Introduction - Genossenschaftsverband Bayern

therefore put the height of the interest rates totally at will, interest
rates rose of up to 80 per cent and sometimes even up to 100 per
cent. Furthermore, private moneylenders were able to terminate
loans or ask for immediate repayment anytime. Thus, debtors were
forced to take new loans at even worse terms to be able to repay
their original loan. If the borrowers could not repay the loan due to
an excessive debt burden, their property was auctioned off. Mostly
tradesmen’s workshops and farms were affected. After the German
Usury Laws of 1890 and 1893, valid for all member states of the German
Empire, these grievances were only partly abolished. The ongoing
problem of market failure, however, was not resolved.
In the 19 th century, the financing problem still was unsolved. For
the middle class, it turned out to be a question of survival since grievances
were no isolated cases but were prevalent. It was never about
financing consumer loans, but it was a matter bare survival to find
loans for tradesmen’s businesses and farms. Workshops, farm buildings
and stables were usually available. But there was a lack of liquid
funds to buy operating resources like seeds, fertiliser, machines for
workshops and farms, as well a funds for refurbishment or for marketing
the harvest.
In view of these adverse conditions, gradually since 1850, in all
German state savings and credit associations (= Volksbanks) modelled
on Hermann Schulze-Delitzsch’s concept and loan associations
(= Raiffeisenbanks) after Friedrich Wilhelm Raiffeisen were founded.
Since the middle of the 19 th century cooperative banks gradually took
over the task of closing the big gap between the required capital
demand and its supply. The founding of cooperative banks resulted
out of economic and social necessity. It not only served to temporarily,
but much more so permanently secure the existence of the middle
class.
Cooperative banks were exclusively founded as a voluntary network
of equal partners based on self-help, self-responsibility and selfmanagement.
Self-responsibility and self-management mean that
1 Market failure in the financial market
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