Cooperative Thought - Raiffeisen
Raiffeisen’s
Model (Rural Cooperatives)
Fredrick Winslow Raiffeisen (1818-1888)
was born in Harm, the place near Sigeskg river in 1818. After his early
education at home, he served in military. He had a short military carrier .Due
to bad dye sight, he retired from the service. After retirement, he entered in
public service. He served as a burgomaster
of Weyerbusch in 1848, Flammersfield in 1848, Heddersdort in 1854.
He had deep sympathy for poor people.
He himself had seen poverty and the misery of the rural poor. Therefore, he
wanted to make them happier and more comfortable. He strongly believed the self help will lift
the poor out of poverty.
He developed voluntary association of
poor people to improve their conditions. He was the opinion that self help and
mutual aid to obtain capital easier and cheaper and thereby they can save for
themselves. Raiffeisen recognised that
the cooperative way was the only solution to save the poor.
Cooperative Experiment
Raiffeisen started his cooperative experiment at
Flammersfield where he established the ‘Flammersfield Poor Peasants Society in
December 1849. This society was started with the help of philanthropists. It supplied cattles at reasonable cost to the
farmers for the period of 5 years. The
members repaid the amount with interest in easy instalments. The members were
jointly and severally liable for all debts of the society.
Raiffeisen founded the ‘Heddersdort Benevolent Society’ in 1854 with the help of 59 better off
people. It was the multi-purpose
society. He dissolved a charity
association in 1864 and founded ‘Heddersdort Association of Loan Bank’s. This was a concrete step taken by Raiffeisen
based on self help through mutual help.
Raiffeisen later established such societies in
different places. They were famously known as local credit units or village
banks. Their functions include supply of credit and agricultural requirements,
collection of deposits, marketing of members’ agricultural produces etc. Poor people begin to get credit at reasonable
rate and payable in easy instalments.
Features
1. Rural Cooperatives:
Raiffeisen’s credit organisations are organised in the rural areas. These societies were open not only to farmers
but also to aritsans, traders, and others having their daily activities within
the limits of the village.
2. Unlimited
liability: The societies organised by
Raiffeisen were practiced unlimited liability system by which members were
jointly and severely liable for the debts of the society.
3. Honesty: Raiffeisen strongly advocated that the basis
of members should be character and not material assets. He gave much importance
to individuals as human beings.
4. One village one
cooperative: Raiffeisen wanted to limit the area of operation of the society in
one village. This made possible all the members to know each other closely,
selection of members based on character and constant meeting with them.
5. Small unit of
shares: Raiffeisen started his cooperatives
with small unit of share capital as the members were poor. The initial funds
are moblished from philanthropist. He wanted to give to all desirable persons. Collection of share capital will not be a
criterion for joining the society.
6. Sound Capital: Raiffeisen wanted to have sound capital for
the society. Since share capital is not
mobilised, adequate resources are mobilised from the members and non members
through collection of deposits.
7. Personalisation of
credit: Loans to the members issued for
productive purposes only. He insisted
that security of loan should be the personal character of the borrower. Therefore
the society maintained the record of honest and character each members of the
society.
8. Allocation of
profit to reserves: The profit earned by the society is allocated for creating
various reserves for meeting unforced losses and debts. The profit is not distributed to its members.
9. Democratic
administration: The management of the
society organised by Raiffeisen is democratic.
The democratic structure consists of the general body and the board of management.
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