FARMERS' CO-OPERATIVE BANKS.

Dominion, Volume 4, Issue 1229, 11 September 1911, Page 8

FARMERS' CO-OPERATIVE BANKS.

THE PBEMIER'S SCHEME. ' Tho full text of tho Trimo Minister's proposals in regard to fanners' co-opera-tiro'banks, as stated in tho Budget and summarised on Saturday, is as follows:— "It is desirable to enable' small men or small associations of nien to whom credit is ■ not readily, if at all, accessible under our existing banking system to obtain it for productive .purposes,--or purposes ensuring economy. This, in'my opinion, can bo dono by tho formation of farmers' associations of even comparatively small numbers. , I proposo to submit a. scheme to enable- this to bo done. These will bo incorporated and empowered to borrow money for purposes of loan to their, members on such security as they'think fit for productive purposes, but repayments of the money so borrowed will bo guaranteed under, proper conditions by the State. This will enable it to bo obtained at 'reasonable rates of interest, from ordinary banks, and if not so available, then from other sources. Each member of tho association will, subject to proper safeguards and conditions, ■ bo liablo for the default of any one of their number. This last provision it is conceived, will prevent waste or abuse of the system. The security of a loan to small fanners under such a scheme is not necessarily—as it is under present banking methods—the valne of tho property tho small farmer can offer, but either tho industry, character, and skill of the farmer himself. Such a scheme provides for an export test of the moral risk involved in the personal knowledge the banking associations will have of the, borrower, and for a watchfulness, secured by a keen sense of collective responsibility of tho capaeity of the'borrower to turn the loan to profitable account. Thus the qualifications of the small farmer for his business become in large measure tho security on which ho can borrow, and men with small, or oven no material security, can obtain capital. Similar schemes have been found enor 7 inously beneficial by small farmers :in several European- countries. They . have not-only made .capital available to struggling men, but greatly cheapened the rates at which it could be obtained. This, too, will tend to reduce any attempt to monopoly which might' arise under onr present banking system. In Germany 950 co-operative banks of one. type alone'keep about .€100,000,000 -steadily in circulation in credits in that country. Germany has indeed about 12,000 of such banks in all, and by far the greatest number aro employed in financing agriculture. I have every confidence in stating that as the result of close examination into the matter this can bo done without risk to the Dominion or injury to our financial institutions."