Friedrich Wilhelm Raiffeisen The idea
Heddesdorf, Germany, 1864. Mayor Friedrich Wilhelm Raiffeisen (1818-1888) is personally touched by the poverty of the villagers and decides to do something about it. His idea: The best way to fight poverty is to help people to help themselves. His solution: The credit cooperative. This is the idea that lies at the heart of Rabobank.
The rural population in Westerwald in Germany is suffering from poverty and hunger in the mid-nineteenth century. Mayor Raiffeisen wants to improve the lives of the local residents, while at the same time bringing an end to the prevailing exploitative loan shark practices. This is why he decides to found a charity organisation. But this turns out not to be a real solution to the problem. Raiffeisen begins to realise that self-help is more beneficial than charity with a view to bringing about lasting improvements. This is why he transforms his charity organisation into a credit union in 1864. This Heddesdorfer Darlehnskassen-Verein brings together local savings in order to utilise them to meet the local need for credit. Raiffeisen writes a book about his insights and experiences in 1866. In it he outlines his basic premises for a cooperative bank. They are: equal and unlimited liability of the members (with an elected management from their ranks), unremunerated management, reserving profits, a local field of operation and local independence with the opportunity to join a cooperative central bank.
Raiffeisen's idea for the credit cooperative catches on. The first agricultural cooperative banks in the Netherlands come about in the 1890s. They are created according to Raiffeisen's recipe with a central bank, or actually two: Coöperatieve Centrale Raiffeisen-Bank in Utrecht and Coöperatieve Centrale Boerenleenbank in Eindhoven. These two central banks join forces in 1972 and Rabobank is born.
For more information about the cooperative, please click here.