But what of short-term credit—the seasonal credit that the farmer, like the business man, must have to conduct his farming operations? In the spring the farmer's demand for capital is very heavy. He must buy his seed, his fertilizer, perhaps additional horses and implements. He must pay his laborers. If he is a dairy farmer, he may have to put in additional cows, or cull out his poor stock and replace them with better ones. A payment may fall due upon the mort gage and unless be meets it on time, he stands in danger of foreclosure. Such loans are only seasonal and, in order to be of benefit to the farmer, must be immediate. It was doubt less the aim of the founders of the Society to provide this form of eredit to the Jewish farmer, as well as the long-term mortgage credit. But in actual practice it was found that the Society was not in a, position to extend such loans. It could not loan a farmer in North Dakota, for example, $100 for seed without resorting to a cumbersome investigation. This not only consumed valuable time but involved a heavy tax upon its administrative machinery. Then, too, not be ing in a position to look after the loan after it was made, personal credit was out of the question and the Society had to resort to niortgage security for the smallest loan. This involved also a heavy expense upon the borrower.
To obviate this difficulty the Society set about to devise ways and means to provide short term credit for Jewish farmers, and has found a satisfactory solution in the Credit Unions. An exhaustive study of the cooperative eredit sys tems of Germany, Italy, and other European countries was started in 1907. In 1909 the Society decided upon the adoption, with certain modifications, of the Raiffeisen type of cooperative credit bank, and in 1911 the first of these banks began operations. Today there are eighteen of these local banks doing business, eight in New York, five in New Jersey, four in Connecticut, and one in Massachu*etts.
The seventeen banks that were in operation on September 30, 1913, reported a total membership of 517 and a paid-in capita] of $9,165. They had then been in operation for periods averaging a little over thirteen months, during which time they loaned out $79.,624.66, about eight times their own capital. The outstanding loans at that time aggregated $22,808.55. Their total expenses were only $726.93. This is accounted for by the fact that none of the officers, with the exception of the secretary, received remuneration for services rendered. In some of the credit-unions even the sec retary serves gratis. The total income of these credit unions amount to $27,487.56, and their out-go to $26,169.63, the net profits being $1,317.93, that is, at the rate of 131/2 per cent per annum on the capital. No losses have been reported so far. The only loss sustained by any of the credit-unions was a 'loss of $27.98 by the credit-union of
Colchester, Connecticut, thru the failure of its depository-, the First National Bank of Norwich.
The credit-unions are highly democratic institutions and are entirely under the control of their respective members. The one-man-one-vote principle is fundamental with these credit-unions, and the member having only one share has as much control as the.man having, say, twenty shares. Loans are made only for productive purposes and for urgent needs, and arc secured by the borrower's promissory note, indorsed by one or more responsible persons. No loan can be made for a period exceeding six months, or for an amount over $1.00.1 13. Description of agricultural cooperative organ izations.—Various forms of agricultural societies are in existence in America ; the most active are those in the dairy business. The Dairy Division of the United States Department of Agriculture has drawn up typi cal constitutions and by-laws for a dairy association. These may be secured from the Department by any one who is interested. For the purpose of this dis cussion, however, on account of the suggestiveness of the respective methods, it is better to contrast the Irish and the Danish system of organizing and fi nancing dairy societies.
In Ireland, where limited liability is prescribed by law, the main part of the capital is raised by shares, which give the right to a vote in the management. They may be held by the milk-suppliers themselves, or by societies, cooperative agricultural societies and cooperative town stores, or by pri vate individuals. The latter are generally local sympa thisers who wish to give the society a good start. Every milk-supplier is required to take up at least o.ne share, value of which 5s. is paid on application and the remainder at the discretion of the committee after due notice. Mem bers may elect to pay up their shares in full at any time. To the end that the society may, if necessary, be able to raise loan capital (at a rate limited to 5 per cent) each member is required to take up loan-guarantee shares equal to the amount of his nominal holding. One shilling is paid up ; and the rest only on the voluntary or compulsory wind ing up of the society. On these shares no interest is paid. Arrangements have been made with the joint stock banks for granting overdrafts to the societies at a uniform rate of 4 per cent on the "joint and several securities of the mem bers." The banks prefer this to a corporate security, be cause it enables them in the event of a society's dissolution to sue the richest member for the whole loan, leaving him as best Ile may to recoup himself from his poorer fellow members. This provision, which sometimes frightens away the richer farmers, has been unsuccessfully objected to by the Irish Agricultural Organization Society. The danger, how ever, shows itself in practice to be quite nominal.