province of Saxony there are 660 rural banks. These are small village savings banks with an average membership of about 100 farmers. They are the units of the farmers' cooperative organizations of the province. At Halle there are three central cooperative organizations, with all of which the local banks stand in relation and are members: (1) The Central Cooperative Bank, which does nothing but a banking business and whose members are cooperative associations instead of individuals. (2) The Central Cooperative Association for the purchase and sale of agricultural products. This, like the central bank, has for members associations instead of persons and does a wholesale business in buying and selling agricultural products. (3) The Union of Cooperative Societies, which oversees the management of the local societies, audits their books, furnishes uniform systems of bookkeeping and looks after the organizing of new societies and does the propaganda work in promoting agricultural cooperative work in the province.
In order to become a member of the Central Bank at Halle the local association or bank must take a share in it which is 300 marks. The number of shares that the local bank or association hold is in proportion to the amount of business it does. By virtue of holding shares in the central association it is entitled to make loans from it. The farmer goes to his local bank, of which he is a member and to whom he is known, and makes his application for a loan. The bank in turn applies to the Central Association with which it has credit and secures the money and it costs the farmer 12 per cent, more interest than the local society pays the Central in order to cover the local costs of the society. The average interest rate charged by the Central Bank in 1909 was 3.92 per cent., in 1910 it was 4.34 per cent, and in 1911 was 4.39 per cent. The rate of interest paid for deposits is 3 to 312 per cent., depending upon the current interest rate.
Credit is the first requisite of successful cooperation. When a country has a well-established system of agricultural credits it is almost certain to be thoroughly organized on a cooperative basis in other lines. This is the case in the province of Saxony, particularly in the purchase of agricultural supplies, such as fertilizers, feeding stuffs, coal, seeds and agricultural machinery.
The local banks serve the farmers both as the societies through which the purchases are made and furnish the credit for making the purchases. In this way there is a saving in the cost of doing the business and the bank knows how the money is spent.
Moral Effect of Cooperation
The development of the cooperative credit systems among the farmers of Europe has had an important influence on their social life. Aside from the independence gained in their business affairs by being
