Similarly, in Bangladesh, the two-tier cooperation system is being

established. In China, the commune has three levels to provide different

appropriate scales of operation; membership is compulsory. In the United

States, the system of having farmers' organizations sharing in the hiring

and control of extension agents involved a combination of federal subsidies

to the Farm Bureau organization and personal incentives. At first, farmers

were required to join the Farm Bureau to receive individualized extension

services and to participate in the insurance and marketing programs of

corporations controlled by the Farm Bureau. In general, the U.S. system

does not have smaller groups below the county level, but historically in

some places township organization has played an important role.

 Frequently groups are set up to administer credit programs. Go-

vernments make continuation of loan programs to group members contingent

on repayment of past loans, and hope that the social pressures generated

by those who want future loans will force potential defaulters to repay.

This approach is used in Bangladesh.

 An interesting variant is being tried in a World Bank credit pro-

ject in Malawi. To obtain a loan, group members are required to deposit

assets valued at 20 percent of the loans in a blocked saving account.

Shortfalls in repayment are deducted from this account, and then the funds

are returned with interest.2 Such a program presumably generates strong

social pressures for loan repayment, but may constrain small farmer parti-

cipation, as they may lack assets to deposit.



 Mancur Olson, pp. 148-159.

 Dale Adams, "Economy of Loans...," p. 5.