Friedrich Wilhelm Raiffeisen (1818-1888) was a German social reformer. As the mayor of a community in the Westerwald region of Germany, Raiffeisen was confronted by the plight of farmers, labourers and craftsmen on a daily basis. Following several relatively unsuccessful charitable endeavours, he became convinced that people’s problems could only be solved by helping them to help themselves.
In line with a model developed by Raiffeisen, the farmers formed cooperatives which were not geared towards profit, but to supporting their members. Members’ savings were pooled in so-called loan fund associations and were available for distribution to members in the form of low-cost long-term loans. This gave many people the first opportunity they had ever had to borrow money for investments or to tide them over in years of meagre harvests.
The next step was the joint purchase of operating resources such as seed and the common storage and sale of agricultural products. This meant that farmers were no longer forced to sell at knock-down prices in times of oversupply, allowing them to wait until prices had recovered.