Rural Credit
various systems of extending loans to farmers for the purpose of financing the growing and marketing of their crops. Rural credit may be divided into two chief forms: co-operative and state aid. The former is by far the most extensively practiced. The co-operative method had its origin in Germany, where it was first established by Raiffeisen, from whom it has taken its name as the Raiffeisen system. A number of farmers in a community join together and form a co-operative bank in which the members are jointly liable for the debts of the association. Each member owns a limited number of shares, usually only one. Each member has only one vote in determining the policies of the association. In Germany, before the World War, the share capital of the banks formed only three and eight-tenths per cent. of the total capital available for loans, eighty-five per cent. of the capital being supplied by the savings accounts of the farmer-members. This system has RURIK ial legislaspread all over agricultural Europe, but has made little or no headway in this country. In the United States the farmer usually obtains his credit through the regular commercial banks, through credit at the general store, or by means of crop liens, all of which have been extremely unsatisfactory. Within recent years credit unions have been established, especially in Massachusetts, where th they have been encouraged by special legislation. The progress of co-operative credit unions has been so slow in this country, however, that the need of some system of state aid has long been felt, and finally took concrete shape in the Federal Farm Loan Act, passed in July, 1916, with the specific purpose of aiding the farmers to produce for the war needs of the nation during a critical period. See "Co-operation in Agriculture," by G. Harold Powell, and "Co-operation Among Farmers," by John Lee Coulter.