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U. S. DEPARTMENT OF LABOR
JAMES J. DAVIS, Secretary

BUREAU OF LABOR STATISTICS
ETHELBERT STEWART, Commissioner

BULLETIN OF THE UNITED STATES \
BUREAU OF LABOR STATISTICS/ ’
M I S C E L L A N E O U S

• • ■ {No. 314

S E R I E S

COOPERATIVE CREDIT SOCIETIES
(CREDIT UNIONS) IN AMERICA AND
IN FOREIGN COUNTRIES




By EDSON L. WHITNEY

NOVEMBER, 1922

WASHINGTON,
GOVERNMENT PRINTING OFFICE
1922




CONTENTS,

Pago.

Introduction—Description of the credit union.................................
Cooperative credit abroad.....................................................................
Germany.........................................................................................
Schulze-Delitzsch societies....................................................
Raiffeisen societies.........................................................:**.-*
Comparison of Schulze-Delitzsch and Raiffeisen societies
Officers and buildings.....................................................
Membership................................................. ...................
Capital...............................................................................
Liability of members.......................................................
Method of making loans................................................
Interest.............................................................................
Management.....................................................................
Withdrawals and dissolution..........................................
Federations................................. .....................................
Progress.............................................................................
Italy..................................................................................................
Other countries...............................................................................
France.......................................................................................
Argentina, Uraguay, Egypt, and Canada............................
Belgium....................................................................................
Holland.....................................................................................
Switzerland..............................................................................
Austria......................................................................................
Hungary, Czechoslovakia, and Yugoslavia.........................
Serbia and Bulgaria................................................................
Russia........................................................................................
Prussian Poland......................................................................
Russian Poland, Bohemia, Moravia, and Silesia................
England...................................................................................
Ireland......................................................................................
India.............. . .........................................................................
Comparative statistics....................................................................
Cooperative credit in America.............................................................
History of movement.....................................................................
Quebec......................................................................................
New Hampshire.......................................................................
Massachusetts...........................................................................
Jewish unions..........................................................................
Development of agricultural credit......................................
Feaeral farm loans...........................................................
State credits........................ ; .........................................
Legislative action...........................................................................
Credit union legislation..........................................................
Name of credit associations............................................
Control........................1....................................................
Articles of incorporation and by-laws...........................
Share capital...................................................................
Deposits.............................................................................
Loans.................................................................................
Other activities................................................................
Liability................... . ............................... .....................
Meetings................... .......................................................
Directors and officers.......................................................
Credit committee.............................................................
Supervisory committee...................................................
Committees in general.............. . . ................................




1

2-14
22
2,3
33
4
4,5
5
5-7
7
7.8
8
8.9

9

10,11
11-13 '
11,12
12
12
12
12

12
12
12

12.13
13
13
13
13
13
13.14
15-56
15-20
15,16
16
17.18
18.19
19.20
20
20
20- 29
21- 29
21
21,22
22, 23
23
23.24
24
24.25
25
25
25, 26
26
26,27
27

ill

9
9

IV

CONTENTS

Cooperative credit in America—Continued.
Legislative action—Continued.
Credit union legislation—Continued.
PageDividends........................................................................................................ 27
Guaranty or reserve fund............................................................................ 27,28
Withdrawal of members..............................................................................
28
Reports...........................: ............................................................................... 28,29
Examination of accounts............................................................................
29
Dissolution......................................................................................................
29
Attitude of labor unions.............................................................................................. 29, 30
Public educational effort...........................................................................................
30
Private plans.................................................................................................................. 30, 31
Proposed uniform law.................................................................................................. 31, 32
Characteristics of American credit unions............................................................. 32-35
Membership............................................................................................................ 32-34
Borrowing on character...............................................................................
33
Loans........................................................................................................................
34
Management........................................................................................................... 34, 35
Surplus.......................
35
Credit union experience in America....................................................................... 35-55
Quebec.................................................................................................................. 36-39
Massachusetts..................................................................
39-44
New York........................................................................................................: . . . 45-48
North Carolina........................................................................................
48-52
New Hampshire.....................................................................................
52
Rhode Island.......................................................................................................... 53
Jewish credit unions............................................................................................. 53, 54
Comparative statistics.......................................................................................... 55
Conclusions................................................................................................................... 56, 56
Appendix—Bibliography................................................................................................... 57-60




BULLETIN

O F THE

U. S. BUREAU OF LABOR STATISTICS
NO. 314

WASHINGTON

NOVEMBER, 1922

COOPERATIVE CREDIT SOCIETIES (CREDIT UNIONS)
AND IN FOREIGN COUNTRIES.

IN AMERICA

INTRODUCTION.

Cooperative credit societies have been established for the purpose
of encouraging thrift among and extending credit at low cost to
honest, frugal, industrious workers of the agricultural and mechanical
classes with slender means, and thus preventing their falling into the
hands of “loan sharks” in time of unemployment, sickness, or need.
Communities without local banks, or where existing banks do not loan
money in small amounts, are a fertile field for credit societies. These
organizations are known under different names—people’s banks,
popular banks, rural banks, savings and loan banks, loan associations,
credit associations, savings and loan fund associations, credit and
savings societies, cooperative credit societies, loan societies, loan and
credit unions, loan fund unions, and credit unions. It is the general
experience that wherever such societies have been introduced the
usurer has left, homes have become comfortable, and the poor man has
become a small capitalist.
These societies are not charitable institutions to care for the helpless
or assist the incompetent, nor are they reformatory institutions to
turn dishonest men into honest ones. They help only such able,
honest, and unfortunate persons as are capable of oeing helped and
are willing to try to help themselves. They are purely business
propositions. Their underlying principle is cooperation, each society
being organized for the furtherance of cooperative purposes and not
to enrich the members. They comprise two classes of members—
borrowers and lenders—both often merged in the same individual, and
both treated with equal justice in the distribution of the profits. Each
member must hold at least, one share of stock in the association and
may hold more, the par value of shares being placed so low as to keep
out no one otherwise eligible for membership. Regular rates of inter­
est are paid on deposits and are charged on loans. Depositors do not
receive large rates of interest on their money, and borrowers avoid
paying high rates to money lenders.
In many ways these societies resemble combined savings bank and
building and loan associations but are engaged in other than building
operations. They differ from the regular commercial banks in four
important particulars: First, they are organized and managed pri­
marily in the interests of the borrowers; secondly, the par value of the
shares is small and may be paid for in weekly or monthly installments
of a few cents each; thirdly, small loans are preferred to large ones;
fourthly, other collateral being lacking, good character is occasionally
accepted as security for a loan.



i

2

COOPERATIVE CREDIT ABROAD,

COOPERATIVE CREDIT ABROAD.
GERMANY.
SCHULZE-DELITZSCH SOCIETIES.

These societies for cooperative credit originated with Hermann
Schulze, a graduate of Leipsic University, and at the time a judge in a
provincial court in his native town of Delitzsch, in Prussian Saxony.
He was an earnest student of cooperation as then taught in England
and France and adapted his idea of thrift from the English friendly
societies, with which he was acquainted.
Greatly affected by the deplorable condition and poverty of the
working classes in his Province following the famine of 1848, he or­
ganized an association of poor people for the purpose of buying raw
materials at wholesale and selling tnem to members at cost, and then
tried to evolve a plan to raise capital for persons without money or to
give them credit safely without security. Two years later ne or­
ganized a second society composed of needy mechanics and a few
philanthropic members, the latter to loan money to the former, who
were to repay it with interest in monthly payments of small amounts
each. The profits were to form the basis of a fund to be used in
making further loans to members at a low fixed rate of interest.
In 1853 he organized another similar society and provided for the
creation of a fund by the contribution of members alone. In the
following year he began a systematic agitation for the formation of
cooperative credit societies, or Creditvereine, as he called them in a
book issued in 1856, defining their scope and object. He issued a
series of brochures, corresponded with leading newspapers, and as a
member of the Prussian Parliament advocated his theories publicly.
In 1859 he opened a central bureau to promote the cause of coopera­
tion, to keep members informed of the condition and progress of the
societies, to promote closer relations between them by exchange of re­
ports, to obtain loans for societies from commercial banks, to keep a
register of societies, and to publish yearly statistical reports. These
societies existed as voluntary associations until 1867, when the first
cooperative law in Prussia was passed. In 1868 this law was adopted
by the North German Confederation and in 1889 by the German
Empire; all cooperative societies in Germany are now organized under
the imperial act.
As a result of this active propaganda the number of societies rapidly
increased. They were at first intended for the jobbing artisan and
small tradesman in towns, but have been found useful by the man of
larger business. Members of all occupations are found in their ranks,
but though the largest occupational ^roup (one-fourth of all members)
is composed of workers on farms, these societies seem better adapted
to the industrial and mercantile classes with small stores than to
small farmers and agricultural laborers, because of the length of time
for which loans are granted.
RAIFFEISEN SOCIETIES.

An adaptation of the Schulze-Delitzsch societies for the benefit of the
farm classes was worked out by Frederick Wilhelm Raiffeisen, who, as



GERMANY.

a

burgomaster of Weyerbusch, an inhospitable region of small farms in
the Rhineland, had noted the inability of the half-starved peasants
to make a living following the drouth of 1846 and 1847.
Believing that their suffering was largely due to the terrible usury
practiced by money lenders Raiffeisen organized at Flammersfeld,
to which he had been transferred in 1848, a cooperative society to sell
the peasants bread and cattle at cost. In 1849, he organized a credit
and loan society to loan money to the peasants at reasonable rates of
interest. Five years later at Heddesdorf, another town in which he
had become burgomaster, he persuaded certain philanthropists to
loan money on the security of the combined credit of the borrowers, and
thus to enable the latter to buy cattle, fertilizers, and other farm sup­
plies at wholesale and to sell them to members at cost, the loan to be
repaid in five annual installments at a low rate of interest. In 1862 he
organized at Anhausen a society in which he united the cooperative
banking plan of Schulze with his own plan of distribution. The next
society was opened in 1868. Since 1880 the idea has spread rapidly
until to-day societies on the Raiffeisen model, confined mainly to rural
districts, outnumber those on the Schulze model three or four to one.
COMPARISON OF SCHTJLZE-DELITZSCH AND RAIFFEISEN SOCIETIES.

Both of these types of societies, unsuccessful when run as charitable
organizations, but successful as business enterprises, were organized
for similar purposes—to obtain by combination credit that could not
be obtained individually, to combat usury, to encourage thrift, and to
change dependent into independent producers. Comparison between
them is rather difficult and the differences between them have been
sufficiently great to prevent their acting in harmony.
Schulze was materialistic and commercial, kept the financial aim
ever in view, avoided all connection with religion and charity, and
carried the doctrine of self-help to its limit, refusing outside aid of
any kind, whether State or local. Raiffeisen was humanitarian and
ethical, idealistic, intensely religious, preached educational and moral
reform, accepted outside aid wherever proffered, tried to organize his
societies in connection with churches, enlisted the aid of parish
priests, and though a Lutheran was supported by the clergy of all
denominations.
OFFICERS AND BUILDINGS.
The Schulze societies, popularly known as peopled banks, are gen­
erally housed in their own building which is often the principal one
in the town. They have well appointed offices, paid clerks, and reg­
ular banking hours, and resemble small State or private banks in this
country. Many indeed have developed into regular commercial banks.
The Raiffeisen societies, popularly known as village banks, or
savings and loan banks, have but one paid official—the accountant—
who is generally the village priest, school-teacher, or a local public
official, and in the earlier days was often not a member of the society.
He receives a salary of from 300 to 800 marks ($71.40 to $190.40, par)
a year for his services, and his office, which is frequently in a room in
his house or in the bam, is open for business only at stated times, as on
holidays, Sundays after church services, and on two or three evenings
a week.



4

COOPERATIVE CREDIT ABROAD.

MEMBERSHIP.

The Schulze societies are in the populous centers, and the aim is to
have one in each town, with a large membership, because of the safety
in numbers, the reduced cost of management, and the better security
offered. The societies have an average membership of about 625,
though there are societies in existence with a membership of more
than 10,000. Practically any respectable self-supporting person of
good moral character is eligible to membership on assenting to the rules.
Membership is not limited to any class. The more varied the occu­
pations the steadier the foundation and the less the risk, but people of
the poorest class are not welcome, nor are minors admitted.
The Raiffeisen societies exist where the population is sparse, t They
aim to have one society in each parish or locality of 400 people, each
with a small membership now averaging less than 100, and some having
only about 15 or 20 members. They are composed mainly of one class,
farmers. Their object is not to secure a large membership but to
exclude those not eligible, and to benefit the very poor. The major­
ity of members come from the middle class. However, any person
may be admitted to membership after being recommended by a
member of the society and being found on investigation by the
trustees to be of orderly habits, good reputation, good moral charac­
ter, and able to support himself—if elected by the members. Few
worthy persons are debarred from membership, for nearly every
farmer has some equipment or live stock or a little property of some
kind that can be used for security if need be.
Both societies exclude drunkards, spendthrifts, profligates, and
those without means to maintain their membership. Neither society
advocates the formation of societies composed entirely of the poor,
though Raiffeisen never refused membership to a poor man if honest.
CAPITAL.

Schulze organized to obtain funds. Raiffeisen organized to create a
condition where outside credit could be obtained at a minimum of cost.
This credit is created out of the general knowledge of the character of
members and this is more easily attained in the small restricted area of
operations of the Raiffeisen society than in the large unrestricted area
of the Schulze organization. The Schulze societies borrow but little
money as they obtain nearly all they need in other ways. The
Raiffeisen banks borrow heavily, and generally for long periods of
time, from commercial banks willing to loan on the security of the
combined credit of the members.
The Schulze societies desire to have a large capital in order to give
standing to the organization. Therefore the par value of the stock
is made rather large, generally 300 to 500 marks ($71.40 to $119, par),
and sometimes 1,000 marks ($238, par). Each member is required to
own one share, being allowed to pay for it in monthly installments
small enough to admit the poorer classes, though the size of the share
undoubtedly prevents some desirable persons without property from
joining. In order that the poorest may be.admitted, the Raiffeisen
societies organize without cash capital where the law so permits and
in States where a cash value of the stock is required, each share is put
at as low a value as possible, generally 4 marks (95.2 cents, par), or
even less, and the ownership of more than one share is generally for­
bidden.



GERMANY.

5

In the Schulze societies the reserve fund is formed from a nonreturnable entrance fee of 10 marks ($2.38, par) collected from each
member on joining, all the profits of the first year, 15 to 20 per cent
of those of the second and third years, and 5 to 10 per cent thereafter.
The reserve is intended to be kept at about 10 to 20 per cent of the
capital and 8 to 10 per cent of the liabilities, and is used to make
good any losses and to reduce the necessity of borrowing.
In the Raiffeisen societies all the profits, after paying losses and
running expenses, are carried to the reserve fund, which takes the
place of borrowed capital and reduces the cost of borrowing to
members.
In both systems deposits on which interest is paid are received
from anyone, child or adult, whether or not a member of the society.
The Raiffeisen society tries to become the savings bank of its district,
distributes savings boxes among the families in the community,
sells savings stamps and cards, and endeavors to get possession of
every spare coin in its vicinity. From 85 to 90 per cent of its-work­
ing capital consists of deposits. The average working capital of a
Schulze society is about ten times that of a Raiffeisen society.
LIABILITY OF MEMBERS.

At the outset Schulze, in his effort to find a basis of credit for his
societies, adopted the system of unlimited liability of each member
for the debts of all as the one calculated to attract depositors and to
inspire confidence among persons with money, for the latter, though
unwilling to loan money to one person of good character, might be
willing to loan money to a group of such persons without other security
than the individual promise of each to become responsible for the pay­
ment of the whole debt. This system causes caution to be exercised
in the selection pf members, discourages any tendency toward specu­
lation, and makes each one feel his responsibility for all. Besides, there
is little danger in the assumption of such liability, for in no case does
the personal liability begin until after the exhaustion of all the capital
and the reserve of the society.
Since 1889 the law of Germany has permitted limited liability
and most of the Schulze societies since organized have been organized
on the limited liability principle. To-day more than one-third of
these societies are limited and permit members to hold more than
one share. Experience has shown that the principle of unlimited
liability is less essential as the capital of the society grows. Up to
the present time in Germany the debtor's estate or sureties or the
reserve have proved sufficient to take care of every case of failure by
borrowers to pay principal or interest and the necessity of unlimited
liability has never been put to the test. The Raiffeisen societies,
however, still hold to the original principle of unlimited liability.
METHOD OF MAKING LOANS.

Under both the Schulze and Raiffeisen systems bank accommo­
dation is given to members only. The Schulze banks confine
themselves to a banking business, discounting and accepting bills
of exchange, which are in general use in Germany in place of checks,
and granting advances on the note of the borrower for small amounts




6

COOPERATIVE CREDIT ABROAD.

and with one or two indorsements for larger amounts. All this
is done at practically the same rates charged by commercial banks,
but for short periods of time, not more than ninety days, with
renewals in case the borrower reduces the amount of the loan.
Each society fixes the maximum amount to be loaned a member,
which is always small. No one is extended credit in an amount
exceeding one-fifth of the property of the society, and the amount
of loans outstanding may not exceed twice the capital. An attempt
is made to keep the society’s funds liquid. Advances on realty are
discouraged. Shares of its capital stock are not taken as security.
Chattel mortgages are preferred. For failure of a borrower to meet
his payments his security is forfeited, then his shares are taken, and
lastly his indorsers are called upon to meet any deficiency.
The Raiffeisen societies confine themselves to the simplest kind of
banking transactions, receive deposits, and borrow on the credit of
the society, neither giving nor cashing checks or commercial paper
of any character. Adi transactions are for cash, a small amount of
money—800 to 1,200 marks ($190.40 to $285.60, par)—being kept on
hand for emergencies and the rest of the funds deposited in a com­
mercial bank without incurring risk. Most of the money loaned by
the society comes from deposits or is borrowed from commercial
banks. The loans are generally for less than 500 marks ($119, par)
each, and are most frequently made on the credit of the individual
member, or on a note, with one or two sureties, according to circum­
stances, but for a long period of time, three to five years or more,
repayment being made in installments or amortized.
Borrowing, however, is not encouraged, in fact it is made somewhat
difficult, in spite of the current belief that cheap and easy credit is
obtained on character alone. By borrowing on u character” is
usually meant the borrowing by the society from a bank on the collec­
tive character of the members of the society, not primarily the bor­
rowing from the society by a member cm the strength of his personal
character. Credit is not indiscriminately given. Every society
requires from its borrowers as safe a security as is exacted by any
bank. The applicant must show his need for the money. The
improvident is refused a loan. A loan is never made to procure a
luxury, but is made for a specific productive purpose or for some­
thing that will repay the loan out of savings, additional profits,
or the proceeds. Credit is refused small traders and workmen with­
out means, even if honest. Safety is the prime requisite, not business.
The Schulze banks, because of their size, fluctuating membership,
and unrestricted area, do not watch to see whether the money is
used for the purpose for which borrowed, provided the security given
is sufficient.
The Raiffeisen societies, however, record the purpose for which the
loan is made and watch carefully to see that the money is used for
that purpose, and will call it in if misapplied or if the borrower is
careless m paying the interest thereon promptly when due or if he
lets his security deteriorate in value. Every three months the con­
dition of debtors and their securities is inspected and additional se­
curity demanded if circumstances require it. The close acquaintance
with borrowers due to the limitation of membership to a pursuit
or a neighborhood, the restricted area covered by the society, and
the common spirit in industrial and social relations make vigilance



GfiUMA m f.

7

possible. The caution in granting loans, the careful checking of
every act, the avoidance of all risks, the cheapness of the service, the
small, modest and humble manner in which the business is carried
on, all tend to make the Raiffeisen societies successful.
INTEREST.

The rate of interest charged for accommodation by the Schulze
societies is the current rate charged by commercial banks in the
vicinity, the borrowers receiving part of it back at the end of the
year in the form of dividends. Large dividends, often as high as
12 per cent, are the rule in the first years of a society’s existence in
order to attract capital and to cause members to pay up their shares
early, dividends being returned on paid-up shares only. Schulze
advocated the payment of high dividends in order to attract money
and secure the best managerial ability, and thus make possible
favorable terms to borrowers.
In order to attract members the Raiffeisen societies place the rate
of interest lower than that charged by banks. In order to prevent
greediness, no dividends are paid; whatever profits remain at the
end of the year, after provisions for impairment of capital and deduc­
tions made for the reserve fund, are used to pay subscriptions to
periodicals or devoted to public or social welfare work in the com­
munity. Raiffeisen laid emphasis on the low rate of interest charged
borrowers.
Thus the systems of both encourage thrift—that of Schulze by
encouraging the creation and constant accumulation of capital,
requiring small weekly payments on a large share of capital and
encouraging members to become capitalists; and that of Raiffeisen
by requiring repayment of loans in small amounts extending over a
long period and encouraging members thus to obtain property, on
the theory that periodical payments on long-time loans were as
effective to encourage thrift as periodical payments on shares. In
one case stock was obtained, in the other land or property.
In addition to their banking business, the Raiffeisen societies,
especially during the earlier years of their existence, buy farm sup­
plies, seed, fertilizer, coal, feed, and farm machinery—at wholesale
for cash—and distribute them among members, receiving pay therefor
when the crops are gathered. A society may buy a large farm and
allot it to members, who repay in installments and avoid all brokerage
charges.
MANAGEMENT.
The government of both societies rests in all the members at the
annual or semiannual general meeting, where the officers are elected,
important questions considered, the general policy of the bank shaped
and final appeals heard, no one having more than one vote or voting
by proxy, and no difference being recognized between rich and poor.
The management of the Schulze society is vested in an executive
committee of three—manager, cashier, and comptroller—forming a
board with general control of the bank, and selected purely for their
fitness. They recommend persons for membership and carry out the
policy determined at the annual meeting. They themselves are not
allowed to borrow from the society and their acts are supervised and
examined quarterly by a supervisory committee of nine representing all
sections of membership, wnich checks everything that is done, audits



8

COOPERATIVE CREDIT ABROAD.

accounts, inquires whether proper security was taken in each case,
removes members of the executive committee for cause, appraises
the credit value of each member, and admits and expels members.
Both committees are generally paid, the former often on a commission
basis, which is apt to make them to be less careful of the security
offered and at times to embark on hazardous or speculative under­
takings. They serve three years, one-third of each board retiring
yearly. The safety of the business depends on the carefulness with
which the supervisory committee does its work. Almost every case
of loss has been due to negligence on the part of this committee.
A biennial inspection of every society is made by an inspector
appointed by a group of societies, compulsory since 1889, voluntary
before that time.
,m
The Raiffeisen societies are managed by a committee of five elected
for four years, two or three retiring every two years. They meet
weekly and perform all the executive work. A council of supervision,
consisting of from three to nine members, is elected, for three years,
one-third retiring yearly. They meet quarterly, supervise the com­
mittee, and under certain circumstances discharge members of the
committee. The duties of both boards are similar to those of the
corresponding boards of the Schulze societies, except that the man­
ager oversees the use of the loan and attends to any buying and
selling in which the society may be engaged. The custom is to have
a majority of the committee composed of the wealthier members,
officials and landowners, often the most important men in the town­
ship, who do not need credit but who join the society because of
their interest in its object, make deposits, and give it a visible sol­
vency. All serve gratuitously, except the accountant or cashier,
and he is merely an executive agent. Caution and safety are the
guiding motives in every act. AU accounts are sent to headquarters
of the central office and there checked. Inspectors examine thor­
oughly each society every two years.
WITHDRAWALS AND DISSOLUTION.

Generally, on three months’ notice, a member may withdraw from a
society and receive the value of the shares bought, but he loses all
his right to the entrance fee and any share in the reserve fund.
Expulsion may follow immoral conduct, failure in business or in
meeting liabilities, or joining another similar society organized on
the unlimited liability plan.
Heirs of a deceased member are not necessarily entitled to admission
to the society, but only to a settlement of accounts.
Whenever a Schulze society goes out of business, and many have
done so, the assets including the reserve are divided among the last
members.
If a Raiffeisen bank goes out of business the reserve fund is trans­
ferred to some public institution to be used in organizing other similar
societies in the same district, and if none is organized within a rea­
sonable time, then to the commune for some local public benefit.
FEDERATIONS.

In Germany, the Schulze societies are independent but are affiliated
to 32 provincial federations, each including cooperative, distrib­
utive, productive, and building, as well as credit departments, and



GERMANY.

9

each having its periodic meetings. The provincial federations are in
turn affiliated with a central organization known as the General
Federation of German Cooperative Societies, a voluntary organization
governed by a general committee elected by the groups above men­
tioned, and holding an annual congress where pertinent questions of
interest to the members are discussed, views are interchanged, reso­
lutions adopted, and cooperative conditions kept pure and uniform.
Since 1904, the Dresdner Bank, which in that year absorbed the
German Cooperative Bank that had been organized at Berlin as a
central bank for the Schulze societies, has acted as a central batik
for the federation.
The Raiffeisen societies are grouped into a more comprehensive
system than the Schulze, each part supporting the rest. They are
national
frouped into provincial federations and the latter in turn into with the
odies. The provincial federations are supervisory bodies,
right of inspection and audit of each local society, and carry ori
organization and instruction. There are three central organizations:
(1) The Central Agricultural Loan Bank, originally established at
Neuwied in 1877 but whose headquarters since 1910 have been in
Berlin, with branches in various parts of the country. Its function is
to act as an intermediary between the individual societies and to
equalize the money market. Each local society holds one share of
stock in the bank. (2) The General Federation of Rural Cooperative
Societies, a general supply agency of German agricultural cooperative
societies, established in 1877 but taking its present name m 1899.
The federation extends and supervises the credit societies and repre­
sents their interests everywhere. Between 1905 and 1913 the
federation was affiliated with the Imperial Federation of Agricultural
Cooperative Societies, which was an organization of provincial distrib­
utive agricultural cooperative societies formed in 1883. (3) The
firm of Raiffeisen & Co., established to raise funds, manage the print­
ing office of the societies, publish their paper, and be a savings bank,
using the profits for the benefit of the societies. Independent assem­
blies are held in the larger States of Germany.
•

PROGRESS.

These societies have a limited field peculiarly their own. When
they started there were few banks which would receive small savings.
They have not displaced the savings banks nor are they competitors
of the commercial banks which are glad to be rid of small and vexa­
tious loans which return but little profit, and devote themselves to
larger and safer loans more easily handled. They give to the small
borrower the same' banking facilities elsewhere reserved for capital.
Their value to the Government during the recent war was well shown
in that through them imperial bonds were floated to the extent of
3,500,000,000marks ($833,000,000, par). They were heavy subscribers
to the second and third loans.
Their success has been marvelous. The percentage of losses has
been trifling and confined mainly to those on the Schulze model.
In the Raiffeisen societies no depositor or creditor has lost a cent, as
losses have been covered by raising the interest rates on loans or
slightly increasing the price of supplies. The surplus earnings and
savings of the community are thus kept at home instead of being
sent to the city to be used elsewhere.



10

COOPERATIVE CREDIT ABROAD.

ITALY.

From Germany the idea spread until at the present time one type
of society or the other, and generally both, is to be found in every
country in Europe. Some are simply loan societies, charitable or
philanthropic. Others, though retaining the cooperative idea, have
departed so far from the original that the adapted form is hardly
recognizable.
The first form introduced into a country has generally been the
Schulze, though after the introduction of the Raiffeisen form the
latter has soon outdistanced its rival in the number and varieties of
societies. The latter is the prevailing form in Austria, Italy, Switzer­
land, and Russia. One noticeable feature in regard to the intro­
duction of these societies is that in no country have the Raiffeisen
societies been introduced by a farmer, or the Schulze societies by
anyone needing their help. Both have invariably been introduced
by charitably disposed or public-spirited persons who after studying
them have been impressed with their value and felt that they were
suited to the needs of their own country.
The credit society of Schulze was introduced into Milan, Italy,
May 25, 1866, by Luigi Luzzatti, then a young man, but later Minister
of Finance and Prime Minister of Italy. The form was somewhat
changed from the German model, and to-day people's banks, as they
are termed in Italy, are to be found in all the larger cities in the
northern portion of the peninsula.
The members of these societies are drawn mainly from small
tradesmen of the middle class but with several from the well-to-do
to give strength to the society in its earlier days, inasmuch as
limited liability is the rule, the Italians being unacquainted with the
principle of unlimited liability. Admission to a society is a guaranty
of good character, for character is as carefully scrutinized in Italy
as in Germany. The high par value of the Schulze shares is reduced
in amount. Shares vary in value from 5 to 100 lire (S0-.97 to $19.30,
par), generally lying between 20 and 50 lire ($3.86 and $9.65, par).
A member is limited to one vote though he is allowed to hold stock
up to the value of 5,000 lire ($965, par), paying for it in 10 monthly
installments, thus early giving the society a definite capital. The
societies receive no assistance, State or charitable; give preference to
applicants for small loans, accept and discount bills of exchange,
make loans on a member's character, pledge, or shares; limit loans
except those for agricultural purposes to three months, lend their
surplus to nonmembers, avoid all risk, pay dividends, and give a
percentage of the profits to charity and for civic betterment. Some
of the larger societies do every variety of banking business. The
societies do not borrow money. Their funds come from the sale of
shares, low entrance fees, a reserve fund created by carrying to it
20 to 25 per cent of the yearly profits, and by the issue of interestbearing bonds, but mainly from deposits, as these societies are con­
sidered savings banks.
The final governing body is the general meeting. At the annual
meeting four unsalaried committees are elected: (1) A council, or
board of management. The council has from 7 to 140 members




OTHER. COUNTRIES.

11

representing all parts of the membership and all the various sections
and interests, has general administration of the society, elects new
members, and appoints, inspects, and reviews the administrative
officers. It appoints from its own number an executive board of
from three to five, to whom the general management of the society is
intrusted. (2) A committee of discounts of from 15 to 40 members
to keep records of the safe credit value of each member and his past
dealings with the society and to approve or reject applications for
loans or credits. (3) An appeal committee of three members to act
as arbitrators in all disagreements between members and the various
officers and committees relative to matters of administration. (4) A
committee of from three to five to approve and make or to refuse
(for good reason) loans and discounts. The societies cover larger
districts than the Schulze in Germany and some of them have several
branches, often as many as 20, with a membership of 5,000 or more.
There is no central organization. Some of the societies are grouped
into district bodies, which are without authority over the member
societies. Some of the larger societies act as central banks for the
smaller organizations in their vicinity. No general directing or
inspecting body exists, and therefore uniformity is lacking.
Though one-fourth of their members are in agricultural pursuits
the people’s banks do hot reach small farmers and villagers. Notic­
ing mis, Leone Wollemborg, later Minister of Fmance of Italy, in
June, 1883, established at Loreggia a rural society on the Raiffeisen
principle, furnishing most of the initial capital himself. By 1912
the number of these societies had increased greatly, outstripping
the people’s banks of Luzzatti, and all closely following their
Raiffeisen model. The same care as in Germany is observed in
electing members. The societies have only one salaried officer, no
shares, no dividends, turn all surplus into the reserve, do a simple
banking business with a small membership, and require that loans
shall be used for the object stated in the application. General meet­
ings of all the members are held frequently, nonattendance being
penalized by a fine. The organization is a little different from the
Raiffeisen model. An executive board of five, similar to that of the
Luzzatti banks, administers the affairs of the society. The council,
which meets fortnightly to examine accounts, receive deposits, and
consider applications for loans, is larger than in Germany. All loans
are for three months or less but are renewable.
One of the peculiarities of many of the Italian societies is the
uhonor loan,” which is a loan ranging from 50 to 100 lire ($9.65
to $19.30, par) made to honest nonmembers without security if
vouched for by a member, and repaid in installments, often without
interest.
OTHER COUNTRIES.

From Italy the Luzzatti system entered France. On April 9,
1883, a people’s bank was organized at Mentone, and has been suc­
cessfully conducted ever since, though the artisans and working
classes generally form but a small part of its membership. A few
other societies on the same plan have been formed, but they are
outnumbered by the Raiffeisen societies which entered France




12

COOPERATIVE CREDIT ABROAD.

direct from Germany in 1892 through the influence of Louis Durand,
a loyal follower of Raiffeisen. The original was followed except that
the societies are closely connected with the church and have a strong
religious bent. A few imitations of both societies exist in Spain
and Portugal, but they differ widely from their models. The Luzzatti plan, considerably changed, has “been adopted by societies
organized in Argentina, Uruguay, Egypt, and Canada.
In Belgium the popular banks with but slight changes from the
Schulze system were introduced by a large landed proprietor, Leon
d’Andrimont, into Liege, in 1883. Limited liability, however, was
soon substituted for the unlimited liability of the German system.
The management is vested in an unpaid council of 15, which appoints
the manager, cashier, and executive committee. The value of the
shares is generally 200 francs ($38.60, par), and loans are made on
these shares up to one-half of their value. The reserve fund of
these societies is less than of those in Germany. There is no cen­
tral bank.
The Raiffeisen societies of Belgium are very similar to those in
Germany. They were introduced by Abbe Melaerts and have ever
been closely under the control of the Catholic church. The parish
priest is a member of the managing committee, which decides upon the
eligibility of candidates for admission with the same care as in Ger­
many. Meetings are regularly opened with prayer, and a gratuitous
funeral mass is said on the death of a member. No State aid has
ever been received and unlimited liability is the rule. The' head­
quarters are at Louvain.
The Raiffeisen societies in Holland, where the first one was organ­
ized at Limberg, in 1895, are a close imitation of those in Belgium.
The few in Switzerland are largely denominational, and date from
1900, when the Vicar of Bichelsee formed a society in his parish.
In Austria, societies on the Schulze model were organized before
1859, and are similar to those in Germany. About two-thirds of
them are organized on the limited-liability plan. Many Raiffeisen
societies are also found in Austria. In Hungary, Czechoslovakia,
and Yugoslavia, societies on both models have been formed, but most
of them follow the Raiffeisen model, though heavily subsidized by
the Government. In Serbia and Bulgaria the shares of the Raiffeisen
societies are paid for in annual installments and at the close of a
stated term the money is refunded.
In Russia an adaptation of the Schulze societies was introduced
in 1864 at Dorovatov by de Louguinine, a Russian landlord, the
credit feature being but one part of the business of the society.
Thirty years later the Raiffeisen societies were introduced, but
changed almost beyond recognition, unlimited liability being the
principal feature retained- Each society is organized on the approval
of the Ministry of Finance, is located in a town, covers a large dis­
trict, and has a large membership, with paid officers. The Russian
credit society has no capital except what is loaned by the State, and
all profits go into the reserve. Both the Schulze and Raiffeisen
societies, as found in Russia, have departed so far from their originals
that it is generally difficult to distinguish between the two aaapta-




OTHER COUNTRIES.

13

tions. Both receive State aid and are carefully supervised by the
State. Under the Soviet Government they have been encouraged as
a part of the cooperative system.
In Prussian Poland, the Schulze societies are in the majority, and
closely follow their original. In Russian Poland, the Raiffeisen
type prevails, as is also true in Bohemia, Moravia, and Silesia.

England has not proved a fruitful field for cooperative credit
societies. The few founded there have not increased in size or
attracted much attention. Those in Ireland, where they were intro­
duced in 1895, are rural and of the Raiffeisen type, and are success­
fully operated.
In India, a land teeming with usurers, a cooperative credit act was
>assed in
{ and 1904, after consideration of theofneeds of the country and a
ong
careful governmental study the societies of Europe.
This, provided for the formation of societies on the Schultze plan
in cities where four-fifths of the membership was to be nonagricultural,
and on the Raiffeisen plan in the rural districts where four-fifths were
to be agriculturists. The rural societies were to have unlimited
liability, and with the urban societies the form of liability was to be
optional. According to this law, the profits of the former go into the
reserve, and three-fourths of the profits of the latter are divided
among the members. The societies may borrow from the Govern­
ment, which also controls their management. The officers serve
without pay. Loans are for a specific purpose approved by the
proper committee, which is less severe than that of the German
societies in the character examination of members and less sus­
picious over loans.
COMPARATIVE STATISTICS.

Correct statistics of these societies are practically unobtainable.
Under the laws of the various European States all cooperative
societies are supposed to be registered and to make annual reports.
In most States statistical abstracts of these reports are printed. In
some of these reports, however, no separation of the credit societies
from Other types is made, and where a society conducts other opera­
tions besides credit it is generally impossible to separate the credit
statistics from the rest. In some of the less progressive countries
many societies fail to give reports and uniform data are unprocurable.
The following table based on statistics taken from- various sources
and scattered reports will serve to give some idea of the work done
in the more important countries.
259°—22---- 2




STATISTICS OF COOPERATIVE CREDIT SOCIETIES IN SPECIFIED COUNTRIES.1
[A .= agricultural; R .= Raiffeisen; S .= Schulze-Delitzsch.]
Country.

Great Britain
Hungary.......
India.............
Ireland..........
Italy..............
Japan..........
Korea..........
Lithuania...
Mauritius...
Netherlands
Norway...;.
Russia.........
Serbia..........
Switzerland.

All. 1915
1913
1917
1919
All. 1918
R. 1918
All. 1918
S. 1911
R. 1918
A. 1919
All. 1914
A. 1916
R. 1916
All. 1918
R. 1918
S. 1918
R. 1918
All. 1918
All. 1917
All. 1920
1918
1919
1919
S. 1917
R. 1917
R. 1911
R. 1919

Share capital.

377
11
Kr. 69,702,756 ($14* 149,659)
431
485
1,039
92
R. 48,548 ($23,623)
9,551
1,107 135,538
Kr. 2,886,000 ($585,858)
Kr. 5,932,000 ($1,204,196)
3,705 399,623
917 641,429
M. 61,000,000 ($14,518,000)
4,712
11,164 1,099,843 M. 4,637,794,799 ($1,103,795,162)
£170,301 ($828,765)
216
22,373
£775 ($3,772)
127
16,602
183
£1,414,888 ($6,885,552)
25,036 1,045,452
£7,968 ($38,777)
138
15,881
L. 2,200,000 ($424,600)
140
27,000
508
10,390 1,223,000
65,742
Yen 786,608 ($392,124)
240
76
23
R. 106,143 ($51,649)
2,837
1,159
Kr. 237,797 [ m , 730)
210
12 ,677
4,362
12,114 } 10,478
9,082
638
Fr.l, 250,947 ($241,433)
250
18,976

1 Data are mainly from International Review of Agricultural Economics, Rome.
• Included in share capital.




Deposits.

Loans.

Reserve.

F61,500 ($59,335)

P-149,500 ($144,238;
Kr. 470,392,068 ($95,489,590;

(2)

R. 2,954 ($1,437)
Kr. 474,255,000 ($96,273,765)
Kr. 996,839,000 ($202,358,317)
iM. 319,000,000 ($75,922,000)
M. 1,929,553,015 ($459,233,618)
£525 ($2,555)
£6,009,324 ($29,244,375)
£48,675 ($236,877)
L. 34,000,000 ($6,562,000)
Yen 133,000,000 ($66,300,500)
Yen 294,363 ($146,740)
R. 62,521 ($30,423)
FI. 227,765,000 ($91,561,530)
rR. 262,700,000 ($135,185,420)
iR. 419,600,000 ($215,926,160)
Fr. 718,713 ($138,712)
Fr. 38,643,068 ($7,458,112)

R. 50,209 ($24,432)
M. 575,378,455 ($136,940,072)
£71,700 ($348,928)
£2,265 ($11,023)
Kr. 12,597,497 ($2,557,292)
£2,827,765 ($13,761,318)
£33,453 ($162,799)
L. 5,833,000 ($1,125,769)
L. 10,777,500 ($2,080,058)
Yen 91,700,000 ($45,712,450)
Yen 2,127,646 ($1,060,632)
FI. 78,662,000 ($31,622,124)
Kr. 2,526,950 ($677,223)
R. 238,700,000 ($122,735,020)
R. 295,000,000 ($151,807,000)
Fr. 2,640,529 ($509,622)
Fr. 54,428,843 ($10,504,767)

R. 6,374 ($3,102)
Kr. 6,945,000 ($1,409,835)
Kr. 14,233,000 ($2,889,299)
(a)

£613,619 ($2,986,177)
£4.133 ($20,113)
L. 1,100,000 ($212,300)
Yen 529,684 ($264,047)

'Fr. 179,616 ($34*666)
Fr. 1,418,322 ($273,736)

COOPERATIVE CREDIT ABROAD.

Argentina........
Austria............
Belgium...........
Ceylon.............
Czechoslovakia.
Germany.........

Class Year Num­ Number of
of so­ of re­ ber of
ciety. port. socle- members,
ties.

HISTORY OF MOVEMENT.

15

COOPERATIVE CREDIT IN AMERICA.
HISTORY OF MOVEMENT.

The first attempt to establish credit associations in the United
States was in 1870, when Josiah Quincy and other prominent men of
Boston petitioned the Legislature of Massachusetts for the passage
of a general law allowing the incorporation of cooperative banks on
the Schulze-Delitzsch plan, then attracting so much attention in
Europe. A translation of the act of 1868, passed by tlm North Ger­
man Confederation, was laid before the legislative committee on banks
and banking. At the session of the legislature which met in January,
1871, favorable committee reports were made to both houses. A
bill to permit the organization of cooperative societies for distribu­
tion, manufacturing, loan, and credit, with the right to receive de­
posits of savings, was introduced but failed of passage. Subse­
quently, bills were passed providing for the incorporation of coopperative societies of the various kinds mentioned in the bill of 1871,
except for cooperative credit.
In the meantime, articles were printed in the various economic
and banking journals and leading literary magazines describing the
system of cooperative credits in Europe. The United States De­
partment of Agriculture in 1892 issued a detailed description of the
workings of the Schulze and Raiffeisen societies. The cooperative
journals contained frequent references to the system, and among
certain classes the working and the value of these associations were
well understood.
QUEBEC.

The first general law in North America authorizing the organiza­
tion of cooperative credit associations was not passed, however,
until 1906. The passage of this bill was due to the efforts of Alphonse
Desjardins, who, December 6, 1900, had founded a cooperative
people’s bank at Levis, a city of 7,000 inhabitants on the St.
Lawrence River opposite the city of Quebec.
Desjardins was a journalist who had spent his life in that vicinity.
He was acquainted with the conditions of the people of the Province
of Quebec, who were popularly known as French Canadians. They
were descendants of settlers from France who passed under English
control in 1763, following the French and Indian War. They were
oor
knowledge of
little patronage for
E people, with nothey had been banking and terrible usury, fre­
anks. For years
victims of
quently paying 100 per cent interest on small loans. Desjardins
corresponded with the leaders of the cooperative credit movement
in Europe, examined the savings-bank system of New England,
and finally evolved a plan, based upon the Luzzatti system of co­
operative banking in Italy, combining with it the distinctive features
oi the Raiffeisen societies, at that time spreading rapidly throughout
Europe, but modified by the needs of the people with whom he was
acquainted. He drafted a constitution, and with the help of the
Roman Catholic priest and the clergy of the locality, he organized
La Caisse Populaire de Levis, with 90 members and a capital of $28,
and opened for business January 23, 1901.



COOPERATIVE CREDIT IN AMERICA.

1 6

In the following July, a similar association was formed in the rural

>arish
a
J ofatSt. Joseph de Levis. In January, 1905,thethird society was
ormed St. Malo on the eastern outskirts of city of Quebec.

The formation of other societies was discouraged during the ex­
perimental stage, which, however, by 1906, Desjardins felt had
passed. In that year, with* the support of both political parties,
the Quebec Syndicates act, as drawn up by Desjardins, providing
for the formation of consumption and credit associations of a cooper­
ative character, was passed without a dissenting vote, though six
years befor#the Quebec Parliament had refused to consider such an
act. It followed the constitution and by-laws of the three societies
then existing in Quebec.

The passage of the act awoke great interest in cooperation in the
Province of Quebec. Until then, Desjardins had acted as president
and manager of the Levis society, serving without pay, the place
of business having been in his private office. He then moved the
office of the society down town and hired a manager for it. Three
associations were organized in 1907, 11 in 1908, and 15 in 1909.
In 1912, the number of such associations was 98; in 1913, 122,
besides 19 similar associations in the Province of Ontario, the latter
all voluntary.
An effort was made to have a bill passed by the Dominion Parlia­
ment. A bill modeled on the Quebec act of 1906 was introduced
into the Dominion House of Commons in 1907 and referred to a
committee which, after making an exhaustive inquiry into the
subject of cooperative credit, recommended its passage; but nothing
further was done. The Retail Merchants’ Association of Canada
disapproved the scheme because of its distributive feature and, in
the session of 1908, vigorously opposed it. However, it passed the
House of Commons unanimously and was lost in the Senate by only
one vote. In 1910 another effort was made to pass a similar bill
and was met by the same opposition. Then Desjardins divided his
bill into two parts, one for cooperative credit and the other for
cooperative production and distribution. The latter was defeated
and the former never reached a final reading, in spite of the fact that
the Governor General of Canada, the Lieutenant Governor of the
Province of Quebec, and the Archbishop of Quebec were members
of the Levis bank. No further efforts have been made to secure
the passage of a cooperative law by the Dominion Parliament.
NEW HAMPSHIRE.

In the meantime the work attracted attention in this country.
Large numbers of French Canadians had emigrated to the factory
towns of northern New England. Among them in Manchester,
N. H., Desjardins on December 16, 1908, founded the first credit
association in the United States—La Caisse Populaire Ste. Marie—99
per cent of whose depositors to-day are French. It is operating
under a special charter, granted by the legislature April 6, 1909,
following closely the provisions of the Quebec act, and still remains
the only organization of its kind in the United States so organized
and operating.




HISTORY OF MOVEMENT.

17

MASSACHUSETTS.

In Massachusetts, at the same time, several associations existed
bearing a striking resemblance to the Canadian societies. Hon.
Pierre Jay, bank commissioner of the Commonwealth of Massa­
chusetts, m his report dated February 11, 1907, made a brief review
of the various agencies in Boston which, without legal authority,
received deposits for the encouragement of thrift. In his report
for the year 1908, he referred to five cases where employees in busi­
ness houses had organized savings and loan associations, received
deposits from members and invested them or loaned them to members.
Such societies were operating contrary to law, yet the commissioner
recommended the passage of laws encouraging them and continuing
their existence.
The oldest of these societies was the Globe Savings and Loan
Association, organized in 1892, its membership being confined to
employees of the Boston Globe. It was a mutual cooperative and
loan society, organized and operated, absolutely independently of
the owners of the newspaper, by 444 of the 600 employees for their
own benefit, and was organized for the purpose of borrowing small
amounts of money at reasonable rates and avoiding the then com­
mon practice of borrowing at high rates from one another or from
outsiders on assignment of wages. Only members were allowed to
make deposits and deposits were not allowed to be in excess of the
loans needed. On January 1, 1909, the loans outstanding were
$48,329; cash on hand, $5,209.64; deposits, $53,319; surplus, $219.64.
During the year 1908, of a total of 4,579 loans made, aggregating
$67,571, nearly 53 per cent were in amounts of $5 or less and 97 per
cent were in amounts of $50 or less.
The success of this association led the employees of other news­
papers and of large manufacturing plants and mercantile establish­
ments in Boston to organize similar societies.
The bank commissioner, in concluding this part of his report for
1908, called attention to the success of these societies, described the
credit associations organized by Desjardins in Canada and the
25,000 cooperative banks in Europe and India, with 3,000,000 mem­
bers, and $1,000,000,000 of assets, and their success among farmers,
small tradesmen, and industrious workmen, and ended with a strong
recommendation to the legislature to pass a bill authorizing the
formation of credit associations for people in moderate circum­
stances, legalizing societies similar to the Globe association, and
placing them under the direction of the bank commissioner.
Through the influence of the bank commissioner, Desjardins was
invited to give an address before the Twentieth Century Club of
Boston, describing the working of the credit associations of Quebec,
and to confer with the banking committee of the Legislature of
Massachusetts, before which in February, 1909, he explained the
theory and practice of his system and aroused public interest in this
agency. On the basis of the committee’s report, the legislature
passed an act similar to that of Quebec, embodying all the princi­
ples Desjardins advocated, which was approved, by the governor,
May 21, 1909. Several applications for incorporation were received
but only one was granted during the year, and no organization was




18

COOPERATIVE CREDIT IN AMERICA,

made under that approval. The first society opened for business
was the Myrick Credit Union, of Springfield, whicn was incorporated
April 5, 1910, and began business in a large manufacturing plant
on May 2 of the same year. By the end of the year four more had
been established—one of French Canadians in a Roman Catholic
parish in Lyim, one of Poles residing in the North End of Boston,
and two others in the same city.
Literature was prepared to aid in the starting of credit associa­
tions and during; the year 1911 determined efforts were made to bring
before the public the advantages of establishing credit unions in
communities that might be benefited by them. The Boston Chamber
of Commerce appointed a committee to aid in their establishment
and Desjardins made several addresses in various parts of the State
advocating their formation. Several societies were established as
a result.
JEWISH UNIONS.

The movement was also helped forward from another and unexected source. The Jewish Agricultural and Industrial Aid Society
ad been incorporated-in New York City in 1900 to encourage the
removal of Jews from the cities to the country. To aid it in this work,
the society was given a part of the Baron de Hirsch fund of $2,500,000.
This was a fund established by Baron Maurice de Hirsch in 1891, for
the amelioration of the condition of immigrant Jews who, beginning
with 1892, had come to the American shores in large numbers, mainly
from the agricultural districts of Russia, Rumania, and Galicia,
and had remained in the large cities along the coast in spite of efforts
to settle them on the land farther west. The society granted loans
to mechanics, artisans, and tradesmen to enable them to secure
larger earnings and to accumulate savings with which to buy homes
in the suburbs and rural districts. Many Jewish colonies were es­
tablished in the West, and several abandoned farms in New England,
New York, and New Jersey were bought, the society paying all the
expenses except transportation, which was paid by the Industrial
Removal Office, another Jewish society organized in February, 1901.
Where individuals had difficulty in borrowing money with which to
buy farms, the society granted them financial assistance, taking a
second mortgage on the property and allowing repayment to be
made in installments, using a method adapted from the “ credit
fonder” system common in France. As time passed, many short­
term personal loans were also made to those desiring to purchase
equipment for their farms.
In 1907 a study was made of the cooperative credit system in
general use in Europe, and in 1909 a form of credit union was de­
vised, slightly different from that established in Massachusetts, but,
like it, based on the Raiffeisen form of cooperative banks. It was,
however, modified by the society’s experience with the Jewish
colonies planted in the West, and substituted for the State the Jewish
Agricultural and Aid Society, which loaned each union twice the
amount of its capitalization. The capital stock of each union was
placed at $500, and after the shares had been bought by members
the Aid Society loaned the union $1,000 at 2 per cent interest annually.
Membership was confined to Jews. Between the years 1911 and
1915, 19 Jewish credit unions, the first agricultural credit unions

E




HISTORY OF MOVEMENT.

19

formed in the United States, were organized—8 in New York, 5 in
New Jersey, 5 in Connecticut,.and 1 in Massachusetts—the last one
being organized in 1914 under the credit union law of that State,
and remaining to this day the only agricultural credit union in
Massachusetts. The others were voluntary organizations in States
where no credit union law existed at the time of their formation.
DEVELOPMENT OF AGRICULTURAL CREDIT.

Two other occurrences, apparently unrelated to the subject and
independent of each other, drew attention to the credit union move­
ment. The first of these was the report, in 1908, of the Country
Life Commission appointed by President Roosevelt, which found
a lack of agricultural credit facilities and recommended the adoption
of some method of cooperative credit and rural cooperative organi­
zation. The second was the report of the National Monetary Com­
mission to inquire into and report changes necessary or desirable
in the monetary system of the United States, appointed in accord­
ance with the provisions of sections 17 to 19 of the act to amend
the national banking laws, approved May 30, 1908, following the
commercial crisis of 1907. This report called attention to the
superior facilities for obtaining loans enjoyed by farmers in Europe.

The first of these reports showed the need of cooperative credit
among farmers, and the second aroused interest in the possibilities of
cooperative credit in the United States in view of its wide and suc­
cessful use throughout Europe. Many articles on the subject appeared
in the newspapers and magazines. The subject was discussed at a
meeting of the Bankers’ Association of Ohio on October 26, 1910. A
year later, the American Banking Association at its annual meeting
m New Orleans created a committee on agricultural and financial
development and education, and caused the organization of sub­
sidiary agricultural committees in 34 States to study the various
forms of agricultural credit in use in Europe.
In 1912, a series of events of interest in this connection occurred.
Early in the year, David Lubin, the American representative to the
International Institute of Agriculture at Rome, had sent broadcast
through this country copies of a collection of articles describing the
importance attached by the European Governments to the farmers
employing the Best business methods possible. One of these pam­
phlets fell into the hands of Senator Fletcher, of Florida, at the time
resident of the
Commercial Congress. At his invitation,
P came fromSouthernand attended the fourth annual meeting of
nbin
Rome
that congress at Nashville, Tenn., April 9, 1912, after giving six days’
instruction in rural cooperative credit to a conference on agricultural
finance, attended by representatives from 27 States. As a result,
the congress voted to appoint a committee on rural finance, consisting
of two persons from each State to investigate the actual working of
the cooperative credit socities among the farming and industrial
classes in Europe.
In the summer of 1912, each of the leading political parties at its
national convention adopted recommendations m its platform favor­
ing such an investigation. At the meeting of the American Bankers’
Association in Detroit, in September, several addresses were delivered
on rural credits in Europe. Later in the year, there was issued a Pre­
liminary Report on Land and Agricultural Credit, prepared by Hon.



20

COOPERATIVE CREDIT IK AMERICA.

Myron T. Herrick, who had been the principal speaker before the
bankers of Ohio, in 1910, who had introduced the resolution creating
the committee on agricultural development of the American Banked
Association, in 1911, and who was at that time, and is at present, the
American ambassador to France. This report, prepared by direc­
tion of President Taft, was a summary of the system then existing
in the leading countries of Europe. In December, at the meeting
of the house of governors, at Kichmond, Governor O’Neal, of Ala­
bama, chairman of the committee pn rural credits, addressed the
meeting on that subject. In the spring of 1913 the first National
Conference on Marketing and Farm Credits, called by the pub­
lishers of farm journals m the United States, was held in Chicago
and gave due consideration to the question of rural credits.
FEDERAL FARM LOANS.

The commission assembled by the Southern Commercial Con­
gress, consisting of 2 from each of 29 States, 4 from Canada, and 5
appointed by President Wilson in accordance with a provision in the
agricultural appropriation act approved by President Taft on the
last day of his term of office, was absent from the country from April
26 to July 25, 1913. Under the direction of David Lubin and the
International Institute of Agriculture, the members visited Egypt
and every European country, except Portugal and the Balkan States,
and made a detailed study of the finances, production, and organi­
zation in agricultural ana rural life, including agricultural credits
and cooperative banks. On their return, the presidential appointees
on the commission submitted four successive reports to the Senate
between October 20, 1913, and March'13, 1914, recommending that
incorporation of banks with small capital be left to the consideration
of the States, but that Congress by appropriate legislation establish
some system of agricultural credit. Eighty-six bilk relating to rural
credits were introduced by various members of both Houses of Conand eventually, July 17,
the
loan bill,
fress, on the Prussian landschaft,1916, with aFederal farmcooperation
ased
but
mixture of
and Federal assistance, was enacted into law.
STATE CREDITS.

During the three years that the question of national legislation
was under consideration, addresses were made, articles were printed
in the papers and magazines, pamphlets were written, and the State
members of the commission reported to their respective governors.
Nineteen States passed legislation relative to rural credits permitting
State loans to farmers under certain conditions and the creation ot
rural savings associations or banks, all relating to farm mortgages
for long terms of years, and paralleling in a way the Federal act of
July 17, 1916.
LEGISLATIVE ACTION.

In nine States,1 widely separated and representing different condi­
tions, acts similar to the credit union acts of Massachusetts and New
Hampshire were passed, designed to aid small fanners and artisans.
1Texas (Acts of 1913, ch. 87), New York (Acts of 1913, ch. 582), Wisconsin (Acts of 1913, ch. 733), Rhode
Island (Acts of 1914, ch. 1103), Oregon (Acts of 1915, ch. 277), North Carolina (Acts of 1915, ch. 115). Utah
(Acts of 1915, ch. 120), South Carolina (Acts of 1915, No. 154), and Nebraska (Acts of 1919, ch. 198).




LEGISLATIVE ACTION.

21

In California, an act (ch. 279, Acts of 1915) was passed, providing
for the appointment of a commission to consider and report on the
advisability of the adoption of a system of rural credits. In New
Jersey a bill introduced in the legislature, March 4, 1919, giving
banking powers to associations managed on cooperative principles
under the department of banking and insurance, failed of passage.
The New York act was passed at the request of the Jewish Agri­
cultural and Industrial Aid Society, which desired incorporation for
its eight credit unions, and of certain benevolent institutions in New
York City. In the other States, the legislation seems to have been
the outgrowth of the current discussion on rural credits, and to have
been designed to enable small farmers to obtain financial aid for short
periods of time at rates not prohibitive. The New York act was
replaced by a new act the next year,2based on the experience abroad,
in Canada, and Massachusetts, and the savings bank and building
and loan experience in New York, and the Massachusetts act of 1909
was revised in 1915,3 the provisions varying from the earlier act
mainly in arrangement. In 1921, New Hampshire passed a general
act4 providing for the incorporation of credit unions, following in
the main the provisions of the special act of 1909.
COOPERATIVE CREDIT LEGISLATION.

The laws show by their fullness the ideals of the founders of the
plan. Whenever the details have been conscientiously followed,
credit unions have been generally successful. Failure in nearly
every case has been due to carelessness in the observance of details.
After the establishment of one society in a State, the rule has been
never to organize other societies in advance of the need for them nor
until those who enter them understand what they are doing.
The main provisions of the various laws are summarized below.

Name of credit associations.—The names of these associations in
the different States vary somewhat. In Quebec they are incorpo­
rated as cooperative syndicates for consumption, production, and
credit, though popularly referred to as cooperative people's banks.
In Massachusetts the name “ cooperative banks" had already been
iven by law to building and loan associations. To avoid confusion
etween the two types of organization, it therefore seemed advisable
to coin a new name for the credit associations and, after consultation
with Desjardins, the term 11credit union" was adopted. This is the
English equivalent of “ creditverein," the term used by Schulze in
his book written in 1856 and the name by which several of the
cooperative associations founded by him were known. In New
Hampshire, New York, Rhode Island, Oregon,5 and North Carolina
they are also called credit unions; in Texas rural credit unions; in
South Carolina6 cooperative credit unions; in New Hampshire,7*
Wisconsin, and Nebraska cooperative credit associations; and in
Utah cooperative banks for personal credits.
Control.—Except for one in New Hampshire, credit unions are

S

incorporated under general laws and are generally under the
*Acts of 1914, ch. 369.
aActs of 1915, ch. 268. General Laws of Massachusetts of 1921, ch. 171.
♦ Acts of 1921, ch. 40.
6 In the title of the act they are called rural credit unions or cooperative associations.
• In the title of the act they are called cooperative unions.
*In the act of 1909.




22

COOPERATIVE CREDIT IK AMERICA.

direction of the banking department of the State. In North Carolina
credit unions are organized and controlled by the superintendent of
cooperative associations and credit unions, who is under the direction
of the joint committee for agricultural work in the division of
markets and rural cooperation.
Articles of incorporation and by-laws.—Generally they are organized
by 7 or more8 citizens® of a State, making, signing, and acknomedging
a certificate containing the name and location of the association with
the conditions of residence or occupation necessary to qualify for
membership, with number, names, and addresses oi the first board
of directors and subscribers and the number of shares each is to take.
The law of Utah requires that before the articles are approved 400
shares must have been subscribed for and half their value paid in.
The certificate is then presented to the State banking board, or
superintendent of credit unions in North Carolina, for approval
which is generally granted as a matter of course. In Massachusetts,
New Hampshire, and South Carolina, consent may be given if the
board is satisfied that the proposed field of operation is favorable
to the success of the corporation,*and in Nebraska, North Carolina,
*
South Carolina, Utah, and Texas, when further satisfied that the
standing of the proposed members is such as to give assurance
that its affairs will be administered in accordance with the spirit of
the act. In South Carolina the charter is granted by the secretary
of state. In New York and Oregon an appeal to the supreme court
is allowed from an adverse decision of the banking department.
After approval, a copy of the articles or certificate is filed with the
secretary of state or with the clerk of the county court or muni­
cipality in which the principal office of the society is located.
The certificate is then returned to the incorporators who come
together and draw up by-laws. In some States the by-laws are
drawn up at the outset and presented to the board with the proposed
articles of incorporation. The required contents of the by-laws vary
somewhat in the several States. Usually, the name of the organiza­
tion must be given and must contain the words “ credit union” or
similar words designated in the statute, and the use of these words
by any association not incorporated under the act is forbidden.
The by-laws must also state the purpose, location, conditions of
residence, or occupation necessary to qualify for membership, the par
value of the shares, the conditions on which shares are issued, trans­
ferred, and withdrawn, the conditions on which deposits are received
and withdrawn, loans made, and dividends declared, the method of
receipting for money paid in on account of shares or deposits, the
number of directors and officers, the number of members of the
credit committee, the duties of the several officers and committees,
the fines for failure to meet obligations to the corporation punctually,
the date of the annual meeting, the manner of notifying members
of meetings, the number of members necessary to constitute a
quorum, and such other matters as seem advisable.

The laws of several States have additional requirements; thus, the
act of New Hampshire requires the amount of the entrance fee to be
stated in the by-laws, and the date of the beginning of the fiscal
year. The acts of New* York, Oregon, North Carolina, and Nebraska
• 5 in Rhode Island; 10 in South Carolina, Texas, and Utah; 12 in Quebec; and 15 in Nebraska.
• Persons employed or residing in, in Massachusetts, New York, North Carolina, and Oregon.




LEGISLATIVE ACTION.

23

require that the manner in which the guaranty fund is to be accu­
mulated shall be specified, as well as the manner of conducting
meetings, the number of directors necessary for a quorum, the
compensation of officers, and the maximum rates charged on loans.
North Carolina requires that the method of investing funds and
manner of dissolution be shown, and with New Hampshire that the
number of members on the supervisory committee be stated. New
Hampshire requires the maximum amount of a loan to be indicated,
Massachusetts and New Hampshire the maximum number of shares
onq may hold, and Nebraska the manner in which funds are to be
employed. In Utah the names of associations in towns containing
more than 3,000 people must include the words “ urban cooperative
bank” and those in smaller districts the words “farmers' cooperative
bank.” In South Carolina and Utah, the by-laws must state the
system for encouraging members to increase their holdings. These
by-laws, after adoption, by the association, must be approved by
the State banking department and are not to be changed except
with its approval.
Share capital.—Shares may be subscribed and paid for in such
manner as the by-laws prescribe and are to be issued only to persons
qualified for membership. No limit is set on the share capital of
the society, except in the first society formed in New Hampshire,
where it may not be less than $1,000 or more than $100,000. In
Quebec it may not fall below the amount mentioned in the articles of
association. All members of the association are required to be
shareholders. In no State is provision made for the organization of
credit unions on a mutual basis without capital stock. In Quebec,
the par value of each share must be at least $1; in New Hampshire
(the first society), $5, and in Nebraska $10; in South Carolina and
Utah it is fixed at $5, and in Texas at $25; in Massachusetts and
New Hampshire it is limited to $10; and in New York, North Carolina,
and Oregon, to $25, In South Carolina and Utah members may
purchase not more than 200 shares each; in the first society, New
Hampshire, the limit per member is $500, or one-sixth of the share
capital of the society. In New York, North Carolina, Oregon, and
Nebraska, the payment of commissions for securing members or for
selling stock is forbidden. The capital of such societies is exempt
from taxation in Wisconsin; in New Hampshire, New York, North
Carolina, Oregon, and Rhode Island the societies are considered as
savings banks for purposes of taxation.
In New York and Oregon shares in amounts of less than $600 are
not to be sold on execution. In New York, Oregon, North Carolina,
and Nebraska the society is allowed to impress a lien on shares and
dividends to the extent of loans, dues, and fines outstanding.
In Quebec membership in the society is permitted to farmers'
clubs, agricultural societies, school districts, municipalities, parishes,
and townships. Membership is expressly permitted to cooperative
associations in Utah, and is impliedly so in other States, except
South Carolina, where it is confined to natural persons.
In all States shares may be issued to and deposits received in the
name of minors, and shares may be held and deposits made in trust,
provided the name and address of the beneficiary are disclosed.

Deposits .—Credit unions are permitted to receive deposits from
members in all States, and in North Carolina, South Carolina, and



24

COOPERATIVE CREDIT IN AMERICA.

Utah from nonmembers. In South Carolina the payment of savingsbank rates of interest on deposits is required.
Loans.—Credit unions are permitted to loan their ^tmds—share
capital, deposits, and surplus—to members only, at reasonable rates, ’
for such purposes and on such security and terms as the by-laws
permit or the credit committee determines. In Texas such loans are
allowed for productive purposes only or for urgent need and are
limited to $200 for a period of eight months, without renewal for
the amount of the original loan. In Massachusetts, under certain
circumstances, loans may be made on the security of a first mortgage
on farm land for not more than 50 per cent of its value. Oregon,
New York, North Carolina, and Nebraska permit no loan for more
than $50 to be made without an indorsed note or other security.
New York, Oregon, and Nebraska require a pledge of the shares held
by the member to whom a loan is made ana permit additional
security to be demanded if, at any time, the loan is deemed unsafe.
New York, Oregon, and Utah limit the rat£ of interest on loans to
12 per cent, South Carolina to 7 per cent, Texas to 6 per cent, New
Hampshire and North Carolina to the legal rate. In Utah not more-'
than 15 per cent of the capital and surplus may be loaned to one
person.
The loan may be repaid in whole or in part on any day when the
office is open for the transaction of business, the borrower to be fined
for failure to pay the interest or ,any installment required by the
terms of the loan as prescribed by the by-laws. Similarly, in New
York, North Carolina, and Oregon, a penalty may be levied for non­
payment on shares which, in the last-named State, is limited to 2
per cent a month, with 5 cents a month as a minimum.
Such surplus funds as are not loaned or needed for current use
may be deposited in banks or trust companies incorporated in, or
national banks located in, the same State as the credit union. In
New York and Oregon the surplus may be invested in shares of or
deposited with other credit unions. In Massachusetts and Utah the
surplus may be invested in the bonds of other credit unions or of
farm land banks incorporated in the State or in securities that are
legal for savings banks. Massachusetts further permits deposits to
be made in other credit unions, or invested in shares of credit unions,
farm land banks, or local building and loan associations, up to 30
per cent of the share capital and surplus, subject to the approval of
the bank commissioner. In New Hampshire and Nebraska such
surplus funds may be invested in Federal, State, local, or farm loan
banks, or in other securities approved by the State banking board.
In Utah funds in excess of 15 per cent of the reserve may be loaned
to nonmembers on demand.
In North Carolina, all credit unions over 3 years old must keep on
deposit in regular banks an amount of the reserve fund equal to 20
per cent of the total liabilities.
Other activities.—All associations are permitted to borrow money .
from nonmembers if needed to lend to members. In New York and
Oregon the amount so borrowed is limited to 40 per cent of the
share capital, or $2,000, if the capital is less than $5,000; in North
Carolina, to the capital, reserve, and surplus of the association; and
in Quebec to twice that amount.



LEGISLATIVE ACTION.

25

In all States credit unions are allowed to undertake such other
activities relating to the purposes of the association as their by-laws
authorize, subject, however, to the general banking laws of the State
in which located and to the general supervision of the banking
department (or superintendent of credit unions in North Carolina),
the credit unions being in this respect on the same footing as the
savings banks. In Massachusetts, under certain circumstances, credit
unions are allowed to trade in their own collateral trust bonds secured
by first mortgage on farm lands.
Liability.—Limited liability is the rule, though the laws permit
any credit union to adopt the unlimited system if its by-laws so pro­
vide. In South Carolina the liability of each member is to be the
same as in the case of other banks; in Nebraska, twice the par value
of the stock held.
Meetings.—The fiscal year corresponds with the calendar year,
except in Massachusetts and Wisconsin, where it ends October 31.
The annual meeting is held at such time as is prescribed by the
by-laws. The act of Massachusetts, however, specifies that this
meeting shall be held within 30 days after the close of the fiscal year,
and the statutes of New York, Nebraska, and Oregon that it shall
take place in January.
At these meetings the members receive the annual reports of the
officers, decide questions of interest to the corporation, fix the amount
of the entrance fee for the ensuing year, amend the by-laws (if the
notice of the meeting specified the changes suggested), elect the
members of the board of directors and various committees provided
for by the laws of the State and the by-laws of the organization, and
may reverse decisions of the credit committee or board of directors.
In most of the credit union States, special meetings may be called
by order of the directors or supervisory committee or‘by the clerk
on request of 10 members. In North Carolina and Quebec a special
meeting may be called on request of 10 per cent of the members; in
Nebraska, of 15 per cent of the members. Notices of the meetihg
are to be given as prescribed in the by-laws. Each member is entitled
to but one vote, irrespective of the number of shares he owns, and
no one may vote by proxy except in North Carolina, where proxy
voting is allowed in cases of sickness or unavoidable absence, but
no one is allowed to act as proxy for more than one person. In
several States no one is permitted to vote who has been a member
of the society less than three months. In Massachusetts and New
Hampshire members under 18 years of age have no vote. Where
the member is another society or organization it may designate some
one to cast its vote. At the special meetings usually no business is
to be considered except such as is indicated in the call for the meet­
ing.
Directors and officers.—The board of directors consists of at least
five members elected by the society at its annual meeting. In New
Hampshire and Massachusetts, if the by-laws of the society so provide,
they may serve for three years, in which case one-third ark elected
yearly. In Quebec, similarly, they may serve for either two or three
years.
The board has the general management of the affairs, funds, and
records of the corporation, and meets as often as may be necessary.
It admits and expels members, fixes the amount of tne surety bond



26

COOPERATIVE CREDIT IN AMERICA.

required of officers having custody of funds, determines the rate of
interest to be allowed on deposits and paid on loans, directs the
deposit or investment of the funds, fills vacancies in its number and
(except in Massachusetts) in the credit committee until their successors
are elected. Where not otherwise fixed by the by-laws, the directors
recommend at the annual meeting the amount of the entrance fee,
the maximum number of shares to be held by members, the maximum
amount to be loaned to members, amendments to the by-laws, and
the amount of dividends to be declared. In New York and Oregon,
however, the rate of dividend is decided upon by the directors. Their
decisions and acts are subject to review at the annual meeting and
may be reversed generally on vote of three-fourths of the members
present, but in North Carolina and Oregon by a majority vote of all
the members.
The directors elect from their own number a president, vice presi­
dent, clerk, and treasurer, who constitute the executive officers of
the corporation. In Massachusetts, Nebraska, New York, New
Hampshire, North Carolina, and Oregon one person is allowed to
act as secretary and treasurer. In Quebec any officer may be desig­
nated as manager, who acts also as treasurer.
All officers and members of committees are sworn and hold office
until their successors are elected and qualify, but their positions
become vacant on their ceasing to be members. Officers having
custody of funds must give bonds in the form prescribed by the bank
superintendent for the faithful performance of their duties, and a copy
is filed with the bank superintendent.
Credit committee .—A credit committee of at least three members
is elected at the annual meeting in every State except Texas where
they are selected from among the directors. This committee serves
one year, except in Massachusetts and New Hampshire where the
members may serve for three years, in which case onerthird of the
members are elected yearly. In New York, North Carolina, and
Oregon, if the by-laws so provide, the board of directors may serve
as a credit committee in associations located elsewhere than in a city.
It is the duty of the credit committee to meet as frequently as neces­
sary and to approve applications for loans. The applications are
made in writing and the purpose for which the loans are desired and
the security offered are stated. The committee is forbidden to
approve a loan until satisfied that it gives promise of benefiting the
borrower and unless the loan was approved by all present when the
application was considered. Their decision is subject to appeal to
the board of directors. In North Carolina, a loan may be granted, in
fixed monthly installments, if needed to buy necessary supplies for
growing crops. The acts and decisions of the credit committee,
like those of the directors, are subject to review at the annual meeting
and to reversal ther^
Supervisory committee.—A supervisory committee of three mem­
bers (or more, in the case of New York, North Carolina, and Nebraska),
is also elected at the annual meeting in every State except Utah.
No member of the board of directors is allowed to serve as a member
of either credit or supervisory committee except as before noted and,
as a rule, no member of either committee is allowed to serve on the
other.




LEGISLATIVE ACTION.

27

The supervisory committee meets periodically, keeps informed of
the financial condition of the society, oversees all the business of the
association, inspects its securities, cash, and accounts, and super­
vises the acts of the board of directors, officers, and credit committee.
It may call a meeting of the shareholders to consider any violation
of the State act or of the by-laws or any practice that is deemed
unsafe or unauthorized, and may suspend the members of the credit
committee or any officers elected by the directors—even the directors
themselves, in New Hampshire, New York, North Carolina, Oregon,
Massachusetts, and Nebraska. Within seven days after such sus­
pension the committee must call a special meeting of the association
to take such action as may seem necessary. The committee fills
vacancies in its own number and appoints others (or acts itself in
Nebraska) to take the places of the suspended members until new
members are elected and qualify, and in Massachusetts and New
Hampshire, jointly with the board of directors, fills vacancies in the
credit committee. In Quebec each committee fills vacancies occur-,
ring in its own body.
At the end of the year the committee makes a thorough audit of
the receipts, disbursements, income, assets, and liabilities of the cor­
poration and makes a full report to the directors which is read at
the annual meeting and filed with the records.
Committees in general.—All members of committees serve without
pay, but officers appointed by the directors receive such compensation
as is authorized by the board. In Massachusetts, New Hampshire,
Rhode Island, Utah, and Wisconsin, no member of either committee
is permitted either to borrow or to. become surety for any loan or
advance to other members, but such members, in South Carolina and
Texas, and directors, officers, and committees, in other States, are
granted such permission on approval, at a regular meeting of the
association if the matter is mentioned in the call for the meeting.
In South Carolina and Utah a special committee of two members
is elected at the annual meeting to make loans to members of com­
mittees and the directors, acting toward them as the credit committee
does to others.
t
Dividends.—In New York and in Oregon dividends are declared by
the board of directors, in one society in New Hampshire by the board
of directors with the approval of the supervisors, and elsewhere by
the members at their annual meeting on recommendation of the board
of directors. Such dividends are to be paid from the net profits of
the year and only after any impairment of the capital has been made
good. In North Carolina dividends are limited to 6 per cent, in
Massachusetts to 20 per cent, in South, Carolina to 1 per cent more
than the average rate of interest received from borrowers during the
year, and in Utah to 2 per cent more than that rate. Dividends are
paid only on capital stock fully paid up, such as becomes fully paid
up during the year being entitled only to a proportional part of the
dividend. Dividends may be paid in cash, or credited on partially
paid shares.
Guaranty or reserve fund .—Before dividends are paid, a certain
part of the net income accumulated during the year is added to the
guaranty or reserve fund. This fund belongs to the association and
must be held to meet contingencies or losses in business. Cost of
organization may be charged against the reserve. The proportion



28

COOPERATIVE CREDIT IN AMERICA.

of profits reserved yearly is as stated in the by-laws in Quebec, is
10 per cent in Utah and New Hampshire, 25 per cent in Nebraska,
New York, Oregon, and North Carolina, and 20 per cent elsewhere.
On recommendation of the directors, the society at its annual meeting
may vote to increase this percentage, and when the fund equals the
aid-in share
of profits to
to it may
Edecreased. capital, the proportionCarolina, and be addedthe fund is
e
In New York, North
Oregon,
not to exceed the share capital plus 50 per cent of the other liabilities.
This reserve fund also includes all entrance fees in all States, and
fines in Nebraska, New York, North Carolina, and Oregon. The
amount of the entrance fee is determined by the society in annual
meeting, and in cases where not otherwise provided in the by-laws,
may be proportional to the number of shares bought; in South Caro­
lina and Utah, the amount of this fee is placed at a minimum of $1.
A member may sell any of his shares to any one elected a member,
upon such terms as the by-laws provide, but the purchaser may be
required to pay a reasonable transfer fee, which in North Carolina
must not exceed 25 cents a share. In New York, North Carolina,
and Oregon, this fee also is carried to the reserve. Stock transfers
are exempt from taxation in New York and North Carolina.
Withdrawal of members.—Members may withdraw at any time on
may expel any
who
fiving notice. The board of directorswith the society member been
as not carried out his engagements
or has
convicted of a criminal offense, or neglects or refuses to comply with
the provisions of the act or of the by-laws, or who habitually neglects
to pay his debts or has become insolvent or bankrupt, or (except
in New York, Nebraska, New Hampshire, North Carolina; Texas,
and Oregon where the right is reserved to the society) whose private
life is a source of scandal. In Quebec the board may expel a member
who is interdicted, in South Carolina and Utah, any member who
has deceived the committee with regard to his property, resources,
or credit, in Massachusetts, New Hampshire, South Carolina, Texas,
Utah, and Wisconsin, who has also deceived the society in regard
to the use of borrowed money, and in North Carolina and Nebraska
one who is habitually intemperate. However, final action may not
be taken until the member has been informed in writing of the
charges against him, and an opportunity given him to be heard.
Members who withdraw or are expelled receive back, in the order
of withdrawal or expulsion, as funds become available, the amount
they have paid into the society for shares or in deposits, less the
amount necessary to liquidate any indebtedness to the society.
Their shares are then canceled.
Reports.—The board of directors is required to make a report to
the superintendent of banks 10on forms prescribed by him and signed
and verified by the officers of the credit union and by the supervisory
committee. These reports are to be made within a month following
the close of the fiscal year, under penalty of $5 for each day of delay.
In Massachusetts, the report shows the condition of the association
as of October 31; in New Hampshire and Rhode Island, as of June 30;
elsewhere as of December 31. These reports are published by the
respective banking departments in connection with their regular
annual reports, except m North Carolina. There the superintendent
w The superintendent of credit unions in North Carolina.




ATTITUDE OF LABOR U NIONS,

29

of credit unions reports to the division of markets and rural coopera­
tion, and mails a copy to each credit union and to the clerk of the
superior court in whose jurisdiction the principal office is located.
Until November, 1920, he printed a monthly report showing the
condition of the credit unions. In Quebec the report is made by
the manager and filed with the secretary of the municipality. Since
1915 abstracts of these reports have been printed in the provincial
statistical yearbook.

Examination of accounts.—The State banking officials 10 examine
the societies from time to time and may request special reports from
them. If examination shows a society to be insolvent, or to have
violated the law or its charter or if a society neglects to make reports,
correct wrong practice, or pay assessments or fines, the examining
official may n necessary request the attorney general to bring suit
for its dissolution. In that case the official takes possession of the
property and administers or liquidates its affairs, as circumstances
require. Any officer embezzling or misapplying funds is to be
prosecuted. Failure to file annual reports or pay fees or fines within
a certain time after due may work forfeiture of the charter in North
Carolina.
Dissolution .—On unanimous recommendation of the directors 11 at
any meeting specially called to consider the subject, the membership
may vote to dissolve the society. The laws require generally that
two-thirds of the membership shall be present when this vote is taken.
New York and North Carolina require a four-fifths vote of the mem­
bership, while in seven States and in Quebec the society may not be
dissolved if more than 10 members object. The vote being taken,
the State bank official is then notified, and after his consent has been
obtained, a committee of three is elected (except in New York and
North Carolina where the directors act) to liquidate the assets and
ay
proceeds
E each shareholder a proportion of thepaid. after all deposits
ave been returned and debts have been
ATTITUDE OF LABOR UNIONS.

While it does not appear that labor unions as such abroad have
interested themselves to any extent in credit unions except inci­
dentally in connection with the cooperative movement in general,
it would seem that this is an activity that might well be undertaken
by them, especially in connection with other cooperative movements
they may be carrying on. That this question has been considered
by labor unions in America is evidenced by the fact that several of
the credit unions in New York and New England are composed
entirely of members of labor unions and that on the committee of
the National Association on Credit Union Banks are the president
and the secretary-treasurer of the Brotherhood of Locomotive
Engineers and others who have been closely connected with the
trade-union movement in this country.

One national union, at least, Has considered the question fully.
At the annual meeting of the Amalgamated Clothing Workers of
America in Boston, in May, 1920, the question of establishing credit
10 The superintendent of credit unions in North Carolina,
u Two-thirds in Massachusetts and New Hampshire.

259°—22-----3




30

COOPERATIVE CREDIT I F AMERICA.

unions was seriously considered. Numerous resolutions bearing
on the subject were submitted. Addresses were made by leaders
in the movement, and after a lengthy and thorough consideration
of the question, it was voted that the new officers be directed to
formulate plans for the establishment of credit unions. At a meeting
of the general executive board, July 27 of the same year, in view of the
unsettled conditions in the clothing trade at that time it was voted to
leave the undertaking until a later date. The New York Clothing
Cutters’ Union No. 4, however, applied for and received a charter
from the banking department at Albany, and has begun business. In
Boston another local is in process of organization.
PUBLIC EDUCATIONAL EFFORT.

Little official organized effort has been made to extend the cause
of credit unions, except in North Carolina. There, as a part of the
work of the division of markets and rural cooperation, a superin­
tendent of cooperative associations and credit unions was authorized
to be appointed and paid by the State in 1915. His work was to
organize and conduct a bureau of information in regard to cooper­
ative associations and rural credits, to maintain an educational
campaign to promote and organize cooperative associations and
credit unions, and on the request of three persons to furnish printed
information and blank forms necessary for the formation and es­
tablishment of the same, and on the request of twelve residents of a
particular locality expressing' a desire to form such an organization
to proceed to that locality and advise and assist in establishing the
institution in question. Acting under this authorization, the divi­
sion appointed an assistant in credit unions, and issued pamphlets
and circulars and reports; nearly all the credit unions formed in
North Carolina have been organized as a result of the activities of
this division.
In New York, the legislature, in 1914, appropriated $20,000 to
enable the commissioner of agriculture to disseminate, through the
various communities of the State, literature and lectures relative to
the advantages of cooperative associations and credit unions and to
aid in their organization, but nothing seems to have been done under
that authorization.
In Massachusetts, on the passage of the act in 1909, a pamphlet
was issued relating to credit unions, and in December, 1914, the
bank commissioner of the State prepared a pamphlet describing
credit unions, their history, advantages, and organization, with a
copy of the credit union law, forms to be used by .those wishing to
establish credit unions, sample records for the preliminary meetings of
a credit union, and recommended bv-laws, but beyond sending copies
of this to inquirers, very little has been done by the State.
PRIVATE PLANS.

February 6, 1915, the Russell Sage Foundation and the mayor’s
committee on unemployment in New York City formed a plan to
organize a credit union with a capital of $250,000. This was to be
an educational institution to encourage the foundation of other
credit unions among members of fraternal, labor, and religious
organizations in New York City, and to loan money to them secured



PROPOSED UNIFORM LA W .

31

by the joint liability of all members, on condition that the locals
accept as members only those out of employment. The directors
were to be men familiar with the principles of cooperative banking,
and it was hoped-later to form a reserve bank to equalize the demand
and the supply as is done in several European countries. The
plan, however, was never carried out.
Somewhat over a year later, the Massachusetts Credit Union
Association was incorporated by chapter 281 of the Acts of 1917,
“to disseminate information in respect to the benefits of credit
unions * * * to organize and assist in the organizing of credit
unions; to make loans to credit unions at a rate not exceeding 6
per cent per annum; and generally to promote and assist credit
unions.” This association has been quietly at work spreading
information through Massachusetts as best it could with the limited
means at its disposal.
On May 31, 1919, at a meeting at the City Club in New York City,
the Massachusetts and New York friends of credit unionism organized
the National Association on Credit Union Banks to urge Congress to
pass legislation authorizing the establishment of people’s banks
under national control, basing the national law on the experience in
Massachusetts, New York, and North Carolina. On July 22, the
Massachusetts Credit Union Association enlarged its board to aid
in the extension movement and made plans for a vigorous extension
of the work, but owing to a number of causes the movement has
not as yet gained the headway desired.
PROPOSED UNIFORM LAW.

The national association suggests that, until Congress passes
appropriate legislation, the laws of the States be made uniform. A
draft of a proposed uniform law creating credit union banks in each
State was issued by the national association June 1, 1920, which
differed hut little from the laws in the various States already described.
The principal deviations from those laws are as follows: The names
of these associations are to contain the words “credit union bank,” 13
and the society is to be organized by eight residents of the State
in which it is to be located; the par value of the shares is to be
$10; and the annual meeting is to be held in January. The com­
pensation and duties of officers, the question of whether the cor­
poration shall borrow money, the manner in which the funds of
the corporation are to be invested, the conditions on which loans
are to be made and repaid, the manner in which reserve funds
are to be accumulated, and the manner in which dividends are to
be determined and paid are all to be stated in the by-laws. The
fiscal year is to correspond with the calendar year. The board of
directors is to be allowed to act as a credit committee where the
members so desire, and more power is to be given to the directors
and the two committees. Fines for failure to meet payments on
shares as due are not to exceed 1J per cent a month; the rate of
interest on loans is to be limited to the same amount; the society
is to have the right to rediscount or borrow up to the amount of
the capital, surplus, and reserve; to deposit the surplus funds in
The commissioner of banks of Massachusetts, in his report for the year 1920, objects to the use of the
word “bank” by credit unions, as “not in keeping with the policy of the Commonwealth,”




COOPEEATIVE CREDIT IN AMERICA.

32

credit union and other banks up to 10 per cent of the capital and
reserve fund; and to invest in first mortgages for not more than six
months at one-half their appraised value up to 20 per cent of the
capital and funds. No society may be dissolved except on vote of fourfifths of the membership. The credit union is to be considered a
savings bank for purposes of taxation; nq State tax is to be levied
on stock transfers, and no loans are to be made to nonmembers.
CHARACTERISTICS OF AMERICAN CREDIT UNIONS.

In Quebec, the rules governing credit unions are stricter and
more easily enforced than in the United States, since the population
there is more homogeneous. Credit unions there exist mainly among
people of one nationality, who have lived in the same place all their
lives, and who are thoroughly acquainted with one another, and are
generally found in places where the details of a man’s character
and habits of life are well known to everyone in the community.
It is easy, therefore, for the officers of the societies to pick their mem­
bers more unerringly, and the proud boast that no one has lost any
money through the credit unions in Canada is easily believable.
In the United States, however, outside of North Carolina, where
many conditions exist similar to those in Canada, the societies are
differently circumstanced. Those in New York and New England,
with the exception of the few Jewish societies, are located in cities
or villages where, because of the mobility of the population, the
members generally have not been known to one another for any con­
siderable length of time previous to their admission into the society.
Hence, it is not surprising that in the United States there have
been cases where nonmembers (depositors or banks) have lo$t money
by the failure of a credit uniqn. This rarely happens, however, with
credit unions that have existed two or three years, for by that
time they have accumulated enough reserve fund to offset losses
from bad loans. Therefore great care and prudence have to be
exercised in establishing a credit union, and also in granting credit
to new members.
MEMBERSHIP.
Not every applicant for admission is received. The directors,
acting as a committee on admission, carefully examine each candidate
from the standpoint of character, honesty, integrity, moral habits,
and his practice as to the payment of debts. One careless or slow
in the fulfillment of pecuniary obligations is admitted only with
reluctance, his social position or his peculiar relations to members
or his desirability in other respects notwithstanding. If admitted,
he obtains a loan only with difficulty; and is summarily disciplined
for any infraction of the by-laws of the association.
All members can not be borrowers, nor can all members be lenders,
nor should any one join expecting to obtain a high return of interest
on his deposits or to obtain loans at less than a fair rate of interest. %
Some members join with no expectation of borrowing, but with the '
sole intention of aiding the movement and are content to receive
savings-bank rates on their investment. Some join to receive re­
duced prices on articles bought through the society. Those, however,
who join with the intention of borrowing find that the requirements
of the credit unions are as stringent as those of the regular bank.



CHARACTERISTICS OE AMERICAN CREDIT UNIONS.

33

Banks loan on tangible collateral; credit unions loan on intangible
collateral—character—and the collateral in the second case is as
carefully scrutinized as in the first. In the former, the scrutiny is
generally conducted by one man; in the latter, by several—the
manager and the credit committee—and objection by any one of the
scrutinizers is sufficient to prevent the granting of the loan. Fur­
thermore, a subsequent review by a committee of three others may
result in the loan being called in.
A borrower may generally obtain a loan of $50 on his personal note,
one over that amount requires the indorsement of two other mem­
bers. This enables a man without ordinary bank credit to go to
some one who knows him and obtain at regular rates of interest a
sum of money so small that the ordinary bank would not care to
bother with it. In fact, the credit union is organized for the benefit
of the small borrower. Preference is always given to the one who
wants to borrow the smaller sum and repay in installments. Though
the loan is at regular rates, the dividends received by the borrower
on his capital invested help to reduce the rate he is paying on the loan.
Thus, the depositors receive larger dividends, and the borrowers
borrow at lower rates of interest.
Membership in a well-managed credit union is in itself a certificate
of good character. To avoid the possibility of admitting undesirable
members carefully followed rules are necessary. The membership is
confined to a small number of persons, one hundred or so, related to
one another by some common bond—race, nationality, religion,
occupation, residence within a restricted area, membership in a
settlement house, village improvement association, church, club,
lodge, labor union, grange, fraternal organization, school district, or
employment in the same mercantile, manufacturing, or transporta­
tion company.
In Europe, the membership is generally composed of farmers,
artisans, and small traders living in a parish, or members of the same
cooperative organization. In Canada, the membership is generally
resident in the same parish or provincial electoral district, and the
parish priest is frequently the manager. In North Carolina, the mem­
bers are usually farmers residing in a community or school district.
Below is shown for those societies in Massachusetts and New York
for which information was secured the distribution in 1920 as to
nationality and occupation of members. These figures are not
mutually exclusive; that is, the same society may be counted twice,
if information is available on both points. Thus, it may appear as
one of the societies whose membership was prevailingly Italian and
also as one the majority of whose members were employed by a publicservice corporation. The figures do not include the credit unions of
the Jewish farmers.
P r e v a ilin g n a tio n a lity o f m em b e rsh ip .

Jewish..................................................................................
French Canadian..............................................................
Italian..................................................................................
Scandinavian...........................
Finnish................................................................................




New York.

1
2
3
5
4

Massa­
chusetts.

18
15
3

1
1

34

COOPERATIVE CREDIT IN AMERICA.

P r e v a ilin g e m p lo y m e n t o f m e m b e rsh ip .

M&ssa-

Members employed by—
New York, chusetts.
Government..........................................................
6
3
City.........................................................................
7
4
Societies.................................................................
15
5
Banks.....................................................................
11
1
Stores............................................
8
11
12
1
Offices....................................................................
Factories... ..................
9
8
Public-service corporations.................................
10
3
Members of labor organizations..................................
14
7

Thirteen of the New York societies and 23 of the Massachusetts
societies are town, city, or community organizations.
In 1921, 51 of the credit unions chartered in Massachusetts were
located in Boston, 30 were in the suburbs of Boston, and 34 were
more than 25 miles from that city. In New York no urban credit
unions are situated outside of Greater New York.
A limit is generally placed on the number of shares or amount of
deposits allowed each member in order that no one may have a pre­
ponderating influence in the affairs of the society, or damage it by a
sudden withdrawal of funds. As the object of the credit union is to
stimulate saving, it accepts pennies from the poor and dollars from
the well-to-do. In Canada, deposits of as low as a nickel are received
and departments for school children are maintained. This is also
true in regard to North Carolina credit unions.
LOANS.

Loans are made for productive purposes alone and as emergency
arises, and never for frivolous or extravagant purposes. Therefore,
a borrower must disclose the purpose for which the loan is desired,
and this is probably the principal reason why credit unions are not
more popular in this country. The average American objects to
having others interfere with his private affairs, and if he wants a
certain thing he feels capable of deciding for himself whether it is a
luxury or a necessity, and he objects to laying his personal matters
before intermeddling outsiders in order to borrow a little money.
On the other hand, it is essential for the safety of the society that such
facts be disclosed, that a severe penalty follow deceptions on the part
of the borrower, and that the committee be held to strict accounta­
bility for their actions in loaning money contrary to the by-laws.
In Canada, most of the loans are made to enable the recipient to
buy a pig, cow, or tools, to pay off a mortgage, or to quiet a usurer.
Formerly, it was customary to buy farm animals ana tools on the
installment plan. Nowthe purchasers pay cash, borrowing the money
for this purpose from the credit union and ending long shop credits.
Among the Massachusetts credit unions loans have been made
taxes,
fenerally to pay the expenses of sickness, overduebusiness bills for
ouse repairs, back rent, or tuition for children in
schools;
in North Carolina, they are almost entirely for purposes connected
with the farm.
M ANAGEM ENT.

The real power of the credit union lies in the annual meeting, for
there the committees and officers are chosen. The committees vary
in number with the size and business of the society.



CREDIT>UNION EXPERIENCE IN AMERICA.

35

The board of directors is generally composed of those knowing most
about business matters. On the credit committee are generally
such men as are not likely to need a
for law and prudence
fdaced members of the credit committee to loan, to themselves. Such
orbid
loan
join the society because of their interest in its success, and they
realize the delicacy of the position they hold. They should be men
with experience, prudence, and a good acquaintance with the charac­
ter of the other members whose moral character is the guaranty for
the repayment of the loan. The solvency of the credit union depends
on the credit committee. The supervisory committee, which is
the most important committee, should actually supervise and care­
fully examine all acts of the directors, officers, and credit committee,
and not do it perfunctorily. It is, in effect, an auditing committee
which in addition watches all transactions of the association and
inspects its property as the representatives of the general meeting.
Generally the treasurer or the secretary is the manager of the
credit union.
S U R P LU S.

Only enough cash is kept on hand to meet daily requirements, the
surplus, which protects the shares and savings against loss, being
deposited to the credit of the society in chartered banks. A certain
percentage of the profits is transferred to the reserve fund each year.
This fund protects the shares and savings against possible loss,
strengthens the system, is not to be drawn upon except according to
the by-laws, and is not to be distributed nor kept idle, but is to be
invested in sound enterprises, deposited in banks, or loaned to
public bodies. It benefits depositors by increasing the net profits
to be distributed on shares and benefits borrowers by reducing the
rate of interest on loans. Here is the cooperative principle which is
new in banking: The borrowers benefit by increased dividends be­
cause they own the shares. The reserve fund insures the continuance
of the society.
On the other hand, a large reserve fund acts as a temptation to the
members to dissolve the society in order to distribute the surplus
among themselves as extra dividends and to reorganize. To prevent
their acting on this temptation thus to distribute the accumulation
of their predecessors made for the purpose of strengthening the credit
union and to insure the permanency of their society, the Quebec law
requires that, in the event of dissolution, the reserve ftmd of the
society shall not be distributed among the shareholders but given for
an object of public utility designated by the lieutenant governor in
council.
CREDIT UNION EXPERIENCE IN AMERICA.

As before stated, the acts authorizing the establishment of credit
unions have been passed in 11 States of this country, and in the
Province of Quebec in Canada. In Wisconsin, South Carolina, Utah,
and Nebraska no organizations have been formed under these acts.
In Texas, two rural credit unions have been organized under the law.
One of these dissolved before doing any business, and the other has
never done any business. In Oregon also, two credit unions have
been organized, both located in Portland. The first was suspended
by the banking department, within a month after it opened, for adopt­
ing methods not approved by the department, and was later ais


COOPERATIVE CREDIT 1ST AMERICA.

36

solved by action of the courts; the second never transacted any busi­
ness after receiving its certificate of authority.
According to most recent reports availaolfe, in New Hampshire
and Rhode Island, 2 associations had been granted charters in each
State; in Massachusetts, 123* societies had been granted charters;
in New York, 84; and in North Carolina, 43; besides the unincorpo­
rated Jewish credit unions in Connecticut and in New Jersey, in which
States no legislation recognizing credit unions has as yet been passed.
Q U EBE C.

In the Province of Quebec the reports of the cooperative people’s
banks were not printed until 1915, and no official figures are obtain­
able before that date. According to a statement made by Desjardins
three banks had been organized by 1906; three more were organized
in 1907; 11 in 1908; and 15 in 1909. The total number in existence in
1912 was 98, and in 1913, 122. In 1913 also, there were 19 such
societies in the Province of Ontario. The following figures, taken from
the Statistical Year Book of the Province of Quebec, show the number
of societies in operation on December 31 of each year:
1915
1916
1917
1918
1919

91
97
95
102
103
102

1920

Of the 102 societies reporting in 1920, 1 was organized in 1901,
1 in 1903, 2 were organized in 1908, 15 in 1909, 6 in 1910, 6 in 1911,
11 in 1912, 20 in 1913, 17 in 1914, 2 in 1915, 12 in 1916, 4 in 1917,
2 in 1918, 3 in 1919, and 2 in 1920.
In the table below are shown the number of stockholders, depositors,
and borrowers in those unions which furnished reports for the years
1916 to 1920. These figures do not include the unincorporated
banks.
COOPERATIVE PEOPLE’S BANKS IN QUEBEC, CLASSIFIED BY NUMBER OF SHARE­
HOLDERS, DEPOSITORS, AND BORROWERS, ON DECEMBER 31 OF EACH YEAR, 1916
TO 1920.
[Canada. Province of Quebec. Statistical year-books, 1917 to 1921.]
Class .of member, and year.
Shareholders:
1916.................................................................
1917..................................................................
1918..................................................................
1919.................................................................
1920.................................................................
Depositors:
1916.............................................. ..................
1917..................................................................
1918.................................................................
1919..................................................................
1920.................................................................
Borrowers:
1916..................................................................
1917..................................................................
1918..................................................................
1919..................................................................
1920..................................................................




Number of banks having classified number of
members of each class.
50 or 51 to 101 to 251 to 501 to Over
under. 100. • 250. 500. 1,000. 1,000.
2
2
2
3
3
19
13
12
9
9
44
40
41
42
35

12
8
8
7
6
15
19
17
18
17
24
25
24
24
29

47
46
45
39
41
39
33
40
38
32
20
21
26
28
29

20
23
28
37
33
15
20
21
26
28
3
4
5
5
5

10
10
13
12
14
3
3
6
7
11

1
1
1
1
1
1
2
1
1
1

Total.

92
90
97
99
98
92
90
97
99
98
91
90
96
99
98

37

CREDIT UNION EXPERIENCE IN AMERICA,

In these credit unions the entrance fee is generally 10 cents, and
shares are paid for at the rate of 10 cents a week. The table follow­
ing gives the number of societies which paid specified rates of divi­
dend on capital stock and of interest on deposits for each of the
years 1916 to 1920:
COOPERATIVE PEOPLE'S BANKS IN QUEBEC, CLASSIFIED BY RATE OF DIVIDEND ON
SHARE CAPITAL AND RATE OF INTEREST ON DEPOSITS PAID EACH YEAR, 1916 TO
1920.
[Canada. Province of Quebec. Statistical year-books, 1917 to 1921.]
Number of banks paying specified rate.
Item and year.

Less 3 3* 4
5
6
8 10 Total.
than per per per per per per per 7 to per per
3 per cent. cent. cent. cent. cent. cent. cent. 7* per cent. cent.
cent.
cent.

Dividend on capital:
1916.................................
1917.................................
1918.................................
1919....... . ........................
1920..........................
Interest on deposits:
1916.............................
1917.................................
1918.............................
1919.................................
1920.................................

1
1

1

h

1

22
23
25
16
12
10
12
18
20
24

1
54 17
59 18
60 18
57 120
53 2 21

1Including 2 banks which paid 31 per cent.

6
7
8
7
9

30
35
37
43
39

4
2
2
4
6

12
14
20
21
26

3
5
3
4
4

1
1

1
1

79
89
96
96
97
81
89
96
98
99

* Including 1 bank which paid 3J per cent.

The number of loans of each specified amount granted by the
societies reporting are shown below:
NUMBER OF LOANS OF COOPERATIVE PEOPLE'S BANKS IN QUEBEC, CLASSIFIED
BY AMOUNTS GRANTED EACH YEAR, 1916 TO 1920.
[Canada. Province of Quebec. Statistical year-books, 1917 to 1921.
Number of loans of classified amounts.
Year.
1916...........................................
1917...........................................
1918...........................................
1919...........................................
1920...........................................




$50 $100 $500
$10 $25
Total.
Under $1 and and and and and and $1,000
under under under under under under and
$1. $10.
over.
$25. $50. $100. $500. $1,000.
82
83
122
101
156

806
816
869
895
915

1,883
1,856
1,934
1,714
1,822

2,417
2,436
2,883
2,629
2,60i

2,575
2,900
3,763
3,222
3,551

2,972
3,734
3,744
4,511
4,680

313
525
612
757
894

153
391
366
557
678

11,201
12,741
14,293
14,386
15,297

COOPERATIVE CREDIT IN AMERICA.
38
In the two tables following are shown the number of banks having
classified amounts of assets, deposits, and reserves on December 31,
and their expenses for each year, 1916 to 1920:

C O O PE R A T IV E P E O P L E ’S B A N K S IN Q U E BE C , C LA SSIFIE D B Y A M O U N T O F A SSETS
A N D D E P O S IT S ON D EC E M B E R 31 OF EA C H Y E A R , 1916 TO 1920.
[C anada. Province of Quebec. Statistical year-books, 1917 to 1921.]
N um ber of banks having classified am ounts.
$500 $1,000 $10,000 $50,000 $100,000 T otal.
Under and
and
and
and
and
$500. under under under under over.
$1,000. $10,000. $50,000. $100,000.

Item and year.

Assets:
1916.........................................................................
1917.........................................................................
1918.........................................................................
1919.........................................................................
1920........................................................................
Deposits:
1916.........................................................................
1917.........................................................................
1918........................................................................
1919.......................................................................
1920........................................................................

1
1
1
1
1
4
6
1
3
3

1
1
1
3
5
4
3
2

32
24
20
10
10
23
16
18
15
17

51
50
59
57
52
44
40
44
61
52

1
4
6
10
16
8
12
13
6
10

9
12
10
20
20
12
13
16
10
15

94
92
97
99
99
94
92
96
98
99

C O O PER A TIV E P E O P L E ’S B A N K S IN Q UEBEC , C L A SSIF IE D B Y AM OUNT OF R E SE R V E
ON D EC EM BE R 31 A N D OF E X P E N S E S EACH Y E A R , E N D IN G D EC EM BER 31, B Y
Y E A R S , 1916 TO 1920.
[Canada. Province of Quebec. Statistical year-books, 1917 to 1921.]
Num ber of banks w ith classified am ounts.
$100 $500 $1,000 $10,000 $50,000 Total.
U nder and
and
and
and
and
$100. under under under under over.
$500. $1,000. $10,000. $50,000.
Reserve:
1916..
1917..
1918..
1919..
1920..
Expenses:
1916..
1917..
1918..
1919..
1920..

6
14
10
5
3
46
41
40
28
29

33
23
31
30
20
37
40
39
36
29

26
14
20
22
22
5
7
11
9
10

22
31
33
41
50
4
1
2
4
9

1
1
2

1

87
87
95
99
98
92
89
92
77
77

The general statistics of operation for the Quebec cooperative
banks reporting are shown in the table below. These figures and
similar figures for credit unions in the United States can not be
checked from year to year, since old unions having dissolved and
others having been formed, the data do not cover indentical societies.
STATISTICS OF O PE R A T IO N S O F C O O PER A TIV E P E O P L E ’S B A N K S IN Q U EBEC , 1915
TO 1920.
[Canada. Province of Quebec. Statistical year-books, 1917 to 1921.]
Year.
1915____
1916......................................................
1917......................................................
1918......................................................
1919......................................................
1920......................................................




N um ­
ber of
banks
report­
ing.
91
94
93
98
100
100

N um ­ N um ­ N um ­
ber of ber of ber of
m em ­ deposi­ bor­
bers. tors. rowers.
23,614
25.028
25,669
27,593
29,795
31.029

13,696
15,613
18,997
20,672
23,451
26,238

6,728
6,696
7,458
8,056
9,148
9,213

Share capital
Num ber of Paid in R epaid
loans
granted. during during
year.
year.
8,983 '$132,222 $63,088
11,201 118,196
61,733
12,741 146,507 72,220
14,293 132,006
66,405
14,386 188,236
74,853
15,297 230,816
75,998

A s of
D ec. 31.
$715,336
770,944
237,592
907,857
1,034,302
1,199,170

39

CREDIT UNIO N EXPERIENCE IN AMERICA.

STA TISTIC S OF O PE R A T IO N S OF C O O PE R A T IV E P E O P L E 'S B A N K S IN Q U E BE C , 1915
TO 1920—Concluded.
D eposits—
Year.

Received
during
year.

Repaid
during
year.

Loans—
As of
D ec. 31.

Made
during
year.

. Repaid
during
year.

1915..................................................... $2,706,304 $2,496,407 $1,141,528 $1,549,760 $1,270,848
1916..................................................... 3,543,463 3,142,982 1,552,390 1,771,247 1,423,445
1917.............................;...................... 4,751,518 4,147,160 2,116,055 2,328,940 1,796,574
1918..................................................... 5,763,881 5,382,652 2,513,406 2,546,741 2,195,190
1919..................................................... 8,453,537 7,297,027 3,682,051 3,643,169 2,590,283
1920..................................................... 10,529,629 9,667,921 4,558,053 4,265,367 3,071,339

Year.
1915.
1916.
1917.
1918.
1919.
1920.

Entrance
fees re­ Reserve D ivi­ General Total
ceived fund, dends expen­ receipts
during D ec. 31. paid. ses for for year.
year.

’•I
$3,332
3,089
3,769
3,948
5,384
6,642

Assets,
Dec. 31.

$68,337 $27,593 $11,994 $4,490,953 $2,027,728
94,920 31,563 16,230 5,534,246 2,540,880
119,436 35,206 17,589 7,316,298 3,227,579
153,585 38,124 22,489 8,956,729 3,765,144
200,365 64,702 27,867 12,319,235 ' 5,114,380
252,627 55,661 45,105 15,260,726 6,306,965

^
O utstand­
ing, D ec. 31.
$1,684,651
2,039,179
2,534,135
2,901,518
3,976,941
5,181,392
Balance
on hand.
D ec. 31.
$318,444
478,464
672,365
839,843
1,107,345
1,034,910

M ASSACH U SETTS.

In Massachusetts credit unions from the beginning have reported
to the bank commissioner of the State, and the following statistics are
based on the reports of that official. Altogether 123 (Efferent credit
unions have been chartered in Massachusetts, of which 81 were in
operation on October 31, 1921; 19 had not begun to do business; 5
were in the possession of the bank commissioner, awaiting final
liquidation; 2 had been liquidated by the bank commissioner; and 16
had been dissolved in conformity with the laws, of which number 2
had transacted business for but a short time and had closed without
ever reporting to the commissioner. The following table shows the
number of credit unions reporting each year:
1910 ........................................................... * ................................................. 2
1911 ....................................................................................................................
1912 ....................................................................................................................
1913 .....................................................................................................
1914 ..............................................................................................-.....................
1 9 1 5 ...................................................................................................................
1916 ....................................................................................................................
1917 ....................................................................................................................
1918 ....................................................................................................................
1919 .........................................................................
1920 ....................................................................................................................
1921 ....................................................................................................................

17
26
34
45
47
53
56
59
60
64
81

Of the 81 credit unions reporting in 1921, 2 were organized in 1910,
6 in 1911, 7 in 1912, 6 in 1913, 12 in 1914, 11 in 1915, 4 in 1916, 7 in
1917, 5 in 1918, 2 in 1919, 4 in 1920 and 15 in 1921. Of the 18 that
were organized and have since dissolved, 2 were operated for less than
one year, 3 for one year, 1 for two years, 5 for three years, 4 for four
years, 2 for five years, and 1 for seven years.
The largest number of credit unions chartered and opened in any
one year was in 1921, and the largest number of dissolutions occurred
in 1915. The years 1914, 1915, and 1921 were the only years in



40

COOPERATIVE CREDIT IK AMERICA.

which any unions were taken over by the bank commissioner. A
greater number of societies were organized and opened prior to 1915
than since, and the net increase in the number oi such organizations
was slow from 1915 to 1921.
The entrance fees charged in the societies reporting range from
nothing to $5.
The most common par value of shares is $5, though the value
ranges, in the societies reporting, from $2 to $5. In all but three
societies these shares may fee paid for in installments. The maximum
number of shares that one member may hold ranges in the different
credit unions from 2 to 1,000, though in 20 societies the number is
unlimited.
A member may borrow a sum varying, among the different socie­
ties, from $50 to $8,000. In 17 societies there is no fixed limit. If
the amount of the loan is less than the share capital owned, generally
no collateral is required. Acceptable ^flfteral consists of paid-up
life insurance, the deposit of a saviiftgs^mhk book or a note indorsed
by one or two members, according to the circumstances. Stockmarket securities or real-estate mortgages are generally accepted as
security on loans up to 60 per cent oi their market value. For the
loan the member pays a maximum rate of interest of from 6 to 12
per cent, the latter being the rate charged by 30 societies. In Boston,
two-thirds of the societies charge 10 or 12 per cent; outside of Boston,
two-thirds charge less than 10 per cent.
The table below shows the number of credit unions having each
classified number of shareholders and of borrowers on October 31 of
each year, 1910 to 1921:
CREDIT UNIONS IN MASSACHUSETTS, CLASSIFIED BY NUMBER OF SHAREHOLDERS
AND BORROWERS ON OCTOBER 31 OF EACH YEAR, 1910 TO 1921,
[Massachusetts commissioner of banks. Part II of annual reports, 1910 to 1921.]
Num ber of credit unions having classified
number of members of each class.
Class of member, and year.

Less 51 to
than 50. 100.

Shareholders:
1910.............................................................................
1911............................................................................. |
1912............................................................................ l
1913.............................................................................
1914.............................................................................
1915.............................................................................
1916.............................................................................
1917........................; ...................................................
1918.............................................................................
1919.............................................................................
1920......... ...................................................................
1921.........................................................., ................
Borrowers:
1910.............................................................................
1911.................... ........................................................
1912.........................................................................
1913.............................................................................
1914.............................................................................
1915.............................................................................
1916.............................................................................
1917.............................................................................
1918.............................................................................
1919.............................................................................
1920.............................................................................
1 9 2 1 ................................................ ..........................




2
3
9
14
11
15
11
11
10
9
14
ii
17
20
29
28
29
.25
20
21
24
37

1
10
12
10
12
13
10
5
5
8
9
12
1
2
6
6
6
11
13

16
17

16
14
12

101 to
250.

251 to
500.

5
8
11
13
13
13
24
22
16
15
22

3
4
5
6
8
10
13
9
12
11

501 to
1,000.

1,000
and
over.

1
4
6
4
4
13
12
14

1
2
4
4
7
8

1
2
4 ...............|................
i
5
3
3
2
8
9
4
11
5
2
10
3
8
16
7
2
7
4
20

1
1

T otal.

1
17
26
34
45
47
53
56
59
60
64
81
1
13
25
30
40
45
52
54
55
58
64
81

41

CREDIT U NIO N EXPERIENCE IN AMERICA.

Deposits are generally received in amounts from 10 cents up.
The maximum amount that may be deposited by any one member
varies from $100 (in one society) to an unlimited amount (in 36
societies). The credit union in New Bedford accepts deposits from
school children. These deposits draw interest from the nrst of each
month. Five credit unions do not receive deposits. Interest is paid
semiannually. The table below shows the number of credit unions
which paid each specified rate of dividend on share capital and of
interest on deposits in each of the years, 1910 to 1921:
CREDIT UNIONS IN MASSACHUSETTS, CLASSIFIED BY RATE OF DIVIDEND ON SHARE
CAPITAL AND OF INTEREST ON DEPOSITS PAID EACH YEAR, 1910 TO 1921.
[Massachusetts commissioner of banks. Part II of annual reports, 1910 to 1921.]
Number of credit unions paying specified rate.
Item and year.

3 and 4 and
U nder under under
3 per 4 per 5 per
cent. cent. cent.

Dividends on share capital:
1910.............................................................
1911..........................................................
1912.............................................................
1
1913................................................ ............
1914.............................................................
1915.............................................................
1916............................................................
1917............................................................
1918............................................................
1919_____________________________
1920_____________________________________
2
1921...........................................................
Interest on deposits:
1910.............................................................
1911............................................................
1912______________ _______________
1913...........................................................................
1914............................................................ 1.............
1915......... .............................................J _ ............
1
1916 ..........................................................
1917 ..........................................................
1918 ........................... ..............................
1919............................................................
1920............................................................
1
1921............................................................

1
1
1
2
1
2
2

1
2
3
4
4
4
9
6
3
2
2

4
5
6
7
6
2
5
4
3
3
1

1
7
11
11
16
20
15
15
15
14

6

5 and
under
7 per
cent.

7 and
under
10 per
cent.

1
3
6
9
14
16
22
25
25
20
1
1
4
8
12
13
15
19
25
27
30
32

2
4
2
4
9
11
11
16
21
18

10 and
under
15 per
cent.

15 per
Total.
cent None.
and
over.

1
3
3
7
5
4
2
1
4
7!
i

1
2
3
1

|
i
1
______! _____
2
2
2
1
3

2
15
19
17
27
21
19
16
17
13
12
30
1
11
11
12
15
13
17
12
15
14
16
30

2
17
26
34
45
47
53
56
59
60
64
81
2
17
26
34
45
47
53
56
59
60
64
81

Each credit union prints its own literature, and many of them have
issued literature explaining the work of the credit unions in general
and of themselves in particular. The Progressive Workman’s Credit
Union of Malden supplies its members with coal at a reduction of
50 cents a ton, and with furniture, rugs, and carpets at reduced
rates.- The Revere Credit Union furnishes coal at a reduction
of 25 cents a ton and has made arrangements with several reliable
firms to sell clothing, furniture, and household commodities to its
members at reduced rates. The Beverly Credit Union loans on
second mortgages to help members buy homes. The Industrial
Credit Union oi Boston makes loans to buy furniture, get discounts
on bills, and to buy coal, flour, and sugar in quantities.




42

COOPERATIVE CREDIT IN AMERICA,

During the war, the credit unions were used to aid in the floating
of Liberty bonds. To-day they own in their corporate capacity
nearly $100,000 worth of tnese bonds, besides having made loans to
members up to the face value of their individual holdings in order
to prevent their selling their bonds at a loss.
In the table below is shown the number of credit unions having
each classified amount of assets and deposits on October 31 of the
years 1910 to 1921:
CREDIT UNIONS IN MASSACHUSETTS, CLASSIFIED BY AMOUNT OF ASSETS AND
DEPOSITS ON OCTOBER 31 OF EACH YEAR, 1910 TO 1921.
[Massachusetts commissioner of banks. Part n of annual reports, 1910 to 1921.]
. Num ber of credit unions haying classified amount.
Item and year.

Assets:
1910................; ............................................
1911...............................................................
1912...............................................................
1913.................................................. ............
1914.................................................. ............
1915.................................................. ............
1916...............................................................
1917...............................................................
1918...............................................................
1919...............................................................
1920...............................................................
1921..............................................................
Deposits:
1910...............................................................
1911..............................................................
1912. ..........................................................
1913...............................................................
1914..............................................................
1915...............................................................
1916...............................................................
1917...............................................................
1918..............................................................
1919...............................................................
1920...............................................................
1921...............................................................




Less 1500 and $1,000 $10,000 $50,000 $100,000 Total.
and
and
and
than under under under under
and
$500. $1,000. $10,000. $50,000. $100,000. over.
2
5
5
8
4
4
5
4
4
4
5
10
10
11
16
13
14
15
14
9
8
11

7
2
1
5
4
5
3
5
1
3
4
1
3
3
7
3
8
7
9
5
6
4
6

1
8
17
19
21
25
24
27
25
24
16
30

2
9
11
13
18
13
16
18
26
27

1
1
6
5
7
5
5

1
2
4
6
10
10

1
8
10
11
7
14
11
15
15
23
22

2
4
5
3
5
6
6
10

1
4
2
1
1
1

1
1
3
5
8
7

t

1
17
26
34
45
47
53
56
59
60
64
81
1
14
21
28
32
33
41
43
44
42
50
57

43

CREDIT UNION EXPERIENCE IN AMERICA,

The table following shows the number of credit unions which had
each classified amount of reserve on October 31 and of expenses of
operation for the year ending on that date, during the years 1910 to
1921:
C R ED IT U N IO N S IN M ASSACHUSETTS C LA SSIFIED B Y AM OUNT O F R E SE R V E ON
OCTOBER 31 A N D OF E X P E N S E S FO R EACH Y E A R E N D IN G O CTOBER 31, B Y
Y E A R S , 1910 TO 1921.
[Massachusetts commissioner of banks. Part II of annual reports, 1910 to 1921.]
Num ber of credit unions w ith classified
am ounts.
Less
than
$100.

Reserve:
1911..
1912..
1913..
1914..
1915..
1916..
1917..
1918..
1919..
1920..
1921..
Expenses:
1910..
1911..
1912..
1913..
1914..
1915..
1916..
1917..
1918..
1919..
1920..
1921..

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.

.




2
6
12
11
14
19
19
13
7
5
17
1
13
18
19
21
23
25
22
20
22
20
29

$100 and $500 and ' $1,000 $10,000
and
and
under under under under
$500. $1,000. $10,000. $50,000.
1
4
4
8
10
15
18
20
20
23
16

3
6
4
4
5
5
4
8
10

3
6
10
15
17
15
21

4
~9
9
14
17
20
22
23
21
19
16

2
4
3
3
6
8
7
7
12

2
2
2
3
4
6
8
16
21

1
2
3

*

Total.

3
10
19
25
31
44
52
53
49
53
67
1
17
27
32
41
45
51
54
57
. 58
62
78

44

COOPERATIVE CREDIT-

IN

AMERICA.

The growth of the credit-union movement in Massachusetts since
1910 is shown in the table below, which gives miscellaneous statistics
of operation of these societies:
STATISTICS OF O PER A TIO N OF C R ED IT U N IO N S IN M ASSACHUSETTS, 1910 TO 1921
[Massachusetts commissioner of banks. Part II of annual reports, 1910 to 1921.]
Share capital
Year.

1910..........................................
1911..........................................
1912..........................................
1913..........................................
1914..........................................
1915......................................
1916..........................................
1917..........................................
1918..........................................
1919..........................................
1920..........................................
1921..........................................

Number Number Number Number
shares
of
reporting. members. ofheld. borroof
wers. Paid in
during
y ea r .,
1
17
26
34
45
47
53
56
59
60
64
81

105
1,623
2,862
4,577
6,149
7,846
11,418
14,821
17,636
22,987
29,494
32,226

984
4,789
14,983
21,872
31,953
47,131
93,042
126,143
153,033
251,366
348,208
373,656

$1,745
64
19,074
348
54,820
752
92,392
1,560
126,879
2,109
154,664
2,887
283,270
3,623
303,940
4,583
446,220
5,897
831,761
7,872
9,621 1,100,758
12,180 1,008,156
Loans—

Deposits—
Year.

Received
during
year.

Repaid
during
year.

As of
Oct. 31.

Made
during
year.

Repaid
during
year.

Repaid
during
year.
$75
1,648
10,830
37,018
69,505
59,373
97,201
147,085
165,809
339,399
538,557
805,536

Year.
1910.
1911.
1912.
1913.
1914.
1915.
1916.
1917.
1918.
1919.
1920.
1921.

$4,889
$3,145
$1,743
30,293
14,063
19,036
84,762
134,771
68,332
287,762
209,497
146,598
293,591
371,353
224,360
501,349
340.817
362,430
831,544
540,545
652,386
1,095,778
754.818
993,345
1,477,215
913,562 1,555,088
2,153,842 1,413,878 2,295,832
3,311,699 2,284,918 3,323,410
3,003,765 3,042,699 3,314,370

Reserve Dividends General
expenses
fund,
paid.
for year.
Oct. 31.

Total
receipts
for year.

$62
1,247
2,678
5,692
10,582
11,994
13,441
16,959
21,795
29,862
49,473
61,826

$5,923
43,122
187,607
417,980
571,059
726,568
1,267,093
1,792,283
2,498,698
3.862.948
5,729,109
6.396.949

$248
1,150
3,495
6,147
7,768
15,395
27,330
42,407
64,335
97,910
140,482

$8,336
13,383
13,242
19,697
25,164
29,656
60,745
83,507

Total
Cash on
resources hand
Oct. 31. O ct. 31.
$ 2,

25,
91,
180,
269,
418,
808,
1,235,
1,962,
2,769,
3,966,
4,047,

i Mainly Liberty bonds, Federal certificates of indebtedness ,and acceptances.




$1,670
19,623
64,910
120,284
177,657
252,218
436,164
593,020
874,542
1,372,322
1,938,844
2,132,269

Entrance
fees
Outstand­ received ,
during:
ing,
year.
Oct. 31.

$606
$798
$193
7,007
5,155
3,812
32,425
15,559
21,948
50,308
75,856
47,496
78,892
91,540
62,956
143,592
81,762
148,429
153,116
328,103
338,741
561,962
519,945
286,085
421,774
978,495
' 837,360
1,116,952
853,355 1,239,515
1,770,971 1,229,217 1,784,581
1,516,892 1,645,740 1,586,873

1910.
1911.
1912.
1913.
1914.
1915.
1916.
1917.
1918.
1919.
1920.
1921.

As of
Oct. 31.

$705
6,037
23,139
34,130
44,337
49,103
124,311
161,017
276,726
260,258
323,717
276,599

448
683
1,088
867
1,366
1,391
2,819
3,255
4,339
7,402
8,006
Invest­
m ents.1

$5,033
30,350
73,988
115,119
207,175
294,794
438,372

45

CREDIT UNION EXPERIENCE IN AMERICA.

NSW TOSS.

In New York the development has been slightly different from that
in Massachusetts. In the latter State credit unions have been organ­
ized along racial and trade-union lines in factories, towns, and villages,
while in New York they have developed mainly in stores and offices
in New York City. The following statement shows the number of
credit unions reporting each year:
1914
1915
1916
1917
1918
1919
1920

....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
....................................................................................................................
........................
....................................................................................................................

2
14
29
39
41
49
68

Of the unions furnishing reports in 1920, 3 were organized in 1914,
8 in 1915, 10 in 1916, 6 in 1917, 7 in 1918, 15 in 1919, and 19 in 1920.
Entrance fees range from 5 cents to $7.50, 10 cents, 50 cents, and
$1 being the more common rates.
The par value of the shares of the societies reporting varies from
50 cents to $25, the most common value being $5.
The maximum rate of interest charged ranges from 6 to 12 per
cent, the latter being the most common rate.
The number of credit unions having each classified number of
shareholders, depositors, and borrowers is shown below:
CREDIT UNIONS IN NEW YORK, CLASSIFIED BY NUMBER OF SHAREHOLDERS,
DEPOSITORS, AND BORROWERS, ON DECEMBER 31 OF EACH YEAR, 1914 TO 1920.
[New York superintendent of banks. Annual reports, 1914 to 1920.]
Class of members, and year.
Shareholders:
1914..................................................................
1915.................................................................
1916.................................................................
1917.................................................................
1918.................................................................
1919.................................................................
1920.................................................................
Depositors:
1914.................................................................
1915....................................... .......................
1916.................................................................
1917.................................................................
1918.................................................................
1919.................................................................
1920.................................................................
Borrowers:
1914.................................................................
1915...............................................................
1916..................................................................
1917..................................................................
1918..................................................................
1919..................................................................
1920..................................................................

259°—22-----4




Number of credit unions having classified num­
ber of members of each class.
50 or
less.
3
8
11
6
5
6
2
6
10
14
11
19
19
2
8
14
14
12
13
20

51 to 101 to
100. 250.

251 to 501 to Over
500. 1,000. 1,000.

1
3
5
2
8
6
14

1
5
7
14
14
19
20

2
5
6
10
15
15

2
1
1
2

2
3
2
2
3

1
1
2
2
1

3

2
5
9
10
14
12

2
8
8
10
13
19

1
4
4
6
10

1
2
2
1
2

Total.

1
2
O
2
3

1
2
4
1
1
10

2
14
28
39
41
48
68

1

20
16
24
28
2
13
28
37
38
47
64

I

2
6
13

46

COOPERATIVE CREDIT

IN

AMERICA,

The table following shows the rate of dividend paid on share
capital and of interest paid on deposits by the societies during the
years 1915 to 1920:
CREDIT UNIONS IN NEW YORK, CLASSIFIED BY RATE OF DIVIDEND ON CAPITAL
STOCK AND OF INTEREST ON DEPOSITS PAID EACH YEAR, 1915 TO 1920.
[New York superintendent of banks. Annual reports, 1915 to 1920.]
Number of credit unions paying classified rate.
Less 3 and 5 and
than under under
3 per 5 per 7 per
cent. cent. cent.

Item and year.
Dividend on share capital:
1915 ...........................................................
1916..................................................................
1917..................................................................
1918..................................................................
1919..................................................................
1920.................................................................
Interest on deposits:
1915.................................................................
1916 ............................................................
1917..................................................................
1918.................................................................
1919................................................................
1920..................................................................

1
1
2
3
2
6
3
6
9
7
9
11

1
2

7 and
under
10 per
cent.

10 and
under
12 per
cent.

1
4
5
10
5
13

1
3
2
3
3

3
3
8
3
14

12 per Total.
cent
and
over.
1
1
1
4

1

3
2
3
8

2

3
9
14
24
14
42
3
7
12
9
12
21

The classification of the societies according to the amount of assets
and deposits on December 31 of the years 1914 to 1920 is given below:
CREDIT UNIONS IN NEW YORK. CLASSIFIED BY AMOUNT OF ASSETS AND DEPOSITS
ON DECEMBER 31 OF EACH YEAR, 1914 TO 1920.
[New York superintendent of banks. Annual reports, 1914 to 1920.]
Number of credit unions having classified amount.
Item and year.
Assets: .....................................................
1914
1915 ...................................................
1916 .....................................................
1917 ...................................................
1918 .....................................................
1919 .....................................................
1920 .....................................................
Deposits:
1914.......................................................
1915.......................................................
1916 .................................................
• 1917.......................................................
1918.......................................................
1919 .....................................................
1920.......................................................

Less $500 $1,000 $10,000 $50,000 $100,000 Total.
and and
and
and
than under under under under
and
$500. $1,000. $10,000. $50,000. $100,000. over.

1
2
2
4
1
2
3
9
6
9
8

2
3
1
3
1
1
2
4
3
1
2
2

2
11
19
22
17
13
16
1
2
3
6
7
8
10

1
7
14
16
26
32
1
2
2
2
6

1
3
5
12

2
3

1

2
14
29
39
41
49
68
2
6
H
20
16
21
27

The distribution of the credit unions of New York according to the
amount of reserve on December 31 and the expense of operation for




47

CREDIT UNION EXPERIENCE IN AMERICA,

the year ending with that date for the years 1914 to 1920 is shown in
the table following:

CREDIT UNIONS IN NEW YORK CLASSIFIED BY AMOUNT OF RESERVE ON DECEM­
BER 31 AND OF EXPENSES DURING EACH YEAR ENDING DECEMBER 31, BY YEARS,
1914 TO 1920.
[New York superintendent of banks. Annual reports, 1914 to 1920.]
Credit unions having classi­
fied amount.
Item and year.

Reserve:
19U
1915
1916.............
1917............
1918............
1919.............
1920.............

Less $100
and
than under
$100. $500.
1
10
11
7
5
5

5

Credit unions having classi­
fied amount.

$500 $1,000 Total. Item and year. Less $100 $500
and and
and and
than under under
under under
$100. $500. $1,000.
$1,000. $10,000.
1
3
8
6
6
10

4

12
14
16
21
21

1
3
5
12
22

1
10
26
36
34
44
58

Expenses:
1914..................
1915..................
1916..................
1917..................
1918..................
1919..................
1920..................

2
3
13
14
11
10
10

6
6
10
20
21
21
23

$1,000 Total.
and
under
$10,000.

1
3
2
4
9
11

2
11
26
38
40
48
65

1
2
4
8
21

General statistics of operation for the years 1914 to 1920 are shown
below:
STATISTICS OF OPERATION OF CREDIT UNIONS IN NEW YORK, 1914 TO 1920.
[New York superintendent of banks. Annual reports, 1914 to 1920.]
Year.
1914 ................................
1915..................................
1916..................................
1917..................................
1918..................................
1919..................................
1920..................................

Num­
ber reporting.

Num­
ber of
mem­
bers.

Num­
ber of
shares
held.

Num­
ber of
de­
posi­
tors.

Num­
ber of
bor­
rowers.

Share capital—
Num­
ber of
fe­
male Paid in Repaid As
mem­ during during Dec. of
31.
bers. year.
year.

2
14
29
39
41
49
68

193
2,404
5,930
9,614
9,060
11,799
22,490

4,562
25,643
58,494
101,442
108,414
161,274
312,938

34
101
808
1,436
1,162
1,257
3,619

57
1,142
2,818
5,103
5,125
5,891
11,537

41
$6,031
54,034
356
796 125,521
1,466 252,436
1,491 225,009
1,706 562,205
3,442 1,074,121

Deposits—
Year.

Received Repaid
during during
year.
year.
$2, 111

1914
1915
1916
1917
1918
1919
1920

13,356
75,685
125,396
93,255
144,901
451,988
Year.

1914.
1915:.
1916..
1917.
1918..
1
1919..
.................................
1
1920..




$1,286
9,701
51,322
100,937
96,327
121,464
255,369

Loins-7.

As of
Dec. 31.

Made

during
year.

Repaid
, .during Outstand­
ing,

yea*..,

$2,183
$825
$748
$1,434
106,096
58,304
4,479
49,768
303,798
28,843
202,403
150,623
823,716
53,633
644,797
319,869
929,796
50,390 1,032,678
424,170
73,845 2,239,540 1,735,388
994,968
271,003 4,511,798 3,594,579 1,960,735

Reserve Divi­ General Total
fund, dends expenses receipts
Dec. 31. paid. for year. for year.
$28
1,087
5,779
13,266
19,958
36,822
74,623

$673
$5,358
6,040
53,314
26,568
152,405
84,020 332,509
104,653
447,332
118,956
925,742
245,651 1,773,315

$26
1,080
1,993
4,205
2,208
4,956
12,242

Total Balance Invest­ Bor­
assets, on hand, ments in rowed.
Dec. 31. Dec. 31. bonds. money.

$96
$9,009
$6,297 $3,755 $1,015
$845 2,799
143,605
68,758 15,119
458,866
2,219 5,108
195,981 29,834 29,890
465,367 74,205 68,428
5,857 9,753
465,367
14,736 18,282
568,034
568,054 84,232 52,874
25,266 27,570 1,153,505 1,153,505 88,688 60,003
49,770 66,629 5,796,152 2,203,871 155,078 163,312

$3,000
12,395
16,610
21,608
55,486
50,786

48

COOPERATIVE CREDIT IN AMERICA.

In New York, as in Massachusetts, the complaint is that it is very
difficult to find efficient persons who are willing to serve as officers.
Few are willing to keep the books in the manner prescribed by the
bank officials, who are often too rigid in their requirements ana look
at all questions from the standpoint of the banking department.
The department does not have sufficient funds to warrant a separate
supervision of the credit unions. On the other hand, large corpora­
tions often furnish accommodations for the credit unions organized
in their establishments and frequently provide the help needed to
manage them. As an illustration of the number of applications for
credit union charters refused, the banking department of New York
states that in 1918 the number of such charters granted was 7;
the number refused, 11.
NORTH CAROLINA.

The situation in North Carolina is different from that in New York
or Massachusetts. In the two Northern States the credit unions are
in cities and villages, grouped by communities, nationalities, churches,
societies, races, and industries, and have a large membership. In
North Carolina, with one possible exception, the credit unions are
composed almost entirely of farmers. In Massachusetts and New
York the credit unions are considered a form of banking institution
and are placed under the supervision of the banking department of
the State in which they are located. In North Carolina the credit
unions are considered agricultural cooperative credit associations and
are placed under the cooperative care and direction of the agricultural
interests of the State—the North Carolina State College of Agricul­
ture, the North Carolina State Department of Agriculture, and the
Bureau of Markets and States Relations Service of the United States
Department of Agriculture, under the title of 11State Cooperation in
Marketing Work m North Carolina.”
In New York and Massachusetts the banking departments have
done little to encourage the formation of credit unions beyond send­
ing literature to inquirers. In North Carolina, most of the time, a
superintendent of cooperative associations and credit unions in the
Divip%h of^M^kets and Rural Organization has been supported at
Sl^p^ p ense to esffcfor credit unions. In the two Northern States
thPl^amishmen^ild general direction of credit unions has been left
largerptb jfrWtJte initiative. In North Carolina the superintendent
has been alert to organize a credit union wherever in his opinion its
presence was advisable. In the Northern States the banking depart­
ment explains what is necessary to form a credit union, sends the
proper blanks and on their return approves or disapproves the acts
of file formers of the credit union. In North Carolina the superin­
tendent sends blanks, and when the community is ready to organ­
ize the credit union he is present in person or by deputy with blank
forms and suggested by-laws, and sees that the papers are prop­
erly prepared at the time. In New York and Massachusetts the
banking department makes annual examination of the books of each
credit union and receives an annual report which is printed as a part
of the annual report of the department. In North Carolina each credit
union makes a monthly report to the superintendent, and if an official




CREDIT UNIO N EXPERIENCE IN AMERICA.

49

difficulty in preparing his report the superintendent goes or
sends a deputy to clear up the difficulties.
In Massachusetts and New York the superintendent of the banking
department is concerned mainly in seeing that the statutes relating
to credit unions are properly observed. In North Carolina the super­
intendent suggests to the credit unions what to do. In the Northern
States copies of the annual report of the banking department are
printed and circulated, anywhere from a few months to a year after
the individual reports are made, with a short general resume of the
work done by the credit unions during the year, closing with recom­
mendations to the legislature of additional legislation desired to be
assed,
of regulation. In North
g which is almost always in the line of these monthly reports
arolina prior to November, 1920, copies
were sent to each credit ujiion within a month after they were made,
with words of commendation to those that made the best record,
words of encouragement to those needing it, advice to the newly
organized, and an account of any new wont undertaken, planned, or
completed.
A strong argument used to increase membership in the credit unions
in Massachusetts and New York is that they are organized to enable
their members to avoid the loan sharks, in North Carolina to avoid
merchant credits. In the Northern States loaning money to members
for individual spending is the principal business of the credit union.
In North Carolina the cooperative buying of farm supplies in large
quantities at wholesale prices and the distribution of them among the
members at cost, allowing them time in which to make payment, con­
stitutes an important part of the society’s activities. Members often
save 50 per cent on such purchases. Fertilizers and seeds are the
articles commonly handled, but hay, cotton seed, meal, tin cans for
canning, and sugar, when selling for a high price, have been so bought.
The Valdese credit union, two-thirds of whose members are employed
in the cotton mills, loans money to members to enable them to buy"for
cash at the cooperative store in the village. One union one year
operated a Christmas savings fund. Junior savings clubs composed
entirely of children are connected with several credit unions. Deposits
are received from nonmembers.
Several of these credit unions are composed of negroes. By the
end of 1919 there were 13 such located in two adjacent counties.
Three meetings are generally required to form a credit union in
North Carolina. At the first interest is aroused and information
spread, the superintendent of cooperative associations or a deputy
generally being present and acting as the prime mover. At the
second an organization committee is appointed, directors and credit
and supervisory committees are elected, care being taken to have the
directors represent the various neighborhoods oi the district to be
covered by the credit union, to have every interest in the section
represented, to select as members of the credit committee persons
acquainted with each neighborhood, and to include in the membership
of the society at least one person well known to the regular bank in the
community and in good standing with it. At the third meeting the
by-laws are adopted and forms and books arranged for. A local bank
is selected as depository. Farmers are organized by school districts,

has




50

COOPERATIVE CREDIT Itt AMERICA,

and all the earlier credit unions in North Carolina were organized by a
few farmers and the school-teacher of the district. The organization
meetings were held in the schoolhouse and stock was liberally sub­
scribed for by the teachers and school children. The teacher is
generally elected treasurer and devotes a few hours one day a week to
the work of the credit union, receiving therefor $50 a year.
The following table shows the number of societies reporting each
year:
1916
1917
1918
1919
1920
1921

........................................................................................
.............................................................................................................
...................................
..........................................................
..............................................................................................................
.............................................................................................................

8
14
17
31
33
22

Of the unions reporting in 1921, 4 were organized in 1916; 2 in
1917; 2 in 1918; 10 in 1919; and 4 in 1920. Of the 21 that were organ­
ized and have since been dissolved, 2 were operated less than one
year; 5 for one year; 7 for two years, 4 for 3 years, and 3 for five
years.
The par value of the shares is generally $10. Deposits left for a
year generally draw interest at the rate of 4 per cent. Dividends
are usually limited to 6 per cent, and the rate charged on loans is
generally 6 per cent.
The table below shows the number of credit unions in North
Carolina having each classified number of shareholders, depositors,
and borrowers on December 31 of the years 1916 to 1921:
CREDIT UNIONS IN NORTH CAROLINA. CLASSIFIED BY NUMBER OF SHAREHOLDERS,
DEPOSITORS, AND BORROWERS, DECEMBER 31 * OF EACH YEAR, 1916 TO 1921.
[North Carolina superintendent of credit unions. Monthly reports, 1916 to 1920.]
Number of credit
unions having
classified num­
ber of members
Class of of each class. To* Class of
members,
members,
tal« and year.
and year.
25 26 51 101
or
un­ to to to
der. 50. 100. 130.
Share­
holders:
1916___
19171111
1918!!..
1919!!..
1920! ..
1921*...

1
7
6
12
7
2

5
4
5
13
19
9




2
3
5
5
6
7

i
1
1
2

8
14
17
31
33
20

Deposi­
tors:
1916...
1917...
1918...
1919...
1920...
1921 «..

>Oct. 31, of 1920.

Number of credit
unions having
classified num­
ber of members
of each class. To­ Class of
tal and year.
iai. members,
25 26 51 101
or
un- to to to
der. 50. 100. 13a
7
7
11
15
17
8

7'
2 1
10
2 2
15
2 2 i 20
3 2 l 23
2 1 l 12

B OTTOW. ers:
1916...
1917...
1918...
1919...
1920...
1921 *..

*Annual report.

Number of credit
unions having
classified num­
ber of members
of each class. mA
flOJ|1
tat.
25 26 51 101
or
un­ to to to
der. 50. 100. 130.
7
12
11
18
20
15

1
2
1
2
3

7
13
13
19
22
18

51

CREDIT U NIO N EXPERIENCE IN AMERICA.

The distribution of the credit unions with regard to the amount of
assets and deposits on the last day of each year, 1916 to 1921, is
given below:
CREDIT UNIONS IN NORTH CAROLINA CLASSIFIED BY AMOUNT OF ASSETS AND
DEPOSITS, DECEMBER 31 * OF EACH YEAR, 1916 TO 1921.
[North Carolina superintendent of credit unions. Monthly reports, 1916 to 1920.
Number of credit unions
having classified amount.
Item and
year.
Less $500
and
than under
$500. $1,000.
Assets:
1916.........
1917.........
1918.........
1919.........
1920.........
1921 2.......

2
6
9
12
13
4

$1,000
and
under
$10,000.

3
3
3
7
5
6

Number of credit unions
having classified amount.

$10,000 Total.
and
under
$30,000.

3
5
5
10
13
10

Item and
year.

Less
than
$500.

Deposits8
1916...........
14 * 1917...........
17
1918...........
31
1919...........
33
1920...........
22
19212.........

2
2
2

xOct. 31, of 1920.

6
6
10
12
15
7

$500 $1,000
and 1 and
under under
$1,000. $10,000.
1
•
1 .............
1
4
1!
4
1!
5
1i
5
...........!
3

$10,000 Total.
and
under
$30,000.

2
2

2

7
11
15
20
23
12

2Annual report.

The meager general statistics of operation available are given in
the table below:
STATISTICS OF OPERATION OF CREDIT UNIONS IN NORTH CAROLINA
DECEMBER 31,1 1916 TO 1921.
[North Carolina superintendent of credit unions. Monthly reports, 1916 to 1920.
Year.
1916...................................
1917...................................
1918...................................
1919...................................
1920 2.................................
1921 *.................................

Num­
ber re­
port­
ing.

Num­
ber of
mem­
bers.

8 322
14 539
17 783
31 1,171
33 937
22 1,002

3Oct. 31, of 1920.

Bor­
Num­ Num­
ber of ber of Share De­
rowed Cash
in
depos­ bor­ Capital. posits. Loans. money. banks. Assets.
itors. rowers.
100
187
299
383
367
302

45
119
144
139
129
290

$2,172
4,907
7,978
15,964
12,520
18,675

*10 months only.

$3,771
9,324
14,175
53,288
35,366
45,758

$4,031
10,217
17,779
39,479
45,757
84,153

$700
1,978
3,200
4,294
7,247
19,488

$3,018
6,312
7,530
32,064
10,312
3,511

$7,224
17,174
27,465
79,707
58,101
90,819

*Annual report.

The question is asked: Why have the North Carolina credit unions
attained success while rural credit unions elsewhere do not seem to
flourish ? There are several reasons. The foremost is the care and
direction that have been given to societies in that State, the
oversight by the superintendent of credit unions, the caution with
which he has established them. The Jewish agricultural credit
unions in the North have been composed entirely of farmers, with the
secretary-treasurer too often living in a part of the district incon­
venient of access to the other members. JPurely agricultural unions
with no member resident in a village find it difficult to obtain a sec­
retary-treasurer who can afford during the busy season to give even
a few hours one day a week to the interests of the credit union. In
North Carolina, the secretary-treasurer is generally resident in the
village or in a central portion of the district and therefore conven­
iently located. Again, m North Carolina, credit unions have devoted
most of their energies’to buying cooperatively for their members, who



52

COOPERATIVE CREDIT IN AMERICA.

are given time in which to pay for the articles which they have bought.
The Jewish credit unions loan money to members to spend for various
purposes, and too often the latter find it difficult to repay the amount
when due. In other words, short-term loans are apt to develop into
long-term loans, to the detriment of new would-be borrowers, finally
the North Carolina credit unions have featured their savings depart­
ments.
N E W H A M P S H IR E .

Under the New Hampshire credit union act of 1921,18 one society
has been organized in Manchester, but no report in regard to it has
as yet been printed.
The credit union chartered by special act in 1909 as the St. Mary’s
Cooperative Credit Association became, by chapter 339 of the Acts
of 1917, La Caisse Populaire Ste. Marie. By the terms of the charter,
membership is confined to residents of Manchester, and the members
are French-Canadian workers in the cotton mills. There has been
very little change in the officers and membership of committees from
the date of the organization. The capital stock is limited to $100,000;
this is the only credit union in the united States whose capital is so
limited.
The table below shows, as far as the information is available, the
growth of this society since 1910:
STATISTICS OF O PE R A T IO N OF T H E C R ED IT U N IO N IN N E W H A M PSH IR E, 1910
TO 1921.
[New Ham pshire bank com m issioners. A nnual reports, 1910 to 1921.]

Year.

1914
191 s
. ..
1910
1917
1918.........................
1919.........................
1920.........................
1921.......................

N um ­
ber of
m em ­
bers.

1,182
1,409
1,516
1,880
2,349
2,938

Share capital—
D eposits—
E n­ Reserve
N um ­
trance fund,
ber of
out­
fees. stand­
shares Paid in Repaid Out­ R eceived Repaid A s of
re­
held. during during standing during during June 30. ceived. ing
year. year. June 30. year.
year.
June 30.
2,982
3,677
4,205
4,693
5,035 $3,954 $2,229 $25,191 $196,707 $130,807 $2i6,2i7
5,745 5,402 1,912 28,681 331,178 205,341 342,053
6,495 6,417 2,620 32,478 659,267 459,415 541,905
6,658 4,585 3,770 33,293 679,034 549,320 671,618

1

$191
258
311
226

i

$2,926
3,804
4,926
6,413

Loans—
Year.

1910.
1911.
1912.
1913.
1914.
1915.
1916.
1917..
1918..
1919..
1920..
1921.

D ivi­
dends
paid.

$1,113
1,202
1,372
1,494

u A cts of 1921, ch. 40.




General T otal re­ Total Balance Invest­
assets.
ents in
expenses
Made Repaid A s of for year. ceipts for June 30. on hand, mbonds.
year.
June 30.
during during June 30.
year.
year.

$23,306 $20,747 $211,583
143,342 57,217 297,708
205,110 85,539 417,280
156,036 87,006 486,310

$1,495
2,017
3,903
5,718

$25,056
25,710
74,325
132,972
175,739
202,863
243,407
422,732
803,400
861,976

$12,985
15,144
23,720
36,279
62,497
100,022
137,738
180,221
251,377
383,906
593,627
735,894

$9,794
11,198
12,648
23,884

$29,000
74,000
162.700
223.700

53

CREDIT UNION EXPERIENCE IN AMERICA.
R H O D E IS L A N D .

The first credit union in Rhode Island was incorporated under
the general law of the State on March 9, 1915, and began business
April 1, of that year. There has been practically no change in the
officers and membership of the committees since the organization of
the society. The membership is composed mainly of the French
Canadians in the mills at Central Falls. A second credit union com­
posed of telephone workers in Providence was incorporated March 30,
1920.
The maximum number of shares any member may hold is 200

in the first society and unlimited in the second; the maximum amount
anyone may deposit is $5,000 and $250, respectively, and the interest
on deposits, 4 and 5 per cent, respectively.
The following table gives statistics of the first society in Rhode
Island 1915 to 1919, and of both in 1920, similar to those already

given in other States:

STATISTICS OF OPERATION OF CREDIT UNIONS IN RHODE ISLAND, 1915 TO 1920.
[Rhode Island bank commissioner. Annual reports, 1915 to 1920.]
Year.

Num­
ber of
mem­
bers.

Share capital—
Deposits—
Num­ NumReserve
ber of ber of
fund,
shares borrow­ Paid in Repaid As of Received Repaid As of Dec. 31.
during during Dec. 31.1 during during Dec. 31.1
held. ers.
year.1 year.1
year.1 year.1

1915.................
1916..................
1917..................
1918..................
1919..................
1920..................

212
384
1,033
1,354
1,505
2,016

435
1,043
2,804
5,045
7,526
12,796

Year.
1915..
1916..
1917..
1918..
1919..
1920.

28
68
117
158
189
363

$5,503
11,556
17,501
25,447
90,539

$407
2,749
6,049
13,447
25,850

$5,096
13,903
25,355
37,355
64,689

$155,065
256,975
534,085
887,092
1,949,787

$7i,020
206,157
402,703
782,948
1,402,793

$84,045
134,864
266,246
370,390
546,993

$63
616
1,411
2,900
1,001

Loans—
En­ General Total re­ Total Balance
ex­
Divi­
dends Made Repaid Out­ trance penses ceipts for assets, on hand,’ bonds.
fees re­
year. Dec. 31. Dec. 31.
paid. during during standing ceived. for
year.
year.1 year.1 Dec. 31.1
$127
730
1,383
2,180
3,080

$75,034
103,012
191,366
256,394
671,011

$12,735
31,028
99,686
157,638
242,586

$22,110
$62,299 $116 $1,613 $177,603 90,469 $26,715
134,283 299 4,529 400,912 151,992 16,399
225,963
7,487 858,310 296,849 53,039 $16,706
324,719 247 4,844 1,390,160 439,225 107,360 16,700
428,425
2,301,347 607,441 114,199 17,250

1 Information furnished direct to the Bureau of Labor Statistics by the societies.
J E W IS H C R E D IT U N IO N S .

The credit unions established by the Jewish Agricultural and
Industrial Aid Society, following the year 1911, remain to be con­
sidered. These were 19 in number and were established as follows:
Massachusetts, 1; Connecticut, 5; New York, 8; and New Jersey, 5.
Three of them were organized in 1911, 5 in 1912, 9 in 1913, 1 in 1914,
and 1 in 1915. These were all farmers’ organizations, the only Ameri­
can agricultural credit unions outside of North Carolina. Except the
one in Massachusetts, all these credit unions were organized as vol­
untary associations. Four of those in New York were later (1916)
incorporated under the New York law which was passed after their



54

COOPERATIVE CREDIT IET AMERICA.

organization. No Jewish credit unions have been established since
1915, though several requests for assistance have been received.
Though the Jewish Agricultural and Industrial Aid Society has lost
no money through its credit unions it can not be said that the experi­
ment has been an unqualified success. In 1915, the membership pf
one of the credit unions of New Jersey decreased so greatly that it
seemed advisable that the indebtedness to the parent society should
be reduced. Seven of the societies have declared a dividend: One of
4 per cent a year for 2 years, 1 of 1J per cent; 1 of 5£ per cent, 1 of 6J
per'cent, 1 of 7J per cent a year for 4 years, 1 of 8 per cent, and 1
of 8.4 per cent a year for 5 years, each society repaying to the parent
society an amount equaling that paid to its members m dividends.
The society in its annual reports issued statistics showing the
progress of its credit unions, 1911 up to 1916, but has issued none
since then. Three of the Jewish credit unions in New York that
were incorporated in 1916 failed, within two years, to live up to
the laws of the State, and were closed up; 2 oi the unincorporated
credit unions also went into liquidation. All of them paid their
obligations in full and left a dividend to the stockholders. It is
hard for farmers to observe all the rigid regulations required of banks.
The form of these organizations is that of the Raiffeisen societies in
Germany. Membership is open only to members in good standing
in the local Jewish Farmers’ Association. The board of directors
consists of seven elected members, of whom four—president, vice
president, secretary, and treasurer—constitute a credit committee,
m complete charge of granting loans, and the remaining three mem­
bers constitute a supervisory committee, to audit the books and
supervise the acts of the credit committee. Appeals from either
committee lie to the membership in general assembly. No loan is
granted for longer than six months nor for more than $100. Interest
is paid at the rate of 6 per cent. Each credit union raises $500
through the sale of shares to members and the Jewish Agricultural
and Aid Society loans it $1,000 at 2 per cent. The last one organized
however, received a loan of only $500, as the parent society desired
the organizations to become more self-reliant.
The membership in each credit union is less than 50. The yearly
expenses of the credit unions have been small, more than 50 per cent
having spent less than $100 for operation during each of the years
1913 to 1915.
The following table shows for those years for which figures are
available the statistics of operation of the Jewish credit unions:
STA TISTICS OF O PE R A T IO N OF JE W ISH C R E D IT U N IO N S, 1911 TO 1916.
[Jewish Agricultural and Industrial A id Society. A nnual reports, 1911 to 1918.]

Year.

1 91 1 ...
1912
1913
1914
1915..........
1 91 6 ...

N um ­
ber
report­
ing.

N um ­
ber of
m em ­
bers.

N um ­
ber of
shares
held.

8

84
240
517
536
573
564

308
844
1,833
1,864
1,983
1,932

3
17
18
19
19




Loans.
N um ­
Reserve General Total Total
ex­
ber of
fund,
assets, liabili­
loans, Made R epaid Out­ Segt. penses Sept. 30. ties.
for
made. during. during. standing,
Sept. 30.
year.
year. year. Sept. 30.

66

276
661

$4,460
18,915
50,250

$1,179
11,131
38,506

$3,281
11,066
22,809
26,154
28,681
27,236

$426
249
3U9
386

$727
1,458
2,093

2,886

$12,649
27,488
29,579
31,853
31,493

$12,223
26,170
27,403
28,612
27,659

55

CONCLUSIONS.
C O M P A R A T IV E S T A T IS T IC S .

Although the laws of eleven States and the Province of Quebec
which have legislated with regard to credit unions are similar, com­
parison of the associations organized under them is not altogether
satisfactory because of the difference in methods of organization and
reporting. In order, however, to give some idea of the development
of the credit-union movement in the various States, the following
table showing averages for the latest year reported based on the
detailed figures already given has been computed.
COM PARATIVE A V E R A G E STATISTICS OF C R ED IT U N IO N S IN AM ERICA.

Item.

Province of Massachu­ New York North
Quebec
Carolina
(Dec. 31, setts (Oct. (Dec. 31, (Dec. 31,
31,1921).
1920).
1920).
1921).

81
22
Number of credit unions....................................................
100
68
398
Average number of members per society..........................
310
46
12
34
Average increase in membership per society during year.
3
262
Average number of depositors per society........................
53
14
92
Average number of borrowers per society.........................
150
170
13
Paid in share capital:
Average per society....................................................... 111,991.70 126,324.31 $26,078.21
$848.86
66.17
Average per member.....................................................
30.86
78.85
18.63
Deposits:
Average per society....................................................... 45,580.53 19,591.02 3,985.43 20,807.18
Average per member.....................................................
49.24
146.89
12.05
45.67
Average per depositor...................................................
173.72
74.89
151.52
Loans outstanding:
Average per society....................................................... 51,813.92 40,918.15 28,834.34 3,825.14
Average per member.....................................................
166.99
102.85
87.18
83.98
Average per borrower...................................................
197.48
272.12
290.17
169.09
Average amount of entrance fees received during year.,
98.84
per society..........................................................................
66.42
180.03
Average amount of reserve per society.............................. 2,526,27 1,734.35 1,097.40
Average yearly expense per society...................................
763.28
979.84
451.05
Average yearly receipts per society.........;........................ 152,607.26 78,974.68 85,237.53
Average assets per society................................................... 63,069.65 49,940.41 32,409.87 4,128.14

*8-

It appears from the above table that in none of the States has the
credit-union movement, as indicated by number of societies, devel­
oped to the extent that it has in Quebec. The smallest number of so­
cieties is found in North Carolina, as would be expected from the fact
that the movement is newest there. Massachusetts has the largest
societies, averaging 398 persons, but the greatest growth per society
is found among the credit unions of New i ork.

The Massachusetts societies are the most heavily capitalized and
have also the largest average amounts of loans outstanding while the
Quebec societies lead in deposits. The average expense of the
Massachusetts societies is smaller than those of New York. In
Massachusetts about two-thirds of the credit unions receive deposits,
in New York less than half, and in North Carolina three-fourths.
CONCLUSIONS.

Experience has shown that the passage of enabling acts is not
enough to promote the growth of credit unions, that general educa­
tion in cooperation is needed, and that all ideas of the credit-union
movement based on philanthropy should be dismissed from mind
and the credit unions operated on a strictly business basis.
So long as the members of committees are chosen carefully and
without sentiment and the rule's laid down in the statutes are strictly



56

COOPERATIVE CREDIT IN AMERICA.

observed by the leaders of the societies the latter can hardly
be otherwise than successful. One weakness that has appeared in
many unions is a tendency to allow their control to pass into the
hands of one or two members.
The following points are given as embodying the practice found
by experience to be desirable. While they may seem to be minor
matters, it should be borne in mind that in a society operating on
such a small scale as the credit union, too much attention can not
be given to details.
The qualifications of the manager are of prime importance, since
all the business of the credit union is to pass through his hands.
Essential characteristics of the manager are competence, caution,
rigidity in the observance of the details of the by-laws, and firm­
ness in refusal to depart from the rules, for such departure will
lead to abuses and to the ultimate failure of the credit union. His
function is also to point out abuses and negligence with courtesy
and firmness. It is essential that he know the character, reputation,
and solvency of members.
It has been shown that allowing any borrower to be in default for
even a single day invites carelessness, and sooner or later leads the
credit union to financial embarrassment. Because of the small
amount of the funds and the many requests for loans the credit
committee must rely on rigid regularity in reimbursement. Punctual­
ity in payment at maturity is necessary in order that others may be
accommodated and the credit union insured a constant inflow of
funds.
It has been found desirable that members should not be allowed
to withdraw while they are borrowers, indorsers, or guarantors, and
that forfeiture of membership should follow failure to pay fines or
dues for more than three months. The indorser should invariably
be held liable in default of the maker of the note.
Safety is insured by the transference to the reserve fund of 10
per cent of the profits, or better, 20 per cent for the first year or
two, until an amount double the maximum liabilities represented
by the shares is accumulated.
The determination of the rate of interest to be paid on deposits
is important, for if the rate paid by the society is more than 1 per
cent m excess of the rate paid by tne savings banks in that locality,
the credit union may find itself in possession of more deposits than
it can use advantageously and there will be a surplus bn hand not
drawing interest and inviting speculation.
Central agencies to diffuse information, to point out the benefits
of the plan, and to assist in the formation and supervision of credit
unions nave been found helpful to the movement in other countries
and might be so here.




APPENDIX—BIBLIOGRAPHY.
[The following is a list of books and leading magazine articles printed in English containing matter relat­
ing to credit unions in America and cooperative credit associations elsewhere. Most of the references
to agricultural credit relate to the cooperative credit associations in Europe.]

Austin, Charles B., and Wehrweier, George S. Cooperation in agriculture, marketing,
and rural credit. Austin, Tex., 1914. Bulletin of the University of Texas, No.
355; extension series, No. 60.
“ Banks of continental Europe, Popular.” I n Bankers Magazine and Statistical
Register, July, 1875, pp. 7-9.
Barker, D. A. “ Cooperative credit in India.” I n Economic Review, July, 1909,
pp. 282-292.
Barnett, R. W. “ Review of Wolff’s People’s Banks. I n Economic Journal, March,
1894, pp. 72-75.
Branson, E. C. “ Cooperative credit unions in North Carolina.” I n Southern Work­
man, October, 1920, pp. 468-473.
Bullock, Edna D. Agricultural Credit. New York, 1915.
Cahill, J. R. An enquiry into agricultural credit and agricultural cooperation in
Germany. Report to the Board of Agriculture and Fisheries. London, 1913.
Reprinted as S. Doc. No. 17, 63d Cong., 1st sess. Washington, 1913.
Camp, William R .:
“ A southern experiment in rural credit.” I n Survey, January 10, 1920, pp.
293-295.
“ Credit unions and national farm loan associations.” I n Marketing and Farm
Credits, Madison, Wis., 1917, pp. 50-58. Read at the fourth annual session of
the National Conference on Marketing and Farm Credits, Chicago, Dec. 4-7,
1916.
Markets and rural organization. Reports to the Director, Division of Markets and
Rural Organizations, North Carolina, 1916-1920.
“The movement to organize credit in North Carolina.” I n International Review
of Agricultural Economics, May, 1916, pp. 16-20.
‘1The North Carolina credit union. ’’ I n American Economic Review, September,
1916, pp. 689-693.
Cance, Alexander E. “A credit union in Massachusetts.” I n American Economic
Review, March, 1913, pp. 198-200.
Chapman, Edward M. “ Rural cooperation.” I n Yale Review, April, 1914, pp. 520535.
“ Cooperation in India, First fruits of.” I n Economic Review, April, 1908, pp. 154174.
“ Cooperative credit, The problem of.” I n Economic Review, October, 1914, pp.
420-424.
“ Credit associations in Germany.” I n Gunton’s Magazine, May, 1896, pp. 323332.
“ Credit banks in India.” I n Worlds’ Work, June, 1910, pp. 12989-12990.
“Credit banks of the world, Agricultural.” New York, 1913.
“Credit unions for relief and thrift.” I n Survey, February 6, 1915, pp. 475-476.
“Credit unions, Formation of.” I n vBankers Magazine, November, 1914, pp. 517518.
Cunningham, John, and Brown, William M. Report on Rural Credits and Coopera­
tion. Columbus, Ohio, 1914.
Dawson, William H. “ Agricultural cooperative credit associations.” I n Economic
Journal, September, 1902, pp. 327-333.
Desjardins, Alphonse:
“ Rural cooperative credit.” I n Marketing and Farm Credits, 1916, pp. 78-98.
The Cooperative People’s Bank. New York, 1914. Division of Remedial
Loans, Russell Sage Foundation, R. L. No. 16.
“The cooperative people’s bank.” I n Bankers Magazine, June, 1909, pp. 922-932.
Address before the Twentieth Century Club, Boston.
Doherty, T. K. “ Cooperative credit associations in Canada.” I n Monthly Bulletin
of Economic and Social Intelligence, June, 1913, pp. 16-22.




57

58

COOPERATIVE CREDIT IN AMERICA.

Ely, Richard T. “ German cooperative credit unions.” I n Harper’s Magazine,
February, 1881, pp. 207-223.
Fay, C. R. Cooperation at Home and Abroad. London, 1919. 1st edit., 1908.
Fiamingo, Giuseppe. “ Cooperative banking in Italy.” I n Economic Journal, June,
1896, pp. 278-283.
Flyn, George A. “ Credit unions, an experimenfin democracy.” I n Proceedings of
National Conference of Charities and Corrections. Chicago, 1916, pp. 430-433.
Francois, G. “ People’s banks in Italy.” I n Journal of Political Econony, Sep­
tember, 1899, pp. 456-467.
Frankel, Lee K. “ Self-respect fund.” I n Jewish Charities, August, 1914, pp. 19-23.
Address delivered at the eighth biennial session of the National Conference of Jew­
ish Charities, May 6-8, 1914.
Grabein, Dr. “ Causes and effects of the recent want of success in the department
of cooperative agricultural credit in Germany, and the lessons to be learned from it.”
I n Monthly Bulletin of Economic and Social Intelligence, December, 1913, pp.
1-17.
de Haas, Jacob. “ Credit unions.” I n Jewish Charities, August, 1914, pp. 17-19.
Speech delivered at eighth biennial session, National Conference of Jewish Chari­
ties, Memphis, May 6— 1914.
8,
Hake, R. Egmont. “ People’s banks.” I n Journal of the Institute of Bankers,
June, 1889, pp. 309-330.
Hale, R. S. Determining Credit. A Suggestive Method for Credit Committees of
Credit Unions. New York, 1916. Division of Remedial Loans, Russell Sage Foun­
dation, R. L. No. 22.
Ham, Arthur H.:
‘*Credit unions and their relation to savings and loan associations. ’’ I n Economic
World, Aug. 21, 1915, pp. 235-238. Address before Savings and Loan Associ­
ation, Port Jervis.
“ People’s banks.” I n Proceedings of the National Conference of Charities and
Corrections. Chicago, 1916, pp. 420-430. Reprinted by Division of Remedial
Loans, Russell Sage Foundation, as R. L. No. 24.
The Credit Union and the Cooperative Store. New York, 1917. Division of
Remedial Loans, Russell Sage Foundation, R. L. No. 31. Address delivered
at the Conference of Eastern Cooperative Societies, New York City, Nov. 25,
1917.
The Object of the Credit Union. New York, 1916. Division of Remedial Loans,
Russell Sage Foundation, R. L. No. 23.
Ham, Arthur H., and Robinson, Leonard G. A Credit Union Primer. New York,
1914. Division of Remedial Loans, Russell Sage Foundation, R. L. No. 15.
Haney, Lewis H. “ Farm credit condition in the cotton States.” I n American
Economic Review, March, 1914, pp. 47-67.
Herrick, Myron T. Rural credits. Boston, 1916. Circular No. 59, in 63d annual
report of the Massachusetts State Board of Agriculture.
Herrick, Myron T., and Ingalls, R.:
“ How to finance the farmer.” I n Report of the Ohio State Committee on Rural
Credits and Cooperation, Cleveland, 1915. Reprinted as S. Doc. No. 396,
64th Cong., 1st sess. Washington, 1916.
Rural Credits, Land and Cooperative. New York, 1914.
Hobson, O. R. “ Agricultural credit banks.” I n Journal of the Institute of Bankers,
June,#1912, pp. 329-354.
Hodges* Le Roy:
Notes on agricultural credit systems abroad. H. Doc. No. 1435,62d Cong., 3d sess.
Washington, 1913.
“ The agricultural credit system p f Germany.” I n Texas Magazine, April 8,1913,
pp. 493-500.
International Institute of Agriculture, Bureau of Economic and Social Intelligence:
Agricultural Credit and Cooperation in Italy. Rome, 1913.
International Review of Agricultural Economics, 1910 to 1922. Contains frequent
short articles and items relative to cooperative credit the world over.
Monographs on Agricultural Cooperation in Various Countries. Rome, vol. 1,
1911; vol. 2,1915.
‘*Rural banks and loans on honor in Japan.’’ I n Monthly Bulletin, October, 1914,
pp. 26-45.
The Way out of the Rut. European Cooperative Rural Credit Systems. Rome,
1912. Reprinted as S. Doc. 966, 63d Cong., 3d sess. Washington, 1915.




APPENDIX— BIBLIOGRAPHY,

59

Jay, Pierre. “ Cooperative credit.’* I n Proceedings of the National Federation of
Remedial Loan Associations, 1910. Philadelphia, 1910, pp. 3-12. A ls o in Pro­
ceedings of the National Conference of Chanties and Corrections. Fort Wayne,
Ind., 1910, pp. 494-501.
Jewish Agricultural and Industrial Aid Society. Annual reports. New York, 19111918.
‘‘Jewish Agricultural and Industrial Aid Society, The Work of the.’’ I n International
Review of Agricultural Economics, September, 1916, pp. 1-14.
Kemmerer, E. W. “ Agricultural credit in the United States.” I n American
Economic Review, December, 1912, pp. 852-872.
Keys, C. M. “ Banks for all the people.” I n World’s Work, October, 1909, pp.
12134-12138.
Macpherson, Hector. Cooperative Credit Associations in the Province of Quebec.
Kingston, 1910.
Massachusetts:
Commissioner of Banks. Annual reports. Boston, 1908-1921, Pt. II.
------ Statement and suggestions in regard to organizing and managing a credit
union in Massachusetts. Boston, 1915.
Massachusetts Credit Union Association. You should know about credit unions.
Boston, 1917. Second edition, 1918.
Mathews, John L. “ People’s banks of Italy.” I n Harper’s Magazine, October, 1913,
pp. 724-734.
McCaleb, W. F. “Peoples Banks.” In Review of Reviews, January, 1920, pp. 69-72.
Metcalf, Ralph. “ Rural credits in Germany.” Address delivered before the sixth
annual convention of the Farmers’ Educational and Cooperative Union of America,
May 26, 1914. S. Doc. No. 571, 63d Cong., 2d sess., Washington, 1914.
Michell, H. “ People’s banks in the Province of Quebec.” I n Economic Review,
July, 1914, pp. 259-272.
National Association on Credit Union Banks. Draft of a proposed uniform law
creating credit union banks. Boston, 1920.
New Hampshire. Board of Bank Commissioners. Annual reports. Concord, 1910-1921.
New York. Superintendent of Banks. Annual report on savings and loan associa­
tions, land banks and credit unions. Albany, 1915-1920. The reports of the
credit unions for 1914 are given in the volume entitled Annual report of the super­
intendent of banks.
North Carolina:
Agricultural Extension Service. Raleigh. Circular no. 13, The North Carolina
Credit Union, Augustj 1916; no. 39, How to organize a credit union, March,
1917; no. 41, Developing credit in the country, April, 1917; no. 60, What is
a credit union, January, 1918.
Division of Markets and Rural Organization. Annual Reports, 1916-1919.
State Cooperation in Marketing Work, Division of Markets and Rural Organiza­
tion, Superintendent of Credit Unions. Monthly reports. Raleigh, N. C.,
1916-1920, and January 1, 1922. Montgomery, Ala., 1913.
O’Neal, Gov. Emmet. “ Rural credits, cooperative finance.” Address delivered at
the governors’ conference,-Richmond, Dec. 6, 1912.
Oregon:
Rural Credits Commission. Report to the 28th Legislative Assembly. Salem,
1915.
State Banking Department. Ninth annual report, 1916. Salem, 1917.
Patterson, Thomas B. “Negro credit unions of North Carolina.” I n Southern
Workman, April 1920, pp. 180-183.
Perrott, H. R. “Voices from the Indian up-country.” I n Economic Journal,
September, 1909, pp. 450-463.
Peters, Edward T. Cooperative credit associations in certain European countries
and their relation to agricultural interests. U. S. Department of Agriculture,
Division of Statistics, Miscellaneous series, report no. 3. Washington, 1892.
Price, Homer C. Rural credit in Germany. Columbus, Ohio, 1913.
Putnam, George E.:
“ Agricultural credit legislation.” I n American Economic Review, December,
1915, pp. 805-815.
“ Federal farm loan act.” I n American Economic Review, December, 1916,
pp. 770-789.
Quebec, Canada. Bureau of Statistics. Statistical Year Book. Quebec, 1917-1921.
Quincy, S. M.:
“ People’s banks.” I n Old and New, May, 1870, pp. 704-706.
The People’s Banks of Germany; their Organization under the Recent Law,
Boston, 1870,




60

COOPERATIVE CREDIT IN AMERICA.

Kao, C. R. “ Agricultural credit in India.” I n Economic Review, April, 1911,
pp. 199-202.
Raper, Charles Lee. “ The use of credit by the North Carolina farmers.” I n South
Atlantic Quarterly, April, 1914, pp. 118-128.
Rhode Island and Providence Plantations. Bank Commissioner. Reports. Paw­
tucket and Providence, 1915-1921.
Robinson, Leonard G.:
“ Cooperation as a training school in business methods.” I n Addresses * * *
before the Conference for Education in the South, April 16, 1913. Richmond,
1913, pp. 8-12.
“ The pioneer cooperative credit associations in the United States. ’’ I n Addresses
* * * before the Conference for Education in the South, April 16, 1913.
Richmond, 1913, pp. 4-7.
Simon, George W.:
“ Cooperation among Jewish American farmers.” I n Marketing and Farm
Credits. Proceedings of the first National Conference on Marketing and Farm
Credits, Chicago, 1913, pp. 199-201.
1 ‘ The work of the Jewish Agricultural and Industrial Aid Society. ” I n Marketing
and Farm Credits, Nashville, 1916, pp. 63-70. Read at the third annual session
of the National Conference on Marketing and Farm Credits in joint program with
the National Council of Farmers’ Cooperative Association, in Chicago, Novem­
ber 28, 1915.
Starkweather, H. G., and Macpherson, Hector. Report of the rural credits commis­
sion, Oregon. Salem, 1915.
United States:
American Commission. Agricultural cooperation and rural credits in Europe.
Information and evidence secured. S. Doc. 214, 63d Cong., 1st sess., Washing­
ton, 1913.
------Preliminary report on land and agricultural credit in Europe. S. Doc. 967,
62d Cong., 3d sess., Washington, 1912.
_
American Commission for the Stuay of the Application of the Cooperative System
to Agricultural Production, Distribution, and Finance in European Countries.
S. Doc. 1071, 62d Cong., 3d sess., Washington, 1913.
Articles from the monthly Consular Reports, Department of Commerce, relative
to rural credits. Printed for the use of the Joint Committee on Rural Credits,
63d Cong., 3d sess. Washington,-1915.
Commission to Investigate and Study in European Countries * * * Co­
operative Rural Credit Unions and Similar Organizations. Part III, Personal
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