirements in materials and implements for farm purposes as may be procured in common for the members under resolution of the general meeting. 12. The sale of farm produce is to be organized by the committee as soon as the interests of the members require it and the execution appears assured and profitable. In case of need special rules of business are to be drawn up for the sale in com- mon of farm produce. Section IV. OrpERs or MEMBERS. 13. The committee shall keep a stock of order books, order forms, and dockets (order books may be obtained from the union, price 1 shilling each), which are to be put before the members for the entry of their actual orders. 14. The orders of members must be in writing in the member’s own hand. 15. The collection of orders, or request that orders be given, shall take place at intervals which shall be fixed by the board of supervision on the proposal of the committee. , 16. Members must immediately, on request of the committee of management, send in a statement of their requirements when orders are being collected for any period. 17. Supplementary orders are permitted to all members who have had a share in the principal order. Other supplementary orders can claim consideration only on condition that the association is put to no expense whatever, or if the member so ordering declares himself ready to bear any specially incurred cost arising therefrom. SEcTIon V. CENTRAL Society. 18. The committee must arrange to join the Central Cooperative Society for the Supply of Agricultural Requisites, at Halle-on-Saale, and is requested to pay scrupulous attention to the rules issued by that society in its business relations with it, and especially its business rules. Section VI. PurcHasE or Goops. 19. The committee of management must purchase, or execute the commission, on the basis of the orders entered in the books or handed in by members; they shall not buy without previous order from members. 20. In order to make up the deliveries of goods to round figures and to effect economy in carriage, the committee may conclude purchases beyond the amounts previously ordered by members. 21. The committee must buy according to quality (especially according to percentage content and percentage of germi- nating power) and on a firm offer, but not as a speculation. 22. In agreements to purchase, the place of delivery and of payment for the goods is to be settled. 23. Agreements to purchase, unless made with the central society, shall be for cash payments and not for credit. 24. The commissions to purchase and the agreements must be in writing. Section VII. Reception oF Goons. 25. On the arrival of goods it is the duty of the committee to take care that they are examined to see that the delivery is according to contract, that samples are taken for technical test according to instructions, and the test proceeded with at once. Especially in the case of all goods the value of which depends upon their content as established by analysis, in feeding mate- rial, ascertained germinating power, or the like, must the prescribed samples and reserve samples be scrupulously taken. The samples are to be sent without delay, with due observance of the provisions for such, to the agricultural chemical expe- riment station of the Chamber of Agriculture for the Province of Saxony at Halle. The reserve samples are to-be carefully preserved until the result of the test is made known to both parties. 26. Goods below the standard or not delivered according to contract, in so far as such can be proved on receipt, are to be, placed by telegram at the disposal of the sender, with due observance of the regulations bearing upon the matter. At the same time claims for compensation against the senders for fixed losses which arise, or of losses which have to be borne later, must be made. 27. If the committee neglect to take the prescribed samples or neglect to send such samples for examination, or do not carry out the acceptance of goods according to the prescribed rules, it shall be responsible to the society and to all members concerned in the particular transaction for any loss or damage resulting therefrom. Section VIII. Givine Our oF Goons. 28. Goods must be accepted by members without question at the place and time appointed by the committee, which should be indicated to the members for each separate delivery. 29. From the moment that the member ordering goods does not appear at the appointed place and time for the purpose of receiving the same, and does not take over the goods assigned to him, the committee is empowered to dispose of the goods in another way by public sale for cash or to warehouse the same at the cost of the member ordering. 30. The defaulting recipient is liable for all losses and expenses arising out of his failure to receive, or failure to receive at the proper time, and is under the obligation to make good the damage and expense caused by his default. 430 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Ssection IX. WAREHOUSING. 31. As regards warehousing, the committee must only make provision for the storing of suitable goods after the special assent of the general meeting has been given thereto. 32. The management of the warehouse lies with the manager, unless the committee intrusts such management to another member or the general meeting decide to appoint a special storekeeper. 33. In the latter case the storekeeper is to be appointed by the committee, under whose guidance, supervision, and respon- sibility he shall conduct the business intrusted to him in a conscientious manner. 34. The storekeeper shall keep special warehouse books (these may be obtained from the union at the price of 1 shilling each), from which the entry and dispatch of goods from the warehouse, and so far as possible the actual state of the stock, shall be apparent. 35. The storekeeper must deposit and leave on deposit caution money in proportion to the extent of the business or to the stock kept at the warehouse, and is liable for any deficiencies therein. 36. If goods are taken out of store on payments in cash, the storekeeper must render a weekly account of such receipts to the secretary. In case goods are sold on credit, the warehouse keeper shall furnish the secretary with a weekly account therefor, so that the account may be sent out. 87. Goods are to be stored in such a way as not to be liable to deterioration, and must as far as practicable be protected against fire. 38. The committee must take care that the warehouse is insured. 39. Against possible failure to compensate for loss on the part of the storekeeper special stipulations are to be made with him. 40. The storekeeper must under no conditions stock goods at the warehouse for his own account or on commission, or deal with goods with which the society is dealing or negotiating, for his own account or on commission. Section X. Fixine oF Prices. 41. The prices of goods shall be fixed by the committee in such a way that an addition to their actual cost (i. e., the amount of the invoice plus transport, weigh-house charges, etc.) shall be brought into account, such addition to be settled by the com- mittee of management with assent of the board of supervision. 42. This addition is to be so arranged that the business charges and the charges which are not directly met out of estab- lishment expenses, as well as a profit, can be obtained as a contribution to the reserves, interest, or share capital, and the possible grant of a rebate. 43. The cost of warehouse maintenance must be charged upon the price of goods in store. 44, The sale price of goods in store shall as far as practicable coincide with the market price at the time. Section XI. Senpinc Out oF Accounts AND PayMENTS. 45. It is the duty of the committee to take care that the price of commodities is fixed in good time, and on this basis, imme- diately on delivery of the goods to the members, or at latest on receipt of the sender’s invoice, to send out to the members an invoice of the goods received. 46. The invoice must bear the date on which at latest the member must make payment. This day of payment shall not be deferred beyond 20 days after issue of the account. Chile saltpeter (nitrates) is excluded from this rule as being subject to ready-money payment. 47. Accounts not paid on the day on which they fall due, or on which credit has been asked for and granted, shall be handed over by the committee to the Cooperative Societies’ Bank at Halle for payment to the suppliers, namely, the Central Society for the Supply of Agricultural Requisites. Those members who do not pay on the day on which the money falls due—in other words, do not make payment through the society or the Cooperative Societies’ Bank—must bear their share in the interest and commission charged by the latter. 48. In so far and so long as the business relations of the individual society with the cooperative bank are not broken off, it is the duty of the secretary to see that the dates of payments are punctually kept. Defaulting payers are to be charged, from the day on which payment falls due, for every month entered upon a whole month’s interest, the rate of which is to be fixed by the committee with assent of the board of supervision. 49. Credit beyond —— months is not to be given under any circumstances. Section XII. Casu anp Account KEEPING. 50. The committee must take care that the accounts of the Central Cooperative Society for the Supply of Agricultural Requisites at Halle are paid at latest on the day on which they fall due, and that the secretary deposits all surplus moneys with the banking center of the union—‘he cooperative bank at Halle—whether to current or deposit account. 51. The secretary must be careful that an amount corresponding with the extent of the business (working cash) as fixed by the committee is always available and that the unnecessary cash exceeding such requirements shall be at once used for the payment of accounts or deposited at interest with the cooperative bank at Halle. 52. The secretary shall every quarter prepare an ‘‘arrears account,’’ on which defaulting members and their outstanding accounts shall appear. This arrears list is to be handed to the manager, who shall lay it before the committee for decision and further action. The above business regulations are approved for the Agricultural Supply and Sale Society of resolution of the general meeting. Date: The committee: . , in accordance with AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 431 ARTICLES OF ASSOCIATION OF A DAIRY COOPERATIVE SOCIETY. Registered cooperative society with unlimited liability in— I. Formation oF THE Society. Section 1. The undersigned, on the basis of the imperial law as to cooperative societies, form a society for the promotion of the industry and business of its members by working a business in common under the style of ‘‘dairy cooperative society, registered society with unlimited liability.” The society has its seat in Szc. 2. The nature of the undertaking is the handling and sale of milk for common account and at common risk. I. _ Sec. 3. The membership may embrace all persons engaged in the milk industry (also corporations) capable of executing a binding agreement, and who reside in The admission of persons, not engaged in the milk industry, but who satisfy the conditions set out in section 1, requires the previous consent of the board of supervision. III. Rerrrement or INpDivipuaAL MEMBERS. Szc. 6. Every member has the right on notice given to declare his intention of leaving the society. Such notice may take place at the end of a business year and must be given two years in advance. Nore.—The minimum period fixed by law for notice of withdrawal is three months and the maximum two years. Too short a period of notice should not be adopted; it is desirable to select the maximum. Sec. 14. It is the duty of a member— (1) To observe the articles and the rules of business issued in accordance therewith, which contain also the penalties in case of infringement. (2) Not to act contrary to the interests of the society and its resolutions. (3) Neither directly nor indirectly to take part in any undertaking with the same or like object without the assent of the general meeting. The delivery of milk to others, either to individuals or to societies, and the making profit out of milk, is expressly forbidden. (4) To acquire one share in accordance with section 37 of these articles, and to make the prescribed payments thereon. (5) On admission to pay an entrance fee to go to reserve, the amount and method of payment of which is fixed by the general meeting. (6) On becoming a member to make a declaration of milch cows kept on his farm, and not to reduce the declared number without assent of the committee of management. Any contingent increase in the number of cows is, as soon as possible, but at latest in the first month of the business year next following such increase, to be notified to the committee. (7) The total amount of milk produced on his farm, with the exception of that directly consumed by his household, or necessary for the feeding of his domestic animals, must be delivered daily to the society in accordance with the prescriptions of the business and milk delivery rules, or the special instructions based on them and issued by the committee of management. The obligation to deliver extends also to.the milk of those cows which the member keeps over and above the declared number. By resolution of the committee of management a member may, under exceptional circumstances, for a fixed period, be wholly or partially released from the obligation to deliver. The giving up of the farm (sale, letting on lease, or any form of surrender of the dairy business) does not release the member from the obligation to deliver milk. The committee of manage- ment can, however, in the last case—with the previous assent of the board of supervision, before whom the exceptional con- ditions for the avoidance of possible hardships have been laid—permit release from the obligation to deliver milk. The quantity of milk delivered annually to the dairy by such member shall not be less than —— kilog (2.2 pounds) per head of cows declared. Should this minimum quantity not be reached, the member in question shall pay to the society for each kilog of milk in default the sum of ——. In like manner every member, if he improperly keep back any new milk, or if he use the milk for butter making, with intent to sell the same, shall pay a fine not exceeding £5, to be fixed by the committee of management for each offense. If any member become altogether irregular in his daily delivery of milk, according to the regulations, he becomes further liable to a fine for breach of contract, leviable forthwith, of —— shillings for each day of such failure to deliver, provided the delivery have not been rendered impossible by exceptional disturbances of business, such as by fire, disease, the running dry of the cows, or other unavoidable circumstances. \ In these cases the committee of management must be notified without delay. The regulations in clauses 6 and 7 come into operation against members who have been accepted on the basis of section 3 (2) of the articles so soon as they, subsequent to their admission, engage in the dairy business. (8) For the delivery of adulterated milk, at the discretion of the committee of management, a money compensation not exceeding £25 shall be paid in every individual case of offense. (9) In case of infectious disease on his farm, either among the cows or the members of his household, the member must at once notify the committee of management of the dairy, and for any infringement of this duty of notification or of the ordinances of the committee of management which are applicable to the case, he shall pay a money compensation for each individual offense, at the discretion of the committee, but not exceeding £25. (10) To undertake liability for the engagements of the society, directly to it as well as to its creditors, to the full extent of his property (unlimited liability). Sec. 16. (A note to the text recommends that the committee should not consist of more than five or less than three members.) VII. Worxine CapitTaL oF THE SocieTy—SHARES. Szc. 37. The amount up to which individual members may participate with capital, and in accordance with the following provisions must so participate, is fixed at £——. (It is recommended to fix the amount of the share at as high a figure as possible, preferably not below £50. It is further recommended so to arrange the amounts and periods of payment that the share may be fully paid up in 10 years.) 432 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Each member is entitled to pay up the full amount. Every member is bound to pay in, either at once, one-tenth of the share value, to wit, —— pounds, or in monthly instalments of at least —— shillings. The fixing of the amount and period for the further ‘nstalments of the share to be paid is decided by resolution of the general meeting. (This section may also be given the following form: Every member is bound to pay in a tenth part of the share, that is, —— pounds, within the first year after his admission, and in each following year a further tenth part, at least —— pounds, unless this amount has already been written to the credit of the share out of dividends, supplementary payment for milk deliv- ered or otherwise.) The payments made upon the share, inclusive of the appropriation of profits to share capital, and the writing off of loss thereon, constitute the share capital of a member. This share capital may not be paid out by the society or charged with liability in the course of business as long as the member has not retired from the society. Arrears of instalments may not be remitted. In settling accounts with the society a member can not set off his share capital against any claims upon him by the society. RESERVE FUND. Src. 38. A reserve fund shall be formed to serve as cover for any loss as shown by the balance sheets. Such reserve fund shall be formed from entrance fees, fines accruing to the fund under the business rules, and by the turning over to it of at least 10 per cent of the annual net profits. The reserve fund should be brought up to the amount of at least 20 per cent of the total working capital as shown in the balance sheet, but as a minimum to the same amount as the share capital, and be kept at this level. WORKING RESERVE. Src. 39. A working reserve shall be accumulated by the turning over for the purpose of at least 10 per cent of the annual net profits, as well as by other appropriations to be settled by the general meeting. Such working reserve is to be used for meeting special purposes to be decided by the general meeting, and especially expenses connected with the conduct of business. The working reserve should be brought up to the amount of 20 per cent of the working capital, as shown by the balance sheet, but as a minimum to the same amount as the share capital and to be kept at this level. CONDUCT OF BUSINESS. Sec. 40. The general meeting must decide upon the formation, extension, or limitation of the whole business of the society and the working of individual branches of such business. The committee of management shall prepare for this purpose a series of rules of business and of regulations as to milk delivery governing the whole conduct thereof, as well as, should occasion arise, special regulations for each separate branch. Such rules, after previous consideration by the board of supervision, require the assent of the general meeting. (The specimen articles of association of a dairy society with limited liability differ from those of a society with unlimited liability in the following particulars:) Section 1. Substitute the words ‘‘limited liability” for ‘‘unlimited liability.” Section 4. In case the acquisition of more than one share is made obligatory on members on certain conditions, this sub- section should read as follows: ‘To acquire the number of shares fixed by the articles of association, section 37, and to effect the prescribed payments thereon.” Section 14, subsection 10. The liability incurred on each share may not be fixed at less than the nominal value of the share. Section 37. It is permissible for a member to acquire more than one share. The highest number of shares that may be acquired by a member shall be (Norz.—If it be made an obligation on members to acquire more than one share, a provision on this point should be here inserted. The number of shares to be acquired by individual members is suitably fixed in accordance with the number of cows held by members.) RULES FOR THE CONDUCT OF BUSINESS OF A COOPERATIVE DAIRY SOCIETY (HALLE UNION). Section 1. The working of the society’s dairy shall be under the conduct and management of a dairyman, who shall be under the supervision of the committee of management. He shall keep an accurate register of the milk delivered at the dairy, as well as of the dairy produce returned to the members, and also of all butter, etc., sold. Heshall make all entries in the record of production with the greatest care, and take part in the monthly settlement of accounts with the members. The dairyman is not to be entitled to a vote; he must not deliver milk; and shall hold his appointment on the terms of a quarter’s notice on either side. The committee of management and the board of supervision, with the assent of the general meeting, shall settle the amount of his salary, his commission, and payments in kind. The committee of management must satisfy themselves that the manager carries out his duties punctually, and shall advise the board of supervision from time to time as to the conduct of the business. Sec. 2. Every member must, at the beginning of the business year, advise the committee of management as to the number of cows he will probably keep in the coming year. _ Sec. 3. The members of the society must not sell any milk or dairy produce elsewhere. It is, moreover, their duty to hand over to the society the whole of the milk produced on their farms excepting so much as may be used for their own needs, Any infraction of this regulation may carry with it, by virtue of a resolution of the committee of management and of the board of supervision, a fine for breach of regulations not exceeding £2 10s. Appeal against this to the general meeting is permitted. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 433 No member may be relieved, either wholly or in part, from the obligation of daily delivery of milk, except by resolution of the general meeting. The committee of management may grant a temporary relaxation of this rule, but only by reason of the outbreak of cattle disease or of illness in his household, etc., on the certificate of a veterinary surgeon or on eome other qualified authority. Sec. 4. All milk to be delivered at the dairy must be cooled after milking. In so far as midday and evening milk is not delivered at once, but only with the morning milk on the next day, these shall be kept in a cool chamber, the air of which is pure, the cans open and standing in cold water. The produce of different milkings is not to be mixed before delivery at the dairy. The greatest cleanliness is to be observed in milking; the udders of the cows must be carefully cleaned before milking. It shall be a matter of duty with members to see that the milk pails, etc., are clean. Every member is responsible for delivery to the dairy of pure and unadulterated milk; that is to say, of milk from which the cream has not been removed and to which no addition of water or skim milk has beenmade. Should the contrary be proved against him he shall pay a fine for breach of regulations not exceeding £50, to be fixed by the general meeting—even should he have no personal knowledge of the adulteration. Sec. 5. The members of the society are bound to deliver their milk punctually at the appointed time at the dairy, or to have it ready for removal by the dairy carts. Src. 6. Members must take back the whole of the separated and butter milk produced from the milk delivered by them if the profitable working of the business require it. The price of dairy produce taken by members for their household require- ments shall be fixed by the general meeting. ; Sec. 7. Payment for new milk delivered is made monthly, and is based upon (1) weight and (2) fat content. One kilogram milk i: reckoned as 1 liter (1.76 pints). Sampling is effected as follows: A member of the committee of management by turns, on days the date of which is not to be disclosed, shall take a sample from the mixed milk of each member, and the dairy manager shall perform the examination without knowledge of the name of the persons delivering. The testing vessels must be numbered. The method of calculation is as follows: After the milk of each member has been examined three or four times in the course of the month and the individual results entered in a book, the total number of kilograms of milk delivered is multiplied by the average fat content. The total fat percentages thus obtained are then added together and the sum is used to divide the amount which, after deduction of expenses, etc., may be allotted. In this way the value of the milk, according to the percentage of fat, is arrived at, and also the proper amount which each member has to claim for milk delivered. Sec. 8. If a cow has freshly calved, her milk shall not be delivered to the dairy before the lapse of four days; neither shall the milk of cows due to calve within four weeks be delivered. Infractions of these regulations shall be visited by the same consequences as the adulterations mentioned in section 4. Szc. 9. Milk delivered at the dairy in a sour condition is credited at only #d. per kilogram. It may also be refused. Sxc. 10. Cans for the transport of milk may be procured at the dairy and purchased by members for cash. Members must take care that the cans are immediately and thoroughly cleaned after each delivery on their return from the dairy. If the cleansing is repeatedly found to be defective, it will be done in the dairy at the cost of the member. For the carriage of new milk to the dairy, spring-carts should, as far as possible, be employed. Sec. 11. The committee of management may demand details as to the feeding of the cows, and, in the interests of the dairy, which can only work at a profit on the delivery of the best and most reliable produce, may demand a change in the mode of feeding. The committee have the right from time to time to inspect the cow byres and to satisfy themselves that the regulations are observed. Sc. 12. These rules of business form a part of the articles of association and have the same force. No alteration in them may be made except by the general meeting. Place: Date: Tor ComMITTEE OF MANAGEMENT, Registered Society with Limited Liability. MODEL RULES FOR THE CONDUCT OF BUSINESS OF A CATTLE-SELLING SOCIETY (HANOVERIAN UNION). [Registered society with limited liability.] MANAGER, Sxcrion 1. A manager shall be appointed, whose duty it shall be to conduct the whole business of the society, the receipt and dispatch of consignments of cattle, the keeping of the books, the payment of money, the preparation of the annual accounts, etc. The manager ig responsible in the first place to the committee of management; his appointment rests with the committee, subject to the concurrence of the board of supervision. He shall receive over and above the repayment of out-of-pocket expenses a suitable remuneration for his work, the amount of which shall require the assent of the board of supervision. Sec. 2. The manager must look after the interests of the society in every respect to the best of his knowledge and ability. The holder of the office must not, under any circumstances, traffic privately in cattle. The manager shall not make journeys to slaughter markets except on the special instruction of the committee. ; a If the manager takes journeys on the instruction of the committee, he shall receive, in addition to his traveling expenses, a daily money allowance, the amount of which shall be fixed by the committee in concurrence with the board of supervision. 95273°—S. Doc. 17, 63-1——28 434 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Sec. 3. The manager shall, in accordance with instructions given, keep the account books and cash of the society, as well as a letter book in which all outgoing letters and documents shall be copied. He shall preserve all receipts and vouchers in an orderly manner. As security for the proper conduct of his business he shall deposit caution money to the amount of £250, either in cash or in securities of like value. He shall be entitled to the interest on such deposits. SALE OF CATTLE. Sec. 4. Cattle belonging to members are to be sold through the society on commission. Members are obliged to sell the whole of their fat stock, till further notice all cattle (pigs, sheep, calves, and horned cattle), through the medium of the society only. In the first year members may be released by the committee from the obligation to sell all cattle through the society. The proceeds of the sale at the slaughter markets shall be paid over to the members, less the expenses. Sxc. 5. Members who sell elsewhere cattle which should have been consigned to the society, or consign cattle, not their own, to the society, must pay a regulation fine of 10s, per head of such. The following are exempt from compulsory sale to the society: (a) Animals damaged in such a way that there is fear that they will not survive to the next delivery of animals to the society. (6) Animals slaughtered for the use of the members’ own households. (c) Animals sold for slaughter to private persons or to slaughterers in the neighboring towns and villages within the district covered by the operations of the society. If a member subsequently sell a beast already advised to be taken by the society for slaughter in the towns or villages of the neighborhood, he must pay to the society for every head of large beasts 10s., and 3s. for calves, sheep, or pigs. If a member think that he has been made unjustifiably to pay a fine, it is open to him to make complaint to the board of supervision. The decision of the board shall be final. Sec. 6. Every member is obliged to notify the authorized agent appointed by the general meeting for each locality of his intention to dispose of cattle through the society. The manager advises the agent of the day of dispatch. Notifications by members must reach the agent at least seven days before the day of dispatch. The agents are to advise the manager at least six days before the dispatch of cattle. If there be already a full wagonload, the dispatch of the last-notified beasts shall have first place on the next dispatch day unless there be at least an additional half load. If the manager postpones the dispatch day, he must advise the agents of this at the earliest possible moment. The manager must take care that, as far as possible, only full loads are dispatched, so as to make the best use of the freight. With the assent of the committee, in order to make the best use of the freight, the cattle of nonmembers may be loaded with those of members, but the owners of such cattle must pay, over and above all costs and charges that they could be called upon to pay as members, a further 1 per cent on the gross expense to the society. RECEPTION OF CATTLE. Sec. 7. The reception of cattle at the railway station must be so arranged that the dispatch may take place on the day before the market day at the market center (for instance, Berlin, Cologne, Essen, Frankfort, etc.), so that the cattle may be rested and fed. When there are several loads, the cattle are to be sorted according to quality, inasmuch as they are paid for solely and entirely on quality. The individual trucks can, according to circumstances, be sent to different markets. Cattle are received in the different localities by an agent appointed by the committee. The animals are to be separately weighed, marked, and numbered. Swine are to be branded; large beasts and calves clipped on the left hind leg. The manager must prepare an accurate list of the animals to be sold on commission, showing the name of the owner, kind of animal, live weight, numbers, and marks.. A copy of the list must be sent at once by post to the agent of the Central Coop- erative Society for Cattle Selling at the slaughter market, so that he may have it at hand when the animals are unloaded. In the case of the larger cattle (bullocks, bulls, cows, and steers) a man in charge must be sent with the truck as far as the slaughterhouse. In the case of mixed loads (pigs, calves, sheep, goats) a man in charge is not requisite. If seven head of large cattle are loaded on one truck and the full load is to be supplemented as far as possible with small cattle, they are to be separated from the large cattle by a trellis partition. Partitions are supplied by the railway authorities on request. Expenses for conveying the cattle received from the sheds are to be paid by individual members in proportion to the animals sent by them. Sxc. 8. Cattle are regarded as received when they have been marked and weighed. From the moment of reception all animals are insured, not only against damage in transit, but also against objections to or condemnation by the slaughterhouse and meat-inspection authorities. INSURANCE IN TRANSIT. Szc. 9. The society bears the risk of insurance in transit. The present rates are 6d. per head of small and 2s. per head of large cattle. If cattle die or suffer damage in transit which diminishes their value as cattle for slaughter, the sender receives the aver- age price of the market to which they were sent for the corresponding quality from the society, or the amount of depreciation is made good. Damage in transit must be notified. Damage in transit must be recognizable on arrival at the receiving station and be at once confirmed by certificate of a veterinary surgeon or by voucher of the local superintendent or the railway superintendent. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 435 If it can be demonstrated that the dead animal was clearly ill already or that death arose from overfeeding, the owner thereof must not only bear the loss but also all cost of the investigation. . Cattle must not be fed on the day of dispatch. If, however, they are delivered over in the afternoon, a moderate feed is allowable. SLAUGHTERHOUSE INSURANCE. Sec. 10. All animals received are taken by the society under slaughterhouse insurance, the premium payable to the society therefor being 6d. per head of small and 5s. per head of large cattle. ; : Sec. 11. The transport of sick or presumably sick cattle to the slaughterhouse is interdicted. Interdicted cattle are only taken with others at the risk and cost of the owner. SALE AT THE SLAUGHTER MARKET. Sec. 12. Sale at the slaughter market takes place through the medium of the Central Cooperative Cattle Selling Society in Berlin, or of one of its agents at the particular market. The manager, so soon as the notices of cattle for the next day of dispatch are in, with a statement of kind, number of head, and quality of the cattle to be delivered, must put himself in communication with the central society in Berlin, which then informs him by return of post as to the best probable market for the particular kind of beast and the place to which the cattle should be sent. Freight is to be paid in advance by the manager. The superintendence of the sale is effected through the offices of the central society. If the manager have special reasons for considering his presence at the sale to be necessary, he must obtain the approval of the committee for the journey. (Sec. 2.) The central society arranges that the money for the cattle delivered shall be sent to the society as soon as the market is over, with a detailed invoice of expenses and a statement as to the proceeds of the sale of each beast. MAKING OUT ACCOUNTS. Src. 13. The expenses incurred for freight, food, insurance, commission, etc., must be reckoned separately for each con- signment and then proportionately distributed over the total proceeds of the sale of the cattle. What amounts are to be put under the head of general expenses, excepting expenses for the administration of the society’s business, shall be determined every half year by the board of supervision, according to the proposals of the committee and of the manager. PAYMENT. Sec. 14. On receipt of the money proceeds of the sales the manager must fix the proportion of the expenses and calculate the net amount to be credited to the individual animals. This calculation must in all cases be laid before the members who sent cattle for sale, and the balances are to be paid out to them. If a member sending cattle for sale have not received the money proceeds of such sale on the appointed day, the manager must send it to him by post-office order within eight days. The post-office receipt shall serve as receipt for the money. Src. 15. The committee assigns to the manager the necessary money for meeting the cost of freight and is liable for the outlay of the money according to instructions. If these funds can not be supplied from the deposits of members, they are to be procured through the medium of the savings bank at Src. 16. In order to be able to procure the advance of the money necessary for the expenses of the business members must on joining at once pay in the sum of 5s. on every share held by them. Src. 17. In order to facilitate the carrying on of the business in every locality in which a member resides agents shall be appointed, who must support the manager on his request in every way. Sec. 18. The aforegiven business regulations have been agreed to by a general meeting-of the society held on examination by the board of supervision, and they are binding on all members. (The following provisions are found in the business regulations adopted by other societies, either in addition to or as sub- stitutes for the foregoing:) Members are only obliged to deliver pigs of 165 pounds and over and calves of over 132 pounds. Swine must never be fed on day of delivery to the society. The manager, a valuer, and a member of the committee compose the commission of reception, and the classification of animals according to quality rests with them. Members are not exempted from selling through the society animals intended for use in the district. Transit insurance is fixed at one-third per cent of the gross receipts for the cattle. , after RULES FOR THE CONDUCT OF BUSINESS OF A COOPERATIVE EGG-SELLING SOCIETY (HANOVERIAN CHAMBER OF AGRICULTURE). [Registered society with limited liability.] Section 1. The business must be conducted within the limits of the objects of the undertaking, which consists in the sale in common for profit of the eggs delivered by the members. Sec. 2. The handling and delivery of eggs at the collecting station is regulated as follows: ; (a) Every member is obliged to deliver the whole of the eggs produced on his farm, with the exception of those required for his own use or for the purpose of breeding, at the collecting station designated by the committee. (b) The collecting stations shall only receive such eggs as have been produced on the farms of the members. (c) Eggs which in summer are more than 3 days (4 days) or in winter more than 6 days (8 days) old must not be delivered. They are to be used on the member’s own farm, inasmuch as such eggs have no longer any title to be called fresh eggs and can prejudice the reputation of cooperative egg selling. ; See (d) The holding back of eggs in order to make a subsequent delivery at the collecting station is not permitted. 436 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. (e) The eggs must be taken daily from the nests and kept in a cool well-ventilated place until the time of delivery. Eggs which have been also for one day under a sitting hen must not be brought to the collecting station. Porcelain eggs are to be used as nest eggs. The eggs must be delivered clean and free from attached dirt. Dirty ezgs will be rejected at the collecting station. In order to make the production of clean eggs possible, the cleanliness of the henroosts and of the nests should be especially kept in view. (f) All eggs must be stamped. Egg stamps are furnished by the society, and each member must pay for the stamp assigned tohim. The stamps remain the property of the society and must on cessation of membership be returned to the society. If the stamp is still fit for use, a sum equivalent to the value of the stamp will be refunded. Every stamp bears the trade-mark which the chamber of agriculture has registered, and further, the device of the club or society expressed by certain letters and the number by which the member is registered in the egg receipt book. (9) Every egg is to be examined at the collecting station by an egg lamp or some other suitable egg tester. Eggs that fail to pass the test will not be reckoned as delivered. (hk) Rejected eggs shall be indicated at the collecting station by a special mark. (t) Payment for eggs is made either by number or by weight. If paid for by number, eggs of a less weight than 45 grams (50 grams) are not to be delivered (57 grams=2 ounces). (j) If a member infringe the regulations that only fresh and sound eggs shall be delivered, a deduction shall be made from the payments due to him of —— pence for each bad egg so delivered. (&) Ifa member is proved to have sold eggs to a merchant or to some other person directly, he must pay a fine of —— shillings. (1) Repeated infractions of the regulations as to the delivery of eggs may be punished by the expulsion of the member involved by the society. (m) It is the duty of the person in charge of the collecting station to draw the attention of members to any defects in the eggs delivered. Sec. 3. For the conduct of the business of the society a manager shall be appointed by the committee, who, under the instruction and guidance of the committee, shall carry out the duties imposed upon him in a conscientious manner. Src. 4. The position of the manager shall be regulated by contract. Sxc. 5. The committee shall furnish the manager with the necessary funds for carrying on the business and is responsible for its use for the purposes intended. Sxc. 6. The manager shall keep the necessary books of the society in an orderly manner and make the entries of eggs received in the proper books. He shall further take care that the eggs are handled and packed in an expert fashion, and above all he shall see that only fresh and odorless packing material is used. The eggs must be packed in a clean, light, and well-ventilated room in which no malodorous material shall lie. : In consideration of the fact that the eggs from the moment of delivery to that of dispatch may lie in the packing room at least one and frequently more days this room must be in a cool situation. The manager shall be responsible for loss sustained by the society through neglect of these regulations. Src. 7. The bookkeeping shall be carried out on commercial principles. The following books are to be kept: Eggs received, eggs dispatched, egg ledger, and egg journal. In large societies a ledger for debtors and creditors must be kept in addition. Every member shall receive a small account book in which the manager enters at each delix ery the number of eggs received. In agreement with this a corresponding entry must be made in the eggs-received book. The account book bears the name of the member to whom it is issued; in addition, an impression of the egg stamp, showing the member’s number. Sec. 8. Accounts shall be made up monthly. Members may receive the amount due for eggs delivered in the previous month after the 10th of each month; on request, and with consent of the committee, payments on account may be made. The price to be paid for the eggs shall be established by deducting the monthly expenses and an amount representing the cost of general maintenance from the total receipts for eggs. The accounts shall be made up by two members of the committee, or, in case of their inability, by other members nominated by the committee, together with the manager. The manager shall previously prepare the statement of accounts by calculation of the quantities of eggs delivered. The manager shall receive, as remuneration for bookkeeping, paying out of moneys, preparation of the year’s accounts, receiving, packing, and dispatch of eggs, a sum based on a percentage of the turnover; the percentage to be fixed beforehand by the committee at the beginning of the year. Szc. 9. Should one collecting station not suffice, further stations may be set up within the district covered by the society, from which the eggs shall be sent to a special central station. For the temporary storage of eggs in the substations the regula- tions of section 6 shall hold good. The conduct of business in the substations shall be governed by regulations specially drawn up by the society. BUSINESS RULES FOR COOPERATIVE THRASHING SOCIETIES.! 1. The steam thrashing machine shall, whilst at work, be under the care of a mechanic appointed for the purpose by the committee of management of the cooperative society. His duties, as well as his wages, shall be fixed by a special service agreement, which latter shall require the approval of the general meeting. 2. Members are under obligation to use only the thrashing machine of the society for the purpose of steam thrashing. 3. Every member is bound, for each share held in the society, to employ the steam thrashing machine for hours annually. ; Infringements of this regulation shall be punished by a fixed fine, the amount of which shall be determined by the general meeting. 4. The right of use of the plant by the members shall be regulated as follows: 1 Specimen business rules issued by Union of Agricultural Societies of the Province of Saxony and the neighboring States, registered association at Halle. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 437 (a) In the period from the beginning of harvest up to September 20 of each year, every member is entitled to use the thrashing plant for half the number of hours to which he is bound by the terms of section 3. (6) In order to avoid’ unnecessary moving of the machine backward and forward, the members in each locality must make use of it in turn within the period stated under (a). (c) Use of the machine after September 80 shall be a matter of yearly arrangements. If an agreement can not be reached as to the locality in which the machine is to be first employed, the same shall be decided by lot. ‘ 5. Any person desiring to use the thrashing machine must himself provide for its transport. Immediately upon completion of the work he must again return the machine to a highway. The transport of the machine from one place to another shall be a common charge on the society. 6. Requests for the hire of the thrashing machine must be sent to the secretary. The order in which the requests shall be complied with shall be settled by the committee of management.asa whole. The charge for hire shall be settled by the general meeting, 7. Fuel and binding twine shall be paid for by the user of the machine. The materials will be delivered by the society at cost price. The user must provide for the necessary water supply. 8. The return of the machine after hire shall be the business of the user. The above business regulations are approved by the general meeting of , the (date) ——, 190—. The Cooperative Steam Thrashing Society , Fegistered society with limited liability. The board of supervision: . The committee of management: - FEDERATIONS OF COOPERATIVE SOCIETIES. 1. IMPERIAL FEDERATION OF GERMAN AGRICULTURAL COOPERATIVE SOCIETIES— REGISTERED ASSOCIATION AT DARMSTADT. ARTICLES OF ASSOCIATION. TITLE AND TERRITORIAL SPHERE OF OPERATIONS. Section 1. Under the title of ‘Imperial Federation of German Agricultural Cooperative Societies” an association of agricultural cooperative unions is formed whose sphere of operations embraces the German Empire and its dependencies. OFFICES. Sxzc. 2. The federation has its seat in the place of residence for the time being of the general director, now in Darmstadt. OBJECTS. Src. 3. The objects of the federation are: . The promotion and extension of agricultural cooperation. . The protection and representation of common interests, especially in matters of legislation and administration. . The development, strengthening, and improvement of cooperative organization and effort in all its branches. . The advising and assisting the affiliated unions and societies in all cooperative, legal, and economic matters. . The taking in hand and working out of cooperative, legal, and economic problems. . The execution of the audit required by law of the accounts of the central organizations and cooperative societies directly affiliated to the Imperial Federation according to section 5, paragraph 2. Dn m wD STRUCTURE OF THE FEDERATION. Sec. 4. Within the limits of the Kingdom of Prussia the Imperial Federation shall consist as a rule of provincial unions; in other parts of the Empire of State unions. The independence, internal organization, and administration of these unions shall in no way be interfered with as the result of association in the Imperial Federation. MEMBERSHIP. Src. 5. Membership of the Imperial Federation is possessed by— 1. The provincial and State unions directly affiliated to it. 2. The cooperative societies attached to such affiliated provincial and State unions. Direct membership may be granted— (a) By the general committee to such central trading bodies possessed of legal status as serve the purposes of agricultural cooperative societies, whose activity extends over a considerable area, embracing the districts of all or of the greater number of provincial and State unions. (b) By the council of administration to such as serve the purposes of agricultural societies in German protectorates as well as cooperative and other societies in foreign countries which possess a German legal status and in accordance with German law are entered in the registers of German courts or consulates. RIGHTS OF MEMBERS. Sec. 6. Unions, individual cooperative societies, and central organizations attached as members to the Imperial Federa- tion have the following rights: 1. To make use of the machinery set up in the general interest by the Imperial Federation. 2. To require assistance by advice and by action on the part of the general director and of the other organs of the Imperial Federation. 3. To take part in the proceedings of the agricultural cooperative congress through a representative with right of vote. 4. To submit proposals for the agenda of the agricultural cooperative congress within the period laid down in the business regulations; and, in so far as it relates to single cooperative societies, to do so through the agency of the competent union. DUTIES OF MEMBERS. Sec. 7. It shall be the duty of members— 1. To promote the interests of the Imperial Federation and of its members and to give mutual support. 2. To pay the contributions to the expenses of the Imperial Federation as fixed by the general committee. 3. To take, according to the terms of the resolutions of the general committee, the newspaper selected for the publication of the proceedings of the Imperial Federation and to supply themselves with its yearbook. 4. To deliver punctually the statistical reports and information required by the general director. 438 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 439 ADMISSION. Szc. 8. Admission to the federation is open to all unions of agricultural cooperative societies, as well as to the central organizations and individual cooperative societies named in section 5. They should as a rule represent a district of a province or of a State. Notice of desire to join must be given to the general director; acceptance as member depends upon a resolution of the council of administration or of the general committee (sec. 5). If, at the time the notice of request for membership is given, there already exists in the province or in the State a union affiliated to the federation, the acceptance of the new member shall not take place as a rule without the assent of such union. — RETIREMENT. Src. 9. Membership of the Imperial Federation may be terminated by notice on the part of the affiliated union, central organization, or cooperative society. Such notice can, however, only take effect at the end of the calendar year and must, in order to be effective at this date, be handed in at latest by July 1 of the year in question. With the cessation of membership of a union the relations of its component cooperative societies with the federation also cease without further formality. EXPULSION. Sc. 10. Expulsion from the federation may be decreed against an affiliated provincial or State union, against a central organization, or against a cooperative society in case of gross neglect of the duties of membership on the proposition of the council of administration by resolution of the general committee with two-thirds majority of those present and entitled to vote and actually voting. With the resolution of expulsion of a union the membership of the cooperative societies affiliated thereto terminates immediately. Src. 11. Unions and central business institutions which have resigned or have been expelled are bound to pay their con- tributions up to the end of the current calendar year, but have nevertheless no claim upon the funds of the federation. ORGANS OF THE FEDERATION, Sec. 12. The organs of the federation are: 1. The German Agricultural Cooperative Congress. 2. The general committee. 3. The council of administration. 4, The general director. GERMAN AGRICULTURAL COOPERATIVE CONGRESS. Src. 13. The German Agricultural Cooperative Congress (meeting of members in the sense of section 32 of the civil code) consists of the delegates of the component unions, cooperative societies, and central organizations. Every union, every cooperative society within a union, and every central organization has the right to send a delegate entitled to vote at the cooperative congress. : Further, representatives of unions and members of cooperative societies may take part in the deliberations of the coopera- tive congress in any number, but not in the resolutions thereof. Src. 14. The cooperative congress has the final decision in all business of the Imperial Federation, and especially as regards: 1. The deliberation and passing of resolutions upon all cooperative and like questions allied to agricultural cooperation. 2. Decision in the case of complaints against the organs of the federation. 3. The passing of resolutions as to alterations in the articles of association and as to the dissolution of the federation. 4. The settlement of its rules of business. 5. The election of the general director and of his deputy. (Sec. 32.) The authentication of the resolutions of the coopera- tive congress is effected by their entry in the minutes and the signature thereof by the general director and the minute keeper. Sxc. 15. The proceedings of the congress are open to the public, unless the congress itself by resolution declares in each particular case that the public be excluded. Sxc. 16. The delegated representative at the cooperative congress can not be represented by a deputy at a vote. Sxc. 17. The cooperative congress shall meet regularly each year, with constant change of venue as regards the individual provincial and State union districts. The congress shall be convened by the general director by virtue of a resolution of the council of administration. The summons is to be brought to the notice of the unions and societies at least four weeks previously by insertion in the organ of the Imperial Federation, The German Agricultural Cooperative Press. Sxc. 18. The agenda of the congress shall be drawn up by the council of administration, and is to be made known with the summons to the meeting. Every affiliated union, every cooperative society affiliated to such union, and every central organization has the right to propose matter for inclusion in the agenda, an individual society through the union to which it is attached. The council of administration shall decide on the admissibility of proposals of this kind, which must be in the hands of the general director at least eight weeks before the holding of the congress if they are to obtain consideration. If the proposal is agreed to, the union, the cooperative society, or the central organization in question, is bound to appoint a reporter for the particular matter. Src. 19. The union district in which the ordinary cooperative congress is to be held shall on each occasion be fixed upon by the congress of the preceding year. Szc. 20. Extraordinary cooperative Congresses are to be summoned when: (1) The general committee shall so decide, or (2) at least one-fifth of the affiliated unions, or one-tenth of the members of the societies, demand it. The place of meeting of an extraordinary cooperative congress shall be settled by the council of administration. 440 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. Src. 21. The cooperative congress shall be opened by the general director. The chairman and secretaries shall be nominated by the general committee. The general committee may nominate tem- porary presidents. GENERAL COMMITTEE, Sec. 22. The general committee shall consist of: 1. The general director. 2. The directors of the provincial and State unions holding membership of the federation. These latter shall in case of inability to attend be represented by their regular deputies. _ 38. Six representatives of central cooperative societies, of whom three are to be representatives of the special committees named in section 28 (a), two representatives of the special committees named under (0). 4, One representative for each of the central organizations attached to the federation under section 5, paragraph 2. The general committee shall elect from its own body a chairman and a deputy chairman for five years. It may fix another term of election. The general director is eligible for the office. Sec. 23. The general committee is competent— 1. To consider in advance, and in cases of urgency to decide upon, all cooperative questions of general interest and all matters affecting the Imperial Federation, as well as to carry out the instructions given to it by the cooperative congress. 2. To lay proposals before the cooperative congress. 8. To audit and pase the year’s accounts, as well as to approve of the annual estimates of the Imperial Federation. 4. To fix the annual contributions. 5. To take all necessary steps for the election of the general director and of his deputy, and to lay proposals as to such election before the cooperative congress. 6. To fix the duties of the general director and of his deputy. 7. To decide upon complaints against the council of administration or the general director. 8. To decide upon the setting up of committees and commissions other than those already provided for by these articles of association (sec. 28) for permanent or temporary purposes, as well as upon the election of the members thereof. 9. To accept new members under section 5, paragraph 2. 10. To pass resolutions as to the expulsion of members. (Sec. 10.) Sec. 24. The general committee must be called together at least twice annually. Summons is to be issued by the chairman at least two weeks before the meeting, and except in case of urgency the agenda shall accompany the summons, The general committee must meet if at least 10 of its members demand it. COUNCIL OF ADMINISTRATION, Src. 25. The council of administration consists of— 1. The general director as chairman. 2. His two deputies. 8. Seven members to be elected in the general committee from its body. The election of the members named in paragraph 3 shall take place every five years. Szc. 26. The especial duties of the council of administration, on which the general director ehall serve as permanent adviser, ehall be as follows: 1. The drafting and fixing of the agenda of the cooperative congress and decision as to its summoning. 2. The taking of decisions on those matters of administration which the congress or the general committee may assign to it for carrying out, or which the general director may put before it. The examination of the annual accounts and the drawing up of the report thereon to the general committee. The consideration of the draft annual estimates and the drawing up of a report thereon to the general committee. Decision as to expenses which exceed the estimates. The approval of the employment contracts made with the superior officials of the Imperial Federation. The approval of all other contracts which involve the Imperial Federation in permanent responsibilities. 8. The laying of proposals before the general committee as to the expulsion of members. (Sec. 10.) Sec. 27. The council of administration shall meet as often as may be necessary. Summons is to be issued by the general director accompanied by the agenda and shall be sent out, except in case of urgency, at least one week before the meeting. The council of administration must be summoned when three of its members co demand. SS es SPECIAL COMMITTEES. Sec. 28. Special committees are to be formed for the following societies attached to the affiliated unions:! (a) Central cooperative credit societies. (b) Central supply and sale cooperative societies. (c) Central butter-selling and dairy cooperative societies. Sec. 29. Each special committee shall consist of— 1. The general director or one of his deputies as chairman. 2. A representative of the central cooperative societies handling the special branch of pinikess concerned. Sec. 30. The business of the special committees is— 1. To advise on business matters affecting the common interest of the branches of business involved. 2. The bringing forward of motions before the cooperative congress. 3. The election of representatives on the general committee. ‘In the year 1905-6 four new special committees of analogous composition were formed, viz, for cooperative granary cattle-selling, vine-growing, and machine-selling societies. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 441 Sxo. 31. The regulations of section 24 hold also for the special committees, with the provision that a special committee is to be called together when the representatives of one-third of the central cooperative societies or business organizations belong- ing to it ao demand. ; THE GENERAL DIRECTOR. Src. 32. The general director and two deputies for him shall be elected by an absolute majority of the cooperative congress on the proposal of the general committee for five years. The congress may, on the proposal of the general committee, decide upon election for a different period. Src. 33. The general director constitutes the committee of management of the Imperial Federation in the sense of section 26 of the civil code. He represents the federation legally and otherwise, both within and outside the federation, especially before the authorities, carries out its business independently according to the articles of association and the decisions goveru- ing the business regulations. The scope of the business to be conducted by the general director includes especially: 1. The promotion of German agricultural cooperation and of ita individual branches in every direction, by speech and writing, especially also as regards legislation and administration. 2. The communication of intelligence and advice on all matters to the affiliated unions, cooperative societies, and central organizations, as well as the representation of their interests at their request. 4 3. The arrangement and summoning of the cooperative congress and the sittings of the general committee, of the council of administration, and of the special committees. 4. The executiun of the resolutions of the cooperative congress, of the general committee, of the council of administration, and of the special committees, 5. The administration of the general organization and of the undertakings of the Imperial Federation. 6. The collection, the compilation, and the publication of cooperative statistics and of an annual report. 7. The administration of the accounts and finances of the Imperial Federation. 8. The laying of the year’s accounts and draft estimates before the council of administration. 9. Taking part in the congresses of the affiliated unions. The general director is authorized, in case of personal inability to attend, to cause himself to be represented by one of his deputies, another member of the council of administration, or by one of the officials of the Imperial Federation. 10. The appointment of the higher officials of the federation with the consent of the council of administration. 11. The appointment of the necessary staff for the transaction of office business consistent with the means estimated and placed at his disposal for the purpose. AUDITS. Szc. 34. The imperial federation, under section 53 et seq.of the cooperative societies’ act, possesses the right of appointing auditors, and must undertake, in the case of the directly affiliated central organizations and cooperative societies specified in section 5, paragraph 2, the audit of the general organization and conduct of business in all branches of administration in the manner prescribed by the act, by a skilled auditor not belonging to the cooperative society in question. At the request of the cooperative society or on the instructions of the general director, special audits may be undertaken at any time. se The extension of the audit beyond the limits required’ by the law may at any time be decided upon by the general committee. Sgc. 35. The committees of management of the central organizations and cooperative societies directly affiliated to the Imperial Federation must permit the federation auditor to inspect the books and papers of the society, to examine the position of the society’s cash balances, as well as of the securities, business documents, and goods. Sec. 36. The audit service shall be regulated according to the provisions of the law and the regulations giving effect thereto by means of a series of service regulations, Sxc. 37. For the carrying out of the audit, the imperial federation may appoint one, or, if necessity require, more union auditors. Sc. 38. The number of zooperative societies directly affiliated to the Imperial Federation for the purposesof audit shall be at least three, and shall not exceed 100. EXPENDITURE. Sxc. 39. In ao far as no other receipts may exist, the expenses of the imperial federation shall be met by annual contribu- tions. The affiliated unions are bound to make these contributions. , The amount and the scale on which these contributions are to be levied shall be fixed by the general committee. The amount of contribution due from directly affiliated central organizations shall be fixed in each individual case by resolution of the general committee. Contributions become payable at the beginning of the year on demand of the general director. Reductions in the amount to be contributed may, on special grounds and in individual cases, be arranged by the council of administration. Sxc. 40. The financial year shall coincide with the calendar year. The annual accounts must be laid by the general director before the council of administration at latest during the May of any given year together with the vouchers. DAILY ALLOWANCES AND TRAVELING EXPENSES. Szc. 41. The daily allowances and traveling expenses of the council of administration, of the general director and of his deputies, as well as of officials of the imperial federation, shall be paid out of the federation funds. Their amount shall be fixed by the general committee. The daily allowances and traveling expenses of members of the general committee and of the special committees shall be at the charge of the bodies they represent. 442 AGRICULTURAL CREDIT AND COOPERATION IN GBRMANY. The amount of the daily allowances and traveling expenses of the representatives of special committees on the general committee shall be fixed by the general committee, and shall be borne in common by the affiliated central cooperative socie- ties concerned in the branch of business involved. The manner in which these expenses are to be apportioned shall be settled by each special committee independently. POWER TO PASS RESOLUTIONS. Sec. 42. When summoned to meet in the ordinary manner: (1) The cooperative congress, when any number of members entitled to vote are present. (2) The general committee, the council of administration, and the special committees, provided more than one-half the members are present, are entitled to pass resolutions. VOTES AND ELECTIONS. Sec. 43. Voting shall take place by the members rising in their places or remaining seated. Elections shall take place by means of voting papers. Election by acclamation is permissible, provided no objection be raised. Absolute majority of votes shall decide an election. If the first vote yields no absolute majority, then the two names which have received the largest number of votes shall be put up again to the vote. If two or more of the names to be put up again have received an equal number of votes, a decision as to which of them shall be put up a second time for election shall be obtained by lot drawn by the chairman. ALTERATION OF THE ARTICLES OF ASSOCIATION. Sec. 44. An alteration of the articles of association may only be decided upon by the cooperative congress if— 1. The contents of the draft amendments are made known at latest at the same time as the summons to the congress. 2. At least three-quarters of the delegates present and entitled to vote support it. 3. The delegates voting in support represent more than one-half of the total affiliated unions. DISSOLUTION. Sec. 45. The Imperial Federation may be dissolved by vote of the cooperative congress. The resolution shall, however, be only valid in law when three-fourths of the unions affiliated to the Imperial Federation and one-tenth of the cooperative societies attached to them are present at the congress, and three-fourths of the members of each of the named groups vote in support. Sec. 46. In case of dissolution the settlement takes place in respect of the funds of the Imperial Federation in accordance with the terms of the civil code thereunto applying, unless two-thirds of the congress deciding upon the dissolution adopt other resolutions. ENTRY IN THE ASSOCIATION’S REGISTER. Src. 47. The Imperial Federation shall by registration in the association’s register of a court acquire the rights of a registered association. 2. THE GENERAL (RAIFFEISEN) FEDERATION OF RURAL COOPERATIVE SOCIETIES IN GERMANY—REGISTERED ASSOCIATION IN BERLIN.! ARTICLES OF ASSOCIATION (EXTRACTS). DESCRIPTION—DISTRICT, LEGAL FORM, SEAT, AND OBJECT. Sgcrion 1. The General Federation of Rural Cooperative Societies for Germany, established in accordance with the imperial cooperative societies act, section 53 et seq., shall extend over the German Empire and its dependencies. Sec. 2. The smallest number of societies which the general federation may embrace is fixed at 20; the largest at 20,000. Sxc. 3. The general federation shall by the fact of registration in the register of associations enjoy the rights of a registered association. Src. 4. The general federation has its seat in Berlin.? Ssc. 5. The objects of the general federation are: (a) The establishment of independent audit unions in the individual Provinces and States. It shall be the primary business of these provincial or State unions to undertake the audit of the accounts of the component societies according to the prescriptions of the law; they must be members of the general federation. (6) The drawing up of uniform regulations for the carrying out of these audits. (c) The supervision of the unions with regard to the observance and carrying out of these regulations. (d) The audit of the conduct of business by the unions. (e) To undertake the audit as prescribed by law of the accounts of such societies as are precluded from membership of an audit union attached to the general federation. (f) The preservation and upholding of the Raiffeisen principles as laid down in section 6, paragraph 2, clause 1 of these articles and in the articles of the unions. (g) To devise or support arrangements for the formation of capable officials for cooperative societies, and especially of trustworthy auditors. 1 At a meeting of the general federation held in Breslau on June 24, 1909, it was decided that the seat of the federation should be removed from Neuwie to Berlin at latest by July 1, 1910. 2 The removal of the seat of the general union to Berlin took place on Feb. 1, 1910. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 443 (hk) The furtherance of the material welfare of the people, but preeminently of their moral and spiritual welfare, through the deepening and quickening of the desire to promote the common interest on Christian principles To this end the general federation shall— (aa) Support all efforts which are directed toward the extension of rural cooperation. (0b) By stimulating and instructing in speech and writing, promote the comprehension and spread of the cooperative principles represented by it and their sound development, and especially render assistance in the field of rural social welfare. (cc) Afford information and advice in all cooperative matters to its affiliated unions and societies as well as to their members. MEMBERSHIP: CONDITIONS FOR ADMISSION. Sxc. 6. The following may become members of the federation: I. The audit unions of the Raiffeisen organization mentioned in section 5(a). II. The following members of these unions: (1) Societies doing business either in money or goods (savings and loan bank associations) which have been founded in accordance with the German cooperative societies’ act with either unlimited or unlimited contributory liability, and have been legally registered; as well as further such societies as by virtue of their articles of association: (a) Aim in the first place, by the adpotion of suitable measures, to improve the position of the economically weak, and side by side with the material progress of the members assist their spiritual and moral advancement. (6) Accept as members only those who dwell within the area of operations of the society, such area to be as limited as possible consistent with its enduring vitality, and refuse membership to those who belong to any other cooperative credit society with unlimited liability or with unlimited contributory liability. (ce) Pay no dividend on shares which shall exceed the rate of interest paid by borrowers from the society for loans, and do not permit the possession of more than one share by any member. (d) Pay to none of the organs of the society, with the exception of the manager (secretary), any compensation for trouble taken beyond mere moneys out of pocket. (e) Accumulate from the net profits an indivisible common capital of the association (foundation fund). (2) Other registered cooperative societies (productive societies) which seek to improve the economic position of their members, as, for example, societies for the purchase and sale of goods, wine growing, dairy, granary, hop and tobacco culti- vation, distilling, dealing in spirits, cattle, etc. (3) The centers for financial adjustments (regional cooperative banks—cooperative banks) established in the individual districts for the cooperative societies mentioned in preceding paragraph. (4) Companies with limited liability, as well as central business institutions, which serve social purposes of an economic kind without aiming at profit, provided they have a legal status, and their activity be extended over a considerable area. III. Any associations falling under II, if they are precluded from admission to an audit union. BOARD OF SUPERVISION. Sec. 15. The board of supervision shall consist of the members of the board of supervision of the German Central Agri- cultural Loan Bank. It shall have the same period of office and shall be similarly organized as regards president and standing committee. AUDIT AND SUPERVISION OF THE AUDIT AS CONDUCTED BY THE UNIONS. Src. 24. The audit service shall be regulated by the business regulations issued in accordance with the provisions of the act and with the regulations of the executive in relation thereto. The nature and scope of these audits shall be regulated by the directions of section 25 (c-f). For the carrying out of the audit the general federation shall appoint one auditor, or in case of need more, satisfying the conditions of section 25 (6). Suc. 25. The general federation has the right and the duty of supervising the carrying out of the audit as carried out by the provincial or State unions attached to it. To this end it may itself undertake audits among the unions and require the entire minutes of an audit and the recommendations tendered by the unions to be sent to it for examination. The chief task of the general federation in this direction is the observance and carrying out of a uniform method of audit on the uniform prin- ciples prescribed as follows in the articles of association of all the unions attached to it: (a) Duty of audit.—The union undertakes the duty of subjecting its affiliated societies at least once in every second year to an audit by one of its permanent auditors, and to do what it can to remove any deficiency discovered. (b) Auditors.—Only such persons shall be put forward as candidates for the office of auditor as (1) are in every respect irreproachable, (2) who have thoroughly grasped the cooperative question in all its aspects, as well as the distinctions between the different kinds of societies and especially the importance of the Raiffeisen principles, and (3) whose health is such as will withstand the bodily wear and tear involved in country auditing. No person shall be intrusted as auditor with the examination of the accounts of a society of which he isa member. The training of young auditors is effected in accordance with a plan of instruction to be drawn up by the committee of manage- ment of the general federation. According to its provisions independent audits shall only be handed over to them after they have conducted several audits under the supervision of an experienced auditor or of the head auditor (secretary of the union) and have shown themselves competent and trustworthy. Appointment as auditor depends upon the result ofanexamination. This is held by a commission consisting of the director of the union, the head auditor (secretary of the union), and one other person selected from the committee of the union. The special supervision of the auditors and the working up of the minutes of audit prepared by them shall be under the control of the director of the union through the head auditor (secre- tary to the union). Before the appointment the head auditors must also prove their qualification for the office according to the regulations laid down therefor by the general federation. (c) Audits.—Audits shall be carried out according to the specimen audit report drawn up by the committee of the general federation or in accordance with the service regulations issued by it. They shall not be limited to an examination of the arith- metical accuracy and adjustment of the office books and the balance sheets of the societies. The auditor must further carefully 444 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. determine whether the administration has been carried out in all particulars in accordance with the prescriptions of the cooper ative societies act, the articles of the society itself, and the instructions given by the committee of the general federation Auditors have the right (sec. 63 of the act) to inspect the books and documents of the societies, to check the moneys in hand against the books, as well as to determine the existence of the presumed stock of securities, commercial papers, and goods. The administrative organs of the society must participate in the work of the auditors. (d) Minutes of audit.—In every audit a complete duplicate minute according to the prescribed model shall be prepared, which must be signed by the auditor, the members of the board of supervision and of the committee, and by the secretary. The auditor shall hand one copy to the society for adoption at the next general meeting, the other to the director of the union for examination and working out, with a view to the removal of possible deficiencies therein. (e) Audit certificate—The auditor must furnish the society with a certificate to the effect that the audit has been carried out in the prescribed manner; the committee shall forward this certificate to the competent court. (1) Rights and duties of auditors.—Auditors have the right to attend and to speak at meetings of the committee and of the board of supervision, as well as the general meetings of the societies affiliated to the general federation. In the case of gross dereliction of duty on the part of the organs of administration, which endangers the credit or existence of the society as well as the honor of the union, the auditor must without delay report to the director of the union so that this latter may summon a general meeting, according to the rules laid down by the articles, for the consideration of the neces- sary fresh elections. The legal rights of the society in respect of the displaced organs of administration shall not be disturbed thereby. (g) Rights of the director of the union.—The director of the union has the right to order at any time special audits of the societies of his district. CONTRIBUTIONS. Src. 26. The general federation shall levy no contributions. The business year and the calendar year shall be coincident. At its close the general directors shall prepare and lay before the board of eupervision the year’s accounts and a statement of assets. DISSOLUTION OF THE GENERAL FEDERATION. Sec. 27. The dissolution of the general federation is not permissible so long as 20 societies remain members of it. The existing property of the general federation at the time of its dissolution shall fall to the German Central Agricultural Loan Bank. MISCELLANEOUS. Specimen audit report. Scheme of audit. Forms for statistical returns for— (1) Credit societies. (2) Supply and sale societies. (3) Dairy societies. (4) Other. Contributions to cooperative unions. List of agricultural requisites supplied by a central trading organization. Notes on visit to beet-sugar factory. Land bank, Berlin. MINUTES OF AUDIT OF THE LOAN BANK ASSOCIATION OF GRUNAU. {Drawn up by the union auditor, Albert Osterkorn, February 3, 1904.] 1. Q. Has the association, in respect of the admission of members, kept within the limits laid down in its articles? Sec. 1.1 (Sec. 8 C. A.)—A. Yes. 2. Q. Do members belong to other cooperative credit societies; if so, how many and who? (Sec. 7, V. (2).)—A. Member No. 14 is also a member of the agricultural credit association in Augsburg. 3. Q. What is the present total of members?—A. Forty-five. 4. Q. Is the list of members properly kept, and is it kept in agreement with the court list? Sec.131(1). (Sec. 30 C. A.)— A. Yes. 5. Q. Have all the notifications made by the court upon registration in the cooperative register, especially on the admis- sion or retirement of members, been preserved?—A. Yes. 6. Q. Has the retirement of members been effected according to law? Secs. 77 and 131. (Secs. 69 and 70 C. A.}— A. So far no occasion for such has arisen. 7. Q. Has the court been notified when members have left the district, resigned, or been excluded? Sec. 13 I (4). (Sec. 69 C. A.)—A. No occasion for such notification has thus far arisen. 8. Q. Has the death of a member been at once notified to the court of registry? Sec. 181(5). (Sec. 77 C. A.)A.—Yes. 9. Q. Has the position of the society been considerably changed by the retirement of members, and especially has the amount paid as taxes, on which credit granted by the central loan bank is based, been diminished?—A. No. 10. Q. (a) What is the amount of the share? Are the installments punctually paid? Secs. 6-2 and 29. (Secs. 7-2 and 500. A.). (6) Is the list of paid-up share capital in order?—A. (a) Of the share (£5) every member has paid up the required tenth (10s.). (b) Yes. 11. Q. Have elections to (a) the committee of management, secs. 9 and 10; (b) the board of supervision, secs. 16 and 17; (c) the secretary, sec. 24; taken place at the proper time?—A. (a), (b), and (c) These elections are not yet due. 12. Q. (a) Have the notices to the court of registry as to fresh elections of members of the committee of management been made at the proper time? Sec. 131 (6). (Sec. 28C. A.) (b) Are the notifications of the court on the registration of changes in the committee of management placed with the archives?—A. (a) and (b) No omissions because the members of the com- mittee of management elected at the general meeting at which the society was founded are still in office. 13. Q. (a) Has the committee of management with the assistance of the secretary held the requisite meetings, especially for the granting of credits? Secs. 151,261. (5) Were the whole of the members of the committee of management summoned to the meetings? Sec. 15 II. (c) Do the minutes contain a statement to this effect? Sec. 15 III.—A. (a), (6), and (c) Yes. 14. Q. Are all the resolutions adopted at the meetings of the committee of management fully recorded in the minutes, especially as to the grant of loans as well as the conditions under which they were granted, the grant of further time for pay- ment, the taking up of loans, and the admission of members, etc.? Sec. 15 III.—A. Yes. 15. Q. Do the members of the committee of management or of the board of supervision receive any remuneration? If so, what? Seca. 9 IV, and 16 V.—A. No remuneration. 16. Q. (a) What is the amount of loans and deposits fixed by the general meeting to be taken by the association? Sec. 2111, 6a. (Sec. 49C.A.). (6) Is this amount exceeded?—A. (a) £1,500. (6) No. 17. Q. (a) Has the association sufficient funds on deposit to meet demands for loans? (b) What rate of interest does it pay for such deposits? (c) Is the period of notice long enough (at least three months)?—A. (a) At present these are not altogether adequate; for this purpose the credit of the Central Loan Bank has been temporarily drawn upon. (b) 3 per cent. (c) Yes. 18. Q. (a) Are the papers concerning loans taken up by the association and the entries in the savings books properly drawn and signed? Sec.131(7). (6) Isasavings bank combined with the loan bank? (c) How are these deposits and other receipts supervised? (d) Is the savings-bank daybook and the ledger kept in an orderly manner, or what errors were found?—A. (a) and (b) Yes. (c) Deposits are supervised by the chairman of the committee in that he himself sees on each occasion that the 1 The references without parenthesis refer to the clauses of the articles of association of the society; C. A. stands for the cooperative societies act. 445 446 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. receipts in the savings-bank books are entered under their proper heading and appear correctly in the daybook of the associa- tion as receipts. Further, at the close of the year, the whole of the ledger accounts are laid before the depositors in question and other account holders for their inspection and acknowledgment by signature. (d) Both books agree exactly. 19. Q. In the granting of loans (a) are the limits laid down by the statutes, sec. 32; (b) the prescribed installments, sec. 82; (c) the maximum amounts allowed to a member by the general meeting adhered to? Secs.211II 6b and 32. (Sec.49C. A.) (d) What is this maximum? (e) Has any overstepping of the amount been approved by the general meeting?—A. (a), (6) and (c) Yes. (d) The committee is empowered to lend £100 toa member. Larger amounts up to £250 may be lent on the joint resolution of the committee of management and board of supervision. (e) No overstepping of the amount has occurred. 20. Q. Are loans secured in the manner laid down by the articles, and how?—A. Loans, so far as may be, are secured, either by personal sureties, mortgage, or the deposit of securities. 21. Q. Have the documents of indebtedness on loans (a) been properly prepared? (6) Are they quite complete? (c) Are they also signed by the wives of the borrower and sureties?—A. (a), (b) and (c) Yes. 22. Q. (a) Do the documents deposited as security call for any comment? (b) Have the revenue stamps been affixed as required by law? (c) Is a securities register kept? (d) Are the securities kept under double key?—A. (a) No. (6) and (ce) Yes. (d) This will be done when the safe arrives. (See answer to question 41 (a).) 23. Q. Are sureties living outside area of society accepted, and is their solvability sufficiently known and ascertained?— Answer to both questions: Yes. 24. Q. Are members of the committee of management borrowers or sureties; is such position approved and entered on the minutes by the board of supervision before loans are granted or sureties accepted? Secs. 12 IIb, 32 II. (Sec. 29 C. A.)— A. Yes; approved and entered on the minutes. 25. Q. (a) Are nonmembers of the association debtors to it, and to what extent? (Sec.8(2)C.A.) (6) What is the amount of the outstanding loans granted for the purchase of property? (c) What is the amount of the loans granted? (d) What is the amount of balances on current account? (e) What is the rate of interest on loans?—A. (a) No. (b) These are dealt with as loans and accounted for under that head. (c) £621. (d) £200 1s. (e) 4 per cent. 26. Q. Are all loans and the installments on them punctually repaid, or are extensions granted according to regulations and with the signed agreement of the sureties thereto?—A. Yes. 27. Q. Are there any considerable arrears of interest, and in what years?—A. No arrears of interest. 28. Q. What is the difference between the rate of interest on deposits and on loans? Is it sufficient to permit of the gradual accumulation of a reserve fund? If commission is charged, what is the rate?—A. The margin of interest (1 per cent), together with the commission of 4 per cent, is adequate, and the more so as the association has a handsome profit in prospect from the property transactions at present in hand. 29. Q. (a) Wasa quorum of the board of supervision always present at the meetings? Sec. 20 (1). (b) Did the quarterly investigation of loans and securities take place? Sec. 19I (3). (c) Were the prescribed surprise examinations of the business and cash accounts carried out? Sec. 19 I (3). (d) Are these matters recorded in the minutes of the board? Sec. 20 III.— A. (a), (b), (ec), and (d) Yes. 30. Q. Are the following carried out at the proper time and in accordance with the articles?—(a) Summonses to the general meeting (b) notification of the agenda. Sec. 22.—A. (a) and (b) Yes. 31. Q. Was the balance sheet and annual statement of accounts posted for inspection of members a week before the general meeting, and where? Sec. 27 V. (Sec. 48 C. A.) Did the members receive information of this?—A. The statutory general meeting in which the balance sheet and annual accounts are made known only takes place for the first time in the month of March. 32. Q. Has the statutory general meeting taken place? Do the minutes thereof contain the whole of the business done and the resolutions passed? Secs. 22 and 23 III. (Secs. 44 and 47 C. A.)—A. See answer to previous question. 33. Q. Has the board of supervision confirmed the report of the general meeting on—(a) the annual accounts and balance sheet, and the proposals as to the appropriation of profit or loss? Sec. 191I(2). (6) As to the result of the audit of the previous year’s accounts? Sec. 19 I (4).—A. (a) See answer to 31 and 32. (6) The present is the first audit. 34. Q. Are the annual accounts and the balance sheet—(a) properly drawn up? Sec. 27 (sec. 7 (3) C. A.). (6) Have they been drawn up or examined by the committee of management and the board of supervision? Secs.131(9),191(2). (e) When was the balance sheet published? Has public notice been communicated to the court of registry? Sec. 13 I (10). (Sec. 33 C. A.)}—A. (a) and (b) Yes. (c) This has not yet occurred, but will not be neglected. 35. Q. In the resolutions adopted as—(a) to the appropriation of profits were the prescribed limitations observed? Sec. 30. (b) Were the proportions laid down by the articles written to the foundation or reserve funds? Sec. 30. (c) And especially in regard to any payment of interest on paid-up capital, were the limitations laid down by law observed?—A. (a), (6), and (c) These matters will be the subject of resolution at the forthcoming general meeting. 36. Q. Has the secretary furnished the caution money required by the articles in a satisfactory manner? Sec. 24 I.—A. Arranged by surety. 37. Q. Has the secretary a—(a) credit on current account with the society? (b) If so, are such withdrawals effected only on the instruction of the chairman?—A. (a) No. (b) — 38. Q. (a) What form of bookkeeping is in use? (6) Are the books properly kept according to the rules for guidance in the book of instructions?—A. (a) The books are kept according to the system of the national union. (b) The books are kept by the secretary in the most perfect order. 39. Q. (a) Have errors in the accounts been noted at audit? (b) Are there vouchers to cover all entries of payments? (c) Are the archives and the accounts of the association, together with papers relating thereto, preserved and in proper order? (d) Was the cash in order? What were the total receipts? What were the total payments? What is the balance in hand? (e) How are any differences to be explained?—A. (a) Of no consequence, as the individual small errors which had crept into the accounts had already been corrected by the secretary himself. (b)and (c) Yes. (d) Strictly in agreement with the books as closed as under receipts, £252 88. 9d.; payments, £222 10s. Od.; balance in hand, £29 18s. 9d. (e) No occasion for explanation. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 447 40. Q. (a) Is the monthly balancing of receipts and payments in the daybooks regularly carried out by the chairman or his deputy and the secretary and signed? And in doing this was the actual cash in hand always checked? (b) Are these monthly balancings contained in the minutes of the committee of management? Sec. 14 (2).—A. (a) and (b) Yes. 41. Q. (a) Is a fire and burglar proof safe provided in which both books and documents may be kept? (6) Does the chairman and the committee keep a control book or duplicate of the daybook?—A. (a) ‘A fire and thief proof safe is not yet provided—one is on order and its arrival is daily expected. (6) The chairman of the committee keeps a duplicate of the daybook. 42. Q. Are the following properly drawn up and kept: (a) The lists showing date of maturity. Sec. 33 I. (6) The lists of debtors and sureties. Sec. 331. Does it appear therefrom that the same names occur on opposite sides of the account as debtors and sureties in such a way as to cause misgiving?—A. (a) and (b) Yes. The names of borrowers are not found to any serious extent as undertaking surety responsibilities for other borrowers. 43. Q. (a) Have purchases for common account been properly entered, and is the cash account of these transactions in order? (6) Have arrears arisen therefrom and are they correctly stated? Ifso, to what amount and in what years? (c) Were the funds of the association temporarily used for some other purpose? Ifso, what?—A. (a) Yes. (6) The arrears are correctly set out. These amount at this date to £4 18s. from 1903. (c) For the acquisition of titles of property purchases. 44, Q. (a) Were surplus funds deposited in proper time with the central bank? Sec. 31 I. (6) Is the cross account with the same in order, and are the requisite vouchers to hand? (c) Does the credit taken from the Central Bank appear secured, or what objections may be raised against the credit granted?—A. (a) and (b) Yes. (c) Absolutely no suspicion exists as to the solvency of the association on this head. 45. Q. Is the association affiliated to the Central Loan Bank, or to what other cooperative banking institution? Does it maintain besides banking relations with other banks or loans societies?—A. The association is affiliated to the Central Loan Bank and has no money dealings with any other bank. 46. Q. When was the association founded and when affiliated to the National Union?—A. The association was founded on September 8, 1903, and affiliated to the National Union September 30, 1903. 47, Q. What form of articles has the association, and what modifications has it made in them?—A. The new Bavarian Normal Articles without modification. 48. Q. (a) Have the instructions resulting from last year’s audit been carried out? (0) Was the board of supervision present at his present audit? Section 19 1 (4). (c) Was the report of audit communicated to the court of registry?—A. (a) The present audit is the first. (6) Yes. (c) It will be as soon as completed. 49. Q. What period did the audit cover reckoned from the date of foundation or from the last audit?—A. The period from the foundation of the association (Sept. 8, 1903) to the present date. 50. Q. For what further remarks does this audit give occasion?—A. None. Grunau, February 3, 1904. ALBERT OSTERKORN, Union Auditor. (The undersigned) certify that they have been made acquainted with the contente of the above minutes of audit. Matruias Houz1, Vireit Fax, Avucust Jore, Urnsan Scnoprr, Aurons KLEIN, Committee of Management. JoserH HILueER, Lro JacEr, Henrico Bauer, Karu Freunp, Xaver Braun, JoHann Marer II, JoserH MERK, Kaspar Lane, Board of Supervision. Ators ScHwarz, Secretary. SCHEME OF AUDIT OF THE ACCOUNTS OF THE RAIFFEISEN ASSOCIATIONS. [As framed by the Raiffeisen Federation in 1908.] The principles of audit of the Raiffeisen Associations are as follows: A. Duties or AupIToRs. 1, The inventory of the cash balances, stock of securities, and the balance of goods on hand. 2. The examination of the bookkeeping as to its completeness and conformity with instructions. 3. The examination of the accounts and of the balance sheet with reference to extracts from the books and the annual statement. ; ; 4, Testing whether the recommendations made at the last audit have been carried out. 5. The examination of the lists of debtors and sureties. 6. Checking the debtor and creditor accounts by comparing selected items with the returned pass books. 448 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 7. The examination of all accounts, with the personal collaboration of members of the administrative organs, viz: (a) The loan account in respect of—(1) the securities furnished; (2) the payments of installments and interest. (b) Current accounts in respect of—(1) the securities furnished and the maintenance of the limits of credit to be granted; (2) the activity in the accounts; (3) whether the sums carried forward are correct after comparison with both sides of the account. (c) The goods account in respect of—(1) the securities furnished and the maintenance of the limits of credit to be granted; (2) payments. 8. The testing of the liquidity of the society’s funds. 9. Examining the conduct of the business and its agreement or otherwise with legal provisions and the articles of associa- tion, and also with the resolutions of the general meeting: (a) As regards committee of management—(1) the holding of meetings and the due entry of resolutions in the minutes thereof; (2) dealings with the court registry; (3) granting of credits and maintenance of the limits of credit as laid down; (4) maintenance of the limits of borrowing by the society; (5) report on the audit by the union and removal of the as of the goods in stock; (6) preparation of the balance sheet at the proper time and in the correct manner. (6) As regards the board of supervision—(1) the holding of meetings and the due entry of resolutions in the minutes thereof; (2) supervision of the acts of the committee of management and of the secretary; (3) examination of outstanding claims; (4) examination of the statement of accounts and balance sheet; (5) report on the audit by the union and removal of the deficiencies noted; (6) maintenance of the maximum credit limits; (7) approval of all grants of credit to members of the committee of management or to the secretary, as well as of the sureties offered in each such case. (c) As regards the general meetings—(1) the summoning and holding of meetings according to regulations, and the due entry of resolutions in the minutes thereof; (2) the elections to the organs of administration; (3) the carrying out of alterations in the statutes in a regular manner; (4) the fixing of limits for the taking up of loans and the granting of credit; (5) approval of the statement of accounts and the balance sheet, release of the committee of management and of the secretary from their liabili- ties in respect thereof, the taking of decisions as to appropriation of profits and losses. 10. The holding of a meeting in common with the organs of administration at the close of the audit; the discussion in detail of the results of the audit with the report of the audit before them. B. Duties oF THE UNIONS. 1. Drawing up the reports of audits, preparation of letters of advice based on the results of audits, and supervising the observance and carrying out of such advice. 2. In grave cases to order a more frequent visitation of the cooperative society and the drawing up of written reports on its position to the organs of administration. 3. In case of continued mismanagement of a cooperative society to threaten it with expulsion from the union and, in case of need, to make a motion for its expulsion before the competent organ of the union. The audit of the books is, as is well known, made entry by entry. For a past business year for which the statements of accounts and balance sheet, with the appended vouchers, are already to hand, an alteration has been made to the effect that the entry-by-entry audit of the books may, at the discretion of the audit union, be omitted; an exact audit of all vouchers must be retained as a matter of course. If the entry-by-entry audit of the books is omitted for the past business year, then the audit is to be extended to the following: 1. Additions of the items in the daybook. 2. Checking of all entries by the secretary in the books of payments and receipts. 3. Checking of the year’s balance as shown by the daybook. 4, Checking of the agreement of the abstract of accounts with the account books (previous and final balances and sum of the accounts). 5. Checking of the addition of the abstract of accounts. 6. Checking of the statement of accounts and balance sheet with the abstract of accounts and the statement of the year’s working. FORMS FOR STATISTICAL RETURNS (AS USED BY IMPERIAL FEDERATION), A. Savines anv Loan Bangs. . The seat of the society: . The name (title in full): ———. . The nature of the liability: ———. . The year of foundation: 3 . The number of members at the end of the year: . The total assets (exclusive of any deficit) at the end of the year: £ . The total liabilities (exclusive of net profits) at the end of the year: £ 2 . Profits of the year (difference between (6) and (7)): £ , or 9. Losses of the year (difference between (7) and (6)): £ 10. Outstanding credits to members on current account at the end of the year: £ 11. Accounts outstanding with members for fixed term (on promissory notes, bonds, and other loans granted) at the end of the year: £ Under this head: (a) Credit granted on mortgage security: £ (b) Advances on real property transactions: £ 12. Deposits of members with the society on current account at the end of the year: £ 3 13. Savings deposits with the society at the end of the year: £ 14. Reserve fund and working reserve (special fund) at the end of the year: £——— OND WH 15. 16. 17. 18. 19. (a) (b) 20. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 449 Share capital (sums credited to members’ accounts included) of the members at the end of the year: £ . Total capital proper (i. e., 14-15) at the end of the year: £ < Total turnover (incomings and outgoings together): £ Total amount of payments to members on current account during the year: £ Total amount of loans for fixed term to members during the year (on promissory notes, bonds, etc.): £———-. Under this head: Credit on mortgage security: £ : Advances on property transactions: £ Total payments by members on current account in, the year: £——. 21. Total amount of repayments by members on loans for fixed term during the year: £———. Under this head: (a) () 22. Credits on mortgage security: £ Advances on property transactions: £ F Total amount of savings deposits made during the year: £ 23. Establishment charges for the year—salaries, postage, allowances, traveling expenses, and the like, but not including carriage of goods or dividends: £ 24. Value (purchase price) in the year of the agricultural requisites supplied by the society: £———. 25. oN e o: hand): oN Onan» s 21. . Seat of the society: . . Name (trading title in full); ———. . Nature of liability: . Reserve fund and working reserve (special fund) at the end of the year: £ Liabilities arising out of engagements to collect bills: £ ’ B. AGRICULTURAL SUPPLY AND SALE SOCIETIES. Year of foundation: Number of members at the end of the year: . Total assets (exclusive of any deficit) at the end of the year: £ ; . Total liabilities (exclusive of net profits) at the end of the year: £ : . Profits of the year (difference between 6 and 7): £ ; or Losses of the year (difference between 7 and 6): £ . Reserve fund and working reserve (special fund) at the end of the year: £ : 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. of carriage of goods or dividends): £ 21. Share capital (paid-up share capital) of the members at the end of the year. £ 3 Total capital proper (that is, 10-411) at the end of the year: £ . Value (purchase price) of goods supplied during the year: £ : Quantity of manures supplied during the year—in hundredweights: Quantity of feeding stuffs supplied during the year—in hundredweights: Quantity of seeds supplied during the year—in hundredweights: —. Value (sale price) of the agricultural produce of members sold during the year: £ Quantity of corn sold during the year: hundredweights. Quantity of potatoes sold during the year: hundredweights. Establishment charges for the year (salaries, postages, allowances, traveling expenses, Book value of the property (land, buildings, implements, tools, and of other live and £ i: C. Darry COOPERATIVE SOCIETIES. . Seat of the society: f . Name (trading title in full): ———. . Nature of liability: . Year of foundation: : . Number of members at the end of the year: . Total assets (exclusive of any deficit) at the end of the year: £ z . Total liabilities (exclusive of net profits) at the end of the year: £ 5 . Profits of the year (difference between 6 and 7): £ ; or Losses of the year (difference between 7 and 6): £ Share capital (paid-up share capital) of the members at the end of the year: £ ; _ Total capital proper (that is, 10+11) at the end of the year: £ : _ Number of cows (notified by) all members and persons delivering milk: ——. _ Are all branches of dairy work carried on or are the operations limited? . The quantity of milk delivered at the dairy during the year—in kilos or liters: . Quantity of milk sold (new milk) during the year—in kilos or liters (1.76 pinta): . Quantity of butter produced during the year—in kilos (2.2 pounds): . Quantity of new milk converted into cheese—in kilos or liters: Quantity of separated milk made into cheese or worked up as curds—in kilos or liters: . The gross receipts of milk and dairy products during the year— (a) In case of the return of separated milk to members without payment. (b) Taking into account the value of the separated milk returned to members, at Gross receipts as an average per kilo or per liter of milk delivered. 95273°—S. Doc. 17, 63-1——29 Is any subsidiary busineas done? and the like. but exclusive dead stock, and supplies in d. per liter. 450 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 22. Amount paid for the total milk in the year, inclusive of supplementary payments— (a) When the separated milk is returned free to the members. (b) By adding the value of the separated milk at d. per kilo or per liter. 23. The money yield of the milk per liter or per kilo: £ ; 24. Office and dairy expenses during the year, exclusive of cost of transport to dairy: £———. 25. Office and dairy expenses per liter or per kilo of milk: £ 3 26. Payments for delivery of milk at the dairy: £ : 27. Written off under depreciation for the year: £ : 28. Book vlaue of the property (site, buildings, machines, implements, and other live and dead stock at the end of the year) £——-. 29. Value (purchase price) of the agricultural raw materials supplied through the dairy for members: £———. D. OrgEeR COOPERATIVE SOCIETIES. . The seat of the society: . Name (trading title in full): ——— . Nature of the liability: . The year of foundation: Branch of activity of the cooperative society: ——— Number of members at the end of the year: . Total assets (exclusive of any deficit) at the end of the year: £ . Total liabilities (exclusive of net profits) at the end of the year: £ 9. Profits of the year (difference between 7 and 8): £ 10. Losses of the year (difference between 8 and 7): £ 11. Reserve fund and working reserve (special fund) at the end of the year: £ 12. Share capital (paid-up share capital) of members at the end of the year: £ 13. Total capital proper (that is, 11+-12) at the end of the year: £ 14. Total turnover (incomings and outgoings together): £ 15. Value (sale price) of goods sold by the Cooperative Society to or for their members: £: 16. Office expenses and expenses of working for the year: £ 17. Book value of property (land, buildings, implements, tools, and of live and dead stock, and goods in hand, belonging to the society at the end of the year: £ CONTRIBUTIONS OF AFFILIATED SOCIETIES TO UNIONS. ONAN ONL PoMERANIAN UNION OF AGRICULTURAL COOPERATIVE SOCIETIES AT STETTIN. On 17 June, 1912, the general meeting of the Pomeranian Union resolved as follows: 1. To levy the following contributions from the affiliated cooperative societies: (a) The Pomeranian Provincial Cooperative Bank, £375; the Pomeranian Agricultural Central Society, £375; the Pome- ranian Spirit-Selling Society, £75; the Sale Union of North-German Dairies, £50; fhe Pomeranian Colonization Co., £50. (b) Agricultural Sale and Supply Societies a fixed contribution of £5 plus a contribution of one-twentieth per cent on all transactions beyond £2,500, one-fiftieth per cent on grain-selling business above £2,500, and 1 per cent of net profits, with @ maximum contribution of £150. (c) The contributions of the rural savings and loan banks to be composed of 14d. per £50 of total turnover plus 1 per cent on the profits of the business (gross profit) with a combined minimum contribution of 15s. and a maximum of £7 10s. (d) Distilleries with an output of not more than 14,250 gallons, £3 15s.; for every 190 gallons above this amount 1s. addi- tional up to a maximum of £10. (e) Starch factories one-twentieth per cent on the total turnover, with a minimum of £5 and a maximum of £25. (f) Societies of independent artisans (handwerker) a fixed contribution of £1 10s. and one-twentieth per cent on goods sold. (g) Building societies, £1 10s. (h) Machine factories, one-twentieth per cent on the goods sold, with a minimum of £5 and a maximum of £25. (i) The electric power stations of: Massow, £15; of Lottin and Schojow, £5 each; and of Krussow, £2 10s. (k) Steam plowing societies, £2 10s. (1) Limestone works, £5. (m) Cattle-selling societies, £2 10s. (n) Emery factory at Treptow a. R., £1 10s. (0) Inn society of Belgard, £1 10s. (p) Horse-breeding societies and others not otherwise specified, lis. (q) Stolper Bank, £15. 2. Cooperative societies founded in the course of a financial year shall pay for that financial year as well as for the next ensuing, only the fixed contribution; the same may, however, on application, be altogether remitted to individual societies for the first year by the committee of the union in consideration of their business position, upon proposal made, and reduced for the same year. 3. The results of the working of the last financial year shall be taken for fixing the amount of the union contributions for 1912. 4. Such cooperative societies and companies as can not become members of the union, but have bound themselves to present to the competent court of registry that expert as auditor whom the union shall decide upon and fulfill the other duties incumbent on members, shall have the amount of their contribution fixed by the committee of the union. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 451 By a resolution of the general meeting on July 10, 1910, all cooperative societies are bound, upon the request of the director of the union, to submit their business books to accountancy audit at the book-examining office of the union, unless such examination shall take place at the office of the local society. (By similar resolution of April 20, 1900, a charge for an account- ancy examination of books at the office of the union was fixed at 6s. per day of 8 hours, while for a like examination at the office of the local society a charge of 12s. per day, plus traveling expenses, was authorized.) Union oF AGRICULTURAL SOCIETIES IN THE KiNGpoM oF SAXONY. The levy of the year’s contribution of the cooperative societies of the union shall be made on the following basis: I. The union contribution shall fall due in June in each year. II. Cooperative societies founded between January 1 and the date of levy shall pay a contribution of 10s. III. Cooperative societies founded in the period between the last levy date and January 1 of the current year shall pay a fixed annual contribution, viz, 15s. IV. All other cooperative societies which do not appear in the last union report—reckoned from the date of levy—shall pay £1. V. All cooperative societies which have published a balance sheet in the report of the past year shall pay 25s., provided a higher contribution is not leviable on the basis of the following regulations: (1) Loan and savings bank associations, 15s. fixed contribution with 1s. additional for every £500 of turnover. (2) Savings, credit, and supply associations contribute on the same basis as loan and savings bank associations. (3) Supply and sale cooperative societies, 15s. fixed contribution with 3d. additional for every £50 worth of goods supplied and for every £50 worth of agricultural produce sold. (4) Dairy cooperative societies, 15s. fixed contribution and 6d. additional for every 2,200 gallons of milk delivered to the dairy. (5) Miscellaneous cooperative societies, 15s. fixed contribution with 6d. additional for every £50 of turnover. VI. All cooperative societies which hold a loan of State money exceeding £500 shall pay 1s. additional for every £50 of such State money.”’ Tse Beri UNION or THE RAIFFEISEN FEDERATION. The societies affiliated to this union pay contributions on the following basis: 1. Savings and loan bank associations pay a fixed contribution of £1 and a supplementary amount of 0.18d. for every £5 of turnover. 2. Dairy cooperative societies receiving an annual supply of 165,000 gallons of milk pay 30s., with a supplement of 10s. for every further 55,000 gallons, with a maximum of £5. 3. Thrashing, horse breeding, potato-meal manufacturing, distilling, cattle selling, electricity selling, building societies, etc., pay 10s. Larger concerns pay up to £2, and very large concerns up to £5. AGRICULTURAL REQUIREMENTS SUPPLIED BY UNION ORGANIZATIONS. UNION OF AGRICULTURAL COOPERATIVE SOCIETIES OF WURTTEMBERG (REGISTERED ASSOUIATION). DEPOT.—AGENCY FOR THE SUPPLY OF AGRICULTURAL REQUIREMENTS. From repeated inquiries made by individual associations it appears that there is continual uncertainty as to the goods which can besupplied through our agency. The following list of goods is therefore published: 1. Artificial manures: Basic slag, superphosphate, kainit, potash salts, saltpeter, ammonium sulphate, nitrate of lime, bone meal, lime, gypsum, etc. 3 Feeding stuffs: All kinds of oi] cake, maize, feeding meals, lime phosphate for feeding, etc. Peat dust and peat litter. Coal, coke and briquets. Copper sulphate and sulphur. Safes. Agricultural machines of all kinds: Plows, harrows, two-wheeled hoes, rollers, cultivators, dung distributors and drills, hay and corn mowers, haymakers, horse rakes, swathe rakes, cattle-food and beet-root cutters, gristmills, oil-cake break- ers, potato steamers, hand, horse and steam thrashing machines, traction engines, straw and hay presses, band and circular saws (portable or fixed). Screens and winnowing machines, motors, liquid-manure distributers, plant waterers, wine and fruit mills and presses (also hydraulic ditto). Fruit and vegetable desiccators, cattle—floor and bridge—weighing machines, portable bakeries, smoking stoves, windlasses, hay and corn stackers, etc. 8. Dairy appliances and machinery: Complete dairy installations, conversion of hand into power installations, separators, milk and cream coolers, milk heaters, milk scales, sk’ m-milk separators, milk pumps, milk basins, measuring buckets, cans for milk conveyance, butter machines, butter workers, milk-analysis apparatus, butter boxes and parchment paper, etc. The depot is always in a position to supply goods of the best quality at the lowest prices with a full guarantee, and no one derives any profit whatever out of its business except the associations themselves. The depot will not supply individuals, but only the cooperative societies, associations, communes, etc., which take up orders for their members and deal with the depot as personal purchasers. Stuttgart (Urbanstrasse 12), December 15, 1909. Ree GROSS UMSTADT SUGAR FACTORY. The Gross Umstadt factory, which cost about £70,000 for erection and equipment, has a capacity of about 500 tons per day. (‘‘Larger” factories are estimated to deal with 900 to 1,400 tons perday.) The total sugar output in the ‘‘campaign,”’ which lasta from October to December, amounts to 100,000 centner sacks (a centner is 110 pounds, or nearly equal to a hundredweight), 452 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. representing the production of about seven times that weight of the beet root used. At the Gross Umstadt factory there are about 90 men employed in the full season, many are agricultural laborers, others artisans and workers of various principal occupations. At the end of December only the mechanics and a few others are retained to overhaul the machinery and to clean thoroughly the whole works. The undertaking was organized in 1895 by the present director, then a teacher at the Gross Umatadt Agricultural School, a3 a cooperative society with limited liability, and its membership rose to 881. Buta crisis in 1901 seriously affected the society, which was bound by agreements with its customers. A competing company was started close at hand, which by paying higher rates for the beet roots, drew away the supplies of the society when the same prices were refused by the board of supervision. Two hundred members left, and the cooperative society went into liquidation. The factory was then bought by a number of the members, who formed a limited liability company with a capital of £30,000. The seceding members had, of course, to pay their share of the losses, and were not accepted as members of the new concern, not long after the formation of which the rival company went into liquidation. The members are bound to deliver all their beet root, and must undertake to sow at least 1} acres with this crop. At the present time about 2,500 acres are devoted to ita cultivation by the members. In the district about 12 tons net (that is, trimmed) is considered the normal yield per acre, but capable cultivators obtain up to and over 16 tons per acre. Many shareholders are small capitalists living in the neighborhood. The director remarked that the undertak- ing was noteworthy as an instructive example of the inapplicability of the cooperative principle for undertakings requiring a large sunk capital as well as command of ready money for payment of wages and material. The cooperative societies act allows members to withdraw with their share capital and its attendant liability, giving only a maximum period of two years to the society to postpone the coming into effect of their notice to withdraw, but large undertakings such as a sugar factory large dairies and combinations to secure threshing machines, where large capital is necessary, must be secure from such sudden withdrawals, and must be able to look ahead and calculate upon a fixed basis of capital. Payment in full is made on three days each week during the season, the prices being fixed by the board of supervision on the basis of the actua and probable future prices. The profits, after the payment of 44 percent interest upon borrowed capital, are divided among the members who deliver beet root. These payments vary between ljd. and 24d. for each hundredweight. Nonmembers who deliver beet root do not share in the profits. The bulk of the supplies comes from the neighborhood, but some deliveries come from as great a distance as 40 miles. Upon arrival half a hundredweight of roots are taken from a truck load (or corresponding quantity), and, after washing, the samples obtained from five to six roots, by means of a special sampling rod, are tested. The smaller roots are found to yield more sugar; the larger give 15 to 16, the smaller 17 per cent of sugar. The factory disposes of the exhausted slices of beet root, which are specially dried and made fit for sale, at 5s. per hundredweight. They are used as feeding stuff, either alone or with hay or straw, cottonseed oil, or other oil foods for cattle. Four per cent of the amount delivered is given without charge to the suppliers of roots. They are also at liberty to cart away the residue from the process of clarifying the beet juice, which contains a large pro- portion of lime, and forms a valuable dressing for the land. ; EXTRACTS FROM STATUTES OF THE LAND BANK,' BERLIN. I. GENERAL REGULATIONS. ARTICLE 1. The joint-stock company “‘landbank” shall have its chief office in Berlin. The existence of the company is not limited to a fixed period. Arr. 2. The objects of the undertaking are— (a) The acquirement and sale of real estate in the German Empire for its own account and the account of others. (b) The farming of property acquired as well as the erection and exploitation of any works of any kind soever thereon or the leasing of such property. (c) The formation, on its own real estate or that of others, of holdings subject to annuity payments and the settlement thereof. . (d) Other business for the furtherance of agricultural interests. Art. 3. Real estate which is wholly or in part the property of members of the directorate or of the supervisory board of the company may not be acquired by the company. Art. 4. The notices of the company shall be valid as the result of a single publication thereof in the German Imperial Gazette, provided the law or these articles of association do not require more frequent publication. The company, however, reserves to itself the right, over and above the aforenamed notices, of publication in newspapers to be selected from time to time by the supervisory board, of which two shall be Berlin newspapers. The legal validity of such notices shall not, how- ever, depend upon publication in these newspapers. The form of the notices shall be regulated by articles 16 and 17 of these articles of association according as the notices in each case are issued by the directorate or the board of supervision. II. Caprrat—SHares—Bonps. Art. 5. The capital of the company shall amount to £750,000 divided into 15,000 shares to holder of £50 nominal value. Arr. 6. The capital of the company may be increased to any amount by resolution of the general meeting. Art. 7. In case of an increase of the capital the supervisory board shall decide—without prejudice to the provisions of the law—the price of issue, the term of payment, and the amount of the installments, as well as other matters connected with the issue. ' Provisional receipts to holder shall be executed for the payments made; shares shall only be delivered on the completion of such payments. Should the required payments not be made in due time, 6 per cent interest on arrears from the date on 1 This bank, which appears to be the only German commercial undertaking including as part of its regular business the purchase and sale of landed estates for the purpose of division into small holdings on the annuity principle, was founded in 1895. At the close of 1911, when its share capital stood at £1,000,000 and its bond issue st the same figure, it had purchased for its own account 370 properties with a total of 600,000 acres. 559,500 acres of whioh it had already sold. In addition it had bought for others on commission 48,500 acres. It has five provincial branches, namely, at Stettin, Dantzig, Konigsberg, Breslau, and Hanover. The extracts here translated are taken from the statutes as issued in 1905. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 453 which the payment became due, together with a regulation fine of 10 per cent of the outstanding amount, is to be levied. The regulation fine may be reduced or remitted by the supervisory board on reasonable grounds. The directorate is authorized with the consent of the supervisory board and according to the provisions laid down in the commercial code—after claiming payments three times without effect—to declare the defaulting shareholders to have forfeited their rights to the allotment and to the sums already paid, in favor of the company. In place of the provisional receipts issued for the installments paid, which latter shall be publicly announced by their numbers as annulled, new receipts shall be issued and disposed of to the best advantage. For any loss thereon the defaulting shareholder—or the predecessor in his rights—remains liable to the company. Any surplus on the sale above the amount of the payments in arrear shall fall to the reserve fund of the company. Arr. 8. The company is authorized, on resolution of the supervisory board, to issue bonds. Such bonds shall be personal and to banker’s order unless bearer bonds by special privilege are permitted. The nominal value of the bonds, the rate of interest, the details as to terms of maturity and amortization, shall from time to time be settled, and made known by the directorate subject to the approval of the supervisory board. The calling in of the bonds requires the consent of the supervisory board. Ant. 9. The set form of all shares and bonds, provisional receipts, dividend certificates and coupons, shall be determined by the supervisory board. This body may also decide that the necessary signatures shall be partially executed in facsimile. Arr. 10. Publication of the loss or destruction of shares, bonds, or provisional receipts, shall be made as the law directs. After notice of annulment made in due legal manner fresh papers shall be executed at a charge to be fixed by the supervisory board. The expenses of the procedure shall fall not upon the company but upon the shareholder. . Should shares, bonds, provisional receipts, dividend certificates, coupons, or talons, become unfit for circulation in consequence of damage or defacement, provided the essential contents and the distinguishing marks of the document can still be recognized with certainty, the person entitled may claim from the company the issue of fresh papers on surrendering those damaged or defaced. He must bear the expense thereof and make payment in advance. With the exception of these cases, the execution and issue of new shares, provisional receipts or bonds in the place of others which have been damaged or lost, is only permissible when the nullity of the same has been announced in due legal form. Arr. 11. The company recognizes one holder only of each share, bond, or provisional certificate, and has the right. but is not bound, to require the bearer of shares, bonds, provisional receipts, talons, coupons, or dividend certificates, to prove his right to them. Arr. 12. By allotment or acquirement of shares or provisional certificates, the shareholder submits himself to the ordinary legal position of the company in all disputes with the company or the organs thereof. Arr. 13. Dividend certificates on shares and the coupons of bonds are invalid if they are not presented for payment within four years reckoned by December 31 of that year in which they fell due, and the amounts in question fall to the credit of the company. Mislaid or destroyed dividend certificates and coupons can not be declared void by process of advertisement. If a dividend certificate or coupon be mislaid or destroyed, and the then holder have notified the loss to the company before the expiry of the four years presentation term, he may after expiry of the term demand payment from the company. The claim is excluded if the mislaid certificate or coupon is presented to the company for payment or the claim to the certificate or coupon is made good before a court of law, it may then be that the presentation or legal proof of the claim may be made after the expiry of the term. Right of claim lapses in four years. A formal legal announcement of damage to or loss of talons is not allowable. Fresh talons to a share or bond shall not be issued to the holder of the talons qualifying for the right to dividend certificates or talons if the holder of the share or bond have objected thereto. The talons are in this case to be issued to the holder of the share or bond when he presents the said share or bond. III. ADMINISTRATION. (a) DIRECTORATE (COMMITTEE OF MANAGEMENT). Arr. 14. The directorate (committee of management) has all the rights and duties which pertain to the committee of man- agement of a limited liability company under the commercial code. Art. 15. The directorate shall consist of two or more members nominated by the supervisory board. The nomination is made as a notarial document and must be published. The supervisory board may direct the necessary appointment of deputies for the members of the directorate, as well as the appointment of authorized substitutes or agents. The names of the deputies or authorized substitutes whose nomination is to be drawn up in notarial form must be published. (b) SUPERVISORY BOARD. Arr. 17. The supervisory board shall consist of at least 8 but of not more than 15 members elected by the general meeting. The election of the same shall take place, as a rule, at the ordinary general meeting at an interval ending with the fourth ordinary general meeting following the election. Two members at least shall retire annually in as far as possible regular suc- cession, Until the order of retirement is arranged it shall be decided by lot. Retiring members are eligible for reelection. So long as the number of members of the supervisory board stands at eight or more a fresh or supplementary election need not be held. Art. 18: The members of the supervisory board receive no salary. They may be reimbursed expenses incurred in the execution of their duties and receive a commission under article 32 of these statutes. The distribution of this amount to the members is governed by a regulation to be decided upon by the supervisory board. Arr. 22. In addition to the general supervision of the business of the bank and other duties assigned by this statute, the following matters appertain to the competence of the supervisory board (without prejudice to any legal enactments): 1. The appointment and dismissal of directors and officials to whom powers of attorney have been granted, as well as approval of same. 454 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 2. The approval of the annual salaries account as submitted by the directorate, as well as the confirmation of the nomina- tion of all officials receiving a salary of £150 and over, appointed for a period of over three years, or respecting whom a period of notice of over three months has been arranged, as also the grant of extraordinary remuneration, commissions, or pensions to the directors or office officials. 3. The issue of instructions for the directorate in which the rules for governing their common counsels and resolutions, the principles for the conduct of business, and the bases of monetary transactions shall be laid down, as well as of provisions concerning the acquisition and sale of real estate not exceeding £750 in value; the acquisition, sale, pledging, and cancella- tion of capital entered in the mortgage register; plans for working and new works, and the execution of contracts. 4. To detail one or more members of the board for special departments of their business, especially for audits; to appoint one or more subcommittees out of its body, and to transfer by special proxy special businesses or categories of business to such committee or committees; to appoint to the directorate, out of its body, but only for a period determined before, a substitute for any member of the directorate unable to act. 5. To acquire and dispose of real property exceeding £750 in value. 6. To examine the balance sheet and profit and loss accounts for submission to the general meeting; to move the appro- priation out of profits for special reserve and the dividend to be paid. 7. To dispose of the special reserve in accordance with section 34. Art. 32. Out of the net profits yielded shall be written— 1. Five per cent to the legal reserve fund, so long as this shall not exceed 10 per cent of the capital. 2. Further, such reserve moneys as the supervisory board may propose, to the special reserve (art. 34), or to other reserve funds still to be formed. 8. To a fund to be established by the company for the grant of subsidies for supplementary expenditure in the settlement for distribution among the shareholders. 4. From any surplus still remaining— (a) Four per cent dividend to shareholders. (b) Ten per cent of the balance to the supervisory board. (c) Any balance as supplementary dividend to shareholders. Payment of dividends shall be made at latest in the course of the July following the close of the financial year. Arr. 33. The reserve fund to be formed under article 32, section 1, is to be solely devoted to the covering of any losses shown by the balance sheet. To it shall also be written such profit as may arise from an increase of the total capital by the issue of shares at above their nominal value. Art. 34. By resolution of the supervisory board extraordinary loss or expenditure may be debited to the special reserve formed in accordance with article 32. BIBLIOGRAPHY. MORTGAGE CREDIT. Lanp MortGcaGe CREDIT ASSOCIATIONS. Articles of association, valuation rules, reports or other publications of the associations in: Silesia, Brandenburg, Pomerania, West Prussia, East Prussia, Liineburg (Celle), Hanover-Hildesheim, Posen, Saxony (Province of), Westphalia, Schleswig- Holstein, Wurttemberg, Saxony (Leipzig and Dresden), and Bavaria. Hecht, F.: Die Landschaften und landschafts-ahnlichen Kreditinstitute in Deutschland. Vol. I. Leipzig. 1908. Gierke, O.: Das Deutsche Genossenschaftarecht: Rechtsgeschichte der deutschen Genossenschaft. Vol. I. Berlin. 1868. Weyermann, W.: Zur Geschichte des Immobiliar-Kreditwesens in Preussen. pp. 239. Carlsruhe. 1910. von Briinneck, W. Die Pfandbriefsysteme der preussischen Landschaften. pp. 344. Berlin. 1910. Mauer, H. Das landschaftliches Kreditwesen Preussens agrargeschichtlich und volkswirtschaftlich betrachtet. pp. 206. Strassburg. 1907. Schulte, F.: Die deutschen Bodencreditinstitute, 1900-1909. pp. 43. Leipzig. 1911. Strate, ProvinciaL, AND District Morteace Crepit Banks. The laws, statutes, rules, reports or other publications of the banks for: Hanover, Rhine Province, Cassel Administrative Dis- trict, Grand Duchy of Hesse, Saxe-Meiningen, Saxe-Weimar, Saxe-Coburg-Gotha, and Bautzen (Kingdom of Saxony). Hecht, F.: Die Organization des Bodenkredits: Die staatlichen und provinziellen Bodenkreditinstitute in Deutschland. 2 vols. 639 and 486 pp. Leipzig. 1891. Der Europaische Bodenkredit. pp. 452. Leipzig. 1900. Jahrbuch des européischen Bodenkredits. Leipzig. 1909. Troch, E.: Die wirtschaftliche Bedeutung der staatlichen und provinziellen Bodenkreditinstitute in Deutschland fir den landlichen Besitz. pp.152. Jena. 1905. Franken, C.: Der Staat und die Hypothekenbanken in Preussen. Leipzig. 1904. Schulte, F.:; Die deutschen Bodenkreditinstitute, 1900-1909. pp. 43. Leipzig. 1911. Joint Stock Morteace Bangs. Imperial Mortgage Bank Act. 1899. Company agreements, valuation rules, reports or other pulications of: Preussische Zentral Bodenkredit-Aktiengesellschaft (Berlin), Bayerische Hypotheken-und Wechselbank (Munich), Bayerische Handelsbank (Munich), Siiddeutsche Boden- kreditbank (Munich), Aktiengesellschaft ftir Boden und Kommunalkredit (Strassburg), Pfailzische Hypothekenbank (Ludwigshafen), and Rheinische Hypothekenbank (Mannheim). Hecht, F.: Die Organisation des Bodenkredits in Deutschland: Die Hypothekenbanken. Vol. VI. Berlin. 1901. Schulte, F.: Die deutschen Bodenkreditinstitute. See above. Savinas Banks. Prussian Regulations: Bavarian, Saxon, Hessian, and Alsace-Lorraine Laws. Statutes and rules of numerous banks as well as model statutes authorized for various Prussian provinces. Die Sparkasse. Organ of the German Savings Banks’ Union. (Twice monthly.) Der deutsche Sparkassenkalendar. Die preussischen Sparkassen im Rechungsjahre, 1909. G. Evert. Berlin. 1911. Gotting. Der Geschiftsverkehr der 6ffentlichen Sparkassen. pp. 48. Hanover. Miller, G.: Handbuch fiir die séchsischen Sparkassen. pp. 209. Leipzig. 1908. von. Knebel-Déberitz, H.: Das Sparkassenwesen in Preussen. pp. 228. Berlin. 1907. CreDIT FoR LAND IMPROVEMENT AND Prussian Provinciat Arp BANKs. Laws in Prussia, Bavaria, Saxony, Hesse, and Oldenburg. Statutes of Silesian Land Improvement Annuity Bank. Wesche, G.: Die Organization des Meliorationskredits im Deutschen Reiche. pp. 461. Halle. 1907. Heiligenstadt, C., and Kautz: Landlicher Melioratons und Bankredit im Deutschen Reiche. pp. 232. Berlin. 1907. von Haag: Bayerische Landeskulturrentenanstalt. pp. 205. Munich. 1911. Rent CHARGE BAnKs. Die preussischen Rentengutgesetze und Bestimmungen. INSURANCE INSTITUTIONS. Heiligenstadt, C., and Kautz: Bau-und Meliorations Credit in Deutschen Reiche. pp. 232. Berlin. 1907. 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Imperial Federation: Jahrbiicher. 1895-1912. - Die Festschrift zum 25 jahrigen Bestehen des Reichsverbandes. 1883-1908. pp. 306. —— Taschenbuch fiir landwirtschaftlichen Genossenschaften. pp. 557. 1910. Die deutsche landwirtschaftliche Genossenshaftspresse. (Twice monthly.) Deutsche landwirtschaftliche Genossenschafts-bibliothek. (20 volumes.) Model articles and rules for all kinds of cooperative societies: collection of rules for court transactions, Raiffeisen Federation: Jahresberichte. 1900-1912. Das land wirtschaftliches Genossenschaftsblatt. (Twice monthly.) Raiffeisen Kalender. (Annual.) Raiffeisen-Bibliothek. (17 volumes.) Model articles and rules for all kinds of Societies. Handbook for Conduct of Business of Raiffeisen Savings and Loan Bank Associations. 9th edition. Neuwied. 1906. Wuttig, A.: F. W. Raiffeisen. pp. 84. Neuwied. 1907. Schulze-Delitzsch Federation: Jahrbiicher. 1892-1912. Blatter fiir Genossenschaftswesen. (Weekly.) 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Zeidler.: Geschichte des deutschen Genossenschaftswesens der Neuzeit. pp. 478. Leipzig. 1893. Verein fir Socialpolitik: Der Personalkredit des landlichen Kleingrundbesitzes in Deutschland. 2 vols. pp. 414 and 456. Leipzig. 1896. Heiligenstadt, C.: Die Preussische Central Genossenschaftskasse. pp. 102. Jena. 1897. Ertl, M., and Licht, 8.: Das landwirtschaftliche Genossenschaftewesen in Deutschland. pp. 989. Vienna. 1899. Miller, F.: Die Geschichtliche Entwickelung des landwirtschaftlichen Genossenschaftswesens in Deutschland von 1848 bis zur Gegenwart. pp. 552. Leipzig. 1901. Fassbender, M.: F. W. Raiffeisen in seinem Leben, Denken, und Wirken. pp. 285. Berlin. 1902. Criiger, H.: Vorschuss- und Kreditvereine als Volksbanken. 7 Ed. pp. 426. Berlin. 1904. Leonhard, R.: Kornhauser und Getreidehandel. pp. 201. Munich. 1906. Séchting: Das landwirtschaftliche Genossenschaftswesen in der Provinz Sachsen. pp. 341. Halle. 1906. Hugenberg, A.: Bank und Kreditwirtachaft des deutschen Mittelstandes. pp. 121. Munich. 1906. Criiger, H.: Einfuhrung in das deutsche Genossenschaftswesen. pp. 397. Berlin. 1907. Zimmermann, K.. Die ‘‘Bank Przemyslowcéw” in Posen. pp. 148. Posen. 1907. Grabein, M.: Wirtschaftliche und sociale Bedeutung der landlichen Genossenschaften in Deutschland. pp. 195. Tiibingen. 1908. Lindecke, O.: Das Genossenschaftawesen in Deutschland. pp. 144. Leipzig. 1908. Sohnrey, H.. Wegweiser fiir landliche Wohlfahrts- und Heimatspflege. 3 Ed. pp. 494. Berlin. 1909. Finck, R.: Das Schulze-Delitzsch Genossenschaftewesen und die modernen genossenschaftlichen Entwickelungstendenzen. pp. 368. Jena. 1909. Bussen, F.: Landwirtschaftliches Genossenschaftswesen. pp. 136. Hanover. 1909. Bernhard, L.: Das polnische Gemeinwesen im preussischen Staat. 2 Edit. pp. 620. Leipzig. 1910. Sparr, K.: Das landwirtschaftliche Genossenschaftewesen in der Proving Pommern. pp. 200. Stettin. 1911. Wygodzinski, W.: Das Genossenschaftswesen in Deutschland. pp. 284. Berlin. 1911. Schonitz, H.: Der Kleingewerbliche Kredit in Deutschland. pp. 542. Carleruhe. 1912. Parisins und Criiger, H.: Das Reichgesetz, betreffend die Erwerbs- und Wirtschafts genossenschaften. Berlin. 1911. AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. 457 LIVE-STOCK INSURANCE. Imperial laws: ' Gesetz tiber die privaten Versicherungsuntersichmungen. 1901. Gesetz tiber den Versicherungavertrag. 1908. Viehseuchengesetz. 1909. State laws: Bavaria: Viehversicherungsgesetz. 1896 (as finally amended in 1912). Pferdeversicherungsgesetz. 1900 (as finally amended in 1910). Baden: Viehversicherungsgesetz. 1890 (as finally amended in 1910). Saxony: Gesetze, die staattiche Schlachtviehversicherung betreffend, 1898 and 1906. Model statutes adopted by organizations in various parts of Germany. Rules of the Prussian Saxon Re-Insurance Union. Festschrift der bayerischen éffentlichen Landesanatalten fiir Brand, Hagel, und Viehversicherung. Munich. 1906. Die Landwirtschaft in Wirtemberg. Stuttgart. 1908. Reports of the Bavarian and Baden local organizations over a period of years. Ehrlich, H.: Die Viehversicherung im Deutschen Reiche. 560 pp. Leipzig. 1901. Manes, A.: Versicherungslexikon. 2-vols. Tiibingen. 1909. Das Versicherungswesen. pp. 146. Leipzig. 1911. Moldenhauer, P.: Das Versicherungswesen. pp. 151. Leipzig. 1905. GENERAL WORKS OF REFERENCE. Luck, G.: Die Viehversicherung in Siiddeutschland. pp. 164. Tiibingen. 1908. Handworterbuch der Stattswissenschaften. 8 vols. Jena. 1909-10. Worterbuch der Volkswirtschaft. 2 vols. Jena. 1911. Meitzen, G.: Der Boden und die landwirtschaftlichen Verhaltnisse des preussischen Staats. 6 vols. Berlin. 1868-1906. Roscher, W.: Nationaloekonomik des Ackerbaues. 13 Edition, by H. Dade. pp. 864. Stuttgart. 1903. Buchenberger, A.: Agrarwesen und Agrarpolitik. 2 vols. (pp. 615 and 641). Leipzig. 1892-93. von der Goltz, T.: Agrarwesen und Agrarpolitik. 2 Edition. pp. 330. Jena. 1904. Hecht, M:: Die Badische Landwirtschaft am Aufang des XX Jahrhunderts. pp. 262. Carleruhe. 1903. Kautsky, K.: Die Agrarfrage. pp. 451. Stuttgart. 1899. David, E.: Sozialismus und Landwirtschaft. Vol.1. Die Betriebsfrage. pp. 703. Berlin. 1903. Bankenquéte Kommission, 1908-9. 3 vols. (especially volume: Materialien zur Frage des Depositenwesens. pp.304). Berlin. 1910. Riesser, J.: Die deutschen Grossbanken und ihre Konzentration in Zusammenhang mit der Entwickelung der Gesamtwirtschaft. in Deutschland. 3Ed. 715 pp. Berlin. 1910. ; Statistiche Jahrbiicher for: The German Empire, Prussia, Bavaria, Saxony, Hesse, Baden, Wurttemberg, Alsace-Lorraine. WORKS IN ENGLISH. Nicholson, Sir Frederick A.: Report Regarding the Possibility of Introducing Land and Agricultural Banks into the Madras. Presidency. 2 vols. (pp. 408 and 291). Madras. 1895-1897. Smith, Herbert G.: The Best Methods of Organization for Agricultural Cooperation and Credit. pp. 102. Dublin. 1903. Montgomery, H. de F.: Notes on Agricultural Cooperation and Cooperative Agricultural Creditin Germany. pp.108. Dublin. 1906. United States National Monetary Commission: Miscellaneous Articles on German Banking. pp. 478. Washington. 1910. Interviews on the Banking and Currency Systems of England, Scotland, France, Germany, Switzerland, and Italy. , pp. 541. Washington. 1910. International Institute of Agriculture: Monographs on Agricultural Cooperation in Various Countries. Rome. 1911. Fay, C. R.: Cooperation at Home and Abroad. pp. 403. London. 1908. Plunkett, Sir Horace: Ireland in the New Century. London. 1905. Pratt, E. A.: The Organization of Agriculture. pp. 443. London. 1905. The Transition in Agriculture. pp. 340. London. 1906. Russell, G. W.: Cooperation and Nationality. pp. 104. Dublin. 1912. Wolff, H. W.: People’s Banks: A Record of Social.and Economic Success. pp. 587. 3d edition. London. 1910. Cooperative Banking. pp. 301. London. 1907. Cooperation in Agriculture. pp. 378. London. 1912. 458 AGRICULTURAL CREDIT AND COOPERATION IN GERMANY. GERMANY. Area, 211,273 square miles. Population, December 1, 1910, 64,925,993. Density per square mile, 307.3. Occupations according to occupational census of June, 1907. Percentage Number. | of occupied population. Agrictilture a. 53.06.63 Sed wi siacsiane coved eelannaies stonodeaincedecdac devas soves ubeocuazsetaeaues 9, 883, 257 36. 8 Mam uisc tite occ ech ccs Soc se cae acct erred ones Ef lee od esa sis Sleeps to eile 11, 256, 254 41.9 COMMOTCE 5205252. ss ahs eA Ae cobs nisin See eae coriie saseiolie baahen y boa ee bss USER Ree 3, 477, 626 13.0 DOMESTIC SEWAGE g oc.c.cie 5 ass.a mrss svcd vere Guat rayascoceasnilesesaspinieidededpayarcreus occ 4 cise a Su S075 Sis) ate RO 471, 695 1.8 Public iser vices’ 255 cue motes ecto ecient eM vn ener ea de am on) to a3 sickavar arora temedehseacerersians 1, 738, 530 6.5 26,827, 362 100. 0 Agricultural holdings, 1907.4 Holdings. Number. Percentage. Acreage. Percentage. Und er: 14 acres: <)caciscntan wut eas J ated toluiasiones Soest evs 2, 084, 060 36.3 1, 547, 665 1.4 Jt acres’ to 5:aCress vad obese seeste Zz i : ie (-—¢=- : zB 4 2 _ > BREMEN ig fone — : Jest R J ee ( I = & st V E re == = / o Janow ee ee ee es \ a \ i : ¥ pa joOsndoriick ey f= — ? Posen ? -_ & U ees ) oy a / 5 : Sac A ae = “ ildesheint—. ex ; ae e i isfy . SL? © Miinster LIPPELA ON oy vH “sh Magdeburg — cc Sen eh et -- 0S m ~ ASaS al 8 ‘ > In hae B Re 9) SEES SPR A ae tt oe ~ Do Ne Eye j= ae ee aes fs | sserl ae yee Z : ror . ler J 7 aHalle. 5 = : ‘= War. * i ae et OTB) DSS s 2? 20 Reaper ex ord acoer® a iw #: { OLeipzig wv ) Jar : ~~ S : a oh aR ae 2a ta s B z ologneo 2 x 7 bp S c a5 S Eeficty, Weimar oy cA Sy J Uv a) = Ge Ut } = agiha KG J ae 3 eee” 5 Weegee: | Oo! Ni Pe RB SIRS un + 7 bf > OR 7 eer ‘> re f ath eo ae aa et pateiingen (4 4 Teh. 2Greiz NeuwiedQ,% : (Ay hay. e Coblencel * * os sae = a, UW ( eae L =: J t. = viedberd; CoM Fr / . Coe; Sh ~ g is Ps hpi s \ \fupg J nN, F 3 zt Wiesbaden o es sae aT APS ° Sv xy \ OQ -~ Eeaincturt A ~ pTreves & a i o Darinstadt ‘\ . A fons 2 ead Wurzbur ; J Le A Go eo Wiurebu g J é 40° 7 a S x “> . a 7 ae | see . Pee YS. ee PALATINATET AUT (4 A = i \ : Ludwigshafen Mange €im Wi = Sy ‘ ; 3 ur tag N. eae Neustadt aN aa f ScRECE a wy ) Zale cc ae r wm : BA VAR! A \ nak au . ‘ S 7 $ a '~ 4 Sate o ce zi \. \ Cc Carlsruhe : ‘ a — ¢ A ota \ ¥ S > ~— oStuttgart | =. © “. Strassburg : Bra boi a i a © Augsburg j » < é % Munich° 4 J § ‘ NE \eutkina®? © Grénenbach : > Scale of English M C : a) / a rele z 20 0 20 40 60 ea ea “ es er ee ata — XK \ ~E J \ SWITZERLAND THE NORRIS P. TERS CO. WASHINCTON, D.C GERMAN EMPIRE SWEDEN §nsterburg) \ BRS oT y 2 fy —— | = a > - = “ ! | Rises i oLeipzig cokes | —— = re reslau ti, Py | = + co ag ‘.— & \ | “3 O38 emer Le ee os ! see A a 5 | REE Stee eo ? = o Neisse 4 f | x fement Te “ 9 = : oo“ n ». : ( : =: NE NS. +1 Cose * \ upg — T XN oa = ‘g | EP Nv VV = J XN = L “PAS aie ‘\ as" zburg d : Bb & + © Nuremberg \ ye BA V A R IA \ s REFERENCE. Showing Percentage of total eultivated area occupied by Holdings of 50 Acres and under. Where 70°|, and Ea Scale of English Miles si i ia | I 0 2 40 60 80 100 Miles ie Oe 7 ce ees , 607%, , 599 LJ . 40), 499 C_] . 307%, ,, 399 E_] under 299, Senate Doc. No. {7 ; 63d Cong., Ist Sess. INDEX. A. Page. ADAttOIS..i0-50tawinwatioveclamaencapebsouniavetencaee 230 Agrarian League, the. ............0.0.0.ceeeeeeeee 134, 190 Agricultural Central Cooperative Banks (table)....... 166 Agricultural Central Loan Bank: Administration. ............000000.2..020eeeee 175-176 Bran ches sis ie.o 9 s:0:c/ccscisimieve aioaeinrsrarqars adaanmenunects 175 Capital Jc cieen fej laleeascdieersans dattetdsaneeneronannaren 175 Company, agreement of...............2.2-0----- 417-423 Development of (table)... ..........0.....2.2--- 176 Gad (OMI CE ois ieaceunsiatnvre cis elsa sina caevaamemaaeiniss 175 Management iiciciewocmscnis niseeccinteacc ete 175 Present position...........-..0.0...202ceeceeeeee 175 Raiffeisen founds................2.-2.2--- 164, 174, 265 Supervision, Board of...................20-0--00- 175 Unions, contributions to. .................2.265- 258 Working capital... .2.cc.2.00c2ghiisaenccansmanacs 175 (Cf. also Central loan bank. 5 Agricultural cooperation. ...............2.2-222-4- 189-308 (Cf. Breeding societi2s, Cattle selling societies, Corn selling or granary societies, Dairy societies, Distilling societies, Egg-selling societies, Electricity societies, Fruiting-growing and fruit-disposal socie- ties, Land improvement societies, Land purchase and settlement societies, Machine societies, Pasture societies, Potato-drying societies, Supply societies, Water-supply societies.) Agricultural Cooperation and Public Aid: Cooperative organizations, attitude of ............ 285 Nature and extent of, in: Alsace-Lorraine sos s22scsescmeusssseawe'sesieis 290 Baden. s:2escecessestossek oun euetoaamcmiee aes 289 DavVarla jo. stecascasessacwateeseeee seeks 288-289 Brandenburg......2---------+--eeeeeeeeee- 286 HANOVER os asec ices Sraisiereiesernaincinieniceeeie eee. 287 Hesse-Cassel..........------2--2- 220-22 ee eee 288 Hesse, Grand Duchy of........-..-..-------- 290 Heease-Naseauls.s.i:c s:e:s:s'sinreiaic:ccaein sosesevacevaraseinte wievernin 288 Pomeraniay 2x2 2ccsdecsee setae secoees 287 POSCH: cuesetschwasesecels saiesingracene nein ae 288 Prilséia... .... se seeweaseeckeeebiaeaesecees 285-286 Prassi4;, Bast: . .scceeesscceacans aes see's ses 287-288 Prussia; Westy... 2. ssesccasowetuscereseseeess 287 Prussian, Saxony....-..-..-------+--+--+- 286-287 Rhine Province.........-.--------0+--2++-++5 288 Saxony, Kingdom of........--.---------+-+--- 290 Schleswig-Holstein. ......-.--+--+--+-+-++-- 287 Silesia. ......-0.-e0eeeceeeee Ecvereratarshaiatatsicratahe 288 Weatphalia........0.eee---- eee eee cence ees 287 Wurttemberg.........-.-------2--e-e-e--- 289-290 State, the early attitude of, toward...........-- 284-285 State, the, recent action of, toward...........-..- 285 Agricultural cooperative socisties; contributions to UMIONS oe oieecias coiaicin's haa SESS eaieeReTE Ee eee nie 256-258 Agricultural cooperative societies of Saxony and adja- cent States, union of, constitution of.....--...------ 185 Agricultural credit. ...-..--------+20-------eeeee eee 38-188 Agricultural electricity societies. ...........------- 241-245 Page. Agricultural holdings, the Bavarian Central Bank and 178-179 Agricultural loans by Prussian Joint-Stock Mortgage ABM Ne ahd aistayeaMiass dessa as ee dase a ape lave nena aes RE 69 Agricultural machine societies..............+---0--- 245-247 Agricultural personal credit...........-.-..2-+2+5-+5- 106 Agricultural produce, sale of, by central supply organi- DAUM ODB os 2r5 cre rowan rapes cseaavasteeuge-wev cain ares Se eec eva ralenoaat 205-206 Agricultural produce, sale of, by credit societies....... 104 Agricultural requisites, Dr. Rabe’s experience on sale Ol weteciedae biciaae tle sencetavedvninminba miata cieeante ania om ore nets 222 Agricultural requisites, supplied by a central trading organization... 2... c0.0.cceeecesseeseasseeeseeseees 451 Agricultural requisites, supply society for, in Arheilgen. 136 Agricultural requisites, trading in, by credit societies.. 103 Agricultural societies, congress of..............-.---- 241, 260 Agricultural supply societies.........-...-....--..-- 189-199 Agricultural supply and sale societies, model articles and rules of association................-----+----- 428-437 Agricultural supply and sale societies, forms for statis- teal Pe ture MOR: a2 cswcccmvesc oars encasement 449 Agriculturists, German, large consumption of electric light and power by........-...---------eee eee eee 241 Agriculturists, German, sources of credit for........... 106 Aid banks, Prussian provincial................---- 91-93, 186 Alsace-Lorraine, cattle insurance in .-...-............ 318 Alsace-Lorraine, cooperative unions and State aid..... 290 Alsace-Lorraine, State aid in..................- 249, 290, 308 Altenburg Bank; thes sccssessseoesses veseeeeers eee. 55 Anklam, branch of the Pomeranian Central Couoper- Otive: Bank atures seeeeee ated ede du eaiec cae 183 Anklam, cattle-selling society of............---..-.-- 237 Anklam Supply and Sale Society. .............2.22-. 237 Apolda Cooperative Dairy Society.................-.-- 216 Arheilgen and rural credit..............--2.-20-00---- 111 Arheilgen, cooperative societies in............-....... 136 Arheilgen Savings and Loan Bank, special account of Lite WOrkI Ng sissies ieee eietnndirerand aria ieee nee --- 135-186 Arheilgen Thrashing-machine Society, notes on the... 186, 247-248 Audit, adniinistrative..................... eee ee eee 273 Audit and inspection.............2.-.222-.02522020-- 270-279 Audit contributions of cooperative societies.......... 257-258 Audit departments...................--2.--2--222 200 274 Audit reports, specimen of...............-.---.-.-- 445-447 Audit, scheme Of..............00 0. cece eee ee eee eee 447-448 Aa ULM TONS oo co se essca sca eysera ies ino e uclasayernvarernaes 253, 271 Auerbach Savings and Loan Bank, account of....... 136-137 Augsburg Agricultural Credit Association: Affiliated to the Schulze-Delitzsch Federation.... 187 Agents lores niu shaved e genes comune seest oie. 138 Aréa, extended ss 0. 0 261-262 | Land Bank, Berlin, extracts from statutes of........ 452-454 Special courses (lectures, etc.)........----.- 262-263 | Land Credit Institution for Oldenburg...............- 90 Training school for officials. ............--.--- 262 | Land department of the Bavarian Central Bank...... 178 Administration, council of...........--.----+---- 261 | Land for common pasture societies.............-----.. 250 Articles of association.......--.----------+---- 438-439 | Land improvement annuity banks................- 340-345 Committees, general.......-.-..-.-.-.-------- 260-261 | Land improvement banks.................-.02------ 87, 89 Committees, special............-...--2-0.202 eee ee 261 Bavarian act, general provisions of.............-.- 89 Composition of..-.-..--20-.22--+-22+eeee eee eee 260, 261 Bavarian Land Improvement Bank.............. 89 Congress... 2.2. 2 eee cence eect cere eee e eee e eres 260 Credit for, nature of.......---2....---202.. 22.0 85-86 Development of (table)......-.------+--++-+-+++- 259 Hesse Land Improvement Bank.................- 90 General position and work of.......-----------+- 261 Nature of credit for............2.20-220-2..0002.- 85-86 Haas, Herr, and..-.....-.-- 102, 252, 256, 259, 263, 266, 269 Oldenburg, Land Credit Institution for............ 90 Income, sources of. .....--.-.------ 2002-2 e ee eee ee 264 Prussian Land Improvement Banks.............. 87 Legal status of. .....---------+2 esse eee ence cece 260 Interest and sinking fund.............2.....-. 88 Members, rights and duties of.........---------- 260 Wats woos sven acnedisdcvanewie ves ses ee chases 87-88 Membership, conditions of..........2+----+-++-- 260 Supervision of................22.2220222- 88 Membership of (table).......----.--+--+----+- 264-265 OD) Octo visa ss cisaa-ieeciiecieecncn3 se ceneeiwiais 87 Model articles........-..-------+-- eee e ee 381-398, 428 Privileges Of: sane seise ce. recedeccs eas 87 Model service instructions and business rules for Procedure on part of borrower................. 87 PFCUIE BOCIOTIES occcc eds gence c oo keke 398-403 Security required a sherpa, drag la ela ental pita dak 88 Db ee betel sie cs oiaacadene ia seoeedaceteres 260 Prussian land improvement funds................ 86 468 INDEX. Land improvement banks—Continued. Page. | Machine societies—Continued. Page. RMU OF edelisatcccieoueeer'cocn ay ucteled eanokeueeneene 90 Thrashing-machine societies....... 136, 245, 246, 247, 248 Saxony, Land Improvement Annuity Bank of.... 88 Thrashing machine, utilization by members...... _ 247 Special institutions existing for.................- 86 Weighing machines...............0---+--0+5 -..- 149 Land improvement societies.................002-+--- 251 | Machinery, purchase of.............--2-eeeeeceeeeees 200 Stateprantstosc:4.codeeviwc a sexeae tececcae. 285-286 | Machinery purchased by central agricultural societies. 263 Land mortgage credit associations. See Mortgage credit Mannheim, granary at...........c.000c0-eeeeececeeees 227 associations, land. Manures, sale of ......-. 202. cc cece cecececececeoers 204 Land mortgage credit associations, table of........... 39-40) | Meadow-rollers:...-. cvccasvanucuivesvoes esas sweseeses 245 Land purchase and settlement societies.............. 251 | Meat production and consumption in Germany...... 223-230 Land purchase by cooperative societies ..........- :.. 108 | Mecklenburg, cooperative dairying in............-- 218, 253 Landschaften. See Land mortgage credit associations. Mecklenburg, dairy union in..............2--02002-+ 253 Land transfer, mortgage loans in connection with.... 107-108 | Milk......22 0.22.00. ccc cle cece cece eee ee eee 206-208 Lectures given by Imperial Federation........--...-.- 263 Delivery of, at dairy ccscciu cn ecodecuses ice nees 211 Legal advice and the Raiffeisen Federation............ 268 Bresh, ‘sale cob ste tarcuiuenadaiy cid sic vss sceweweeeees sees soe4 292-307 Silesia, Land Improvement Annuity Bank of, statutes DaXOMy sien aicels odes eetdes acemiemctele wie uci ce 308 Olsseteee Set et sacs eee ke Boa eho ee ee ee 375-379 Wiurttem bergen sexs cherseeenneauec aces obec 308 Silesian cooperative unions and their subventions..... 288 (Cf. also Agricultural cooperation and publicaid.) Silesian Provincial Aid Bank..........2020-0-.-22---0- 92 | Statistical forms for returns........................ 448-450 Banks, limited, utility of...............-2--2-28 93 | Steam plows. See Machine societies. Bonds guaranteed by Province.............---+-- 92 | Steam-plow societies. ................2-. 222.222. eee. 245 Direction and supervision of...........-..---.---- 92-93 | Steam Thrashing Machine Society of Schifferstadt.... 247 Loans, restriction of.........-.-.22.es0eeeeeeeeee 92 | Steam thrashing machines.............2.-..0eccccee 241 Loans, term and security of.........-----.-+-2--0+ 92 | Steinbriick, Prof., on gramaries........2..2......020. 228 Loans to individuals.............---....-eeeeeee ee 93 | Stettin, Central Purchase and Sale Society in........ 220 Profitai sees dacs atsgeier anne sonnei See ek sees 93 | Stettin, Pomeranian Central Cooperative Bank, the. 183-185 Profits, allocation of.......-.-----2++---++--e-ee-+ 93 | Stettin, Pomeranian Union at, and limited liability.... 186 Sinzheim Savings and Loan Bank, special notes con- Stettin Union, the, and credit banks.................. 119 COMMING viet ccc rekne re aertenae eee essa secs 159-160 | Stettin, union of cooperative dairy societies in... .. 218, 253 Slaughterhouses, cooperative -......-...-2+2-+----- 230-231 | Stolp, cattle-selling society of..............2..0...0.. 237 Slaughter insurance.......-.....----2-2-2----- - 308, 318,318 | Stolp Supply Society. .......2...... 0.0. 195 Small holders, advantage of cooperative cornsellingfor. 228 | Straw-pressing machines...................0...022. 245, 248 Small holders and cattle................2----.20-5- 229-230 | Stuttgart, the Wurttemberg Union at...........0... 103, 134 Small holders and meat production..........-.--.- 229-230 | Sugar factory at Gross-Umstadt...............0.22.. 451452 Small holders and pig breeding...........-.-..-.----- 230 | Supply and corn departments of the Bavarian Central Small holders, especial advantages of cooperative Batik esac trace a aero aeprmomentniielns 252 exer ddaciead 178 dairying fore <22222 coeyaelssauiatineesatieees foe ess 206 | Supply Association of German Farmers, the........... 201 Small holders, importance of, in meat production ... 229-230 | Supply department of the Bavarian Central Bank. .... 178 Small holders, influence of, on cooperative dairying . 206,208 | Supply societies (central): Small holders, meat production of...........-.--..- 229-230 Advantages of combination of local societies... 199-200 Small holdings in Bavaria (table).......2...-..e2e0e- 223 Advantages of further organization...-.......... 20 INDEX. 473 aca Page. Page. Supply societies (central)—Continued. T. Audit of... 2... 0.0.02... es esse esse ee ee omen eens 276 | ‘Territorial distribution of registered cooperative dairies Central supply organizations affiliated to the Impe- (table) 208-209 vial Federation. .........0...2 0. 2ccceeeeeeeeee 205 | morri CMS ae ats gt Sa Be ey asta ccatten, uaa 3 erritorial distribution of registered supply societies Central supply organizations, table regarding.... 204 GN peo eee 193 Central supply societies, table of membership... 201, 202 Mhishineniechiness Pechanich. nce ecauscecoanor IAS Educational efforts of..........0.. 0020002000000: 200 3 : Se 2 245, 246, 247 Goods, payment for... . 22.2... cece ee cece ence 204-295 Thrashing-machine Roewotes. Cove ago e Pestyeat Legal tomes Gee 202 Thrashing-machine societies model rules......-.--- 436-437 Machinery, ‘pusihase a SSRIS aE INGE SE STIS 300 Thrashing-machine society at Arheilgen ........ 136, 247-248 Management expenses of ae eee, 205 lee eee BD RE diab at Sie teVerMaareiS 2/2 Soe RR SIRE Capital required.............0-.-0-202 cece e eee eee 246 Mombership.2<...i pes ces orcemexéis ios sees 201 Motor 241 Membership, table showing..............-.-++. 201-202 Brewis ie cc naa acetee 20M Sarita area Of... sss eee eee eee ee eters Be See also Machine societies and Electricity socie- ealeguards for local societies.......-...--+++-++-. 200 Thrift, fos banks and the furtherance of.........- 75 each agricultural products by. ....-.--.----- oe Thrift, stimulation of, by rural credit societies. - or pets Shares, abuse information a to puts SSSCCGRR Saas 203 Training schools for cooperative officials.......-...-.- 262 Societies exclusive dealings with................ 204 | Treves Union, the (table). ............222200eeeee eee 134 Special requirements, attention to............... 200 See also Supply societies, local. me Supply societies (local): Union contributions.............0ccccenecceececces 450-451 Advantages of...........02-0-ecceeceeeeee 190, 191-192 | Union of agricultural societies. .-.....-.----.------ _ 252-258 Analyses of commodities, table of results of tests... 191 Unions of cooperative societies. See Cooperative socie- Agricultural products, sale of by (table)......-. 198-199 ties, combinations of. APM BII OH yao senda laiel hoeeoed eo duce de nese 136 | Urban banks... creteees fst ttetec eee eeeeseesec tees sehibisne 106 Business, scope of. ..........-- etal] dnc yg9 | Urban cooperative societies. .... riteertteeeeeeeet eres 106 Collection of orders. 22... -ccccccccccccccccceccce 19g | Usury, excessive, and rural credit societies.........- 107, 230 Development, general............0..02eeeee enone 193 Vv. Educational influences of. ........-.......--25.- 192 : : : 3 Establishment of registered cooperative agricul- peed Bag selling: Society; epecial notes reaatd 241 tural supply societies (table). ................- 193 SF ae OO TR cae eR ee Tne Goods, delivery of...........--------0------+---- 196 Ww. Goods, lower prices of, through cooperation. ... 191-192 | Wallhausen Savings & Loan Bank, account of...... 161-162 Goods purchased, nature of............---.-+---- 197 | Water-supply societies. ...........20022-2-22eeeeee 250-251 Goods, value of....-....---+-+---- +--+ +e eeeeeees 190 | Weighing machine for wagons. .....-...-.-.-e-eeeee- 149 Grabein, Dr., on noncooperative purchase......-. 191 | Weighing machines. See Machine societies. Gross-Umstadt Supply Society .....-..---------- 199 | West Holstein union of dairy societies................ 218 Guarantee of quality by cooperative purchase.... 190 Westphalia, first provincial aid bank founded in....-.. 91 Importance of other cooperative agencies. - . . . 189-190 Westphalia, land mortgage associations in. ....-.....- 39 Liability, nature of, adopted by .......-..--.- 194-195 | Westphalia, Raiffeisen founds central bank in .. 164, 174, 265 Members, gute oe i eC eT ag5 Westphalia, union of dairy societies in-......-...... 218, 253 I aE Sa 9 TORR IER Ecotec nae 195 | Westphalian Bank 54, 55, 56, 57, 58, 91 Nonmembers, dealings with............-......--- 197 Ww on i tue wach ae ‘State . ai fe eat a 987 Obligation upon members to purchase through.... 197 Se a ee See ees Operations, area of........2-2-0.0..eceeeec eee 19¢ | Westphalian credit societies, number of savings deposit Other societies undertaking supply............ BOOS || x SUC inrmannehers ents so tees snipes aaere iy aS Payment for goods by members............+--- 197-198 Westphalian Mortgage Credit Association (Landschaft), Payment for goods by societies. .............---. 198 articles of association Of... 2----e eee eee ee ieee 347-358 PEC Abia cca hse Mae emt A ee a Estes 198 | Westphalian Union, the, and general social activities.. 104 Registered societies in Germany (table).......... 193 Westphalian Union, the contributions of cooperative Charediss tcc ce suntan be ouch stan eh aoe od del Sus 194 SOCICTIOSE UO eiecac oe Sears dc eerie aeiemtaieeie Se 258 Shares, amount paid up...---.-.--------------- 194 | West Prussia, cooperation and State aid..............- 287 Shares, liability attached to..............---....- 195 | West Prussia, union of dairying societies in............ 218 Societies reporting to Imperial Federation, posi- West Prussian Association, the, areas covered by land tion of (table). ..-.----------+------------ +e 198 MOLCAG Cie so aes hs aed alee sae ss 39 SiOReS ic cieas oeceee cca Mes dee eemeteeeasnnace 196 | Wettruf Egg-selling Society. .......-..--2..22-.....- 240 Territorial distribution (table)................. 192-193 | Wiesbaden, Agricultural Cooperative Union at........ 288 Tests made by central societies (table). ........-. 191 | Worbis, granary at....-....202- 22 eee ee cee eee cence ee 222 Value of purchases per member.......--...-.---. 196. | “‘Wormditt Banks 2... 224 sceneries ee sees 293 Value of purchases per society (table)............ 197 | Wurttemberg, cattle insurance in................... 317-318 See also Supply societies, central. Wurttemberg, cattle insurance in, State aid .......... 317 Supply and sale societies, model articles and rules... 427-428 (Cf. Live-stock insurance.) Sweden, mortgage banks in...........--------------- 56 | Wurttemburg Central Bank..............2........ 172-173 Switzerland, mortgage banks in.........-.....--.--- 56 | Wurttemburg Central Bank, regulations............ 423-425 474 Page. Wurttemberg, cooperation supported by State aid in 289-290 Wurttemberg Credit Association, the outstanding mort- gage loans Of. 6 cuccccsacsecas sees ede ese euanweenaes 47 Wurttemberg, granary societies in, special notes con- COMINGS ¢<.c00 sos deat wedges tae ov'ede's se cewenreaas 226-227 Wurttemberg granary societies, State aid for........ 219, 226 Wurttemberg Savings Bank, foundation of the........ 56 Wurttemberg Savings Banks, articles of the........... 78 Wurttemberg, State aid ..............2.---20--- 22 eee 308 INDEX, Page. Wurttemberg, State aid for breeding societies....-.-- 249 Wurttemberg Union...............----eeeeeeeeeee eee 252 Wurttemberg Union at Stuttgart, the..........----- 103-134 Z. Zemitz, cooperative dairy in. .........-2.0.---2e2e 2 163 Zemitz Dairy Society............-i----2e2-eee eee 163, 218 Zemitz Savings and Loan Bank, special account Of -coaueaeGoceeeae es oeeesd semeeeessie Siaeieeiee wie 162-163 O