000,000 a year, the Commonwealth Bank of Australia, the Irish Land Bank, the Credit Agricole of France, the labor and cooperative banks of Italy, and similar institutions throughout the world which are building up a new social order by dedicating the money and credit of the people to the service of all. In America the initiative in cooperative banking came from a great international labor union, the Brotherhood of Locomotive Engineers, which opened our first cooperative labor bank in Cleveland, November 1, 1920. The bank grew at the rate of a million dollars a month for the first year, breaking all national banking records, and now has resources in excess of $28,000,000. Its marked success in this bank led the Brotherhood to establish eleven other such banks, and the end is not yet. Other labor unions followed its example, in most cases with its direct assistance, so that today there are over thirty workers' and farmers' cooperative banks, with combined resources in excess of $150,000,000. At this moment there are no less than six other such banks in process of organization, in addition to nine auxiliary investment institutions, such as the Brotherhood Investment Company, with its capital of $10,000,000. America surpasses the world in the rapid growth of cooperative banking. Our greatest need for the future is not so much the founding of large cooperative banks in the big cities, but rather the development of little credit unions to supply the small credit needs of the average worker and farmer. These little people's banks can readily serve as feeders for the big city cooperative banks, thereby strengthening the whole cooperative financial system. Much of this surprising growth has been made possible by the educative campaign for cooperative banking carried on among labor unions and the general public by the AllAmerican Cooperative Commission, with headquarters in Cleveland. Doubtless you are wondering how it is possible for workers and farmers and small business people to conduct the banking business successfully. You have believed that there is something mysterious and occult about banking. As a matter of fact, straight banking is a simpler and safer business than running a corner grocery store. There are far fewer failures in banking than in any other kind of business. The banker is really a bookkeeper, whose two functions are to receive deposits and to make loans. A deposit is a credit item, and a loan is a debit item, and that is all there is to it. The exchange of checks and drafts with other banks and the process of international exchange are simply cancellations of credit and debit items. Even the investment of the bank's surplus funds in mortgages, bonds, and trade bills is just a method of making loans on these securities. The actual work of the banking business is largely done by young men and women without special training, but who are careful and accurate with figures. Nor are the directors of the great majority of our 30,000 banks expert bankers. Over 90 per cent of these banks are in country towns, with farmers and small business men as directors. These men may know nothing about manipulating international exchange, but they run their banks successfully because they know the character and reliability of their neighbors, and therefore can determine how much credit they should safely loan them far better than can a distant big-city banker. For the same reason, the workers' and farmers' cooperative banks of Europe and Asia practically never have a loss. In the last analysis, the carefulness with which money is loaned is the heart of the banking business. And here the banker is protected as is no other business man. The grocers and butchers of the country make literally millions of loans to their customers every day by extending them credit on charge accounts, but they do not demand collateral security for these loans, nor do they compel their customers to get the indorsement of their neighbors to assure that the account will be paid. The banker does both of these things, and in addition, has access to confidential information regarding the financial standing of his customer which the small business man cannot obtain. The banker also has another advantage over the grocer: the money which is his stock in trade is not his own money, but approximately thirteen-fourteenths of it is capital contributed by his depositors, for which he pays not more than 3 or 4 per cent, and often nothing at all. Moreover, the law permits the banker to loan his capital over and over again, so that, according to the United States Comptroller of the currency, $1,076,378,000 of actual cash in our banks supported a banking credit structure of $53,079,108,000. In plain English, the bankers took a dollar of cash capital, of which their depositors had contributed about 93 per cent, and made $50 of credit out of it, and collected interest on this sum. This is why the banking business is easier to conduct than the grocery business. It is also safer. A report made by the United States Comptroller of the Currency in 1911 shows that during the preceding fifteen years, less than of I per cent of the eight thousand national banks of the country had failed, only fo of 1 per cent of the state banks, and 1 of 1 per cent of the trust companies. Even these few failures were not due to legitimate banking. The Comptroller's report shows that 60 per cent of the failures of national banks have been caused by violations of the National Bank Act, about two-thirds of which were criminal violations; 23 per cent were caused by "injudicious" banking; 13 per cent by unwise ventures in stocks and bonds and other investments, while only 4 per cent resulted from failure of large debtors and other minor causes. Because cooperative banks strictly limit the profits of shareholders, they are not tempted to take the risks which large profits require. Furthermore, they make no loans to favored insiders or for speculative purposes, and distribute their lendings among thousands of small debtors, rather than a few big ones. For these reasons, cooperative banking is essentially safer and sounder than private-profit banking can ever be. Are there not enough banks in the country? Why should we not use existing institutions, instead of founding a new kind of bank? Because banking power in America has fallen into the control of a small class, which often uses it to exploit the producing classes and to promote monopoly control of industry and commerce. This may sound demagogic. If so, I refer you to that brilliant book, Other People's Money, by Louis D. Brandeis, now justice of the United States Supreme Court, and to the findings of the Pujo Committee appointed by Congress. I know of many fine small-town bankers to whom these serious charges do not apply-men who are earnestly striving to promote the welfare of their entire community. And yet, as Justice Brandeis clearly shows, the small banker is at the mercy of the big bankers, headed by a half-dozen huge banking houses, who can determine the policy to be followed by the small banker, whether he likes it or not. We have already seen that about 93 per cent of all the banking capital of the country is contributed by the depositors, who are largely workers and farmers and small business people. Yet these are the very persons who can get very little banking credit, and often none at all. When the average worker needs a loan, he usually has to go to a loan shark and pay interest at the rate of from 100 to 300 per cent per year. Probably the main reason for the rapid growth of labor cooperative banks in this country is the fact that the big bankers are almost universally opposed to labor unions and to the interests of the working class. As one labor leader put it, "We are tired of having our own money, deposited in trust with the bankers, used by them time after time to cut our own throats." A remarkable fact about the rapid growth of labor cooperative banks in this country is the support they have received from small business and manufacturing concerns having no connection with the organized labor movement. Banks existing to make profits have too often used credit power to stifle economic progress by exploiting productive industry and promoting speculative enterprises. Time and again legitimate businesses have found it impossible to borrow money from the bankers at 8 per cent, while stock speculators could readily secure all the money they wanted at from 2 per cent to 3 per cent. As Dr. Frederic C. House has remarked, "Credit is the most important tool in production, and the class that does not own and control this essential tool will find itself enslaved to those who do control it." We have already suggested some of the services performed by the cooperative bank which the ordinary private-profit bank either cannot or does not render. The cooperative bank mobilizes the credit of the people for productive, and not for exploitative, purposes. It provides credit for workers and farmers and people of small means. Its aim is service to the community, and not the mere making of money. Even when organized by some particular group, such as a labor union, it is not a class bank, since it serves the public as a whole and returns its earnings to its depositors, no matter who they may be. In the great Brotherhood of Locomotive Engineers' Cooperative National Bank of Cleveland, for instance, only 14 per cent of the depositors are known to be connected with the Brotherhood or any other labor union. Cooperative banking also provides democratic control of credit, so that banking power can no longer be perverted to the profit of a small class. And financial democracy is as essential to industrial democracy as the latter is to political democracy. There is a vital sequence here which deserves the thoughtful consideration of those who want to preserve American democracy. Cooperative banks regard the banking business as a public trust. They enable the people to mobilize their money for increasing the production of wealth, and thus enhance the prosperity of the whole community. They make it possible for thousands of poor men and women with talent and ability to have an opportunity for greater social usefulness. They enable helpless immigrants to get honest foreign exchange, serve as trustees for the widows and orphans of workingpeople, protect the wage-earner against fraudulent stock schemes, and help him provide for his old age and the future education of his children by systematic saving and wise investment. What of the future of cooperative banking? Its amazing possibilities become apparent when one finds that the total wage bill of the country is about one-half the fifty-billion dollar total resources of our 31,000 banks, and that the farmers' annual crops equal in value about two-thirds of the remainder. When a majority of the workers and farmers of America once undertake to concentrate their savings and credit power in their own banks, they can control the banking resources of the world's richest nation within one generation. In the words of the French financier, Jules Simon, "The greatest banker in the world is he who controls the pennies of the working class." THE HANDICAPPED REACTION ON PERSONALITY CAUSED BY (ABSTRACT) Lawson G. Lowrey, M.D., National Committee for Mental Hygiene, There are two ways in which physical handicaps operate, direct and indirect. Personality is the sum total of individual characteristics that makes one person distinct from another. We include the whole individual, mental, physical, social, all things which go to make a complete whole human being. Physical handicap means a direct loss of total personality, and is apt to express itself in some form of diminished efficiency in social relationships. It may be in the form of work, or other types of social relationships. The most interesting is the indirect effect upon behavior. We have an instinct for self-assertion, the attempt to set ourselves up as complete individuals. We have a certain conflict between our drive for independent expression of our own individuality and the instinctive drive to conform to the standards of the group. Sometimes these drives reinforce one another and t 3 we get socially acceptable behavior; otherwise it is unacceptable. There are several types of reaction for the handicapped individual. First, he may succumb to the handicap- the self-pity type-seeing the difference between himself and other people. Second, there is over-compensation-the urge or drive to overcome handicap that keeps one going ahead. Compensation of the handicapped is apt to make over-compensation in ways that are socially unacceptable. Physical handicap itself interferes with types of compensation which would be socially acceptable. A boy of seventeen was in the juvenile court on charge of stealing ten dollars. He had had infantile paralysis at six years of age. He did not rate high in intelligence, came from a family constantly in economic distress. He wanted to be like other boys, but could not, and said that as he could not, they would go and leave him, but that if he had money he could always have companions. He could then purchase something the others were interested in. His handicap brought him directly to stealing, though his drive was a thoroughly normal one. We must help the individual to help himself in spite of handicaps and in this way make him an acceptable member of society, even though it may be on a low level. CORRELATION OF PUBLIC AND PRIVATE WORK R. C. Branion, Executive Secretary, National Committee The rehabiliation of the handicapped may for practical purposes be divided into two phases, namely, physical correction and vocational rehabilitation. Physical correction may be effected through medical treatment, surgical operation, the use of prosthetic appliances, and the restoration of function through therapeutic treatment and occupation. The second phase of the rehabilitation of the handicapped we have called vocational rehabilitation. By this we mean not correction of an individual physically, but the development of his remaining powers so that he may, with retraining and placement, be enabled to engage in remunerative employment. It is at this point that federal and state services for the rehabilitation of the handicapped take up the problem. Although federal and state legislation enacted during the past few years generally defines rehabilitation as "the rendering of persons disabled fit to engage in remunerative occupation," the official services begin not with physical correction, reconstruction, or restoration of function, but with training for occupation and placement. It is important to note that even in this restricted field of vocational rehabilitation of adults it is estimated that 84,000 individuals are so handicapped each year as to need, and still be able to profit by, vocational training and placement service of the states. There is written into the law granting federal aid to the states a clause requiring |