U3^5 
 
CORNELL UNIVERSITY LIBRARY 
 
 3 1924 055 322 618 
 
Cornell University 
 Library 
 
 The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924055322618 
 
CO-OPERATION IN INDIA 
 
BY THE SAME AUTHOR 
 
 PEOPLE'S BANKS : A Record of Social and Economic 
 Success. Third Edition, igio. P. S. King and 
 Son, Ltd., Westminster. 6s.net. A fourth edition 
 is in the press. (A Russian translation, by Prof. 
 Totomianz, has appeared at Moscow.) 
 
 A CO-OPERATIVE CREDIT BANE HANDBOOK, Witb 
 Rules. (Out of Print.) 1909. P. S. King- and 
 Son, Ltd., Westminster, is. net. (A new edition 
 preparinjf.) 
 
 CO-OPERATIVE BANKING: Its Principles and Its 
 Practice. With a Chapter on Co-operative Mort- 
 g&ge Credit. 1907. P. S. King and Son, Ltd., 
 Westminster. 7s. 6d. net. 
 
 CO-OPERATION IN AGRICULTURE. Second Impres- 
 sion, 1914. P. S. King and Son, Ltd., Westmin- 
 ster. 69. net. (A Russian translation, by Prof. 
 Totomianz, has appeared at Moscow.) 
 
 CO-OPERATIVE CREDIT POR THE UNITED STATES. 
 
 1917. Sturgis and Walton Co., New York. $1.30 
 net. 
 
 THE FUTURE OF OUR AGRICULTURE. 1918. P. S. 
 King and Son, Ltd., Westminster. 12s. 6d. net. 
 
CO-OPERATION IN 
 INDIA 
 
 BY 
 
 HENRY W. WOLFF 
 
 LATE PRESIDENT OF THE INTERNATIONAL CO OPERATIVE ALLIANCE 
 AUTHOR OF "PEOPLE'S BANKS: A RECORD OF SOCIAL AND ECONOMIC SUCCESS," 
 "CO-OPERATIVE BANKING: ITS PRINCIPLES AND PRACTICE," "CO-OPERATION IN 
 
 " The very thing for India ! Whatever expectations you may have 
 formed as to its results, multiply them by ten, and you will still find 
 them exceeded." — Sir Arthur Cotton to the Author in 1894. 
 
 LONDON 
 
 W. THACKER AND CO. 
 
 2, 'CREED LANE, LUDGATE HILL, E.G. 4 
 CALCUTTA AND SIMLA: THACKER, SPINK AND CO. 
 

PREFACE 
 
 My chapter " The Coming of Co-operative Credit " wJll 
 show in what close touch I have stood with the Co-operative 
 Movement in India from the very outset, that is, from the 
 time when, about twenty-five years ago, Sir Charles 
 Bernard on behalf of the India Office first consulted me 
 about the character to be given to Indian legislation upon 
 the subject. 
 
 Thanks to the great kindness of the India Office, the 
 Government of India, and the"various Registrars of Co- 
 operative Societies, past and present, who have kept me 
 fully informed upon even the smallest details of the progress 
 made, and for which I now express my heartfelt gratitude, 
 I am happy that I am able to say that I have been permitted 
 and enabled to maintain the same close touch up to the 
 present moment. I beg to thank the Registrars, more in 
 particular, not only for the full information freely given, 
 but also for the forbearance with which they have accepted 
 occasional criticism. 
 
 My hope to render relations still more intimate by a visit 
 to India, on the invitation, some years ago, of various 
 gentlemen connected with the movement, above all, of my 
 friend Mr. W. R. Gourlay, the first Registrar in Benga], 
 was, to my regret, disappointed by an intervening jorce 
 majeure. 
 
 But, although I cannot, of course, without personal 
 acquaintance, presume to speak about local conditions, I 
 believe that I know quite enough of the movement from a 
 purely co-operative point of view to be able to form a 
 judgment upon its merits and its perils, as it stands now. 
 
 Notwithstanding that that Movement as yet still covers 
 only a purely fractional part of India, it will have to be 
 admitted that under the judicious guidance and vigorous 
 
vi PREFACE 
 
 working, which have marked its progress, it has already 
 rendered admirable services and prospered greatly — as 
 indeed Anglo-Indians, who know the country well, like the 
 late Sir Arthur Cotton, foretold that it would. It may be 
 said to have thus far only been fairly started. However, 
 this is a case in which the sense of the old Latin proverb 
 may well be held to apply : Prtncipium dimidium totius. 
 
 But it appears to me that the Movement has now arrived 
 at a stage at which further reflection is seriously called for 
 as to the course to be pursued in future, if Co-operation is 
 to render the full measure of the benefit that one may 
 reasonably look for from it. 
 
 In view of this, and of the keen and steady interest which 
 I have all along taken, and still take, in the Movement, and 
 of the intimate acquaintance, with Co-operative Credit, and 
 Co-operative Practices generally, under all aspects, and in 
 the most varied parts of the glolse, which I have gathered 
 during a series of decades, not least so during the long 
 period in which I stood at the head of the International 
 Co-operative Alliance, I venture to hope that my offering of 
 an opinion wiU not be considered an unwarranted intrusion, 
 and that the criticism which I presume to pronounce on 
 some points will be kindly received and borne with. Co- 
 operation opens brilliant prospects. But there are at the 
 same time also dangerous pitfalls contained in its practice, 
 which it will be well to avoid. 
 
 H. W. W. 
 
 January, 191 9. 
 
CONTENTS 
 
 FASE 
 
 , I. THE NEED OF CO-OPERATIVE CREDIT IN INDIA - - I 
 
 II. THE COMING OF CO-OPERATIVE CREDIT - - - 4I 
 
 III. THE RESULT - - - - - - - Jl 
 
 IV. PRECEDENTS GOOD AND BAD - . . - gy 
 
 V. THE VILLAGE SOCIETY .... - 1 34 
 VI. JOINING FORCES - - - - - - 183 
 
 VII. NON-AGRICULTURAL CREDIT - - - - - 221 
 
 VIII. GRAIN BANKS . . - . . _ . 238 
 
 IX. THE WIDER OUTLOOK - . . - 248 
 
 X. THE FUTURE .------- 29I 
 
 POSTCRIPT - 337 
 
 INDEX - - - 347 
 
 VU 
 
CO-OPERATION IN INDIA 
 
 I 
 
 THE NEED OF CO-OPERATIVE CREDIT 
 IN INDIA 
 
 The passing of the Co-operative Societies Act of 1904 bids 
 fair to rank in aftertime as a turning-point in Indian economic 
 and also in Indian social history. It marks the advent of an 
 institution greatly needed and of which the want has for a 
 long time been keenly felt, from the ridge of the Himalayas 
 to Comorin Bay. A native Registrar, grown not unreason- 
 ably enthusiastic over his administration of the Act, and in 
 view of its thus far really unparalleled results, has pro- 
 nounced it " the greatest benefit that India has ever yet 
 received." So in very truth it may prove to be. 
 
 Of the evil under which India was suffering and which 
 the Act was designed to relieve there could, and there can 
 now, be no doubt. //India was a country carrying on skilled 
 Agriculture, cultivating wheat and other standard crops o 
 moderrt time, tilling its fields with meticulous care and with 
 plenty of evidence offered of physiological and technical 
 knowledge, at a time when in their own unreclaimed moun- 
 tains and morasses Europeans still hunted the bear and the 
 wolf. Providence has endowed the country with a wealth of 
 natural resources and rare aptitudes for prolific high-class 
 husbandry, f We know that the soil of Gujarat is "raw 
 gold." An Irrigation engineer sent over from the United 
 States some years ago to study the irrigation works completed 
 . and in progress in India, in his official Report declared him- 
 self enraptured with the glorious opportunities that the 
 apparently inexhaustible resources, with which kind Provi- 
 dence had blessed the country, provide. There is, so he 
 says, water available, by channelling or digging, in plenty ; 
 and, generally speaking, a " lie " of the land favourable to 
 
2 CO-OPERATION IN INDIA 
 
 irrigation, under a sun which fn not a few parts ripens two 
 crops in a year — not to speak of Sir George Watts's " five crops 
 of rice." The " flora " of India is a marvel to Europeans. 
 And to India it is that the country at home looks, not for its 
 tea, cocoa, indigo, coffee and jute only, but now also for its 
 wheat, its cotton and, please God, its sugar. There may be 
 some difficulty about bringing the various elements of rich 
 productiveness, often lying apart, into touch with one 
 another. However, the elements are there. Skill is there. 
 Capacity for labour is there. Arms fit for cultivation are 
 there in plenty. There are the teeming millions of inhabi- 
 tants — seventy-five or eighty per cent, of the three hundred 
 and twenty-five million inhabitants being wedded to the 
 land. Surely here is an astonishing^accumulation of 
 potential agricultural productive power. 
 
 Nevertheless Agriculture, taken as a whole, has remained, 
 and still remains, backward — backward, at any rate, in 
 quantitative production. The sixty and hundredfold pro- 
 duction of the parable is wanting. There are cases of 
 exceptional productiveness. But on the whole Agricultuj^e 
 fails to bring forth as it might. 
 
 And as is Agriculture so, if not worse, is the lot of those 
 who carry it on Look where we will, there is misery and 
 crying want of development. From time to time Famine 
 stalks blastingly through the land, killing those whom Need 
 had only scotched or kept low — those who should have been 
 able to cultivate so .as to prevent it. Governments bestir 
 themselves to the best of their power. No Civil Service in 
 the world has brought forth more capabfc. heads, more 
 feeling hearts, more skilful hands than Wat of India. 
 Unquestionably also there has been progress — great pro- 
 gress. But all the same the rural community continues in 
 a condition of suffering, destitute and as if paralysed in the 
 springs of its energy. In the great mass of cultivators there 
 is no spirit, no determination, no hope to see things bettered. 
 What Shakespeare calls " the native air of resolution " seems 
 sadly " sicklied o'er," turned into a nebula of deadening 
 poison gas, like that .of the Neapolitan " grotto of dogs," 
 which stifles life. There is a weight on the spring which 
 prevents action. 
 
 The one cause of trouble, in both cases alike, as regards 
 Agriculture and as regards rural life, is essentially the same. 
 
CO-OPERATIVE CREDIT IN INDIA 3 
 
 We have heard people talk of the " riches of India." Even 
 
 apart from the abounding resources of Nature there is 
 
 supposed to be wealth in the shape of precious metals hidden 
 
 away in that country such as would astonish people, if there 
 
 were an Aladdin to bring it to sight with his wonder- working 
 
 lamp. Howeverjl^as a productive force India is, in the midst 
 
 of Nature's rich endowment, in the midst of millions of 
 
 healthy arms and skilful hands — and hungry stomachs such 
 
 as might be expected to stimulate to labour and industry — ■ 
 
 in truth wretchedly poor. / It possesses the raw material, 
 
 it possesses the arms to convert that material into wealth. 
 
 'But it lacks that drop of gold which would oil the machine, 
 
 set it going, and turn its -wheels as a productive factor. 
 
 And not only is there want of money, of that working 
 
 capital without which to-day even the richest material and 
 
 the most skilful hands are powerless, but, on the top of all 
 
 this there is crushing debt. The country is, s6 Sir Daniel 
 
 Hamilton has graphically put it, "in the grip of themahajan." 
 
 It is the bonds of debt which shaclde Agriculture. It is 
 
 Usury — the rankest, most extortionate, most merciless 
 
 Usury — which eats the marrow out of the bones of the 
 
 raiyat and condemns him to a life of penury and slavery, in 
 
 wluch not only is economic production hopeless, but in 
 
 which also energy and will become paralysed and man sinks 
 
 down beaten into a state of resigned fatalism, from which 
 
 hope is shut out and in which life drags on wearily and un- 
 
 profitably as if with no object in view. There is no use in 
 
 denying the fact. It is plain to all eyes.// 
 
 Sir W. Hunter has taken up the defence of the mahajan. 
 He has described him as " the one thrifty person among 
 an improvident population, the basis of the simple Indian 
 system of rural economy, without whose help the Indian 
 cultivator would have nothing to depend upon but the 
 harvest of a single year." 
 
 In something of the same strain Sir Denzil Ibbetson, m 
 his most interesting "' Report on the Revision of Settlement , 
 of the Panipat Tahsil and Karnal Parganah " writes : " The 
 village banker or sdhuk^r is a much, in my opinion generally 
 a very wrongfully, abused person. Rapacious Jews of the 
 worst type, to whom every sort of chicanery and rascality 
 is the chief joy of life, and in whose hands the illiterate 
 villager is as helpless as a child, do exist, especially in the 
 
4 CO-OPERATION IN INDIA 
 
 cities. But they are well known and only had recourse to 
 in the last resort. It is unnecessary for me to repeat what 
 has been so often and so well said about the absolute 
 necessity for an agency which shall furnish capital to a class 
 who are, as a rule, without it, and shall receive the produce 
 of the fields in exchange for the hard cash in which alone 
 Government will receive its revenue. But this is not the 
 only function they fulfil. The well-to-do villager keeps 
 his whole accounts with the moneylender ; he seldom 
 stores any amount of grain in his house, as he has no means 
 of protecting it, but makes over to his banker the produce 
 of the harvest, and draws upon him for his daily wants. 
 The account is precisely similar to that kept by an English 
 farmer with his banker, but with this cardinal distinction — 
 that the English farmer starts with a deposit, and has, as a 
 rule, a balance to his credit, whereas the Indian farmer has, 
 as a rule, nothing to deposit at first, and would not deposit it 
 if he had. He starts with a credit, and, however well-to-do, 
 always owes something to his banker. If he has any surplus 
 wealth, h6 as a rule conceals it, or sinks it in jewels for his 
 wife till the time comes for a wedding in his family, when he 
 will spend the whole of it, and an advance from his banker 
 besides. He not unfrequently, unless really indebted, sells 
 his produce to travelling traders at a higher rate than he 
 could get for it in the village; and he very commonly Ibnds 
 money himself, in a small way, to his friends and fellow- 
 villagers, and is generally exceedingly longsuffering in his 
 treatment of them. Nor is the banker himself generally 
 so exacting as he is often said to be. He charges monthly 
 interest at the rate of a paisa in the rupee — 18^ per cent, 
 per annum — when his client is a substantial man, and from 
 25 per cent, upwards when the credit of the latter is doubt- 
 ful. He credits grain received at a seer a rupee more, and 
 debits it at as much less than the market rate. But his 
 chances of loss are often great, the periods of credit are 
 generally long, and at the time of settlement allowances are 
 made and a compromise effected more generally than would 
 be thought possible. His loans are often secured by a 
 mortgage {gehna, girvi); but the mortgage is seldom 
 recorded ; for in most villages it is thought disgraceful to 
 have one's land shown as mortgaged in the Government 
 papers, and so long as the client is reputed honest, the banker 
 
CO-OPERATIVE CREDIT IN INDIA 5 
 
 does not press for an entry, though it would greatly enhance 
 his security. The mortgagor, too, almost always, continues 
 to cultivate the land, and generally at a fairly moderate rent. 
 It is the city Banya, in particular, that is often as unscrupu- 
 lous and rapacious as he can be painted. And in one respect 
 our rules favour his knavery. It is a universal rule among 
 the people that, till the deed of alienation has been registered, 
 if registration is necessary, and till mutation of names has 
 been effected in the Government records, the whole of the 
 money is not paid, and possession of the land is not given. 
 At the same time people believe that registration will not 
 be made unless payment of the consideration in full is 
 admitted, while our rules expressly forbid our ordering 
 mutation of names, unless transfer of possession is shown to 
 have taken place. Thus the alienator must perforce, in 
 order to complete the transaction, admit full payment and 
 transfer of possession before either has been made ; and the 
 alienee, if unscrupulous, withholds the balance due and sues 
 for possession ; and the admissions of the alienator, duly 
 recorded, precludes the possibility of defence. ... In 
 times of drought and famine the Banya is the villager's 
 mainstay ; without him he would simply starve." Never- 
 theless, the same Sir Denzil Ibbetson in another place 
 records the fact that at the opening of the ploughing season 
 raiyats habitually address an earnest prayer to Dharti Mdta 
 (Mother Earth) to this effect : " Keep our rulers and our 
 bankers contented, and grant a plentiful yield ; so shall we 
 pay our revenue and satisfy our moneylender." The latter 
 gentleman accordingly does not appear to be generally 
 considered only a " mainstay." 
 
 Professor Radha-kamal Mukerjee likewise has a good word 
 to put in for the mahajan. "The moneylender," so he 
 writes, " is called by the ryot the jater and pater mahajan, 
 the guardian of his^ honour, and the supplier of his food. 
 He supplies the cultivator not only with food at the time of 
 need, but also with hat expenses every week, with capital 
 for buying stock, and with cash for providing himself and 
 his family with clothes, without which they would fast be 
 reduced to needy paupers." But on another page he com- 
 plains, " Their (the mahajans') sole motive is to make pr<*5- 
 And elsewhere again he exposes some of the tricks by which 
 they succeed in doing so— rather exorbitantly. 
 
6 CO-OPERATION IN INDIA 
 
 Now it is perfectly true that the mahajan renders useful 
 services which, as Indian society is at present constituted, 
 are actually indispensable. But there is nothing to show 
 that the conditions are immutable which make them so. 
 Also, it is not the services which we are now quarrelling 
 with, but the price exacted for them. In the same way 
 that the mahajan is indispensable to the raiyat, is the 
 rapacious sweater indispensable to the East End drudge, to 
 the heroine of Thomas Hood's " Song of the Shirt," and. 
 was the American planter, indispensable to his negro slave. 
 The large-scale banker and billbroker are as indispensable to' 
 the British merchant and manufacturer. But they render \ 
 their services on very different terms. And if theCpresent 
 constitution of Indian society renders usury and peonage so 
 indispensable as to make it acceptable to these advocates of 
 the mahajan, evidently the duty of humane men and women | 
 is to do what they can to get that constitution altered. I 
 And that is the very thing that co-operators in organising \j 
 Co-operative Credit are " out " for. The mahajan is 
 there because former masters of India, and in part our 
 modern ordering of things according to Western ideas, have 
 — ^in addition, so it must in fairness be conceded, to long- 
 established customs of inheritance and the like, which have 
 grown too tight for the greatly enlarged body of an increased 
 population — made the raiyat poor. And wherever there 
 is Poverty, there Usury may with certainty be counted upon 
 to show its hideous head> resolved to fatten upon its helpless 
 victims. " A vast body of raiyats," so writes Sir F. Nichol- 
 son — speaking for the time specifically of Madras Presidency 
 — " habitually live only by means of borrowing ; they could 
 not begin to cultivate without borrowing seed, cattle, grain 
 for maintenance, etc., so that their crop is pledged in advance 
 . . .so that on settlement of accounts the cultivator has 
 little to go on with and must again borrow ; in famine years 
 these men have practically no resource. The raiyat must 
 feed himself and his family. He must pay his kists. And, 
 if there is no money to pay them with — as is usually the 
 case — ^and the revenue officer stands at the door, there is no 
 alternative but to go to the mahajan." 
 
 Thus the descent to the Avernus is an easy one — ^and 
 rapid. Our legal procedure and the curious view sometimes 
 taken of these things by judges hasten the process. The 
 
CO-OPERATIVE CREDIT IN INDIA 7 
 
 raahajan seemingly claims what he likes. The poor raiyat 
 cannot put in an appearance. His usual explanation, when 
 taxed with such apparent remissness, appears to be that he is 
 
 too poor." Pecuniosus damnari non potest, says Cicero. 
 "Cash rules the world," says Byron. The mahajan 
 swears to whatever he pleases. He puts in documents 
 which are allowed to pass because they are not challenged. 
 Generally speaking the sole record of the business transacted 
 is his own ledger. And so judgment goes against the poor 
 cultivator. And the sucking dry of the poor fly by the 
 voracious spider begins — destined not to end, very likely, 
 till the raiyat is hopelessly dispossessed of his holding, has 
 pledged his very children and has himself become a slave. 
 A " slave " is the proper term, as Mr. E. L. L. Hammond — 
 a man who evidently keeps his eyes open and his mind alert 
 — explicitly points out in the last Annual Report which he 
 wrote in his position as Registrar of Co-operative Societies 
 in the Province of Bihar and Orissa. He quotes the very 
 " contracts," as they are termed, written in dog-legal phrase. 
 And a sad revelation his tale is. There are the " contracts," 
 drawn up in semi-legal form, by the village scribe. They 
 are, of course, an imposition on the debtor's ignorant sim- 
 plicity. " They bear an eighteen-anna stamp, are duly 
 signed and witnessed, and the thumb impression of the man 
 himself, and sometimes of his family as weU, appear thereon." 
 They are not of ancient date — before. the " Commission on 
 Slavery " sat in 1836. They bear date of 1303 Fasli, which, 
 according to our Calendar, is 1 896, and later. The borrower 
 therein hands himself over to actual slavery, to plough the 
 lender's field ; to do his bidding at any work. " If I show 
 any laziness or default in service or in all and any work of 
 cultivation with the plough, I will make repayment on the 
 security of my field or out of my personal property." In 
 1905 a man agreed to " plough, till the land, and carry 
 bamboos from the hills, cut weeds and straw, and fill tubs 
 with chopped straw and watch fields and villas, etc." In 
 some cases the son is included in the service. These con- 
 tracts may be " an imposition," as Mr. Hammond indeed 
 calls them. But the service is a sad reality. And under 
 the benign ruling of the Courts, adjudication goes in the 
 majority of cases in favour of the lender. 
 
 In a recent number of " Better Business," a monthly 
 
8 CO-OPERATION IN INDIA 
 
 print issued in connection with the Irish Agricultural 
 Organisation' Society, Johnston Pasha tells a gruesome 
 story, for the truth of which he vouches, of a mahajan who, 
 as the last resource of an oppressed debtor clientele, as the 
 one remedy concluded to be effective, was, by unanimous 
 decree of those debtors done to death — assassinated on his 
 way home — by one who had offered to render the service 
 gratis — when a particularly cruel act had driven his debtor 
 slaves to despair. Th« murderer was found out and 
 charged — but let off, as Johnston Pasha testifies, not without 
 ready willingness on the part of the magistrate — -on the 
 score of a flaw in the pleading. 
 
 To such ills does the reign of Debt and Usury lead ! 
 Justice, helpless, under our Code and its own cast-iron pre- 
 cepts, to protect the injured, openly sympathises with "the 
 wild justice of revenge." And we shall have to bear in 
 mind, as Sir F. Nicholson rightly reminds us, that " it is 
 only the gross cases which attract attention, while the ten 
 thousand ordinary ones are unnoticed." We do not hear 
 anything like the full report. 
 
 Listen to the distressing review of things as they are given 
 by_Sir Daniel Hamilton :^/''" The power which stands in 
 'i^the way of India's economic development is the power of 
 ,evil finance — the want of a banking system /or the people. 
 The people have many bankers but no bank. The land lies 
 (blighted by the shadow of the mahajan. Go where you 
 IwiU, you find the people weary of waiting for a money 
 monsoon which never breaks. They look to the heights of 
 Simla and the plain of Delhi for the cloud with the silver 
 lining, but the cloud never sparkles into showery^ Last 
 month I spent ten days in the Deccan, a land thirsting for 
 water and for money. As I went round the village I asked 
 the people why they grew cotton which yielded them a crop 
 worth only thirty or forty rupees an acre, when they might 
 grow sugar-cane which would give, them ten-times as much. 
 I put the same question in every village and got the same 
 reply in each: ' We cannot grow sugar-cane because we 
 have no money. The seed alone will cost us more than a 
 hundred rupees an acre and a well will cost three or four 
 hundred rupees more. We are deep in debt, and if we 
 borrow more, we shall be utterly undone.' And so the 
 sugar industry and the people both languish. The weavers 
 
CO-OPERATIVE CREDIT IN INDIA 9 
 
 ^r ^^i^ "P ^^ *^^ ^^™^ ^'^^^ power. The mahajan sells 
 them his yarn at his own price, and takes over his cloth at 
 his own price, and so the weavers and the handlooms 
 languish, and the web of India's Hfe is cut short. I go down 
 to Orissa and the cry is the same: 'We want bunds to 
 hold up the rainfall and rice ; but bunds cost hundreds and 
 thousands of rupees, and how can men with an income of 
 two or three annas a day find hundreds and thousands of 
 rupees ?' So the people have to go without the rice they 
 covet, and Orissa, for want of bunds, is being washed 
 into the Bay of Bengal, I go up to Bihar and find the 
 same deadly mildew at work, blight, blight, blight every- 
 where. The mahajan still lies safely entrenched behind his 
 money bags, while the victims of his silver bullet lie all 
 round in heaps. When is this dacoity to cease ? The 
 raiyat is robbed of his crops, his cattle of their food, the 
 weaver of his cloth, a dry and thirsty land is robbed of 
 irrigation, and of education, and of medicine and of that 
 economic development without which spiritual and moral 
 progress is an idle dream. India stands a thousand years 
 behind the times, because the mahajan with his ruinous 
 rate of interest stands athwart the path of progress. Only 
 along the Co-operative Route will India find the way from 
 poverty to plenty." y 
 
 So abject is the raiyat's dependence upon the mahajan, 
 that he literally dares not call his soul his own. In 1894 
 the late General Booth, of the Salvation Army, wrote to 
 me asking for an interview. He had read my book " People's. 
 Banks," the first edition of which was brought out early in 
 1893. He had an ambitious scheme for benefiting India 
 then on the stocks. He was going to create a large Salva- 
 tion Army Settlement. We have had similar schemes, but 
 not quite as ambitious, brought forward since. General 
 Booth's idea was that of settlements in which raiyats' families 
 converted to Christianity might find occupation, profit, hap- 
 piness, liberty and contentment. To carry out his ambitious 
 enterprise he had secured the services of a very capable man, 
 one Lagercrantz, who, oddly enough, had only just ex- 
 changed from a captaincy in the Swedish Guards, a very 
 crack and aristocratic corps, into a colonelcy in the Salvation 
 Army. In due course, I may add that he found his way 
 back into service under his sovereign as a diplomatist. My 
 
10 CO-OPERATION IN INDIA 
 
 difficulty," so General Booth explained to me, " is this, 
 that no sooner have I gained a raiyat over to accept the 
 Christian faith " — ^and of course he would have only 
 Christians as settlers — " but the mahajan steps in and 
 threatens to draw to the noose which the raiyat permanently 
 carries round his neck, and make an end of him by selling 
 him up. Now, to meet this obstacle there is only one way : 
 we must provide a competing institution, which can take 
 over the mahajan's claim and step into his place. Now can 
 you frame us rules for such an institution ?" It was a 
 knotty and a thorny job. For in our credit societies the 
 governing principle is absolutely democratic administration, 
 freedom coupled with correspondingly strict individual 
 responsibility for all. General Booth, on the other hand, 
 would have nothing but military discipline. Like Cornelius, 
 so he put it, " we say to one man ' come ' and he cometh, 
 and to another man ' go ' and he goeth." The ambitious 
 scheme eventually broke down, not on the point of the 
 proposed credit societies, which never materialised, but 
 on that of the settlement. 
 
 Where the evil which produces such results is as plainly 
 declared as it is in India there can be no doubt about the 
 diagnosis. Res ipsa loquitur. 
 
 Writing in the Bengal Co-operative Journal, Dr. NeviU 
 Chambers gives expression to the opinion that, to bring 
 relief, legislation against usury is urgently called for. The 
 Viceregal Council is, or else quite recently was, actually 
 busy framing an Anti-Usury law. However, Legislation 
 never could grapple with Usury, any more than locksmiths 
 could place a bar in the way of Love. Usury laughs at laws. 
 We have had an example lately in England. In 1896 — I 
 think it was — we had a Select Committee of the House of 
 Commons sitting on the subject of measures to be taken 
 against Usury. I gave evidence before it — not on the subject 
 of legislation, but on that of something better, as I thought, 
 something that would crowd it out, if properly handled, 
 that is. Co-operative Credit. On the ground of the Report 
 of that Committee Sir Henry James, as he then was, brought 
 in and carried an Anti-Usury Act. It has proved a fiasco — 
 though the late Lord James of Hereford was undoubtedly 
 a clever lawyer and a capable legislator. He himself, by the 
 way, was so much struck with my evidence that he at once 
 
CO-OPERATIVE CREDIT IN INDIA ii 
 
 begged me to explain the matter more fully to him in 
 private, being resolved to set up — as he tried to do — a 
 Raiffeisen credit society in the parish in Wiltshire in which 
 his then newly acquired country seat was situated. He did 
 not succeed in this, because he handled the matter wrongly. 
 But he certainly succeeded no better with his Anti-Usury 
 legislation. And with all respect for Sir William Vincent, 
 I doubt if he will succeed any better, at any rate in practice. 
 Let the legislator legislate, if he so pleases ! All that 
 one will be willing to hope for is that in legislating 
 ingeniously he will not find himself doing more harm than 
 good. For the mahajan, as has been said, has his uses. 
 Sir W. Hunter and Sir D. Ibbetson are right up to that 
 point. He, after all, provides the money without which 
 rural economy would come to a dead standstill. We sang 
 a doggerel song in England some sixty years ago threatening 
 awful things to him who would be cruel enough to " rob a 
 poor man of his beer." Then how is he to fare who robs 
 the poor man of the only money that he has any chance of 
 procuring for himself ? Our mahajan, though an abominable 
 pest, is not dehberately cruel. It is opportunity that makes 
 the " thief " of him. During the war we have been paying 
 for many things " through the nose." However, at that 
 price we got the things. And at the mahajan's price the 
 raiyat gets his money. Now that the war is over, we shall 
 hope to buy things more cheaply once more. That will be 
 because then there will once more be competition. The 
 mahajan charges exorbitant terms because he is practically 
 the only lender in the market. He has no one to compete 
 
 with him. 
 
 Evidently things can not be left as they were, borne 
 remedy must be devised. And the proper remedy— on this 
 point there could be no doubt — is to brmg another 
 " Richmond " into the field to combat the exacting and 
 oppressive mahajan. Or, rather, in such an extreme case 
 as that of India, in which immediate redress is called tor, 
 there must be two " Richmonds." The first is that doughty 
 warrior, extolled by everyone but not as universally wor- 
 shipped : Thrift. Whatever else may be said m praise ot 
 Indian habits and character, thrift, so everyone appears 
 agreed, is not one of their distinctive features. In respect 
 of an unthrifty disposition the Indian may be said to deserve 
 
12 CO-OPERATION IN INDIA 
 
 the palm. There are writers who excuse this, but no one, 
 so far as my reading and hearing goes, ventures to deny the 
 fact. Sir Denzil Ibbetson will have it that even the fairly 
 well-off Indian rather borrows, when the rainy day of an 
 unexpected call upon his purse comes, and resignedly allows 
 the debt so contracted to run on, than lay by against it or 
 exert himself to pay it off. Professor Mukerjee says that 
 the cultivator " stoops under the heavy burden " (of " an 
 enormous rate of interest "), " but does not improve his 
 position." And if he does lay by, he does so in an un- 
 economic and unproductive way. 
 
 Now there is no stimulus to thrift, economically soundly 
 regulated thrift, which makes savings fructifying to the 
 owner's and the community's benefit, like Co-operation. 
 That fact has been admitted wherevfer Co-operation has 
 been applied. Men of great authority, representing such 
 diverse iiSerests as the late Lord Avebury, a representative 
 of the banking interest, and Sir Edward Brabrook, for many 
 years an ideal Registrar of Friendly Societies in England, 
 have both publicly recommended Co-operative organisations 
 as model savings institutions, preferable to ordinary savings 
 banks. 
 
 But that is not at present my point. My point is this, that 
 co-operative credit institutions, be they ever so humble and 
 so diminutive, not only very successfully attract savings 
 deposits into their own cash boxes — ^we have seen some such 
 results already in India, in the shape of deposits coming in, 
 as will still be shown, in unlooked-for abundance, and of 
 concealed treasure being taken out of its hiding-place to be 
 invested fructifyingly with credit societies — but, on the top of 
 this, saving in co-operative societies has been found to evoke 
 a saving instinct, which carries savings into other receptacles 
 designed for thrift deposits as well. And that is surely 
 wanted in India. What money does the Indian Post Office 
 Savings Bank attract ? Professor Mukerjee will have it 
 that barely two per cent, of the population hold deposits 
 in it. That is sad ; but it is really not to be wondered at. 
 For the Post Office Savings Bank comes to the Indians with 
 a strange ikce ; it is to them an alien institution. However, 
 Post Office Savings Banks have been as badly off elsewhere 
 prior to the advent of Co-operation. In the early nineties, 
 when I carefully investigated the doings and position of 
 
CO-OPERATIVE CREDIT IN INDIA 13 
 
 co-operative credit institutions in Italy — of the remarkable 
 effects of which in attracting savings men like Leon Say 
 and Eugfene Rostand had shortly before expressed their 
 great admiration — the Italian Post Office Savings Bank, 
 then already some ten years old, having been introduced by 
 Sella and M. Luzzatti after the British model — could 
 scarcely be said to be " in it " as a receiver of deposits, by the 
 side of other savings banks and Co-operative Banks. It 
 held about one-fifth only of the national savings — even less, 
 if we take the deposits in ordinary commercial banks into 
 account. Now the position is completely changed. The 
 Post Office Savings Bank rides the high horse. The co- 
 operative village institutions, penetrating into every hamlet, 
 preaching thrift everywhere and enforcing it, have altered 
 the habits of the rural Italian — who has been as unthrifty 
 as the Indian raiyat. The Post Office Savings Bank now 
 heads the list. The Co-operative Institutions have made 
 the running for it. Even in the early nineties, when I 
 began my inquiries, it was generally admitted that the 
 savings deposits collected by the Co-operative Banks had 
 made no inroad whatever upx)n the takings of the long- 
 established Public (not Post Office) Savings Banks, which 
 even then had a glorious record. They are in truth the 
 most unselfish and public-spirited savings banks existing. 
 The Directors of those Savings Banks told me this. And, 
 not content with telling me, they fetched out their books 
 to prove it to me. There had been no diminution, as the 
 figures showed, not even a slackening in the increase of their 
 takings, since the Co-operative Banks had come into the 
 field as their ostensible rivals. In Germany there has of 
 late been some rivalry. But that is only because the Savings 
 Banks (not Imperial, but provincial, municipal or district 
 institutions) have in their greed for money gone beyond 
 their proper sphere in the investment of their " capital, 
 in a manner which thoroughly shocked our Chancellor of 
 the Exchequer of the time, Lord St. Aldwyn, when I 
 told him of it. They lend out money against pronotes on 
 purely personal security. In the United Kingdom, jealous 
 as our bankers are, and have repeatedly shown themselves— 
 not least so in 1893, when the new arrangement about 
 Savings Banks was under consideration m Parhament, and 
 also in to some extent opposing Co-operative Banks, 
 
14 CO-OPERATION IN INDIA 
 
 resenting any suggestion of an invasion of what they con- 
 sider their monopolistic prerogative of taking deposits — ^no 
 one has ever breathed a word to suggest that the deposit- 
 taking of our Co-operative Stores, which has yielded 
 immense sums, has in the least interfered with their own 
 business. In Russia the stimulating effect of Co-operation 
 as a promoter of thrift has been very striking. According 
 to the latest Report of Russian Co-operative Credit 
 Societies the deposits taken by such societies increased 
 from January i, 1913, to January i, 1918, from only 
 650,000 roubles to 150,000,000 roubles. It was during the 
 war, and owing to the emancipation of Co-operation from 
 bureaucratic rule, that Co-operation, more particularly 
 Co-operative Credit, took its great bound upward, which 
 somehow even the Revolution and Bolshevist disorder have 
 not checked. 
 
 In the comparatively small Trustee Bank in Sussex, of 
 which I was for some years one of the " Managers," we had 
 — to state only one instance — a depositor, an old shepherd, 
 who had for years and years gone on laying by, as Indians 
 are in the habit of doing, when they lay by at all, unfructi- 
 fyingly-T-in a stocking. He had in this way during a long 
 Ufe collected a goodly sum. One day his little grand- 
 daughter succeeded in persuading him to put his money 
 into our savings bank. And the emotion of that man was 
 really humorously touching, when he came periodically to 
 collect his interest. " What a fool I have been," so he said, 
 " to leave that money lying idle all these years, when I might 
 have got by it such a welcome addition to my little income." 
 
 That is the feeling^ that one ought to try to arouse in the 
 Indian storer-away of jewellery and gold ornaments. And 
 not selfishly so, in the interest of Co-operation only. Pro- 
 voke the habit of thrift and the mahajan's rule with all its 
 attendant evils and abominations, its peonage, the hopeless- 
 ness of the raiyat's existence, the clog upon agricultural 
 development, will find its days numbered. Usury comes 
 with poverty. Thriftlessness is its parent. Create thrift 
 and usury goes as the devil is supposed to do at the sight of 
 holy water. 
 
 However, Thrift by itself is not enough for such a serious 
 and chronic state of disease as that prevailing in India. 
 There is too wide a space between the sowing of it and the 
 
CO-OPERATIVE CREDIT IN INDIA 15 
 
 ripening. Our starving man requires food on the spot to 
 sustain life. India cannot in its present condition do with- 
 out Credit. 
 
 Now, Credit is a great deal declaimed against and de- 
 nounced as a hopeless and certain snare, and any number of 
 familiar wise sa^ys and proverbs, as well as biblical texts, are 
 quoted against it — which saws and proverbs and texts are 
 perfectly sound in their bearing. However, the people who 
 so declaim against Credit and denounce it evidently do not 
 know how to distinguish between legitimate and illegitimate, 
 productive and improvident. Credit. For there are both. 
 And at the time when the Bible was written and even when 
 those wise saws and proverbs were coined — ^which are of far 
 more recent date — Credit of the modern sort, which is the 
 outcome of our modern banking system, was altogether 
 unknown. The Credit there denounced is the old-style 
 improvident Credit, such as the raiyat has taken from the 
 mahajan, which is the rottenest of all money transactions, 
 because only in a small minority of cases, in which the 
 borrower has sufficient grit, and moral and economic strength 
 and opportunity to boot, does it help him out of his difficulty. 
 It is never resorted to except in a dfficulty or a case of 
 distress. And its usual effect is to make the borrower sink 
 deeper and deeper in the mire — just as the raiyat does when 
 borrowing from the mahajan, who, in contrast with a 
 commercial bank or a credit society, fixes his terms exorbi- 
 tantly high, just because he has a most doubtful customer 
 to deal with, and cannot tell if he will be repaid. On the 
 other hand, when a man of grit and skill and honesty sees 
 his opportunity, with the aid of borrowed money, to produce 
 what wiU more than repay the loan, there can be nothing 
 more legitimate, nothing more sound. Because it not only 
 tends to enrich the borrower with a reward for honest 
 enterprise, and in the course of its use in all probability will 
 give employment to labour and provide a fresh outlet for 
 material and implements and machinery, but by creating 
 new value it will also benefit the community. That is the 
 Credit on which the entire business organisation of the 
 modern world, from State economy downwards, is based. 
 All that enormous economic progress which the world has 
 made — ^which economic progress, as the late Lord Goschen 
 has remarked, carries moral progress in its train — develop- 
 
1 6 CO-OPERATION IN INDIA 
 
 ing Commerce, Industry and Agriculture, is due to such 
 Credit — ^is, in Mr. H. Dunning Macleod's words, "its 
 proper child." And there is infinite scope for more such 
 progress springing from the same root. However, unfor- 
 tunately. Credit has thus far remained the monopoly of 
 those only who, as one would think, should need it least — 
 that is, the moneyed classes. To them, really, the best gain 
 that their own money has brought has been that of attract- 
 ing more money by means of Credit. Now it seems high 
 time that, with the general democratisation of all things, 
 such productive Credit — ^no other is here pleaded for — 
 should be democratised also, that is, brought to the doors 
 of those who may be assumed to need it most, in whose hands, 
 rightly employed, it is likely to yield the largest return, 
 because there it will be to the largest extent mixed with the 
 other productive factors, personal labour and directly 
 applied intelligence — ^intelligence applied to the smallest 
 details ; and because it brings assistance, and the prospect 
 of wealth and comfort, to the broadest part of the social 
 pyramid, in which every human molecule stands to gain by 
 Its use and the whole lump promises to be leavened for good. 
 A lakh of rupees distributed among a thousand deserving 
 and producing people, who know how to use it well, is 
 likely to do more social and economic good and fructify 
 more to the profit of the community than the same sum 
 handed over to one man. It is the special office of Co- 
 operation to create and organise such Credit, which 
 capitalist banking cannot organise, because, compelled as it 
 is to trust only to property as security, it does not possess 
 the means of creating security out of the extant material: 
 honesty and opportunity alone. It cannot test all the 
 humble cases occurring, take the necessary security in a 
 form other than mere property, and afterwards watch over 
 the loan made so as to ensure its repayment. 
 
 Credit, as it has been said, there must be. But that 
 Credit must be dispensed on bearable terms. To such we 
 know already, from what has actually happened in India 
 and what so experienced an administrator of Credit as 
 Mr. Mitra has put on record, that mahajan usury yields 
 readily. Mr. Mitra has shown that in his Province of 
 Bengal, in at any rate some localities, into which economi- 
 cally justifiable Credit has found its way, the mahajan has 
 
CO-OPERATIVE CREDIT IN INDIA 17 
 
 ceased to have " any importance as a village institution." 
 Without such fair Credit in India it is very plain that 
 national economy could not be carried on. It would be 
 idle to thmk of remedying the existing want of money by 
 any other means. The wealthiest Government in the world, 
 the richest Croesus among philanthropists, could not 
 provide the hundredth part of what is wanted, by means of 
 a gift. And a good thing it is that it is so. For money 
 unborrowed, which must mean unearned, would only be too 
 likely to make the receiver reckless and unthrifty. What- 
 ever is earned, that is, has to be paid for, is sure to be care- 
 fully handled. The object to be aimed at is to produce 
 wealth. Borrowed money will do that quite as well as 
 owned. The hired jteam plough ploughs its field as 
 effectively and as cheaply as the owned one. Hired money, 
 which has to be repaid, has, however, this economic advantage 
 over owned : It will of a surety — ^at any rate in most cases — 
 be laid out so as to be certain to reproduce itself — and 
 " leave a blessing behind," in the shape of property pro- 
 duced, which wiD be all the more likely to prove abiding, 
 just because it has been earned and laboured for. The 
 problem, therefore, is to create a form of credit which will, 
 by reason of the fairness of its terms, admit of being handled 
 in the way here spoken of. 
 
 /flxi India, when the subject was first mooted, there was a 
 load of debt, larger than anyone would care to reckon up in 
 figures, weighing upon the immense class carrying on the 
 main industry of the country in a manner which defied the 
 possibility of redemption by anything that could be given 
 out of resources already accumulated, whosoever might be 
 the giver. Year by year the noose was being drawn tighter, 
 properties were sold up, owners became tenants and in due 
 course slaves. Alienation Acts like that for the Punjaub 
 would delay the Completion of the process, but could not 
 prevent the poor cultivator's sinking deeper and deeper into 
 the abyss. And Agriculture was kept languishing. Pusa, 
 Cawnpore, Poona, Chota Nagpur, Coimbatore and the 
 rest of the seats of agricultural teaching and administration, 
 excellently officered as they are, did their best to perfect it, 
 discovering improved and more heavily yielding varieties of 
 planted seed, devising better pirocesses, recommending more 
 perfected implements. Without money in the raiyat's 
 
1 8 CO-OPERATION IN INDIA 
 
 pocket all these devices proved in practice throvi^n away. 
 There was no connection practicable between Tantalus and 
 the coveted, deliciously tempting fruit. 
 
 As a matter of course, individuals seeking for methods of 
 relief, indispensable under the circumstances, then turned 
 their eyes instinctively to Government. Naturally people 
 look to Government for help. There is an ingrained, 
 inherited traditional idea in men's minds that Government 
 is the " father " of the Nation. Government is, not in India 
 alone, supposed to have an inexhaustible fund of riches at its 
 disposal, which it is at liberty, without counting the cost, 
 to draw upon at pleasure, and to employ without any sense 
 of responsibility, except that for being fair in its distribution 
 to everyone, in whatever way it may deem fit. Govern- 
 ments have tried to help in such a fairy-godmother way 
 under many suns. However, practical experience has not 
 left their helping with the best of records. Whatever may 
 have been ostensibly achieved, at the close of the account it 
 has been found that the money so spent has been thrown 
 away. Peter had been robbed to pay Paul, without either 
 being the better for it. 
 
 Some attempts so made and found to end in miscarriage 
 will be specifically referred to. 
 
 In India there were, in truth, in, the matter of help to be 
 rendered, two problems to be dealt with. One was, to 
 come to the rescue of Agriculture as a calling. The other 
 was to improve the condition of the raiyat by helping him 
 out of his throttling debt. There is, of course, a direct 
 connection. between the two. For the raiyats are agricul- 
 turists and Agriculture is carried on by raiyats. All the 
 same there is also a cl early- marked-ofi distinction. The one 
 case is economic and the other social. Government has 
 thus far, within the measure of its power, addressed itself 
 to the first-named problem. By means of takavi it has 
 provided money for the sinking of wells, the provision of 
 pure seed, the purchase of fertilisers and feeding-stuffs and 
 perfected implements and for similar agricultural improve- 
 ments. If the help given has realised only very partial 
 results, the cause is not to be found in the absence of excel- 
 lent intentions, but merely in the insufficiency of the 
 instrument which alone the Government could employ. 
 In respect of the second problem — otherwise than by such 
 
CO-OPERATIVE CREDIT IN INDIA 19 
 
 legislation as that against land alienation — fruitful action was 
 found to lie clearly beyond the limits of governmental power. 
 
 Takavi is, as the Irrigation Commission of 1901-1903 
 has found in its inquiry and stated in its Report, a very old- 
 established form of Government help, granted " from time 
 immemorial " by the Imperial as well as by native Govern- 
 ments to necessitous cultivators. It consists in loans of 
 public money, granted at the rate of from 3 to 6f per cent. 
 — more generally at 6f per cent., which the Indian 
 Government in its Resolution of November 30, 1905, judged 
 to be sufficiently low. In Madras, Bombay and Bengal for 
 a long time the rate was 5 per cent. Takavi is regulated by 
 provisions laid down severally in the Land Iniprovement 
 Act (xix. of 1883) and the Agricultural Loans Act (xii. of 
 1884), the former of which gives power for outlay on improve- 
 ments such as wells, bunds, embankments, terraces and the 
 like; the latter authorises outlay, having more short-termed 
 employment for its object, such as the purchase of seeds, 
 implements and so on. Dr. Voelcker, in his travels on the 
 tour of inquiry — which at the instance of the Government he 
 undertook in the early nineties — found that one or tv/o 
 officers entrusted with the distribution of the fund had 
 stretched a point rather considerately, by granting takavi 
 advances for the purpose of paying off debts owing to the 
 mahajan or sahukar, in order to replace them by loans 
 burdened with only a moderate rate of interest. Admirably 
 conceived as such use of public money is — ^provided that the 
 cases warrant it and that there is certainty of recovery — it 
 is not quite easy to see how such employment can be brought 
 within the terms of either of the empowering statutes. 
 
 The credit so dispensed does not raise the question which 
 otherwise in dealing with credit is the most important, that 
 is, the question of security — though of course, under the 
 Government's summary power of recovery, in truth all the 
 possessions of the borrow^er, whether real or personal, come 
 to be pledged — in preference, too, to other claims. The 
 Government must be assumed to have, through its officers, 
 ascertained the amount of confidence due to the borrower— 
 who in truth often enough was not a claimant for credit, 
 but had the credit -pressed upon him. And certainly it 
 possessed the power of recovery, if such were at all practicable. 
 For takavi money is recoverable by the Revenue officer. 
 
20 CO-OPERATION IN INDIA 
 
 There is a second question which this kind of credit like- 
 wise fails to raise, a question much to be considered when 
 the lender is the Government — that is, the question of the 
 distinction to be made between long-termed mortgage 
 credit and short-termed credit given for momentary wants 
 — for working purposes. Takavi is distinctly given for 
 working purposes, as a complement to the borrower's own 
 working capital. Although the borrower's land is, when 
 necessary, seizable as security, the loan is not given on 
 mortgage lines. 
 
 Now, in the shape of working credit, although takavi has 
 doubtless achieved some good, it cannot be pleaded that its 
 record is absolutely immaculate, or that it has accomplished 
 all, or nearly all, that was aimed at by its use. In the words 
 of the Resolution of November 30, 1905, a document 
 already mentioned, it was to add to agricultural efficiency 
 and increase the total produce of husbandry. There have 
 been substantial sums paid out and, although there has been 
 some difficulty in recovering loans, on the whole the money 
 has come back without much diminution. Both the 
 Famine Commission of 1901 and the Irrigation Commission 
 of 1901-1903 have made a most careful investigation of the 
 worlang of the system, and the Irrigation Commission has 
 embodied in its bulky Report the fullest record extant of 
 its effects, a review both of its merits and its defects. It 
 reasonably complains of " the hardship of rigid recovery, as 
 seriously restricting its application, and also its benefits, and 
 impairing its popularity." These facts the Government 
 likewise recognises in the Resolution named and directs them 
 to be mitigated. The method of collection certainly seems 
 open to criticism, as occasioning serious difficulty for the 
 debtor. He is, as Mr. J. P. Brarider — ^who, to judge from 
 an interesting and instructive letter which I have received 
 from him, has devoted much attention to this matter — 
 explains, required to repay just when he is worst off for money. 
 " The practical result is, that many raiyats are unable to 
 repay and Government has to remit large sums of money, 
 advanced in loans, again and again." Or else the raiyat, 
 dropping from the dripping-pan into the fire, has to take 
 xefuge with the merciful mahajan. 
 
 Dr. Voelcker in his interesting " Report on the Improve- 
 ment of Agriculture in India " echoes this criticism, 
 
CO-OPERATIVE CREDIT IN INDIA 21 
 
 naming as one of the various " objections raised by the 
 cultivators to the takavi system," that " the Govern- 
 ment insists on punctual payment of interest and repay- 
 ment of the loan " — ^whether the cultivator has his grain 
 in or not. And the Irrigation Commission writes : 
 " There is no cause of the alleged unpopularity of the 
 takavi system which has more frequently been testified to 
 than the rigidity of the system of collection. . . . Govern- 
 ment never or rarely gives time. There can be hardly any 
 doubt that this does constitute an objection in the mind of 
 the cultivator to become a debtor to the Government. . . . 
 It is not merely that he has to pay the interest. That 
 would probably be no greater burden to him than an 
 addition to his land-revenue assessment, which he pays with 
 remarkable punctuality. But he has also to pay an instal- 
 ment of principal which, if his crops are poor, may be a 
 considerable burden. The Collector or head of the district 
 has authority, under the rules, in all provinces, to suspend 
 payment on the occurrence of failure of crops or other 
 exceptional calamity, subject, however, to a report to higher 
 authority. But this power of suspension is not very fre- 
 quently exercised, except in years of very general failure of 
 crops ; and when it is, the result is merely to postpone pay- 
 ment of the instalment for a single season, with the result 
 that in the ensuing year the cultivator has to pay double 
 the annual amount. The increased payment has often to 
 be raised with difficulty, and it is probable that under'the 
 circumstances cultivators would seldom care to apply for 
 suspension of takavi payment." By its " Resolution " of 
 November 30, 1905, the Government of India has given 
 authority, and to a certain extent imposed an obligation, to 
 mitigate all this. To what extent its wishes have been 
 carried out I have no means of knowing. 
 
 On other grounds, on Mr. Keatinge's showing, still to be 
 quoted, the unpopularity of takavi has not grown less. 
 But certainly, on the whole, in spite of all the objections 
 raised, the money appears to have come back satisfactorily. 
 The Commission named, after pronouncing its censure, 
 goes on to admit : " Where advances are made by the 
 Government agency the returns show that it is but seldom 
 that there are arrears of any long standing and the State 
 loses very little on this account." The adverse effect 
 
22 CO-OPERATION IN INDIA 
 
 exercised accordingly appears to be more shown in the 
 restricted outflow of takavi than in deficient return. The 
 figures published by the Commissibn in its Report, covering 
 the decade concluding with the financial year 1900 to 1901 
 — which was a year of comparatively very heavy borrowing, 
 raising the average for the decennium by a considerable 
 amount — show this. 
 
 And it certainly is a count against takavi that in con- 
 sequence of its unpopularity, even if there were no other 
 objection, it has been only so little used. The cultivator 
 has fought shy of it. And the land has accordingly gone 
 without the intended benefit. The trouble has been to 
 persuade the raiyat to take the loan. 
 
 The efforts which it has proved necessary to make to 
 induce him to do so remind one of the early labours of the 
 Agricultural Section of the Bank of Egypt— the Section 
 which subsequently was expanded into the " Agricultural 
 Bank of Egypt " — ^whose emissaries literally had, in the 
 first years, as the Report of our Consul-General shows, to 
 stalk about the country with bags of gold coin on their backs, 
 with the chink and glitter of which to allure reluctant 
 fellaheen to accept advances. Indeed, the Indian Govern- 
 ment's " Resolution " of 1905 suggests something precisely 
 of the same sort. 
 
 The difficulties attaching to the takavi system are 
 plainly set down in its record. " It is not perhaps too much 
 to say," so reports the Irrigation Commission, " that the 
 history in the fluctuations of the amounts of takavi taken 
 up in any province is the history of the interest taken in the 
 matter hy the individual officers who were quick to appre- 
 hend the kind of improvements which the agriculture of 
 their district required, and the value of takavi as a stimulus 
 to the execution of such improvements as were most suitable 
 to the locality and its needs." It is " where vigorous 
 measures had been started on the initiative of the individual 
 officer " that takavi business was done. It was the officer 
 who was to discover the needs and press the loan upon the 
 raiyat. An active officer would make a busy market. An 
 indifferent one, or one who did not understand the peculiar 
 needs of, improvements or who lacked the power of per- 
 suasive oratory, would make an idle one. Now that does 
 not appear altogether the correct way of transacting credit 
 
CO-OPERATIVE CREDIT IN INDIA 23 
 
 business. One can understand usurious moneylenders 
 indulging in such practice ; for they have their " profiteer- 
 ing " profit to get out of it. But where a good work and 
 sound business are intended it seems decidedly putting the 
 cart before the horse. The Agricultural Bank of Egypt 
 has had its reward in a huge number of seemingly irreco- 
 verable loans. 
 
 Under takavi, owing to the conditions explained, quite 
 naturally results vary very greatly as between different 
 districts. Th^ figures quoted by the Irrigation Commission 
 show that within the decade concluding with the summer 
 of 1901 something like ^4,000,000 had been lent out. But 
 that decade includes the year 1900-1901, in which alone 
 takavi outgoings mounted to Rx. 867,693. Taking the 
 result at its best, it does not amount to very much for 
 " India " ; and one can scarcely wonder at its failing to 
 achieve even its most immediate purpose, that of stimu- 
 lating Agriculture as a calling. For the removal of populai: 
 distress, indebtedness to the mahajan, improvement of the 
 rural standard of life, economic and moral, and intellectual 
 raising of the raiyat population, its- application appears to 
 have done nothing at all. 
 
 In this connection a word or two may be permissible, or 
 even appear called for, on a companion case to that of 
 takavi, which was, in truth, probably suggested by it — that 
 is, the credit given by the Agricultural Bank of Egypt, 
 which — in the shape projected, and comparable to that of 
 takavi — has practically come to an end with the passing of 
 the Five-Feddan Act, which renders properties up to five 
 feddans incapable of serving as pledges, but which, oddly 
 enough — such is human perversity — has even after its 
 euthanasia found admirers in India. 
 
 In Egypt in 1898, when Sir Evelyn Baring, afterwards 
 Earl Cromer, was at the height of his influence there, the 
 National Bank of Egypt was called into being, having as one 
 of the special tasks set to it in its' Charter the obligation 
 to distribute Government money — at the time it was 
 ^£250,000 — in loans, similar to takavi, among the fellaheen. 
 I confess that I was much disappointed at the time. And I 
 do not think, from what he himself subsequently told me, 
 that Lord Cromer would have acted in quite the same way 
 had it been his fate once more to take the 
 
24 CO-OPERATION IN INDIA 
 
 initiative. As a matter of fact, sinbe some years previously 
 the Egyptian Government had been considering how 
 Co-operative Credit might be made available for the native 
 cultivating population, who certainly seem to have stood 
 in urgent need of judicious financial assistance. Lord 
 Cromer at the time spoken of likewise thought in the first 
 instance of Co-operative Credit, and I was informed by the 
 late Lord Ilkeston that I was about to be consulted on this 
 matter. To my disappointment and surprise out came 
 shortly after the scheme actually adopted. I have questioned 
 Lord Cromer at a later stage, when he sat as a Select 
 Committee-man of the House of Lords on my " Thrift and 
 Credit Societies Bill " of 1910. He was then altogether, 
 and enthusiastically, in favour of Co-operative Credit, in 
 opposition to paternal action — more ^ particularly of Co- 
 operative Credit as a help for cultivators. His explanation 
 was that, at the time when he carried through the formation 
 of the National Bank of Egypt he did not consider the 
 Egyptian fellaheen quite " ripe " for Co-operation. Now 
 one can vinderstand his thinking so. But in truth there 
 never was a greater mistake made — as results hav,e proved. 
 And really there is no better educator for credit business 
 than Co-operation. 
 
 However, in 1 898 in Egypt that was not yet understood. 
 But if I have been correctly informed, there was a hitch, 
 and it was this. There was a question of law and also of 
 international understanding blocking the way. Ther€ was 
 the consent of a good many cooks required at that time for 
 making the broth. And it is not always easy to get the 
 representatives of a number of different Governments to 
 act in unison. But this by the way. 
 
 Co-operation having been ruled impracticable for the time, 
 it was not unnatural that Lord Cromer, who as Sir Evelyn 
 Baring had spent three years in the Indian service, and was 
 familiar with takavi, should have by preference taken that 
 as a model for his own much- needed remedial action. 
 Remedial action of some sort was, as it happened, clamorously 
 called for by circumstances, as they existed. For not only 
 was cultivation then terribly backward, but the reign of 
 usury among fellaheen was nearly, if not quite, as grim and 
 oppressive as it now is in India. It seems a little odd that, just 
 as Sir F. Nicholson has observed with regard to Madras, we 
 
CO-OPERATIVE CREDIT IN INDIA 25 
 
 should find a good number of Mahomedans, abjurers of 
 " interest " as they are, among the rapacious host of money- 
 lenders. However, religious precepts are apt to give way 
 when brought into conflict with personal interest. 
 
 Alike with a view to countering the Egyptian mahajan, 
 and to promoting more productive husbandry, the Egyptian 
 Government had for a couple of years already — since 1895 — 
 tentatively dealt out loans where it considered that such 
 would prove useful, and where its officers could persuade 
 the rather refractory cultivators to accept them. It was 
 at that period, and under the circumstances already referred 
 to, that the Government agents were sent about with their 
 burdens of ringing and shining gold. In 1896 it made 
 j^Elo,ooo (about Rs. 1,50,000) available for the purpose, 
 of which sum £E.y,'joo was actually placed in the shape of 
 loans and was honestly repaid — short of about Rs. 300 in all. 
 Fellaheen, like raiyats, are remarkably honest at the outset. 
 In 1898 this office was transferred to the then newly formed 
 " National Bank." The money employed was still the 
 Government's. Subsequently the business became alto- 
 gether one of the Bank, but with Government aid. The 
 money was lent out at 9 and 10 per cent, in two kinds of 
 loans: Short-term loans on personal security but propor- 
 tioned to the ascertained value of the land held by the 
 borrower, down to amounts of ^E^. The maximum limit 
 originally stood at ;^E20 ; but it has long since been raised 
 to j^200. Besides these, there were longrterm loans 
 secured on the land^ rising at first to ;^E300, but later to 
 j^iooo. By 1902 the amount outstanding on the two 
 kinds of loans had grown to ^1,208,200 in 46,572 accounts. 
 In view of such increase it was judged advisable to create 
 a special banking institution for this work, and accordingly 
 the " Agricultural Bank of Egypt " was called into being, 
 with power to engage in other banking business besides, 
 which it appears to conduct with skill and also with success, 
 but with a distinct precept to cultivate business with the 
 fellaheen, advancing money in amounts not exceeding 
 ^Eioo on real security (mortgages on the land) or ^^5 on 
 personal security (but regulated by the ascertained value of 
 possession held in land), for current purposes. Very com- 
 plicated arrangements were resorted to to ensure that the 
 security pledged was really good and made thoroughly 
 
26 CO-OPERATION IN INDIA 
 
 secure — arrangements which imperatively demand active 
 assistance from public offices, with the right of inspecting 
 land-tax registers, and collection by the Government tax 
 gathered under, if necessary, compulsory process. 
 
 "The assistance rendered to the Bank," so wrote Sir 
 Eldon Gorst, Lord Cromer's successor in the Consul- 
 Generalship, in his Report home in 191 1, " has not been con- 
 fined to the collection of its instalments by the tax-collector. 
 No efforts have been spared by the officials to bring home 
 to defaulting debtors a sense of their obligations, and there 
 is no doubt that, at all events in Lower Egypt, these efforts 
 have had considerable effect on the returns ." Nevertheless, 
 as we shall see, recovery was bad, and went from bad to 
 worse. 
 
 The machinery adopted was highly compUcated. There 
 was sending documents backwards and forwards and there 
 were ample opportunities for levying backsheesh. All this 
 is certainly not a recommendation for the acceptance of 
 the system in India. That is, however, not all that wants 
 to be said. In course of time the erst-reluctant fellaheen 
 grew keen in their appetite for loans. That is an experience 
 common in cases of popular credit made easy. And it is 
 invariably accompanied by' an increasing indisposition to 
 repay, as the shifts come to be discovered by which repay- 
 ment may be for a time, or indefinitely, evaded. And they 
 are freely resorted to, with an admirable resource of cunning. 
 The complicated arrangements devised to regulate the loan- 
 ing, involving numerous references from pillar to post, 
 quite naturally added a further incentive to the evasion of 
 repayment. There was a great boom at the time in Egypt, 
 which tempted and almost drove people into extravagance 
 and improvidence. Values of property in land shot up 
 like Jonah's gourd. A fellah might, if he had been provi- 
 dently disposed, get rid of his entire mortgage debt by sell- 
 ing the sixth part of the property pledged for it. However, 
 such chances were only rarely taken advantage of. There 
 was not sufficient provision made for the restriction of 
 Agricultural Bank lending for productive purposes only. 
 Accordingly people borrowed for indulgence in luxuries and 
 extravagant living. In 1910 it was found that among about 
 40,000 borrowers 2,500 were in arrear. And the financial 
 member of the Khedive's CounciL frankly admitted; "It 
 
CO-OPERATIVE CREDIT IN INDIA 27 
 
 IS to be feared that the difficulty experienced by borrowers 
 to repay their borrowing is, in only too many cases, the 
 consequence of the improvident employment given to the 
 money lent them. The practical conclusion to be drawn 
 from this observation would be, not to grant loans asked for 
 except for remunerative purposes. But it is evident that 
 a bank is wholly incompetent to make sure what its 250,000 
 customers propose to'do with the money borrowed by them. 
 A solution might possibly be found in the creation of co- 
 operative credit societies, acting as intermediaries between 
 the bank and the cultivators. Their guarantee would safe- 
 guard the bank against any danger of loss, and on the other 
 hand they would keep the borrower in hand,so as to make sure 
 that no advance woxid be granted except for a remunerative 
 purpose." And the Board of Directors stated in their 
 annual Report : " It is to be feared that in only too many 
 cases the inability of the borrowers to meet their engage- 
 ments arises from an unproductive employment of their 
 loans," thus accounting for a large amount of loans not 
 recovered. In 191 1, Professor Arminjon, an old resident 
 in Egypt, and a keen observer of economic goings-on there, 
 a teacher at the £cole de Droit of Cairo, wrote in his very 
 valuable book " La Situation Economique et Financifere de 
 I'Egypte," remarking upon this question : " The idea 
 suggesting the foundation of the Agricultural Bank was of 
 the happiest. . . . The peasantry have largely drawn upon 
 its resources — now grown to ^8,000,000 (that is, of twelve 
 crores of rupees ; at the present time they stand at 
 j^io,3 10,000 — that is, fifteen crores). To what uses has 
 this enormous capital been put by them ? Only too often 
 to one that was quite unproductive: to pay the expense 
 of some merrymaking, to buy some young feUow off his 
 military service. Even where the loan has not been 
 squandered in this fashion it has often enough been wasted 
 upon the purchase of land that did not pay the interest and 
 sinking fund of the loan. During the last two years the 
 Bank has been able to recover its loans only partially and 
 with great difficulty." In the same year Sir Eldon Gorst, 
 who had succeeded Lord Kitchener (Lord Cromer's 
 successor) as Consul- General in Egypt, wrote : " There 
 appears to be little doubt that the fellah has accustomed 
 himself during the last few years to a higher scale of living. 
 
28 CO-OPERATION IN INDIA 
 
 aided thereto by the increase in the value of his crops and 
 by the loans of ■ the Agricultural Bank . . . and that it is 
 o^y by the severest pressure of circumstances that he can be 
 brought to recognise the necessity of fulfilling his obligations 
 at the sacrifice of comfort. He is also realising more fully 
 that he can delay repayment of his debts to the Bank with 
 temporary impunity. There is evidence also of a consider- 
 able amount of borrowing from the village moneylenders 
 during the less favourable seasons of 1908 and 1909. When 
 a fellah owes money both to the Agricultural Bank and to 
 the moneylender, there is no doubt that the latter recovers 
 his money before the Bank." 
 
 In 1904, when Sir F. Nicholson, after a visit paid to 
 Egypt, recommended the system of the Agricultural Bank 
 of that country for imitation in India, the Government 
 caused a careful inquiry to be made into the matter by a 
 highly competent authority, as the result of which it found 
 that the Egyptian system would not at all do for India, for 
 the following, among other, reasons : (i) The Government 
 machine is in India quite unsuited for it. Among other 
 things India knows of neither omdeh nor saraf, village 
 oflScers indispensable for the conduct of the business ; and 
 the Government could not find the staff of rather higher 
 officers who in Egypt are paid a miserable salary to 
 do the necessary work at a cost proportioned to the 
 business. (2) The Government could not in India give the 
 information respecting title and the value of property which 
 is indispensable for a loaning service after the Egyptian 
 pattern. That would be so even in raiyatwari districts. 
 In zemindari districts the matter would be quite impossible. 
 (3) The Indian Government could not place the services 
 of the tax-collector at the disposal of such a Bank. And (4) 
 the business of the Egyptian Agricultural Bank, even when 
 showing a good income, shows a steady decline of just the 
 small loans which it is particularly desirable to encourage. 
 Loans of Rs. 75 and under went down rapidly. 
 
 In spite of all official assistance, recovery had indeed 
 become hopelessly bad. In 1910 arrears amounted generally 
 to i8'9 per cent, of the payments due. For Upper Egypt 
 they stood at 53*8 per cent. And they went from bad to 
 worse. By 1913-14 they had grown to 26-4 per cent. In 
 1914-15 under exceptionallyunfavourablecircumstances they 
 
CO-OPERATIVE CREDIT IN INDIA 29 
 
 stood at 74-4 per cent. The figure for 1915-16, being the 
 last in my possession, was 25*8 per cent. Surely that is 
 bad enough. In 191 3 there were legal proceedings pending 
 against 2,544 defaulting debtors, among a total of about 
 40,000. The number eventually grew so large that pro- 
 ceeding in Court was out of the question. That would 
 have been similar to Burke's " indicting a nation." 
 
 In 191 3, as it happened, a kindly meant law, benefiting 
 the fellaheen in another way, practically deprived the 
 Agricultural Bank of the business for which more in parti- 
 cular it had been called into being. The Five-Feddan 
 Act granted to properties not exceeding five feddans — 
 the feddan is somewhere about the size of an acre — " home- 
 stead " rights, exempting them from liability to be attached 
 for debt and thereby depriving them of their qualification 
 to serve as security for loans. " This is a complete reversal 
 of the policy of the Egyptian Government that led to the 
 formation of the Bank," so wrote the Directors in their next 
 following annual Report — the Bank " which was founded 
 with the object of lending to the small cultivators on the 
 security of their land. ... Of the 235,000 clients now 
 on the books of the Bank the large majority are holders of 
 five feddans or less. The law thus reduces the business of 
 the Bank by two-thirds, ... It will be necessary to 
 create a new system of Agricultural Credit." 
 
 The " new system" to be adopted evidently is the co- 
 operative — ^which means that the very object for which 
 the Bank was created, endowed with a large capital and 
 invested with far-reaching powers and privileges, has not 
 been attained, and that the great capitalist and " paternal " 
 scheme has failed. The Bank is a good, strong Bank for aU 
 that, which finds plenty of other remunerative business to 
 do, and to all appearance does it well — ^just as did Gambetta's 
 Caisse Centrale, although failing in its original object, as 
 an aid to popular credit. 
 
 As already observed, authorities in Egypt have for some 
 time been addressing their attention to the subject of the 
 creation of a Co-operative Credit Movement. The Agri- 
 cultural Bank, for its own part, finding itself foiled in its 
 original purpose, has during a few years back been endeavour- 
 ing — possibly designedly, as a preparation for a more 
 co-operative scheme, or else as a tentative probing of the 
 
30 CO-OPERATION IN INDIA 
 
 ground^— under powers newly conferred by the Government, 
 to afford financial assistance to " Agricultural Syndicates " 
 and, in the shape of " collective loans," to " groups of 
 cultivators." The results, however, of this attempt have 
 remained derisory, amounting to only ^20,000 in one 
 year and j^E6,ooo in the next. 
 
 The tale, then, of the " Agricultural Bank of Egypt " is 
 manifestly, as an example for India, a tale of failure— as it 
 was bound to be and as the tale of every similar enterprise 
 taken in hand, with the same laudable motive but on similar 
 ineffective lines, has been before it. There have been not 
 a few such attempts. 
 
 The services of the Agricultural Bank, by the way, have 
 not contributed at all satisfactorily to the improvement of 
 Agriculture and its productiveness in Egypt. In spite of 
 them " cotton- sickness " has gone on increasing because 
 the land is being uneconomically worked out. Certainly 
 the fellaheen have not been rendered more thrifty. Rather 
 have the facilities for obtaining money without proper 
 guarantees for economic employment turned a thrifty race 
 into an improvident one, which is one of the most detri- 
 mental disservices which can be rendered to a country. 
 Also the number of cultivators and farms have not been 
 increased; there has been no extension of " settlement." 
 Sir Eldon Gorst, the late Consul- General, in one of his 
 annual Reports, calls pointed attention to this. " The 
 impression that the loans have contributed to augment the 
 number of smaU owners is erroneous. The Bank does not 
 lend to anyone not already possessed of land, so that it 
 cannot create new individual holdings." 
 
 To return for one brief moment to takavi. Remember- 
 ing how very inadequate takavi has proved as a means of 
 relief to the debt-burdened, and as a stimulus to agricultural 
 improvement, one cannot, in the presence of the more 
 efficient method now within reach, help regretting that in 
 itssession of December, 1917, the IndianBoard of Agriculture 
 should have harked back to the more or less exploded old 
 idea, recommending that takavi should be given " more 
 freely than has hitherto been customary, to enable the 
 raiyats to purchase such manures, improved seed- and 
 implements, etc., as are recommended by the Department 
 of Agriculture." Mr. Keatinge's remarks to that recom- 
 
CO-OPERATIVE CREDIT IN INDIA 31 
 
 mendation show that the failings in the takavi system com- 
 plained of by the Commission of 1901 have not grown less, 
 in spite of the admonition addressed to the executive organs. 
 Apart from " a lack of available funds," to be apprehended, 
 so Mr. Keatinge said, " the staff of the Revenue Department 
 v/as not able to give all the small sums and check them. 
 His experience as a Revenue Officer was that such sums are 
 frequently misused. . . ." He would prefer to see co- 
 operative societies doing the work and strengthened to 
 undertake this work on a large scale, as he doubted if Govern- 
 ment agency was the right channel. The French have a 
 proverb which says that the better is the enemy of the good. 
 There are cases — ^and the present seems to be one — ^in which 
 the very moderate good becomes a distinct obstacle to that 
 which is better. For the sake of a little, for the present 
 still only problematic, relief — ^relief problematic because 
 experience has shov/n that, unless it is officially and im- 
 pressively forced upon intended beneficiaries, it is not 
 accepted — ^providing a little money for the moment, but 
 rather enfeebling than strengthening character (as reducing 
 instead of encouraging the natural instinct for self-reliance 
 and independent effort), a slower, so it is true, but far more 
 enduring and ultimately more effective remedy is to be 
 put aside. The man who is taught to trust to takavi is not 
 likely to become a co-operator, any more than is an habitual 
 beggar liberally encouraged with doles to become a sturdy 
 worker. It is not the use of an air-bladder and safety-belts 
 that teaches a man to swim. The takavi borrower repays 
 because he must. But his disposition to exert himself and 
 to stand upon his own feet is sure to lose in fibre. Obviously 
 the factor of production above all others to be strengthened 
 and stimulated is the man himself, not his purse. And such 
 factor is to be strengthened only by putting the man upon 
 his responsibility, as muscle will grow strong only by 
 exercise. You may talk of the necessity of spreading out 
 Co-operative Credit over all the Empire. Increased 
 employment of takavi loans will not accomplish, but will 
 rather hinder, that. In Ireland, now that, stimulated, by 
 the example of co-operative credit societies, joint-stock 
 banks have grown more liberal in the granting of small 
 credits to small men, on purely personal security, in the 
 way of Scotch cash credit, there has come to be less demand 
 
32 CO-OPERATION IN INDIA 
 
 for co-operative loans. In Ireland, as it happens, at the 
 present time the form of Co-operation most urgently needed 
 is not that of Credit but that of Distribution. The most 
 bloodsucking mahajan of Ireland is the gombeener of 
 groceries, cloth, hardware, and so on. When he has been 
 conquered other needs will assert themselves, and Co- 
 operative Credit, which has rendered yeoman service in the 
 past, is not likely to remain long in abeyance. Co- operation, 
 to be fully effective, must be one and complete. Also it 
 should be pointed out that borrowing from joint -stock banks 
 could not, like takavi, reduce fibre, inasmuch as, the same as 
 Co-operative Credit, it calls for an active sense of responsi- 
 bility, though falling short of co-operative elasticity. In 
 India, by common consent, the first thing now needed is 
 Credit. And, moreover, India does not possess that host 
 of joint-stock banks, with offices scattered everywhere, and 
 a willingness to deal in small and purely personal loans that 
 Ireland is happily blessed with. Accordingly in India you 
 have not even a partial substitute for Co-operative Credit. 
 If you want the raiyat's financial position genuinely and 
 permanently improved, there seems no way for doing so at 
 present open to you but to discourage patronising credit > 
 and encourage credit to be earned by the self-help of Co- 
 operation. 
 
 Experience has, as already stated, been the same in all 
 similar undertakings. More rulers than one have, prompted 
 by the same humane desire which gviided Lord Cromer, tried 
 to bring relief to Agriculture and the cultivating classes by 
 financial help from outside. Things were to be made easy 
 for the borrower. At the same time there must be security 
 for repayment and a guarantee for proper use. It is like 
 setting a philosopher to make a curry. The lender knows 
 nothing of the borrower, and the borrower nothing of the 
 lender. There is a net spread. But the meshes have in 
 every case turned out to be either too wide or else too close. 
 In one case they let in the wrong fish, in the .other they kept 
 out the right. The matter, it must be confessed, is full of 
 difficulties. And there is only one way of meeting them. 
 
 Napoleon III. Credit Agricole is a notorious instance 
 in point. Here was a share capital of Rs. 1,20,00,000 
 made available for lending, with power to raise more by 
 loans. The distinct object of the institution was to help 
 
CO-OPERATIVE CREDIT IN INDIA 33 
 
 the small cultivator, who has a vote and is in France generally 
 speaking the ruling factor in politics. Here there seemed 
 accordingly a wide field open for effectually binding him to 
 a benevolent Government, while at the same time bringing 
 him much-needed rehef. For Rs. 1120,00,000 meant con- 
 siderably more in i860 than it does now. However, the 
 fish for whom the net was spread would not come in. The 
 terms of credit offered were altogether of a nature effectually 
 to deter them. But the money was there. Deposits came 
 in. The Institution's bills were discounted at other 
 counters. A dividend must be earned. So the Institution 
 ran after other business which its Directors — being selected 
 as supposed experts on specifically Agricultural credit — did 
 not understand. And the Institution came to. grief with 
 its liability exceeding its assets by nearly Rs. 200,00,000. 
 Gambetta's Caisse Centrals, devised for popular industrial 
 and commercial credit,fared betteronlybecause it abandoned 
 its original object altogether in time to save its skin. It 
 turned over its capital and services to ordinary capitalistic- 
 ally commercial purposes, just like the Agricultural Bank of 
 Egypt in the present day. The same thing has happened 
 over and over again. I have quoted instances in " People's 
 Banks." King Wilham I. of Prussia, German Grand dukes 
 and Grand duchesses, Spanish Bishops, Austrian Diets, 
 municipal bodies in various countries, all sorts of benevolent 
 people have tried their hand at the game, one after another 
 in the wrong way, putting the cart before the horse, finding 
 the money first and expecting the question of security and 
 proper employment to settle itself. All these things would 
 not do. The well-intentioned authorities who were labour- 
 ing to bring much-needed relief were clearly " boring with 
 the wrong tool." If India was to have the credit which it 
 needed — needed, as has been said, for a twofold purpose, as 
 an economic means to place Agriculture on a more pros- 
 perous footing, and as a social, to bring freedom and com- 
 parative ease to the raiyat as a citizen — such credit must be 
 organised on different lines and governed by different 
 principles : be less rigid in form but more strict in substance; 
 more accessible to the cultivator but providing more 
 adequately for its own repayment; very elastic in method 
 but satisfactorily ensuring employment on proper objects. 
 No Government in the world, be it ever so wealthy or ever 
 
34 CO-OPERATION IN INDIA 
 
 so powerful, could provide such credit out of its own re- 
 sources. The mere volume of what is required would place 
 acluevemeiit beyond its reach. And the other conditions 
 imposed, on the face of it, lie hopelessly outside its grasp, 
 machine that it is, with no soul, no mind, no adaptability, 
 no sense of responsibility in its operating parts. The 
 machinery to be provided could only be supplied by the 
 people themselves who were to profit by it — ^and that much 
 wider, practically immeasurable circle to whom appeals 
 for money have to be addressed, not on the ground of 
 Government- ordained forms, but on the ground of intrinsic 
 security. It wants to be alive, an animate machine, with 
 capacity for thought, observation, knowledge, and a keen 
 sense of responsibility in every part, every spring, every 
 wheel, every cog, acting under the impulse of a living, 
 watching, striving mind, conscious of its duty, and with 
 keenly awakened realisation of its responsibility and own 
 interest. 
 
 Experience has shown that it is not authorities with the 
 big purse that are wanted to set the thing in motion but the 
 persons, be they ever so humble and ever so poor, who can 
 provide security that will satisfy the lender. The whole 
 matter hinges, not on money, but on security. Money 
 there is, as the late Lord Salisbury has put it on a memorable 
 occasion, in plenty. " It is overflowing in the coffers of 
 our bankers." The problem is how to lure it out of its 
 hiding-place. And the proper magnet for that work is 
 Security. 
 
 Let us cast just one brief look at the origin and the 
 governing idea of democratised Credit, such as is seen most 
 fully developed in its co-operative form, and observe how 
 it naturally grows out of the requirements for which it is 
 needed, and has, being natural and directly suited to the 
 conditions of the case to be dealt with, managed successfully 
 to achieve what is needed. 
 
 Going to the root of things, it is Scotland, which by its 
 activity and its inexhaustible resource in business method 
 has revolutionised banking, at any rate among English- 
 speaking peoples — from whom others have learnt — ^which 
 has given the lead in the solution of this banking problem — 
 Scotland, prodded to the act in this case by the House of 
 Hanover in the hour when in that country that House was 
 
CO-OPERATiVE CREDIT IN INDIA 35 
 
 least popular. The object aimed at was not originaUy 
 to do economic good, but to produce a political effect, to 
 bring into the field a powerful influence making against the 
 dominating strong Tory feeling, which prevailed also in the 
 banking world. The Bank of Scotland was financially a 
 Tory stronghold. The Hanoveria n Crown chartered against 
 it the Royal Bank of Scotland, endowing it with the right 
 of an unlimited issue of notes — which of course became 
 general in Scotland, and, in spite of what appears to us its 
 serious danger, worked very satisfactorily. The new form 
 of business adopted has grown common. But it was the 
 Royal Bank of Scotland which began the work and, to get 
 rid of its notes, and place them in the market where they 
 would count as money, offered credit wholesale in large 
 or small amounts to whosoever could produce satisfactory 
 security. Thus what has become known as " Scotch Cash 
 Credit " — which is a far better regulated thing than what 
 in England is known as " overdraft " — took its birth. To 
 canny Scotchmen, ever on the lookout for opportunities 
 for earning, the convenient facility was not offered in vain. 
 Cash credit, did not go a-begging. The country became 
 covered with banking offices, and every tradesman, down to 
 the smallest, took a pride in " keeping his banker," as it was 
 called. Business advanced by leaps and bounds around 
 cash credit, and, in the words of its chosen historian, the 
 late H. Dunning Macleod, whom Sir Daniel Hamilton has 
 lately quoted — ^with something like daring, considering 
 that he compares the case of the India that is to that of the 
 Scotland that was — it raised the country " in the space of a 
 hundred years " — ^which appears to be a longer period than 
 Sir Daniel is prepared to accord for Indian regeneration — 
 " from the lowest state of barbarism up to its present proud 
 position." " The far-famed Agriculture of the Lothians," 
 so Mr. Dunning^ Macleod continues, " the manufactures of 
 Glasgow and Paisley, the unrivalled steamships of the Clyde, 
 are its own proper children." 
 
 Well, this " Cash Credit," although it has the distmct 
 merit of attaching the car to the right horse, which means 
 the Unding first, not of money, but of security, is after all 
 only a capitalist institution, which would not answer at all 
 for the Indian raiyat. It does not deal in the small amounts 
 which the Indian raiyat needs. And it is based on a system 
 
36 CO-OPERATION IN INDIA 
 
 of security which in its Scotch shape the raiyat could not 
 provide. However, it contains in germ the essentials of 
 Co-operative Credit. It is, so I would remark by the way, 
 strictly personal. It places nothing ©ut of use or under 
 lock and key that the borrower might want, to provide a 
 pledge. It bases the security which it supplies, not on 
 land or houses or chattels, but on personal suretyship — ^still, 
 however, in a capitalist sense, supposing existing property to 
 be underlying suretyship. However, the main point is that 
 it is produced by the voluntary co-operation of people who 
 know one another, and who can very effectually check one 
 another, and unreservedly go bail for one another. For, 
 as matters stood at the time, although very naturally sureties 
 limited their engagements to a certain figure approved by 
 themselves, their liability to the lending institution, the 
 bank, extended to the whole of their possessions. Of course 
 the bank reserved to itself the right to accept or reject 
 sureties offered. Of course, also,, it reserved to itself the 
 right to fix their number according to the exigencies of the 
 pase. All persons likely to be offered as sureties are not 
 equally substantial. There have been as many as eleven — 
 perhaps more — sometimes for one loan. On other occasions 
 one was deemed sufficient. However, the cardinal point 
 was this, that these men, pledging their liability, were in a 
 position effectively to watch and control and check the men 
 for whom they went bail. " This system," so state the 
 two Committees, severally of the House of Lords and the 
 House of Commons, sitting almost contemporaneously in 
 1826 to inquire into " the State of Circulation of Scotch 
 and Irish Notes," in their Report, " has a great effect upon 
 the moral habits of the people, because those who are 
 securities feel an interest in watching over their conduct ; 
 and if they find that they are misconducting themselves, 
 they become apprehensive of being brought into risk and 
 loss from having become their sureties ; and if they find they 
 are so misconducting themselves, they withdraw their 
 securities " — " the practical effect of which," so deposed a 
 witness quoted, " is, that the sureties do in a greater or less 
 degree keep an attentive eye upon the future transactions 
 and character of the persons for whom they have thus 
 pledged themselves ; and it is perhaps difficult for those who 
 are not intimately acquainted with it, to conceive the moral 
 
CO-OPERATIVE CREDIT IN INDIA 37 
 
 check which is afforded upon the conduct of the members 
 of a great trading community, who are thus directly inter- 
 ested in the integrity, prudence and success of each other. 
 It rarely, indeed, if ever, happens that banks suffer loss by 
 small cash accounts." 
 
 Here we have the pith of the whole matter, the seed of 
 the great tree, that is to be, the principle in a nutshell. 
 " The great trading community " is nothing like an essential 
 condition. We know now by experience that the same 
 method, properly adapted, will produce — ^as it has mean- 
 while produced — ^precisely the same effect in a great or small 
 agricultural community. The coat wants to be measured 
 to the body. The main point is that there must be a 
 co-ordination of forces — ^joint action ; and that, to make 
 such effective as a credit-raising power, there must be 
 absolutely effective control. 
 
 Adapted to its environment the principle here set forth 
 as containing the seed of Co-operative Credit has worked 
 veritable wonders in Europe, raising for the use of moneyless 
 cultivators sums such as in view of their prodigious amount 
 only under an exceptional provocation could Governments 
 dream of raising ; distributing them widely, but for the 
 most part in amounts corresponding to the humble require- 
 ments of the receivers, but with peculiar skiU in apportion- 
 ment, on just the right spots, and recovering them unfail- 
 ingly, without compulsion or summary process, generally 
 spealdng without loss, bringing out in the process the 
 remarkable resources of Agricultxire possible where there is 
 sufficient money to feed it, so as to impart to it a different 
 face altogether, a face of unexpected plenty ; raising the 
 poor, despised, backward, impoverished raiyats of Europe 
 hopelessly indebted as they were sixty and seventy years ago 
 to their European mahajans — for things were much on a par 
 in Continental Europe then with what they are in India now 
 
 to a position of comparative comfort and ease — at the same 
 
 time spreading education, raising the people benefited m- 
 tellectually, socially and morally, as well as economically— 
 triumphantly solving, in truth, the two parallel problems 
 to be dealt with, of which I have spoken. It has appeared a 
 veritable miracle even to very learned economists. Professors 
 of Political Economy, at our most famous seats of learning, 
 have expressed to me their wonder at the evolving of such 
 
38 CO-OPERATION IN INDIA 
 
 results from what seemed a mere nothing to begin with — a 
 dream that mere learning could not realise. However, there 
 is the fact. And it is too patent to bear disputing. 
 
 Could this same beneficial agency — ^that is the question 
 which one had to ask oneself twenty-five years ago — be 
 applied with the same or similar effect to India, a country 
 so very different in its main characteristics from European 
 countries ? 
 
 Happily there were indications to go upon which heralded 
 success. There is a natural disposition to gregariousness, 
 which produces common action, in practically all races 
 constituting the population of the great Asiatic Empire. 
 The Hindoos have the tradition of their world- famed 
 ancient Indian " village community " and are used to doing 
 things in common. The Moslems have a sympathetic 
 fellow-feeling towards one another inspired by their religion. 
 Even among the aboriginal and cognate tribes there appears 
 to be a readiness to act in clusters. 
 
 And this tendency has ere now blossomed into actual 
 ins^tances of common action. In his masterly " Report 
 regarding the possibility of introducing Land and Agri- 
 cultural Banks into the Madras Presidency " Sir Frederick 
 Nicholson shows how " from time immemorial " Indians of 
 his Presidency have sought relief from their want of funds 
 in a very primitive way, naturally but very unfortunately 
 very liable to serious abuse, in " Kuttu Chittoos " and 
 subsequently in " Nidhis " — the latter being formed in 
 imitation of our British Building Societies, which are — ^like 
 the Chitfunds, which resemble our English Slate Clubs — 
 likewise very open to abuse by exploiting greedy organisers. 
 
 Apart from the Nidhis of Madras, such native pre- 
 disposition is strongly testified also in the organisation of the 
 Akharas, which occupy a similar position in the United 
 Provinces, and about which Mr. Dupernex has, in an instruc- 
 tive and closely argued Report on the whole question, 
 written in 1900, given some very interesting information. 
 As a matter of course, because the Akharas select their 
 members with some care, expel unworthy ones, and lend 
 only for approved purposes, they are supposed to be identical 
 in character with the Raiffeisen societies. The same claim 
 has been set up on behalf of the Middlesex Self-help Societies 
 and of the Hotokusha of Ninomiya Sontaku in Japan. How- 
 
CO-OPERATIVE CREDIT IN INDIA 39 
 
 ever, in all these cases, although there are undoubtedly 
 points of resemblance, the points of difference are more 
 pronounced and more numerous. Among other things 
 their organisation lacks the Raiffeisen ideal. Indeed, 
 according to Mr. Dupernex's account, the Akhara Wallas 
 are rank impostors, piously rubbing their bodies with ashes 
 and pretending to be God-serving mendicants while all the 
 time they are very Jews for the greedy amassing of wealth. 
 But, in spite of all this, here is distinct evidence to be found, 
 even in these abortiv6 societies, of a natural bent among the 
 native population for Co-operation. And it is also decidedly 
 interesting to note, in view of the question now so much 
 occupying public attention with regard to Co-operative 
 Credit societies in India, that the members of the Akharas 
 have long since found out the great practical importance^ 
 and, indeed, necessity, of careful supervision and control of 
 the societies. They had then two central panchayets, 
 severally at Hardwan and Baroda, which carefully checked 
 and scrutinised the accounts, and appear to have been 
 unsparing in the infliction of penalties. In view of some 
 trouble which we have now to contend with in the matter 
 of abuse of powers by panches, it would be interesting to 
 learn what precisely are the " special measures taken " in 
 the Akharas, " to prevent embezzlement by any of these 
 
 men." 
 
 Imperfect and readily liable to abuse as these institutions 
 are, rfieir presence seems to argue a natural bent towards 
 common action for the obtainment of the very end upon 
 which Governments have wasted their efforts in takavi and 
 Egyptian loans A and B, in Credits Agricoles and other well- 
 meant but more or less abortive expedients. Such bent is, 
 perhaps even more strongly, and certainly more suggestively, 
 testified to by the Idnas or rdthas, and also the ddngwaras, 
 of the Punjaub, of which I shall have to speak at a later 
 stage, in which a number of cultivators designedly join 
 together for common use of their draught cattle and the 
 common execution of agricultural labour of every kind. 
 
 But evidently there is even more in the Indian character 
 and temperament to justify a favourable horoscope for 
 attempts to introduce Co-operative Credit, such as the 
 European Continent has elaborated. There was not a 
 single Anglo- Indian to whom I in those early days expounded 
 
40 CO-OPERATION IN INDIA 
 
 the principles of that Co-operative Credit who did not at 
 once discern in it the agency in which lay the hope of rescue 
 for the debt-burdened rural population and the neglected 
 and backward Agriculture of India. The message was 
 everywhere received with gladness. When in 1894, in his 
 little Tusculum at Dorking, I set forth the meaning of 
 Co-operative Credit — ^it was of the Raiffeisen type — and 
 related what it had achieved and might achieve in India, to 
 the then nonagenarian constructor of the Coleroon anicut, 
 the trusted adviser on Indian affairs for many years to the 
 late Prime Minister, W. E. Gladstone, Sir Arthur Cotton, 
 his delight at the tale scarcely knew any bounds ; he sprang 
 up and exclaimed : " That is the very thing for India ; 
 and whatever expectations you may have formed as to 
 results, multiply them tenfold And you will still find them 
 exceeded." 
 
 That prophecy, greatly cheering at the outset for the 
 work about to be taken in hand, is now in plain course of 
 fulfilment. How the matter was brought about must be a 
 tale for the next chapter. 
 
11. 
 
 THE COMING OF CO-OPERATIVE CREDIT 
 
 Much as the want of Co-operative Credit was felt in India, 
 during decades, not to say a longer time, its actual advent 
 proved slow and lagging. The lateSir WjlianiWjedderburn 
 has told me that he began pleai^gf or it in theearLy^seventies. 
 That statement vnll in all probability have to be taken as 
 meaning that at that comparatively early date he advocated 
 measures of some kind calculated to relieve the severe 
 distress of the rural population, representing over 80 per cent. 
 of the people of India, owing to the prevailing lack of money 
 and the resulting prevalence of debt. For in the early 
 seventies Co-operative Credit and its principles may be said 
 to have been still unknown beyond a very narrow circle of 
 German and Italian pioneers. Sir William's own account 
 of his actual suggestions did not altogether bear out that 
 what he originally proposed was Co-operative Credit. The 
 peculiarity of Co-operative Credit, more specifically, vyhich 
 has since been generally singled out by everyone acquainted 
 with the circumstances, as specially marked out for applica- 
 tion in India, that is, the Raiffeisen type, was generally 
 speaking still waiting to be revealed. Sir Robert Morier 
 had, as British Minister at Darmstadt, seen the Schulze 
 Delitzsch type at work, and sung its praises to our British 
 Co-operators at their first Congress, held &t Manchester in 
 1 868. However, that was a type of Credit, as then practised, 
 suited more particularly to meet the needs of small and 
 medium tradesmen and jobbing artisans pushing upward to 
 higher planes. The Raiffeisen system never became known, 
 even in its own native country, until after the mquiry 
 instituted in 1874 and 1875 by order of King William of 
 Prussia by a Royal Commission— a Commission composed 
 of three highly qualified experts, namely, Professors Held 
 and Nasse and Herr Siemens, the introducer, by the way, 
 
 41 
 
42 CO-OPERATION IN INDIA 
 
 of agricultural beetroot- sugar manufacture in Germany. 
 That Commission issued a most laudatory Report, which at 
 once established the popularity of the new system and 
 secured its diffusion under royal favour. It rapidly in- 
 gratiated itself — on the score, more particularly, of its ideal 
 aims and its social and moral achievements — with all classes 
 in Germany having a connectioji with rural life, alike 
 Government, priests and ministers of the several churches, 
 and philanthropic landowners. But it still took nearly 
 twenty years to fiU up, to any extent, its cadres then created 
 and make of it a real living economic and educational force. 
 Once that point had been reached, the triumph of the 
 system was great and unchallenged and it spread rapidly 
 over the rest of Europe, and not long after even beyond the 
 limits of that quarter of the globe, to dispense everywho-e 
 fresh material benefits and raise the standard and the tone 
 of rural life. 
 
 So far as India is concerned, the first trustworthy evidence 
 of an advocacy of specifically co-operative credit that I have 
 been able to trace is that of Sir Heiuy Storks's making himself 
 its spokesman before the Government of India in 1883. 
 That was — so it may be permitted to point out as a curious 
 coincidence — the very year in which Leon d'Andrimont 
 started the Co-operative Credit movement (on Schulze 
 Delitzsch lines) in Belgium, which was destined to achieve 
 rather signal, though only temporary, success; the year also 
 in which Leone WoUemborg opened the first (foreordained 
 to become the mother of a more than thousandfold offspring) 
 Raiffeisen society in Italy ; in which, furthermore. Professor 
 Tanviray formed the first Agricultural Syndicate in France, 
 at Blois, which was destined to tiller into a rich crop of 
 organisations of the kind, working, according to the testi- 
 mony of Lord Reay, " veritable wonders " in the spread of 
 education ; and the year in which Wilhelm Haas, having 
 separated himself from his master Raiffeisen, in disappoint- 
 ment at his holding so tenaciously fast to his ideal objects, 
 inaugurated his feeble offshoot union of agricultural supply 
 societies in Hesse, which under active Government pro- 
 tection was destined to develop in due course into the mighty 
 "Imperial Union" of Germany with, at present, about 
 20,000 societies of divers kinds addressing themselves to the 
 satisfaction of every- conceivable branch of agricultural busi- 
 
COMING OF CO-OPERATIVE CREDIT 43 
 
 ness and rural wants except ideal ones, but including credit, 
 with something like two million members. The year 1883 
 was therefore a fruitful hatching period for Co-operation. 
 
 In India Sir Henry Storks's pioneer attempts remained 
 without results. His ideas as to what was to be done, of 
 course, were at that early date not very clear, and his 
 proposals were thought rather nebulous. The need of some 
 remedial measure was, however, universally admitted. Agri- 
 culture was known to be backward — not because the Indian 
 cultivators — who grew their wheat and paddy probably 
 centuries before British husbandmen knew of their existence 
 — failed in knowledge or aptitude for their calling, but 
 because the nervus rerum, the cash indispensable as a driving 
 force, was lamentably lacking. And the rural population was 
 known to be in a state of crying destitution and oppressive 
 peonage, steeped over head and ear? in debt, and falling an 
 easy prey to famine and drought whenever such occurred. 
 
 In respect of the need existing Sir Henry found no one to 
 gainsay him. But ideas as to the proper remedy to be 
 applied were still vague and unformed. Takavi was being 
 tried and takavi was proving only very partially effective. 
 
 Meanwhile. Co-operative Credit was forging fast ahead 
 on the European Continent. Co-operative Credit societies 
 of various sorts kept multiplying and gave proof of admirable 
 capacity for work. In a manner, I may say, they became 
 at an early date familiar to myself. For in the late fifties 
 and the early sixties I lived in Germany and had evidence of 
 their work before my eyes. About 1890 I took up the study 
 of them in good earnest. And in 1892 it was my good 
 fortune to be the first to call attention, in the Economic 
 Review, more particularly to the remarkable ideal as well as 
 economic working, more specifically of the Raifleisen 
 societies. The Schulze Delitzsch societies had found an, 
 it is true only oartially informed, eulogist some years before 
 in Sir John Lubbock, afterwards Lord Avebury, who m 
 1889 pleaded in the House of Commons for the substitution 
 of sometliing of their Hnd in the place ot pur savmgs banks 
 on the ground— since strongly supported by so experienced 
 and well-informed an authority on the matter of thrift as 
 Sir Edward Brabrook— that, instead of placing savers m 
 the position of tutelage, as our savings banks do, they con- 
 stitute them the guardians of their own thnft, thereby 
 
44 CO-OPERATION IN INDIA 
 
 \- 
 educating them economically and training them to a know- 
 ledge of business and judgment in dealing with money. 
 
 About the same time — in 1892 — a curious experiment 
 which has some bearing upon the question of Co-operative 
 Credit was entered upon by some enterprising people at 
 Panjawar in the Punjaub. The common land there was 
 handed over to trustees to administer on behalf of co-sharers, 
 the profits resulting to be applied in the shape of loans to 
 the co-sharers wherewith to pay off their debt. Though 
 in no wise on all fours with co-operative banking, this 
 experiment may be said to have given some encouragement 
 to the co-operative idea. It is stated to have proved 
 successfid and to have served also to enhance the value of the 
 land dealt with. The authors and leaders in this experiment 
 were Sir Edward Maclagan and Captain Crosthwaite. 
 
 In 1893 I brought out my book " People's Banks : a 
 Record of Social and Economic Success," which was fortunate 
 in being the first book in the English language explaining 
 the various systems of Co-operative Credit and their prin- 
 ciples. Although interest in the subject of the book was 
 naturally limited within a certain narrow radius, the infor- 
 mation proffered was happy in its reception ; and it is not 
 surprising that within that radius very notable Anglo- 
 Indians were to be found. In India interest had arisen 
 before, and as early as in 1892 the late Lord Wenlock, when 
 Governor of Madras,* had told off Mr, (now Sir Frederick) 
 Nicholson for special duty, to inquire into the subject of 
 co-operative banking as practised in Europe, the result of 
 which remains a permanent monument of admirable public 
 service, on record in Sir Frederick's truly masterly Report, 
 \ the first volume of which appeared in 1895. 
 
 * The late Lord Wenlock was a convinced believer in Co-operation. 
 Before setting out for India he had formed a co-operative distributive society, 
 for the benefit of the villagers, at Escrick, near York, in which parish his 
 family seat was situated. In 1899 he took an active part in the formation 
 of the " British Agricultural Organisation Society," formed in imitation 
 of the Irish founded by Sir Horace Plunkett, and became its President. 
 In 1908 he kindly undertook the sponsorship in the House of Lords for my 
 " Thrift and Credit Societies Bill," which he championed with unmistakable 
 interest. Although jockeyed out at the time by the Government of the 
 period, the same Bill made a triumphant passage through the House of 
 Lords on the unanimous recommendation of a Select Committee which 
 by the way, included Lord Cromer, the founder of the " Agricultural Bank 
 of Egypt," among its members. 
 
COMING OF CO-OPERATIVE CREDIT 45 
 
 By that time, however, we had made not inconsiderable 
 progress in the " India " of London. Retired members of 
 the Indian Civil Service, to whom I had explained the 
 Raiffeisen system, owned themselves greatly pleased with 
 what I had told them and, as if by common consent, declared 
 that system to be the one marked out for application in India. 
 Prominent among these was, as already related. Sir Arthur 
 Cotton, the constructor of the Kistna, Godavari and 
 Cauvery Canals, and Mr. Gladstone's chosen confidential 
 adviser on many Indian questions. 
 
 In the same year the late Sir Charles Bernard, at the time 
 at the head of the Revenue and Agricultural Department 
 at \^Tiitehall, and a true friend to the population of India, 
 sought me out to ask my advice respecting the best form in 
 which to introduce Co-operative Credit into India. There 
 was a good deal of confabulation and correspondence. But 
 we soon came to see pretty clearly in what direction remedial 
 action would have to be taken and began formulating plans. 
 
 Mr. Nicholson's tour of very careful inquiry was followed 
 by a rather hurried visit to me from Mr. Henry Dupernex^ 
 of the United Provinces, told off in 1899- 1900 for the service 
 by Sir Anthony Macdonnell (now Lord Macdonnell) ai 
 the time Lieutenant-Governor of the provinces named, and 
 like Lord Wenlock, a thorough believer in Co-operationi 
 whom in 1910 I was thankful to see seconding my Cof 
 operative Thrift and Credit Societies Bill, brought in by the 
 Earl of Shaftesbury, and who as a member of the Select 
 Committee appointed to examine the Bill, rendered mo^t 
 valuable service to the cause of Co-operation. Unfortu- 
 nately Mr. Dupernex's time seemed very narrowly measured. 
 Mter he had read' my book we had a long palaver m London, 
 in the course of which I explained things as well as I could. 
 But I wanted him to see for himself societies in Germany 
 and Italy which I still consider were the only ones to prove 
 of real service to him. I offered to give him the necessary 
 introductions. However, he had not time to do more than 
 iust break his journey to Brindisi. And so I had to content 
 myself with giving him an introduction to the Peoples 
 Bank at Mentone, which we do not consider very co- 
 operative " That brief and exclusive visit has, I regret, 
 left a mark upon the Co-operative movement in India, 
 which I cannot help looking upon as a damnosa h^editas. 
 
46 CO-OPERATION IN INDIA 
 
 In June, 1900, I addressed the following letter to Lord 
 George Hamilton, at that time Secretary of State for India : 
 
 -, T lune z6th, 1900. 
 
 Mv Lord, ^ 
 
 Some time ago your Lordship was reported, alike ia Hansard 
 and in the daily newspapers, to have stated in the House of Commons 
 that on the proper opportunity presenting itself the India Office 
 would be wiUing to afford facihties for the establishment of co- 
 operative agricultural banks in India. 
 
 Since then, among other people, Mr. Dupernex, of Banda, who 
 came to see me about the matter when in England, and who is, in 
 some sense, a pupil of mine in this business, has brought out a book, of 
 which I beg your Lordship to accept the accompanying copy, and to 
 which r would humbly venture to call your Lordship's attention. 
 And he hopes to do something towards establishing co-operative banks 
 in the North-West Provinces. His book is shortly to appear in 
 Hindostanee. 
 
 I do not subscribe to every word that Mr. Dupernex has written, 
 though I expect good results from his apostleship. But I am afraid 
 all co-operative work in India must find itself seriously hindered while 
 the law with regard to co-operative societies remains what it is. 
 Mr. Dupernex is constrained to form his banks under the Companies 
 Act, which is quite unsuited to the institution, and which in this 
 country, quite apart from the question of expense, no one would think 
 of invoking. 
 
 The same thing is reported to me, in my capacity of Chairman of 
 the International Co-operative Alliance, by Ambika Charan Ukil, who 
 has formed four modest Uttle co-operative societies at Calcutta.* 
 
 Since your Lordship has kindly promised to befriend the movement, 
 may I hope that you will Idndly, as a first step, which would not 
 commit the India Office to anything, take into consideration the 
 advisableness of introducing into India ordinances Kke our Industrial 
 and Provident Societies Act and our Friendly Societies Act or some- 
 thing similar. 
 
 The Friendly Societies Act is not really a very convenient Act, for 
 it was designed for a totally different purpose. But we have to take 
 refuge under it because, for the Agricultural banb, which are doing 
 such good work in Ireland, we must have unlimited Uability, which the 
 Industrial and Provident Societies Act, otherwise a much better Act 
 and absolutely sufficient for banks adopting limited liability, does not 
 permit. Since the passing of Mr. Plunkett's supplementary Uttle 
 Actf of two years ago the Friendly Societies Act serves its purpose 
 fairly well. 
 
 But in India neither of these Acts is in force. If your Lordship 
 
 * I am sorry to have to say that since this letter was written I have seen 
 reason to change my opinion about Mr. Ambika Charan Ukil as an apostle 
 of genuine Co-operation. 
 
 f The " Societies Borrowing Powers Act " of 1S98. 
 
COMING OF CO-OPERATIVE CREDIT 47 
 
 would kindly aUow me to talk over the matter with some gentleman at 
 the India Office who has charge of these matters, I have no doubt that 
 1 could bring him to see the advisableness of giving to India the benefit 
 ot legislation which has contributed immensely to the raising of the 
 condition of the labouring classes in this country and which is free 
 from any objection. For nobody asks for money from the Govern- 
 ment, or desires to pledge it to further concessions. All that is asked 
 is, that the Government should place the poor people in India in a 
 position to help themselves. 
 
 I beg to commend the matter very warmly to your Lordship's 
 attention, and 
 
 Remain, etc., 
 
 Henry W. Wolff. 
 The Secretaby of State for India. 
 
 This letter was duly acknowledged, and attention was 
 promised to its contents. Next Mr. Nicholson's Draft 
 Proposition for a Bill to be passed, now sent to me by Sir 
 Charles Bernard for my opinion, which I gave, accompanied 
 by the following letter. 
 
 Meanwhile Mr. Nicholson's Report had come out and on 
 the ground of what he had seen and learnt that deserving 
 oflRcer drafted a Bill, which was of course sent up to the India 
 Office at Whitehall — the Government of Madras having 
 decided that the matter was not one of urgency.* I have 
 not the India Office's comments upon that draft in my 
 possession. They were privately communicated to me 
 along with the draft, for perusal and advice. However, my 
 reply will show that those comments were not altogether 
 favourable. Here is my letter, as returned, in a printed 
 form, bv the India Office : 
 
 DbakSir, July 3rd, r900. 
 
 I have to thank you for your kind letter of 29th ultimo, and the 
 two volumes of Nicholson's Report as well as a copy of the Madras 
 Government Order. 
 
 The last named I beg to return herewith. 
 
 I have had to deal with the matter rather hurriedly, mainly on 
 account of my imminent departure for Paris, and the organisation of 
 one of the Congresses to be held there being thrown almost exclusively 
 on me. 
 
 I cannot too warmly recommend you to take the opinion of 
 Mr. Brabrook, Chief Registrar of Friendly Societies. To deal with 
 the matter under an Amended Companies Act would, I am sure, be a 
 tremendous mistake. We want a Co-operative Act. 
 
 '■ See " Government Gazette, the United Provinces of Agra and Oudh " 
 of May 14th, 1904. 
 
48 CO-OPERATION IN INDIA 
 
 I encloee a reference to Acts in force in this kingdom. 
 Of course, if I can be of any service in the matter, I shall be only 
 too glad to be so. 
 
 Believe me, etc., 
 
 Henry W. Wolff. 
 Sir Charles E. Bernard, K. C.S.I. 
 
 Memorandum by Mr. Henry Wolff on Mr. Nicholson's Report 
 AND THE Madras Government Orders regarding Agricul- 
 tural Banks. 
 
 Perhaps I may be permitted to say a few words with regard to the 
 Board's Report and the Governor's ruling, with a view to clearing 
 away a few misconceptions. It is quite true that Mr. Nicholson does 
 not in his book give a clear " Ught and leading " on all points. More 
 especially does he appear to contradict himself with respect to State 
 aid, which is a very difficult subject. There are two sides to the 
 question, and as the one or the other presents itself most prominently 
 it is perfectly natural that, like other persons and bodies having 
 greater familiarity with the general question, he should incline one 
 way or the other. 
 
 However, the main ground for the Board's adverse judgment 
 evidently is, that it does not quite accurately appreciate the object of 
 the institution for which Mr. Nicholson pleads, and misjudges it upon 
 the ground of what may be proved to be altogether illusory facts. I 
 will point out two which are put forward very prominently on page 52, 
 paragraphs 20 and 21. The mortgage debt in Germany, of which the 
 Board makes so much, proves nothing at all against the Banks. In the 
 first place I have the best official authority (I will only quote here 
 Dr. Buchenberger, Minister of Finance in the Grand Duchy of Baden, 
 the best authority on the subject ; but there are others) for saying that 
 the amount of that debt is greatly exaggerated in the official statistics 
 for these two reasons, (i) the debt appUes in fact to buildings, which 
 on small properties (those in question) represent often the major part of 
 the property, though they do not do so ostensibly, therefore the pledge 
 value of the mortgaged estates is greater than represented ; (2) many 
 of the mortgages are as a matter of fact paid off, though, to save 
 expense and facilitate fresh borrowing, if necessary, they are ostensibly 
 only transferred to the mortgagor. In the second, generally speaking, 
 that mortgage debt does not at all refer to the small proprietors who 
 compose the credit societies. The two classes are practically two 
 distinct communities. The co-operative banks do not profess to 
 grant mortgage credit, and as a fact grant only very little. The two 
 kinds of credit ought not to have been mixed up. And it is a pity 
 that Mr. Nicholson did mix them up, and so in a measure led the 
 Board to jump to a false conclusion. 
 
 The second very serious error is to Be found in the Acting Settle- 
 ment Commissioner's footnote on the same page. So far it is in- 
 
COMING OF CO-OPERATIVE CREDIT 49 
 
 correct to say that France has no Raiffeisen banks ; that as a matter of 
 .0 JL'.}f ""^ T''"^ have Raiffeisen banks multipHed so fast and done 
 ZTrf ^V\ "''"' °^f countries.* The work of starting them was 
 practically begun in 1894; and now there are between 500 and 600, 
 working weU to sav nothing of the hundreds of similar banb formed 
 by the agricultural syndicates. There would be at least 200 more 
 (the_783rd was registered last week) had not the French ParUament 
 unwisely changed the law a couple of years ago. The condition— of 
 an unmarned priesthood, etc.— which the Commissioner is good 
 enough to insist on as being adverse to co-operative credit in France, 
 exists m the very same degree in the larger portion of Germany where 
 Raiffeisen credit has struck root, which is Roman Catholic and wine 
 dnnhng, and has even invented and brought to something like per- 
 fection those co-operative winepresses which, in many cases, exactly 
 double the profits which cultivators draw from their grapes, and 
 which France (which, by the way, is rapidly becoming, not wine, but 
 spirit drinking, as witness a report recently made to the Soci6t6 
 des Agriculteurs de France by M. Urbain Guerin) as yet has not. 
 
 The object of co-operative banking is not at all to foster what the 
 Board will call " licentious " borrowing or " facile " credit. It is, to 
 create and make available a new security. So far from making credit 
 to poor cultivators or labourers " facile " or easy, as I have pointed 
 out in my various writings, it makes " possible " only by making it 
 *' difficult." It does not ask the man to come and borrow. It 
 distinctly tells him: You will have no money unless you can fully 
 satisfy us as to having a good case. The presumption is against 
 lending. 
 
 Also, the object of co-operative banks is by no means merely to 
 place fair credit in the place of unfair. It is to create working capital, 
 without which the most fertile land, situated near the best markets, 
 is worth very littie. Among the thousands of co-operative dairies 
 which in Germany enable small and large cultivators to turn their 
 milk to the best account, there are many hundreds which were set up 
 without capital, merely with the help of the co-operative bank, whose 
 claims have been gradually paid off at the rate of so much per gallon 
 used. There are steam thrashing machines which have never cost 
 their owners, a society, anything, inasmuch as the bank had advanced 
 the money and had been repaid out of the hire. 
 
 The Presidency of Madras may be in an exceptionally happy 
 position. But, as I have never found an Anglo-Indian to whom I 
 could manage to explain the system to say otherwise than that co- 
 operative credit would be an unspeakable boon to all India, so it was 
 ■the late Sir Arthur Cotton, a Madras man, who, more in particular, 
 
 "' The situation in France has very materially changed since then, ovying 
 to the Government's persecution of the late Louis Durand, the " Raiffeisen 
 of France," on account of his ultramontane opinions, and the hothouse 
 forcing of the State-eiidqwed and vote-catching Credit Agricole with large 
 State funds. 
 
 4 
 
so CO-OPERATION IN INDIA 
 
 showed himself delighted with it, and told me, " Whatever results 
 you look for multiply them tenfold, and you will still find them 
 exceeded." No argument could be drawn from the poverty of the 
 people. We find that, generally, the poorer the people the more 
 readily do they grasp the principles of co-operative banking, and the 
 more readily do co-operative banks thrive amongst them. That is why 
 they succeed so well in Ireland, more particularly in the congested 
 districts. The fact that in Madras Presidency the Sov^car question 
 does not arise, but ryot lends to ryot, is only on a par with what has 
 happened in those parts of Venetia and Lombardy, where Raiffeisen 
 banks have proved particularly acceptable and successful. 
 
 The Board probably misilnderstood what Mr. Nicholson says with 
 regard to " finding Raiifeisen." Raiffeisen is found. What you want 
 to find is (i) the conditions under which he can be put to work, that is, 
 suitable legislation ; (2) a number of local Raiffeisens, men wiUing to 
 show their sense of the duty which they owe to their neighbours by 
 working a little for them, less giving than working. 
 
 The Board's objection (Clause 22) that peasants are " inclined to 
 borrow for every purpose except land improvements," is met by the 
 fact that for nearly every purpose except land improvements the co- 
 operative bank will be debarred from lending to them. The German 
 character, moreover, is not " homogeneous." 
 
 The fraud and mismanagement practised (p. 154, CI. 26 in) in the 
 nidhis are no more an argument against banks than similar abuses in our 
 loan societies are. Qujte the reverse, they show that new conditions 
 are required, which preclude fraud and mismanagement. Co-opera- 
 tive management furnishes them. It does preclude fraud and mis- 
 management. Our Irish Raiffeisen banks have " never made a bad 
 debt." And it cannot be shown that " catastrophes have attended 
 on like schemes in other countries." No such catastrophes have, in 
 point of fact, occurred in connection with co-operative banks. 
 
 In the Governor's opinion, I have only the statement occurring in 
 Clause 20, p. 162, to complain of, which is founded upon an unproven 
 assumption. I have not found that Raiffeisen banks suffer seriously 
 from unpunctuality in repayment, neither have I ever heard of this. 
 And if Mr. Nicholson has committed himself to such a statement, he 
 has been misinformed. 
 
 Coming to Mr. Nicholson's draft, it altogether staggers a European 
 by its ambition. Here are a Companies Bill (for Joint Stock Banks), 
 a Savings Banks Bill, a Land Improvement Bill, a Co-operative Bill, 
 and one or two other things, all rolled into one. In this country we 
 should want about five or six Bills for all this, and five or six sessions 
 for their consideration. 
 
 I cannot quite see why Joint Stock Banks should have been dragged 
 in. They have the Companies Act already, and it can scarcely be 
 argued that Joint Stock Companies, which exist to earn for a small 
 number of persons a profit out of their dealing with others, require 
 " privileges " or exemptions. 
 
COMING OF CO-OPERATIVE CREDIT 51 
 
 Savings Banks appear as much out of place in a proposal for pro- 
 viding credit. There is more to be said against the draft under this 
 head on other grounds. However, the best prospect of drawing what 
 in Ireland goes by the name of " stocking money " out of its hiding 
 places, and of making it useful and fructifying, is not to provide new 
 burying places for it, as a savings bank would do, but an active use, 
 tempting to the depositor, who may want credit. That it is which 
 has made the Schulze Delitzch banks so magnificdntly successful in 
 Germany. The use of the money by credit serves as a bait to make 
 depositing popular. 
 
 Land improvement credit, Landschaften, and the like, likewise have 
 no legitimate place here. 
 
 And, since Building Societies in Great Britain and in the United 
 States are referred to, I want to point out that there is an essential 
 difference between the two local specialities.* 
 
 The Governor has very rightly, as I think, up to a certain point, 
 decided to confine his attention to co-operative banks. It is a pity 
 that he does not say " co-operative societies," for there is very much 
 more besides convenient banking that co-operation could be made to 
 bring about. And, as in the United Kingdom, in Germany, and 
 elsewhere, one law, if India only had it, would suffice for all. 
 
 But what staggers a mere European quite as much as the com- 
 prehensiveness of Mr. Nicholson's proposal is his suggestion that the 
 matter should be settled by an amendment of the Companies Act. In 
 this country nobody would think of such a thing. The Companies 
 Act, quite apart from the intolerable expensewhichitinvolves, is very 
 unsuitable, indeed directly adverse to co-operation. It means that a 
 small number of persons should have as full as possible power of dealing 
 with the money and interests of a much larger number ; that things 
 should be done oHgarchically, with as little publicity as possible, 
 nothing being let out in balance sheet or general meeting, except what 
 the directors consider indispensable. And it emphasises " profit." 
 Co-operation cannot succeed except the circumstances be exactly 
 reversed. There must be a maximum of democratic government to 
 excite interest and vigilance, of publicity, of control and supervision, 
 and it ought to be writ large upon its rules and practices that not 
 profit but a common service is the object of the society, profit being 
 kept out altogether. Under this point of view Mr. Nicholson's 
 proposal that " profit should be divided according to the shares " 
 is an exceedingly bad one, which no co-operator in this country would 
 dare so much as to name. That is the joint-stock principle. The 
 co-operative principle is that, since it is, not shares, but custom which 
 makes the profit, it is to custom that the profit belongs in what French 
 people call the ristourne, i.e., the return of what was paid m excess. 
 We must not promise the ryots bread and give them a stone. 
 
 * It was so at the time. Since then American " Loan and Building 
 Societies " have very much assimilated themselves to British. 
 
52 CO-OPERATION IN INDIA 
 
 . One cannot help wondering that no notice whatever should have 
 been taken of the Industrial and Provident Societies Act of the 
 United Kingdom, as well as of the Friendly Societies Act, both of 
 which have worked so well that instead of co-operative societies seek- 
 ing refuge under the Companies Act, as is proposed in India, we have 
 profit-seeking companies actually seeking the advantages of cheapness 
 under the Provident Acts named. 
 
 Mr. Nicholson refers to the English Loan Societies Act of 1840 and 
 the Irish Loan Fund Societies Act of 1843 as being desirable models, 
 more particularly on the score of the facilities which their provisions 
 provide for the recovery of debts by order of a magistrate. I confess 
 that when I first took in hand the framing of Rules Qn 1 893) — I beg 
 to enclose a copy each of " A People's Bank Manual " (under the 
 Industrial and Provident Societies Act) and of " Village Banks " 
 (under the Friendly Societies Act) — I felt attracted by the Act of 
 1 840 on the same ground. However, I found that there was no more 
 unpopular Act in the kingdom, and that all the facilities given in it 
 for the recovery of debts are made illusory by the fact that magistrates 
 will not make an order under it. The statistics quoted by the Registrar 
 of Friendly Societies, for the litigation which has to be engaged in to 
 recover debts, support this. No returns have been presented to 
 Parliament for a long time, because nobody seems to take an interest 
 in an Act which is thought to be unsuited to the conditions of the 
 present time, and which leads to abuses very similar to those which 
 the Board.complains of as attaching to the work of the nidhis, mainly 
 because there is no democratic management and no publicity. Things 
 are done in secret, and the secretary's main object is to assure to 
 himself a good " screw." In 1890 there were no fewer than 3,052 
 summonses issued in respect of something over 300 societies, which 
 means, as the Chief Registrar put it, " one summons to every f± 
 profit earned." The Irish Act of 1843 is as bad. It has led to great 
 loss owing to difficulties of compliance with the rules laid down. 
 The promissory notes given could not be enforced, and debenture 
 holders have accordingly lost their money. The Act is now being 
 amended by Parliament. But the Loan Funds cannot, as the Com- 
 mittee of the Irish Agricultural Organisation Society has reported, 
 compete vrith the new Raiffeisen Banks. 
 
 The truth is that all these supposed aids to co-operative banking, by 
 magisterial interference, etc., are really serious hindrances. That has 
 been found to be the case not only here, under the Loan Societies 
 Acts, but just the same tinder the various " privileges " for the 
 recovery of debt granted abroad, with the special view of facilitating 
 " agricultural credit," to which Mr. Nicholson so longingly adverts, 
 more particularly under the various laws granting such privileges in 
 Italy, of which I speak in my bode " People's Banks." In the words 
 of Cav. V. Sani, Director of the People's Bank of Bologna, the Bank 
 which practises most " agricultural credit," these privileges are useless 
 although they are made very cheap. The object of a co-operative 
 
COMING OF CO-OPERATIVE CREDIT 53 
 
 bank is to excite among the managers so much vigilance, caution and 
 strictness as will ensure that no money is lent out except what will be 
 repaid, by reason not of special laws but of ordinary precautions, and 
 to train the borrowers, in their own interest, which is brought home to 
 them, to fixed habits of businesslike conduct and honesty, which are 
 ten times more effective than punitive ordinances. It is the 
 borrower's brother member who must make him repay, not th(; 
 magistrate or the law court. Only co-operation can bring this about. 
 The bank ought to rely upon its own good management and a careful 
 selection of members, not on magisterial compulsion, which makes such 
 management and selection appear less indispensable and leads people 
 to make light of them. That is the reason why in Raiffeisen Banks, 
 which let in the poorest class of members, relying only upon their 
 '* guarantee," not on shares, unlimited liability, applying to all, is 
 indispensable. It makes people careful and vigilant. The more you 
 take away the necessity for this by adventitious aids, the more you 
 weaken the indispensable foundation, the great supporting pillar of 
 co-operative credit. 
 
 There is really no better Act to point to as a' model than our 
 Industrial and Provident Societies Act for Share Societies with limited 
 liability. And since the Short Borrowing Powers (Societies) Act, 
 brought in by Mr. H. C. Plunkett, was passed in 1898 the Friendly 
 Societies Act will really serve fairly well for societies with unlimited 
 liabihty (Raiffeisen Banks). Like Mr. Nicholson, I have previously 
 contended that the Industrial and Provident Societies Act ought to 
 give power to vsdthdraw shares. But I think now that it will do very 
 well as it is. If we make shares withdrawable the same danger will 
 arise which the Board rightly allude to under the head of Government 
 advances, and which the great Swiss Co-operative Bank " Schwei- 
 zerische Volbbank " rightly guards against by making it a rule that, 
 if a certain proportion of shares should come to be withdrawn, a 
 general meeting is to be at once called to decide if the bank is 
 to go on. 
 
 Since it would be a thousand pities to throw away the present 
 favourable opportunity, I cannot too warmly entreat the India Office, 
 before proceeding to legislation, to study the two Acts referred 
 to and to take the opinion of the Chief Registrar of Friendly 
 Societies. . 
 
 I have asked the General Secretary of the Co-operative Umon ji 
 Manchester to forward to Sir Charles Bernard a copy of their hand- 
 book on the Industrial and Provident Societies Act, which will serve 
 as a useful guide. Doubtless there is some oflScial publication m 
 which the various Friendly Societies Acts are similariy put together 
 
 under one cover. • t j- 
 
 For a Friendly Socieries Law there ought to be ample room m India 
 on other grounds. An Industrial and Provident Societies Act would 
 at the same time help our friend Ambika Charan Ukil at Calcutta and 
 those others who, please God, will soon follow his examole 
 
54 CO-OPERATION IN INDIA 
 
 In this way another important point in the problem would be 
 disposed of. 
 
 The Board as well as Mr. Nicholson want to make the supervision of 
 the co-operative banks to be created a matter for the agricultural 
 authorities. That seems to me a thoroughly bad principle. The 
 object of the supervision provided for, which cannot be too strict and 
 searching — ^for which reason once more a co-operative law is preferable 
 by much to a Companies Act — ^is to keep things businesslike and 
 straight. That is not an agricultural function. The proper 
 authority to do that is a body like our "Registrar of Friendly Societies " 
 (a composite person), which has to think of nothing but good audit 
 and strict control and need not trouble about class or professional 
 interests. Wherever the " agricultural authorities " mix themselves 
 up in the business, so I have found alike in Germany and in France 
 — and Comm. Ferraris' recent (rejected) proposal in respect of Italy 
 only presses the lesson further home — they come to think that they are 
 there to benefit agriculturists, though it be at the cost of others. They 
 think of agriculture and its interests rather than of observances of 
 rules and strict audit, and wink at gifts taken by their supposed 
 Tpiotigia. And the Italian Director of Agritulture to whom the 
 Board admiringly refer, at that time Comm. Miraglia, since pro- 
 moted,* so I found at Rome, though a charming man and kindness 
 itself to me, knew very httle about agricultural co-operative credit, 
 and actually misinformed me. 
 
 What it strikes me that you want in India is an equivalent to our 
 Registrar. 
 
 Running rapidly through Mr. Nicholson's draft, it strikes me that in 
 Cap.. I., 2, line 3, some word such as " and administration " ought to be 
 added after " collection." After a time there will be substantial 
 > revenues, which will want to be administered, not collected. 
 
 Lower down I want to point out that the limitation of liability to a 
 fixed amount beyond the paid-up share capital has not been found to 
 work well in practice. It is odd that alike in this country and in India, 
 people, evidently anxious to avoid unlimited liability, should so readily 
 hit upon this supposed via media, which, as a matter of fact, gives the 
 bank no asset on which a lender would lend anything, while undoing all 
 the good in enforcing watchfulness and care which absolutely unlimited 
 liability ensures. Experience has shown the proposal to be a 
 bad one. 
 
 In Chap. I. (5) the tail end of this paragraph (5) is utterly bad. If 
 you want to supply goods, etc., you must form a separate society, 
 though it be composed of the same members. You must, as experience 
 has shown, above all things avoid mixing up credit and supply. The 
 list of " objects " higher up will accordingly have to be revised. But 
 really all this apparatus of specifications and particulars (see para- 
 graph 7) is quite unnecessary. The very successful " People's Bank of 
 
 * To the Presidency of the Banco di Napoli, a State institution. 
 
COMING OF CO-OPERATIVE CREDIT 55 
 
 Edinburgh " errs on the opposite side. It lays down too little. But 
 It has worked thoroughly well. That is a clear argument in favour of 
 a co-operative as compared with a companies law. In a co-operative 
 soaety the vigilance of the members and the absence of occasion for 
 improper profit serves the purpose of these peddling Company 
 Regulations, f B y y 
 
 Chapter II. I do not feel called upon to criticise. In Chapter III., 
 Clause 73, larger powers might be taken in accordance with what is 
 permitted in our Industrial and Provident Societies Act. 
 
 In Clause 74 the partial limitation of Hability is not likely to work 
 well, as already shown. 
 
 S Clauses 75 and 76 appear to presuppose that co-operative banks are 
 to be formed exclusively on the basis of share capital, whereas the 
 banks more particularly pleaded for and likely to be useful (apparently) 
 are the Raiffeisen Banks, which require no shares. 
 
 I have already spoken about the danger involved in vnthdrawable 
 shares vnthout further safeguards. 
 
 Clause yy, allowing more than one vote to a man, is unco-operative 
 and not likely to work well. 
 
 Clause 85. The objections of the Board to " privileges," i.e., 
 mainly exemptions, are conclusively met by the arguments used in 
 Parliament when our own Acts were under discussion. The matter 
 has, indeed, been thoroughly threshed out, and the success of our 
 legislation, giving privileges but nothing else, as compared with the 
 legislation of other countries, is conclusive corroboration. Mr. Glad- 
 stone at the time argued that it was legitimate and wise to stimulate 
 provident and co-operative action by remission of taxes, such as 
 stamps, but that it would be both illegitimate and unwise for the 
 State to give encouragement in the shape of money. This is in keep- 
 ing wdth the Governor's argument. Our British scale, which gives 
 most things free, might be followed, except that Raiffeisen banks, 
 being under our law " specially authorised societies " and hable to a 
 registration fee of ^i, ought to go free. On the other hand certain 
 services, such as settlements of disputes, ought to be charged for, as 
 they are here. 
 
 I am opposed to privileges of distraint, of priority of claims, etc., 
 because they do not work well, and hinder co-operative action. I do 
 not see why letters should pass free, except it be to and from the Chief 
 Registrar. But the use of some official room for the purposes of the 
 society might be useful. In Italy the local authority frequently 
 lends the village hall (municipo), and sometimes the priest the 
 church. 
 
 But all these exemptions must be supplemented, not balanced, by 
 •strict supervision. You cannot be too stringent so long as you do not 
 actually interfere in the management. There is no better service that 
 <:an be rendered to a co-operative bank than strict inquiry and super- 
 vision, coufled with publicity. That is the object of the Supervising 
 Council, which Mr. Nicholson,in his "Village Bank Rules," fixes at too 
 
56 CO-OPERATION IN INDIA 
 
 low a number. He pjits the Directors (Committee of Management) 
 at nine, which is too much for a small place, and the Supervising 
 Council at only three. The usual figure in the Raiffeisen Banis is five 
 and nine, and very rightly. You do not want a large committee. 
 For its office is to act and not to rely upon others. The office of the 
 Council is to inspect, and to be strict. You can " get at " two or 
 three, this is what the Auditor of one of our Civil Service Credit 
 Societies told me, approving the larger number, " You cannot get 
 round six or nine." The Council ought to be larger. 
 
 At the same time I must warn the India Office that in the first 
 period supervision by the Council is likely to prove a delusion. It has 
 proved so in Ireland, and the Irish Agricultural Organisation Society 
 have unwisely, and against my protest, struck it for the time from the 
 niles, substituting an inspector of their own sent out by the central 
 authority. That inspector ought to be at work as well. That is one 
 of the main services which a central society is intended for. And if it 
 does not exist, or does not provide for periodical inspection by its 
 auditors, the Government ought to appoint its ovra inspectors or 
 auditors. The German Government is very strict in this respect, and 
 does so. But, while these consules videntes tie respublica, etc., etc., are 
 at work under exceptional circumstances, the local council ought to be 
 trained to its work ; nominally the inspection should be the councils, 
 with the inspector acting as assessor only. 
 
 The whole chapter would be better if the Bill adopted were made 
 to resemble our two Acts quoted. 
 
 While upon this subject I ought to explain that Mr. Nicholson goes 
 too far in the preference which he gives to Raiffeisen Banks over 
 Luzzatti or Schulze Delitzsch Banks. The latter may be made 
 economically and even educationally quite as useful as the Raiffeisens. 
 And they suit some localities better. The Raiffeisen Banks, of course, 
 may have shares. Only, the shares should be small. 
 
 The provisions about giving the preference to small business and 
 allowing a larger interest on small deposits must be, in their applica- 
 tion, absolutely dependent upon circumstances. A bank will have to 
 bid forits money. Small deposits may mean aloss, asin Savings Banks, 
 The Bank must cut its coat according to its doth. However, if it is 
 to be co-operative, it is absolutely essential that the rate of interest on 
 shares should be limited. Non-limitation has led to grave abuses, 
 Mr. Nicholson appears to make no provision for this. 
 
 The crucial difficulty, of course, must always be the provision of the 
 first funds. 
 
 Raiffeisen begged his first funds and Schulze Delitzsch scraped them 
 together in the same way. Schwlze Delitzsch's idea was, that a 
 share capital plus unlimited liability should attract deposit money at 
 a time when in Germany Savings Banks were few. Raiffeisen's idea- 
 was, that some better-to-do people should join with the poor, and 
 give them the benefit of, for a time, their deposits, always their credit 
 and their knowledge of business, to put and keep the Bank upon its 
 
COMING OF CO-OPERATIVE CREDIT $7 
 
 legs. In England, before, under the Act of 1898, RaifEeisen Banb 
 became entitled to borrow, i.e., to take deposits beyond the two-thirds 
 limit, I recommended, as I still do, a guarantee at a Commercial 
 Bank, in other words a drawing credit. 
 
 In India, though I do not know, it seems that there is little chance 
 of such help being forthcoming. Mr. Nicholson recommends 
 " Founder's shares," which in this country their very name would 
 condemn. I disapprove of them on other grounds. We have got 
 them in French Agricultural Syndicates and they create two classes 
 where there should be only one, and an oligarchal Government, which, 
 is pernicious in this application. They are accordingly being gradually 
 got rid of. Apart from this, the man who will be ready to take 
 founder's shares will be quite as willing to give a guarantee or place a 
 deposit. 
 
 Mr. Nicholson, also recommends debentures. Sir W. Wedderburn 
 is likewise enamoured of debentures. But what are you to give 
 debentures upon ? You have no pledgeable property. Liability is 
 no proper security. I have already shown that under the Act of 1843 
 debenture holders in Ireland have lost their money. The mere 
 chance of this is sure to prejudice a bank. And the less of pledge 
 credit you introduce into this banking practice, the better will it be. 
 The Raiffeisen societies do take mortgage security to a limited exteat. 
 But only as collateral securitj'. Personal security is the rule. So it is^ 
 according to the books, in the Schulze Delitzsch Banks. One of these 
 once lent money on a mill, which was bodily carried away by the flood. 
 And some Italian banks have suffered severely, a big one now ruined 
 some years ago, by practising mortgage credit. The value of the land 
 was depreciated. The money was locked up. Other pledges are 
 very unpopular. Our English bills of sale spoil the borrower's 
 position. 
 
 As regards State subventions I fully share the Governor's 
 abhorrence of them. And what he urges in Clause 23 (p. 163) is 
 absolutely correct. 
 
 What is now going on in France and Germany does not disprove 
 this. Governments have had large sums voted in support of agri- 
 cultural credit, which leads to the creation of many bogus banks after 
 the manner of what the Board state as happening in Mysore (Clause 
 22, pages I to 3) but on a larger scale.* 
 
 However, money must be found in some way, and so long as the 
 danger of the loan being turned into a gift can be guarded against, I 
 do not see the harm of an advance. I have elsewhere compared this to 
 the paH or two of water which we used to have to pour into a new 
 pump of the old type, not to provide the water to be drawn up, but only 
 to get the sucker to work. 
 
 * German and French spoon-feeding by the State had a distinctljr poUtical 
 object, namely, to catch votes— in Germany for the " Kaiser,'' in France for 
 the " Repiiblic " as opposed to supposed Royalists and Clericals. 
 
S8 CO-OPERATION IN INDIA 
 
 We have had to accept some State aid in Ireland (j^2,ooo), and, 
 though it is too soon to speak positively, it does not appear to have 
 worked any mischief. But it is true the Irish village banks are 
 exceedingly wrell officered.* 
 
 This is what has happened elsewhere: 
 
 By far the best plan is, however, that the money should be found by 
 private persons. Once a sufficient number of banks have been formed 
 to justify the creation of a central bank, the difficulty about first funds 
 wiU disappear. For such a bank will be in a position to make advances 
 to new local banks and keep them sufficiently in hand to avoid 
 danger. 
 
 Since writing the foregoing I have looked over my pamphlet 
 " Village Banks," which I hope very soon to issue in an amended shape. 
 The difficulty about raising the first funds referred to in pages 7 to 9 
 has been got over by the passing of the Act 61 and 62 Vict. cap. 15- 
 Any bank taking power to do so may now borrow what it likes under 
 certain conditions. An Act passed for India would presumably 
 confer this power from the outset under similar safeguards. Still, the 
 method of securing the command of the first funds by a guaranteed 
 drawing credit represents out and out the best means for securing the 
 command of money. Interest wiU have to be paid only on the sums 
 actually dravra out on the strength of the guarantee and the members 
 of the Bank will be more continually and more forcibly reminded of 
 the fact that they are dealing with borrowed money, which will have 
 to be accounted for and repaid within a stated time. 
 \ I ought to state that it is quite possible that village banks may, 
 during the first year or two, find themselves making a loss and not a 
 (profit. That frequently happens. The bank sho^d not be neces- 
 sarily closed on that account. 
 
 I have seen the Chief Registrar about the matter of a convenient 
 Act. He thinks there will be no difficulty about drafting an Industrial 
 and Provident Societies Act which will allow unlimited liability banks 
 to be formed under it as well as limited liability. 
 
 Sir Charles Bernard acknowledged receipt in the following 
 terms : 
 
 India Office, 
 
 Whitehall, S.W. 
 July iph, 1900. 
 Dear Mr. Wolff, 
 
 Thank you for your Memorandum. It will be laid before the 
 Secretary of State and be considered with due attention. 
 
 * That State aid was subsequently arbitrarily withdrawn, to the no 
 small embarrassment of the erst-assisted societies. That should serve as 
 an txemplum utile. . 
 
COMING OF CO-OPERATIVE CREDIT 59 
 
 You are right. Mr. Nicholson's scheme is too large. We will 
 confine ourselves to Co-operative Credit. 
 
 Your argument against State aid appears conclusive. 
 
 Believe me, 
 
 Yours faithfully, 
 
 Charles Bernard. 
 Henry W. Wolff, Esq. 
 
 It win be seen that to a slight extent we Vvere at cross- 
 purposes, and a little misunderstanding of my meaning — 
 which was subsequently partially corrected by Sir James 
 Wilson's judicious interference as one of the Committee 
 adjudicating upon the draft — nearly led to the exclusion 
 from the scope of the Bill of co-operative societies other 
 than for purposes of credit, the desirableness of the forma- 
 tion of which I had nevertheless pointed out in my Memor- 
 andum. I w^s then not thinking of distributive societies, 
 for which I held that there would for the moment be little 
 call in India, but of co-operative supply, productive and 
 common labour societies for the promotion of Agriculture 
 which it is now very rightly sought to multiply. However, 
 it might have been considered out of place for me to urge 
 the India Office further. And at that stage to secure a 
 good measure providing for the formation of credit societies — 
 the great need of the hour — appearedagain sufficient in itself, 
 which it would be well to secure without asking for more. 
 The credit societies once being formed, so I judged — ^and 
 evidently judged rightly — Co-operation of other forms 
 would follow as a matter of course. 
 
 The next step taken was, after consideration of the matter 
 by the local Governments, the appointment of a strong 
 Committee under the chairmanship of Sir Edward Law, to 
 decide on further action. That Committee met at Simla 
 in 1901. Hearing of its impending meeting I thought it 
 might be of service if I sent a copy of my " People's Banks " 
 (of which in the meantime the second edition had appeared) 
 and some other publications bearing upon the subject of 
 Co-operative Credit to the India Office for the use of the 
 said Committee. It was not altogether an agreeable surprise, 
 however complimentary to myself, to learn some time after, 
 in reply to my inquiry, that those publications had proved 
 of so great interest to the gentlemen at Whitehall that, 
 instead of forwarding them to Simla, they had kept them m 
 
6o CO-OPERATION IN INDIA 
 
 London to read for themselves. That gave Mr. Dupernex's, 
 to my mind objectionable, proposal — offered, of course, in 
 thorough conviction of its being good — of imitating the 
 example of Mentone, by starting urban banks with off- 
 shoot rural societies around them dependent upon their 
 financing, an undesirable advantage. Mr. Dupernex was — 
 quite unintentionally, of course — altogether wrong in 
 stating that that form of organisation was common in Italy. 
 No doubt he had been told so at Mentone. But it was 
 altogether at variance with facts. As a matter of fact 
 " urban " and " rural " banks — so to call them for the nonce 
 — ^were in Italy at that time leading a life of cat and dog, 
 and would not look at one another. M. Luzzatti had even 
 given instructions that at Padua I was not to be left alone 
 with Dr. WoUemborg. It was only at our International 
 Congress at Cremona, in 1907, that an understanding was 
 effected, which has ripened into a true heart union, and 
 brought about common action, but not in the way suggested 
 by Mr. Dupernex. How little that system of grouping 
 rural societies round an urban bank and making them depen- 
 dent upon it deserves commendation has been subsequently 
 shown by the experiences of the numerous little banks 
 formed under Mr. Dupernex's guidance around Banda. On 
 the other hand, Mr. Dupernex was perfectly right in advo- 
 cating his " Organisation Societies " — that is, minus their 
 proposed financing action — societies to be composed of 
 philanthropists providing the first funds — only not to any- 
 thing like the lordly extent recommended by Mr. Dupernex 
 — for new bantling societies, and training the members of 
 such for their work. The Committee without good reason 
 that one can see objected to this. 
 
 In due course I received the following from the India 
 Office: 
 
 India Office, 
 February 6th, 1901. 
 
 Sir, 
 
 I am directed by the Secretary of State for India to thank you 
 for the books and papers* marginally noted, and especially for the 
 
 * Letter of June 26th, 1900, with copy of Mr. H. Dupernex's book on 
 " People's Banks in Northern India." 
 
 Letter of July 3rd, with a Memorandum on Mr. Nicholson's scheme and 
 the Madras Government Orders regarding agricultural banks. Also copies 
 of your — 
 
COMING OF CO-OPERATIVE CREDIT 6i 
 
 Memorandum you have drawn up regarding proposals for estabUsh- 
 lagviUage agricultural banks in India. 
 
 The important subject of these papers has for some time been under 
 the consideration of the Government of India. Famine relief 
 operations and other important business have caused action to be 
 temporarily postponed. But the subject has recently been again 
 taken up. A copy of your Memorandum and of the letters and book 
 cited above will be forwarded by Lord George Hamilton to the 
 Government of India, who will be glad to have the advantage of 
 your extensive knowledge of the principles and practice of co-operative 
 village banking. 
 
 I am, etc., 
 
 A. GODLEY. 
 
 Henry W. Wolff, Esq. 
 
 The Simla Committee having reported, a Bill was drawn 
 up, of which I was once more allowed the privilege of seeing 
 the draft, with an invitation given me to express my 
 opinion upon it. There seems no reason for quoting my 
 fr^h Memorandum, handed in in December, 1903, at length 
 — it is rather long — but I may be permitted to extract 
 certain passages in order to make my position in the matter 
 quite clear. The letter is once more addressed to Sir 
 Charles Bernard. Such passages are as follows : 
 
 "The Co-operative Credit Societies Bill, upon which 
 you have been kind enough to ask my opinion, invites 
 criticism on more points than one. To be frank, I agree 
 very much more with the sound principles generally laid 
 down in the Council's despatch, the import of which was 
 reflected in Sir D. Ibbetson's speech introducing the Bill, 
 than with the Bill itself. Since I know nothing whatever 
 about India, I presume to speak of the Bill only so far as 
 the principles of Co-operative Banking come into account. 
 . . . No doubt the original scheme was much too large. 
 However, I beg leave to express regret at the fact that it has 
 not proved possible to deal with Co-operation generally. 
 There are already some beginnings of distributive Co-opera- 
 
 " Village Banks, with Model Rules, etc.," 1898. 
 " People's Bank Manual." 
 " Co-operative Credit Banking," 1898. 
 " Co-operative Credit Banb," 1898. 
 
 "The Industrial and Provident Societies Act, 1893," with explanations 
 and forms. 
 
62 CO-OPERATION IN INDIA 
 
 tion in Calcutta. ... As the credit societies develop, the 
 want of agricultural supply societies and, maybe, of dis- 
 tributive societies and agricultural productive societies, is 
 sure to make itself felt. Such societies evidently ought to 
 be encouraged. And probably all these things might — as 
 is, with one exception, done in this country — be provided 
 for by one Act. ... I also regret the distinction made 
 between ' urban ' and ' rural ' societies. The names are 
 not happily chosen and may lead to the introduction of 
 hindering elements. . . . The dividing principle is not 
 that of town and country. It is that of a confined, self- 
 contained district, in which alone unlimited liability is 
 practicable, and, on the other hand, any district, urban or 
 rural, in which you may choose to apply limited liability. 
 ... In any case it is a principle of co-operative banking 
 that the more you can mix different classes, having different 
 wants, and wants in different seasons of the year, in one 
 society, the stronger, cateris paribus, will that society be. It 
 is quite right that unlimited liability societies should be kept 
 out of towns. . . . But it seems questionable to keep 
 limited liability banks out of the country. 
 
 " It seems even more questionable to limit membership to 
 one calling. There are probably artisans as well as agricul- 
 turists living in Indian villages. And why should such be 
 shut out ? The Council appears to desire to keep the 
 societies puny. In that case there will be puny results — 
 maybe disappointment. The more members you have, 
 the stronger will your bank be. Besides, it goes right against 
 Raiffeisen principles to keep out the wealthier residents in 
 the country. You want them to nurse the bank into 
 strength, to say nothing of the educating influence in respect 
 of business, and generally, more especially moral, which I 
 presume that you want the bunk to exercise. The more 
 you limit membership to small and poor folk, the more, and 
 the longer will you, moreover, have to assist the society with 
 State aid, which I am glad to see that the Council wish to do 
 as little as possible. Prolonged and undiscriminating State 
 aid is destructive of self-help. I fully endorse all that the 
 Council says about State advances. The State aid given in 
 Germany, France and Austria has been productive of much 
 mischief — the creation of a great deal of bogus Co-operation, 
 
COMING OF CO-OPERATIVE CREDIT 63 
 
 which has resulted in loss and done no good to the 
 people. 
 
 " The clause in the Bill 2 (g) also tempts to a word or two 
 on the official interference proposed, which may be necessary 
 in India— all the worse for Co-operation— but which has 
 been meted out with no stinting haAd, The Registrar is 
 to say who is to be eligible. The Registrar is, I suppose, 
 also to turn out undesirable members. That shifts the 
 responsibility, which properly belongs to the society, on the 
 Registrar. Raifieisen adopted unlimited liability in order 
 that societies should stand on no etiquette with candidates, 
 consider well whether such were eligible, and unsparingly 
 supervise them. Once the Registrar is responsible, instead 
 of members, such motive and object is gone. In truth all 
 this Government supervision imposes upon India that 
 tutelage which in respect of our Friendly Societies, minister- 
 ing to the very helpless and uninstructed class, Parliament 
 has again and again refused to sanction, because it must 
 destroy the peculiar utility of the institution. The ' group 
 of contiguous villages ' is altogether good. Clause 7 speaks 
 of a rural society borrowing, subject to the sanction of the 
 Registrar — once more a case of interference. ... In truth 
 there is little fear of the power of borrowing — in a narrower 
 sense, in which evidently the word is here applied — being 
 abused. The difficulty threatens to be not that money 
 will be recklessly borrowed, but that none will be got. 
 And then, how about deposits ? It is evident from what 
 follows after that there are to be deposits. They are of the 
 essence of the bank. And the Council has done absolutely 
 right in not exempting them from liability to attachment. 
 In the unlimited liability societies you must have deposits, 
 or you can do no business whatever. Even in the limited " 
 you require them, unless your society is to degenerate into 
 a mere Slate club. Its object is to use its credit. But 
 nothing is said about deposits. 
 
 " I should say that a clause is required defining the objects 
 of the society as we have one in our Act. Clause 6 (3) 
 wisely lays it down that there is to be a reserve fund. But 
 it seems to tie it up. With due submission it seems to me 
 desirable to state (what is of course understood) that, though 
 not available for dividend,^ it is so for losses on the annual 
 
€4 CO-OPERATION IN INDIA 
 
 business. I should rather have put ' surplus ' in the place 
 of the first ' profit,' and ' interest ' in the place of the 
 second. The less ' profit ' is suggested the better. Clause 
 8 (2) is excellent and must not be let go. Clause 8 (3) may 
 prove inconvenient and the ' at any time ' may want 
 qualifying ' after the debt has become due.' ' Agricul- 
 tural produce ' is a very inconvenient security to hold, and 
 may prove costly. . . . Clause 22 only calls for this 
 suggestion. The society must be made to know whether 
 the members hold takavi loans or not. The existence of 
 such a loan reduces its own security. It ought also to be 
 laid down that a person may be a member of one society only. 
 The society judges of his ' value ' according to what it 
 knows and can see. To allow an unseen liability behind 
 would be to deceive the other members. It is a common 
 rule. 
 
 " I apologize for going so much into detail, but 
 having been asked I give my frank opinion, and remain. 
 
 etc." 
 
 As a sequel to all this correspondence and palavering 
 Act X. 1904 was passed. In pronouncing his sanction of 
 it the Viceroy, Lord Curzon, paid me the compliment of 
 specifically referring to the advice given by me as the Govern- 
 ment's justification for not allowing a larger amount of 
 State aid. His words were these : " There is one point 
 upon which there seems to have been some misconception, 
 and which it is desirable to make clear. I have seen it 
 complained, and at an earlier date I have heard the complaint 
 from the lips of an Honourable Member of the Council, that 
 Government might have been a good deal more liberal in 
 initiating so great an experiment, and that part of what we 
 take from the people in land revenues we might very 
 appropriately give back in capital for these societies. These 
 views, plausible as they may seem, rest upon a complete 
 misconception, both of the Co-operative System and of the 
 policy of the Government with regard to this peculiar 
 scheme; and I desire to supplement what fell from the 
 Finance Minister on this point. It is not primarily because 
 the financial contributions that might have been required 
 to assist any new institution would he great, or because we 
 grudge the money, that so little is said about grants-in-aid 
 by the State, but because the best advice and the teaching of 
 
COMING OF CO-OPERATIVE CREDIT 65 
 
 ^perience are at one in the conclusion that unrestricted 
 Ijovernment assistance is dangerous, and may be a fatal gift. 
 ^S'?l^^^ *°*^ indiscriminate State dd,' says Mr. Henry 
 Wolft, who IS an unrivalled authority on the matter, ' is 
 destructive of self-help. . . .' For similar reasons no 
 special powers of recovery of debt have been given to the 
 societies. The object is to foster a spirit of responsibility 
 and self-reliance ; and it is because the societies must be 
 dependent for their success on their own care and caution 
 in the disbursement of their funds that it has been possible 
 to dispense with restriction on their powers in the Bill that 
 would otherwise have been necessary. Government aid 
 will be forthcoming when necessary, and there is more 
 danger to be apprehended from excessive liberality than 
 from the withholding of assistance where there is a prospect 
 of its proving advantageous." 
 
 To have carried that point was under the circumstances 
 certainly something to be thankful for. For there was at 
 the time a great clamour for State action and financial State 
 help. Mr. Dupernex's proposal providing for a right royal 
 endowment for widespread spoonfeeding was still before 
 the Council. And Sir Frederick Nicholson, having shortly 
 before paid a visit to Egypt and seen the Agricultural Bank 
 of Egypt at work there, had turned completely round upon 
 himself, and, having concluded his masterly Report of some 
 years before with an earnest admonition : " Find RaiflEeisen," 
 had, in 1904, impressively urged the copying of the Egyptian 
 example. The Government, as already stated, at once 
 submitted his proposal to an expert authority still in active 
 service in India, and, his Report proving altogether adverse, 
 had wisely but also luckily dismissed Sir Frederick's scheme 
 as unacceptable. How wise such decision was may now be 
 judged by a comparison between the results in the two 
 countries : Look on this picture, and then look on this ! 
 
 As a matter of fact the State aid actually allowed has 
 proved amply sufficient, and I think it was quite in the right 
 quantity and the right form. Societies complying with the 
 rules laid down are allowed moderate assistance, free of 
 interest, for a period of three years. That period of grace 
 has avowedly served as an inducement to keep societies 
 longer in debt to Government than was really necessary. 
 Also I regret to see it owned to that the conditions laid down 
 
66 CO-OPERATION IN INDIA 
 
 with regard to it have led to an abuse which might indeed 
 have been foreseen. Societies applying for a State advance 
 are required to show an equal amount of money in their keep- 
 ing in the shape of share capital, reserve fund and deposits. 
 The consequence of this has been that wily Hindoos in 
 some cases have borrowed a certain sum from mahajans to 
 deposit with their society, in order on the strength of that to 
 claim the corresponding State advance — after which very 
 probably the deposits borrowed for the purpose of window- 
 dressing were, withdrawn. Cases of this kind are referred 
 to in one of the annual Reports from Assam. 
 
 However, there has not been really much harm done. 
 And no one would seriously have conceived of a Co-operative 
 Credit movement being started in India altogether without 
 State aid. Otherwise the objects of the Act are very clearly 
 and very ably set forth in the official Summary of the Act, 
 of which Sir Denzil Ibbetson's speech in Council was an 
 admirable echo. 
 
 The Act as it was passed was just as might have been 
 expected from the collaboration of exceptionally able men, 
 thoroughly in earnest, but dealing with a matter really 
 entirely new to them. As a matter of course various points 
 had been overlooked. It is not necessary here to enter into 
 all that is laid down. The first Act was, more particularly, 
 marked by two distinct defects. In the first place it limited 
 authorisation, save under a permissive additamcntum 
 adopted on the proposition of Sir James Wilson, to credit 
 societies only. In the second, it made no provision for 
 societies combining among themselves to Unions, or forming 
 Central Banks, which is under all circumstances highly de- 
 sirable and in India maybe considered an absolute necessity. 
 Both these defects have been remedied by the Act of 191 2. 
 That does not yet, of course, make existing legislation 
 perfect. There will be more filing necessary as time goes 
 on. However, for the time it has given Indian Co-opera- 
 tioners what they want. 
 
 Co-operation may be said to have been fortunate in the 
 manner in which the new legislation was put into force. 
 There has never been active interest wanting in either of 
 the two grades of official organisers called into action. And 
 the seed cast out by them may be said on the whole to have 
 fallen upon fertile and respojsive soil. And, apart from 
 
COMING OF CO-OPERATIVE CREDIT 67 
 
 some trifling aberrations, the machine has been kept moving 
 on right lines. 
 
 The choice of the Registrars, upon whom the immediate 
 responsibility for setting the Act in motion has fallen, was 
 certainly happy. These gentlemen buckled to their new 
 task with unmistakable determination, interest and judg- 
 ment — as I may well testify, since the majority of them 
 came to me at the outset for information and suggestions 
 and most of them have subsequently honoured me by 
 maintaining a close touch, freely giving me information and 
 asking my opinion. Some of these gentlemen at first 
 anticipated serious difficulties in the provision of money and 
 in their getting together sufficient adherents in a society 
 bulkheaded by walls of " caste." But all were keen. 
 Mr. W. R. Gourlay, the first Registrar for Bengal, who has 
 done yeoman's work for the movement, and to whom the 
 movement is to a large extent beholden for a sound founda- 
 tion laid, readily accepted my invitation to attend our 
 International Co-operative Congress just about to meet 
 at Budapest (I being at the time Chairman of the Inter- 
 national Co-operative Alliance), which enabled me to 
 introduce him to the leaders of the chief Co-operative Credit 
 movements in Europe. Most of these he afterwards visited 
 in their own respective homes. And, not content with 
 that, he settled for four weeks at Neuwied, at that time the 
 headquarters of the Raiffeisen Union, and there studied the 
 practical working of rural Co-operative Credit thoroughly, 
 under the guidance of the leaders of the movement, attend- 
 ing committees, visiting societies, watching inspections and 
 making himself thoroughly acquainted generally with every- 
 thing that was being done. In this way he made himself 
 completely master of his subject. And the four weeks* 
 apprenticeship referred to, so Mr. Gourlay has subsequently 
 owned to me, taught him more about the practical work that 
 he had been charged with than all his book reading. One 
 can readily understand this. And if, as I trust will be the 
 case, the Government of India should decide upon an active 
 mobilisation of their available forces for the purpose of what 
 an American agriculturist has called " a veritable campaign 
 of education," in support of Co-operation, it may be hoped 
 that they will take their cue from Mr. Gourlay and 
 make their emissaries graduate in the school of practical 
 
68 CO-OPERATION IN INDIA 
 
 Co- operative Credit as it is worked where well established. 
 For co-operative banking is a practical business. And there is 
 very much indeed in the practice of such banking that writing, 
 were it by thecleverest scribes, the most lucid expositeorsand 
 most imaginative illustrators, cannot teach and that can be 
 learnt only by the personal observation of practice, with all 
 its practical details, such as will show whom to trust, what 
 precautions to take, how to guard against abuse and against 
 imposition, and what allowances to make in one's calcula- 
 tions. So much depends in co-operative banking upon 
 character. And there i§ nothing to instil an understanding 
 of rural borrowers' character like the observation, in detail, 
 of practical business. As mere writers we authors are 
 emphatically " out of it." 
 
 There is also great benefit in going back from time to 
 time from new departures, such as new circumstances 
 absolutely call for, to first principles, and from new schemes, 
 in which anticipating conjecture and imagination play a 
 great part, to longest-established practice, with its most 
 varied and extended experience. As matters now stand, 
 one could not of course expect Indian Registrars, even in 
 the neophyte days of their practice as Registrars, to do as 
 Mr. Gourlay did fifteen years ago, that is, go bodily to 
 Germany for tuition. For some time to come that must 
 be wholly out of the question. Please God, a state of things 
 will return in which Antaeus-like touch with the mother- 
 stock will again become possible. Meanwhile we know what 
 OTiginal Raifieisenism is accomplishing, and how it is working. 
 And that should never be lost sight of, For principle 
 remains principle, whatever adaptation to new environments 
 be required. And longest experience establishes the best 
 code. We may assume that there were not a few sound 
 provisions in Talmudist "traditions." But we have the best 
 authcffity for holding that the old Decalogue, framed when 
 social relations were of the most primitive and simjde, must 
 still be taken as overruling them. We none of us want to-day 
 to converse in Greek or Latin. But in the land of Sanskrit, 
 the mother- tongue of aU Aryan languages, certainly it ought 
 to be understood how precious a source to draw from in 
 the modern use of language are those time-honoured and 
 methodical old tongues. It is the same in the case of 
 Co-operative Credit. The old principle — ^which happens 
 
COMING OF CO-OPERATIVE CREDI^ 69 
 
 to have been thought out and established in Germany, still 
 stands supreme, governing the entire subject matter. 
 Then do not let us be afraid to learn in Co-operation from 
 those whom in other matters we have now every reason to 
 turn away from ! If, as the Dutch Minister Dr. Treub has 
 well said, amid international co-operative applause, " Co- 
 operation knows no frontiers," then it ought also in its 
 practice to be above rejecting economic instruction because 
 of moral resentment. Fas est ab hoste doceri. India did not 
 despise the help of two distinguished German foresters to 
 organise for her a system of forestry which now promises her 
 a rich revenue. In the same way let us now not despise the 
 teaching of veteran experts in that speciality of co-operative 
 banMng, so far as first principles come into account, but 
 continue to test our own modern adaptations, absolutely 
 necessary as such are under new conditions, by comparison 
 with the principles which have so brilliantly stood the 
 test of seven decades of time. We shall not lose by such 
 checking. 
 
 Whatever be the calls which its being placed amid new 
 circumstances addresses to Co-operation, we have no reason 
 to fear that those who are at the helm for its guidance will 
 not be equal to adapting their course to prevailing currents. 
 For one most praiseworthy feature in their conduct of affairs, 
 for which Indian Registrars deserve the highest credit, 
 distinctly is the resourcefulness which they have shown under 
 new conditions. In the jungles and thickets of new circum- 
 stances they have with truly Indian instinct always managed 
 to discover some path to lead them through. The paths 
 chosen may again and again not have been absolutely the 
 best. But in general they have served as evidence of good 
 practical sense and pliant adaptability. We may therefore 
 with confidence leave the actual battling with practical 
 difficulties to the Registrars. 
 
 In the higher grade of the official hierarchy likewise the 
 movement has been favoured by sound, judicious guidance. 
 Whatever casual mistakes may have been committed, in its 
 main principles the movement has been kept on its proper 
 lines. Registrars in their difficulties have sometimes sighed 
 for " Egyptian fleshpots," that is, among other things, for 
 more liberal pecuniary benefactions, grants of takayi, and 
 compulsory collection. Their superiors have (wiselj- in 
 
70 CO-OPERATION IN INDIA 
 
 every case) met such requests with a blunt refusal. To yield 
 would have been to spoil Co-operation for the sake of 
 momentary convenience ; to mar the good fortune of an 
 institution carrying in its cornucopia not quite easily 
 opened, so it is true, rich stores of good gifts, and which 
 advances with great promise of the best services, for the 
 Bake of a little deceptive and fleeting ease. 
 
 Under such circumstances the new movement may, be 
 said to have been launched under once- raging auspices, and 
 thus far it may be held to have more than answered expecta- 
 tions. Our next business will be to examine how, under 
 such favouring circumstances, it has fared in its main lines, 
 after which we may do well to inquire what still remains to 
 be done on its further course. 
 
Ill 
 
 THE RESULT 
 
 The result of the measure to which Lord Curzon as Viceroy 
 gave his sanction in 1904 must have astonished even its 
 own authors by its largeness. It has, at the same time, so 
 it is satisfactory to note, gratified co-operative observers 
 by its general soundness. If the planting of the new seed 
 has required patience and labour, its germination and 
 growth have brought forth rich fruitage, which now is 
 fast ripening under a favouring sun. None of the obstacles 
 of which so much was made at the outset, and which 
 appeared to bar the way like unsurmountable mountains, 
 have stopped progress. All the familiar " lions in the 
 way " have proved idle phantoms, melting like morning 
 mist under a summer sun. Neither has the poverty of 
 the rural masses stood in the way of their being broken in 
 to habits of providence and thrift and raising funds for 
 their own fructifying use by means of self-help. No more 
 has grossly prevalent illiteracy disabled them from learning 
 to understand at any rate the methods, if they do not yet 
 fuUy grasp the principles, of the new institution. Certain 
 backward races have indeed had to be taken in hand by 
 the indefatigable and self-sacrificing missionaries, acting 
 as elementary teachers — ^guides in moral as well as economic 
 iristruction — ^who rightly discern in this new form of 
 economic betterment a " service to man " which fits 
 well into their sacred charge ; and they are succeeding 
 in their work. No more have differences of caste formed 
 an insuperable barrier. Members of different castes have 
 been found content to join hands in common work for 
 the national cause of social improvement, which benefits 
 the workers' surroundings as well as themselves. No more 
 have Mahomedan scruples about the taking of interest 
 on loans stood in the way. " // est avec le del ies accom- 
 
 71 
 
^^ CO-OPERATION IN INDIA 
 
 modements." A way has been found for transacting credit 
 business in one or other of perfectly businesslike ways, 
 and without the taking of "interest" in anything like 
 an objectionable form. The dreaded mahajan, with his 
 insatiable greed and his command of legal trickery, under 
 cover of false declarations and affidavits, has not been able 
 to block the way, though he has undoubtedly tried to do 
 so. The glad tidings of relief have been greeted with 
 equal readiness and thankful joy by the Hindoo, still 
 cherishing the recollections of the happy group life in the 
 ancient Indian " village community," and the Moslem 
 rejoicing in the brotherliness and community of interest 
 which distinguishes his creed. 
 
 No doubt there are difficulties still to be overcome. 
 Some such it will be my task to touch upon in the present 
 chapter, and consider at greater length at later stages. 
 But, whatever difficulties there may stiU remain, we have 
 an earnest, in thp overcoming of the more formidable 
 hindrances now done with, that co-operators' goodwill 
 and administrators' judicious action are likely to prove 
 equal to the task awaiting accomplishment. 
 
 In view of such remaining difficulties no doubt we shall 
 for the present still have in prudence to speak of the success 
 thus far achieved only with bated breath. But in general 
 the outlook is certainly hopeful. Never, in truth — ^unless, 
 perhaps, we allow the remarkably rapid attainments of 
 what, after all, in view of present political troubles, may 
 prove to have been only an ephemeral triumph, in liberated 
 Russia, to rank as a rival achievement — ^has co-operative 
 seed been known to drop upon more fruitful soil and to 
 ripen so rapidly into a rich harvest. Pioneer co-operators 
 in Germany, the native country of most of the institutions 
 to which we are now trying to produce fellows in India, 
 had to labour for years and decades, straining their patience, 
 their vigour and their eloquence, before they could pretend 
 to have gained anything like a sure foothold. In France 
 Industrial Co-operation, the child of the Revolution of 
 184.8, is at the present time still struggling in its swathing 
 bands ; and its agricultural brother, called into life seven 
 lustra later, although he has already grown to larger pro- 
 portions, is still walking only in leading-strings and with 
 the help of a governmental go-cart. Italy, Switzerland, 
 
THE RESULT 75 
 
 Belgium have much the same tale to tell ; and even Den- 
 mark had for a long time to battle with difficulties before 
 Co-operation emerged as a dominating force. And Great 
 Britain is in the matter of Co-operation in Agriculture 
 still only groping its way helplessly and very awkwardly in 
 the dark. In India the magic touch of Co-operation 
 almost at once conjured up success. It was a second 
 Veni, vidi, vici. It makes a European co-operator's mouth 
 water to read in Mr. Langley's paper prepared for the 
 Seventh Congress of Registrars of " one or two village 
 societies in the Punjaub " (favoured province that indeed 
 it has been found to be) " possessing funds exceeding a 
 lakh of rupees ; and a number of societies with funds 
 exceeding Rs. 10,000 is considerable." Just about ten 
 years after the first Co-operative Act came into operation, 
 at midsummer, 1915, Co-operation in the whole of India, 
 including the native states of Mysore and Baroda, but ex- 
 clusive of the provinces of Delhi, the North- West Frontier, 
 and Baluchistan — in which there had up to then been 
 little development — stood represented by no fewer than 
 17,327 registered co-operative societies, composed of 
 824,469 members and disposing of a share capital — share 
 capital only — of Rs. 1,48,66,045, and a general working 
 capital, including reserve funds amounting to nearly 52 
 lakhs, of nearly nine crores — of which sum only about 
 I3i- lakhs represented nursing advances received from the 
 State. More than four crores were then outstanding in 
 loans (the number of which is not given; but they were 
 almost all small). Native states had lost no time in follow- 
 ing the lead of the British Dominion. Mysore and Baroda 
 had their co-operative societies organised altogether on 
 the British Indian model, working under very similar 
 Acts. And Indore, Hyderabad, and Travancore had taken 
 their places in the co-operative phalanx. Gwalior had 
 even in one little matter — the providing of a textbook — 
 given us a lead. By midsummer, 191 7, in spite of the 
 war, the number of societies had risen to 23,036, with a 
 membership of 1,045,425, and a coUective worHng capital 
 of Rs. 12,22,92,180, of which sum Rs. 2,12,23,325 stood 
 for share capital, supplemented by Rs. 92,04,138 in reserve 
 funds. Only Rs. 17,24,859 of aU this stood still to the 
 credit of the Government, having been supplied in the 
 
74 CO-OPERATION IN INDIA 
 
 shape of advances free of interest for three years. 
 Rs. 9,01,39,858 were deposits from members, non-members 
 and societies. The deposits taken from members alone 
 amounted to Rs. 79,00,585 — more than four times the 
 amount loaned from the State. In the course of the 
 year Rs. 4,24,16,473 had been lent out to individuals, of 
 which sum there was in all Rs. 3,28,18,310 outstanding 
 in loans still running. Of this amount it is regrettable 
 to state that Rs. 1,04,14,861 was overdue. That is one 
 of the spots in the sun. In addition, Rs. 1,84,91,610 had 
 been lent out to societies and there was Rs. 3,06,16,013 
 such money outstanding., However, such advances, of 
 course, had served only as material for lending out afresh 
 to individuals. Comparatively large as were the overdue 
 amounts, the losses sustained on these transactions had 
 been quite trifling. The money, raised at rates of interest 
 ranging from 5 to 8 per cent., in some few cases 10 per 
 cent. (6 to 12! per cent, being paid on shares), had been 
 lent out to borrowers at rates varying from 6^ to 10 per 
 cent, and in a few cases to 12-i- per cent., which for India 
 is a moderate rate enough. Schulze Dditzsch's banks 
 began early in the fifties with lending at 12 to 13 per 
 cent., in addition to which there was 2 per cent, com- 
 mission charged. This was at the time considered a boon. 
 (The Schulze DeUtzsch have now all come down to 5 or 
 5i per cent, with no commission.) There was, in the 
 Indian account of 1917, after deduction of losses, a de- 
 clared " profit " — which is a most misleading term, the 
 overplus accumulated under this title being in truth 
 simply a balance, overcharged for safety's sake, returned, 
 as excess income tax is returned by the Government — 
 of Rs. 31,25,305. And the cost of management works 
 out, for 256 " Central Banks," at Rs. 3,58,878 (on a grand 
 turnover of Rs. 1,82,52,478), for 20,459 " Agricultural 
 Banks " at Rs. 6,42,193 (on a turnover of Rs. 5,11,89,153), 
 and for 426 "Non-agricultural Societies" at Rs. 2,45,411 
 (on a turnover of Rs. 2,39,91,317). Considering Indian 
 circumstances, the difficulties of communications and the 
 smallness of the societies concerned, that cannot be 
 reckoned an excessive proportion. The " agricultural 
 societies " (" primary," or local) are all small. The 
 average number of members is, for all India, a little above 
 
THE RESULT 75 
 
 37, for non-agricultural 146, and for "Central Banks" 
 III (societies). In "agricultural" societies the figure 
 reaches the highest point in Bombay, which reports an 
 average of 100, Coorg following next with 82, Mysore 
 with T], Madras with 75, Assam with 58, Bihar and Orissa 
 with 48, Bengal with 46, the Punjaub with 40, Ajmer with 
 37, the United Provinces with 36, Baroda with 33, the 
 Central Provinces with 29, Burma bringing up the rear 
 with 21 and 22. The number of societies is largest (3,627) 
 in the Central Provinces, which have recently edged the 
 Punjaub out of the premier place, the Punjaub now follow- 
 ing with 3,495, the United Provinces with 3,246, Bengal 
 with 3,087, Burma vpith 2,575, Madras with 2,216, Bihar 
 and Orissa with 1,429, Bombay with 1,307, Mysore with 
 974, Ajmer with 377, Assam with 344, Baroda with 325, 
 and Coorg with 34. The Registrar of Burma takes credit 
 for it that in three districts of his province, namely in 
 Kyaukse, Shwebo and Pakkoka, societies lie as thick per 
 area as in Central. Germany. However, his societies are 
 incomparably smaller than the German. Measured by the 
 number of members, the order of the provinces is this : 
 Madras, 1,65,606; Bengal, 1,43,448 ; the Punjaub, 1,38,245; 
 Bombay, 1,31,018 ; the United Provinces, 1,17,232 ; the 
 Central Provinces, 1,03,132 ; Mysore, 74,906; Bihar and 
 Orissa, 68,713; Burma, 55,730; Assam, 19,700; Ajmer, 
 13,920 ; Baroda, 10,994 ; and Coorg, 2,781. 
 
 It is interesting to pursue the progressive changes in 
 the assistance received from the Government. Govern- 
 ment advances stood in 1906-7 at Rs. 2,84,738. They 
 have now risen (as per 1916-17) to Rs. 17,24,859. But 
 that is as forming part of a total working capital of 
 Rs, 12,22,92,180, that is, about 1-4 per cent., whereas in 
 1906-7 the working capital stood at only Rs. 23,71,683, and 
 the Government's share accordingly amounted to about 
 12 per cent. As the societies have grown in strength— 
 which they have to a remarkable degree — ^and the Central 
 and Provincial Banks have come in to lend their aid, the 
 need of Government help has grown smaller and smaller. 
 In the Punjaub, to state one instance, between 1908 and 
 1914 its proportion to general worlang capital went down 
 from I9-8 per cent, to 0-50 per cent. Indeed, it was m 
 several provinces reported wholly superfluous, as long as 
 
76 CO-OPERATION IN INDIA 
 
 four or five years ago. However, the benefit of holding 
 even only a small Government advance altogether free of 
 interest for three years together has naturally tempted 
 societies to take advantage -of the opportunity and retain 
 the money longer than was really necessary. In the 
 Central Provinces, where the societies held Rs. 14,19,759 
 share capital, Rs. 42,51,707 deposits, and Rs. 15,47,513 
 advances from " Central Banks," there was no Government 
 assistance at all. In Madras such assistance amounted to 
 only Rs. 9,795out of a total working capital of Rs. 2,04,98,85 1 ; 
 in Coorg to Rs. 1,683 out of Rs. 1,23,470 ; in the United 
 Provinces to Rs. 28,907 out of Rs, 1,20,40,886; 'm the 
 Punjaub to Rs. 1,33,766 out of Rs. 1,98,30,422. It is 
 largest in Burma, where it stands at Rs. 9,62,696 out 
 of a total working capital of Rs. 1,47,09,304. The increase 
 in the figure for Deposits — more specifically non-members" 
 Deposits, which are needed to bring grist to the mill — ^and 
 of Reserve funds is altogether satisfactory. In 1906-7 
 Deposits stood at Rs. 14,72,542 (not reckoning advances 
 from the Government), Rs. 5,76,025 being Deposits from 
 members; and Reserve funds at Rs. 58,598. In 1916-17 
 the figures were respectively Rs. 4,99,67,302, Rs. 79,00,585, 
 and Rs. 92,04,138. The province strongest in paid-up 
 share capital is the Punjaub, holding Rs. 59,44,752. Next 
 to it stand the United Provinces with Rs. 21,39,339. 
 Bombaj foUows third with Rs. 21,17,958, Madras with 
 Rs. 20,48,564. Burma shows strength for the number 
 and size of its societies with Rs. 19,28,564. Non-members* 
 Deposits and loans, betokening the degree of confidence 
 reposed in the societies by the public, are largest in Madras, 
 where the amount is Rs. 72,87,488, between seven and 
 eight times the amount of Government advances. They 
 are also substantial in Bengal (Rs. 55,78,204), in Burma 
 (Rs. 56,67,127), and in the United Provinces (Rs. 44,47,954). 
 There can be no denying that here is a great, in truth, 
 a magnificent, work accomplished. " At a low computa- 
 tfon," so said Sir Edward Maclagan at the sixth Conference 
 of Registrars, held in 1912, " we save the agriculturists 
 of India from an absolutely unnecessary burden of at least 
 ten lakhs of rupees on every crore of rupees lent out by 
 co-operative societies. And the sums so lent out already 
 begin to be counted by crores." They have grown larger 
 
THE RESULT 77 
 
 since, the saving increasing proportionately. And that is 
 not all by a long way. For in many districts the mahajan 
 has by the competition created by the societies been com- 
 pelled to lower his terms and deal more humanely with 
 his borrowers. How many thousands of raiyats breathe 
 more freely for having been able, by an easy versura, to 
 convert heavy debts, dragging at their feet Uke cannon 
 balls chained to a convict's leg, not for one lifetime only, 
 but for several, with practically no hope beyond, no prospect 
 of settlement except by eviction, into a burden which, 
 by reason of the much lower rate of interest charged and 
 the exclusion of the chance of trickery perpetrated 
 under guise of legal process, they can cast off in a few years 
 — after which to be free ! How many relatives of girls 
 destined to marriage or of near belongings of men to be 
 carried under ground wUl be grateful for having had the 
 cost of the religious ceremony severally of a wedding or a 
 sradh greatly reduced to them ! And how much more 
 produce is there likely to have been got out of the soil 
 by the employment of fertilisers, of better seed, of modern 
 implements ! At the same time there is, it may be slowly, 
 but with remarkable steadiness, a treasure growing up to 
 men's credit in the shape of deposits, in a doubly useful, 
 because productively beneficial, money-box. Pusa no 
 longer works for the wealthy only. Co-operative societies 
 have distributed its improved seeds far and wide, among 
 the needy as weU as among the rich. There is more money 
 for wells and irrigation generally, which means a touch of 
 Midas to Indian soil. Hand industries, such as silk and 
 cotton weaving, spinning, dyeing, also carpentering, shoe- 
 making and the like, one of the hopes of the Indian working 
 population, are doing the better for the help of the new 
 organiser and profferer of money. In Burma Co-operation 
 is pumping up much water for irrigation and providing new 
 homes and settlements for landless and homeless. Vivant 
 sequentesi For in this application of Co-operation lies 
 the promise of great benefit to poor Indians. And m 
 other provinces of utility as well already does Co-operation 
 provide beneficially— say, against loss by mortality of cattle 
 by means of insurance. An entirely new atmosphere has 
 been breathed into Indian country life. A new horizon 
 has been opened to the Indian tiller of the soil. 
 
78 CO-OPERATION IN INDIA 
 
 And we see tlie result distinctly affecting the moral 
 and intellectual character of the people. There is a keen 
 desire observable everywhere for Education — not Educa- 
 tion for purposes of pelf only, in the shape of training for 
 Co-operation and for better domestic management and 
 business. That appetite, in truth, has not yet been 
 awakened to anything like the desirable degree. But 
 people are crying out for school teaching for their children. 
 The guru is everywhere in request. Societies spend money 
 freely on pathshalas and on gurus' keep. Some societies 
 have actually made their secretaries throw into their 
 regulation work a certain number of lessons in the raw 
 elements of school culture per week to children. Culti- 
 vators are eager to learn about perfected Agriculture. 
 Provident habits have at any rate made a start on a promis- 
 ing course. And the first shy heralds of a new practice 
 of saving money in a more useful shape than heretofore 
 have shown themselves the vanguard of the great army 
 of secret hoarders bringing out some of their concealed 
 treasure to put into the exchequer of the great national 
 cause. Manifestly the labour employed has not been 
 given in vain. 
 
 There can be no question to what influence these results 
 are due. 
 
 ' In the first place, there is in the new institution unmis- 
 takable appropriateness to the conditions of the country. 
 The ancient Hindoo village community, the fraternal 
 jgroup and family feeling among the Moslems, the readiness 
 with which, as is attested by both Sir Frederick Nicholson 
 land Mr. Dupernex, Indians have taken to the provident 
 /and semi-co-operative practices of the Western world 
 /in their nidhis, akharas and similar institutions, not for- 
 f getting the Idnas or rdthas and dangwdras of the Punjaub, 
 prove that Co-operation is no bare name to Indians, that 
 1 in their nature lie hidden germs of a tendency favourable 
 j to its acceptance and development, which readily fasten 
 j their tendrils and rootlets around the old shoots of social 
 '. life and soon gain a gripping hold. It was the knowledge 
 ! that this was so, no doubt, which prompted the prophecies 
 ',of such greatly experienced Anglo-Indians as Sir Arthur 
 \Cotton. 
 
THE RESULT 79 
 
 It should also be borne in mind that India, the country 
 of fabled riches, is in truth a country at the same time of 
 great popular need. Now it is a general experience that 
 it is backward countries in which Co-operation most 
 readily gains converts and strikes root, gathering followers 
 to its banner. It is primarily need wluch prompts to co- 
 operative action, because under need the necessity of relief 
 is most keenly felt and desire for it ripening to energetic 
 effort is correspondingly most quickened. And it is its 
 simplicity which particularly recommends Co-operation 
 to die needy, the men of little culture. 
 
 No doubt it has to be appropriately shaped to make it 
 suit their faculties of understanding. For this reason it is 
 indispensable that it shoidd be kept simple, and intelligible 
 to the plainest- minded. And that it is, I think, which parti- 
 cularly commends the system actually selected. And the 
 common interest which it evokes and which grows upon 
 people, the new ties which Co-operation weaves, appeal 
 naturally more or less powerfully to the isolated. One 
 would say that the separation from other villages, owing 
 to the undeveloped condition of communications, which 
 is otherwise something of a hindrance in India, in itself 
 tends to attune the Indian raiyat, with his raiyat's mind, 
 his stereotyped simple wants and his equally simple and 
 unpretentious hopes and ambitions, to co-operative action. 
 Here is industry in Agriculture scattered over myriads of 
 small communities and still much smaller farms. There is 
 so much of the " United we stand, divided we fall " to urge 
 to Co-operation ! Co-operation is the best friend, in the 
 present day the most indispensable ally, to small Agri- 
 culture! And at the same time it is the most effective 
 teacher of methods of agricultural improvement, the best 
 educator generally for the poor. There is none, for 
 practical purposes, superior to it. 
 
 Co-operative Credit, above all forms to which Co- 
 operation lends itself, was bound to have a strongly alluring 
 voice for the struggling small Indian cultivator. In 
 Great Britain we have seen Co-operation strike root first 
 of all in the shape of Distribution or Supply, as it used 
 to be called ; in principle the two forms are the same 
 thing — ^as a help to the industrial artisan. In France 
 the revolutionary spirit of the great national upheaval 
 
8o CO-OPERATION IN INDIA 
 
 suggested industrial Production. In Denmark the tempt- 
 ing market of England prompted the btilking and careful 
 grading of agricultural produce — ^foodstu£Es — ^which sell 
 best in our home country. In Ireland an influence of 
 the same kind drove farmers to co-c^erative dairying. In 
 Italy, rural colonisation, the co-operative renting of land, 
 is the most impelling force among the poor rural popula- 
 tion, urging them to Co-operation. In India — as before 
 it in Germany — unmistakably Co-operative Credit stood 
 foremost as the most commanding need. It was the use 
 of money that was wanted. And to the offer of money 
 the rural population rose with a degree &f alacrity such 
 as, in the interest of sound organisation and construction 
 upon a sure basis, organisers had rather to bridle than to 
 stimulate. 
 
 Next, as our second generating factor, we have the 
 Indian Government and the India Office to thank, not 
 only for the bringing in of a measure to establish Co- 
 operation, and the establishment of it on generally the right 
 lines, but also for carefully watching over its application 
 and guiding that with a judicious and at the same time a 
 firm and resolute hand. More than once has it occurred 
 that, carried away by momentary impatience to produce 
 rapid results, and eagerness, speaking economically, to 
 reclaim the raw ground, by means, so to speak, of a ten- 
 share motor plough, rather than the carefully handed 
 pioneer's spade, one or other of our Registrars have asked 
 for " powers," or else more money, or some other extraneous 
 help, in the place of the more slowly but more surely and 
 solidly working co-operative spirit, to speed his work, 
 when Co-operation has been saved by the Government's 
 replying with a firm non fossumus and words of guidance 
 which have generally been in the right key. 
 
 However, great recognition, perhaps most of all, is due 
 to those same zealous Registrars, in the choice of whom 
 the Government has certainly been guided by a happy 
 inspiration, who have devoted themselves whole-heartedly, 
 and on the whole with sound judgment, certainly with 
 laudable zeal and fruitful thought, to their important 
 mission, which, quite apart from the glaring disproportion 
 between its magnitude and their scanty number, has 
 proved by no means an easy one. Wisely they have de- 
 
THE RESULT 8i 
 
 liberately abstained from forcing the pace and producing 
 a showy multa rather than a valuable multum. But, on 
 the other hand, they have certainly not allowed grass to 
 grow under their feet. And, to what, on the whde, 
 despite occasional lapses, must be pronounced sound judg- 
 ment in the selection of means, they have added a most 
 happy degree of resourcefulness, which has led them — 
 at any rate up to a late hour — not to seek to apply in India 
 German or French or Italian methods, slavishly copied, 
 but to strike out new paths, suited fo the conditions of 
 the country and the temperament of the people, where such 
 conduct seemed called for. As a particular instance I would 
 notice the formation — first resorted to by Mr. Hope Simp- 
 son — of " Central Banks," certain features in the action of 
 which I shall indeed presently have to criticise, but which, 
 as an institution, readily and satisfactorily supply the need 
 which has in other countries driven people to State aid, 
 as the assumed only resource. Even in poor India by such 
 means has it proved possible to attract sufficient free — 
 that is, voluntarily deposited, not conscripted or donated — 
 money. In this direction Registrars have accomplished 
 a great deal. In recognising the quality of their present 
 work, in this connection, we ought not to forget the work 
 of those early pioneers who cleared the ground and laid 
 the first, very solid and rightly constructed, foundations. 
 The work of the two periods is one. It has succeeded so 
 well because with sound judgment it was begun on the 
 right plan and maintained on right lines. 
 
 However — at the present time at any rate — there is 
 also a reverse side to the medal, a seamy back to the woof. 
 Progress has not at all points been equally happy. There 
 are signs of coming tares among the growing wheat. It 
 is not only that, in the words of one Registrar, " there 
 is a good deal of diseased tissue to be cut away," in order 
 to keep the body sound. Hercules has also come to that 
 critical awkward parting of ways, at which point he is not 
 quite sure to which side to turn for his further progress. 
 
 Phenomenally rapid as really has been the progress of 
 the Co-operative movement in India, to some ultra- 
 ardent spirits it appears to have been not nearly swift 
 enough. "We have 700,000 villages in India," so dis- 
 'appointedly exclaims Sir Daniel Hamilton, who, according 
 
82 CO-OPERATION IN INDIA 
 
 to a classical saying, quicquid vult, valde vuh. " What a 
 small fraction of them have been thus far benefited ! At 
 the present rate of progress we shall have to wait until 
 the year 2,200 before every one of those villages has its 
 own viUage bank." Sir Andrew Fraser chimes in with a 
 similar lament. And Mr. Ascoli points out that out of 
 every 150 agriculturists in India now only one obtains 
 accommodation from a village bank and that for every 
 rupee advanced by a village bank Rs. 238 are still advanced 
 by the mahajan. Aye^ but progress is not at all likely 
 to remain as slow, comparatively speaking, as it has been 
 hitherto. Sir Daniel Hamilton might have satisfied him- 
 self during his last visit home in what progressive manner 
 rightly planned co-operative movements advance as they 
 go on, by reference to the British " Co-operative Union," 
 whose societies, like the Indian, at the outset multiplied 
 only at the rate of units, to accelerate their pace eventually 
 at a surprising rate, so that at their Jubilee gathering last 
 Whitsuntide, they could boast of having three millions 
 and three-quarters of members on their roll. The " birks " 
 of Sir Daniel's native country grow slowly, but they endure, 
 and, having grown slowly, they supply all the better timber. 
 Chi va 'piano va sano, e chi va sano va lontano. And it is 
 andare lontano that we are laying ourselves out for. I 
 have already compared our past work to laying the founda- 
 tion for the railway across Chat Moss. All depends upon 
 the foundation being sound. Once we can make sure that 
 we have the right stones to handle, we may expect to see 
 men and women rising up out of them numerous as those 
 raised up according to the ancient myth by Deucalion and 
 Pyrrha. It is the good sire and the good dam who make 
 the valuable breed. We are troubled enough as it is with 
 stumbling-blocks, such as illiteracy and ignorance, which 
 lead to all sorts of misconceptions and in consequence to 
 abuses. Let us fell our wood before attempting to square 
 it ! Of all things let us beware of " more haste, worse 
 speed " ! One good bank will make the running for a 
 host of others. Bad banks will only frighten people off 
 from the path on which we invite them to walk. There- 
 fore let us make sure of making a sound start rather than a 
 rapid one ! 
 There is in truth no fault to be found on the score o 
 
THE RESULT 83 
 
 slow pace. But unfortunately our pudding produced is 
 not all plums and candied peel. There has been a Pandora 
 sitting by during the cooking who seems to have acted 
 like that well-intentioned but misguided hotel-keeper at a 
 well-known inn in the Tyrol, who, with the commendable 
 intention of pleasing his English guests by doing a charac- 
 teristically " English " thing, poured a bottle of Worcester 
 sauce over the plum pudding served for dinner. 
 
 There is the mahajan, of course, to work up opinion 
 against Co-operation. And froh fudor ! as the Govern- 
 ment Resolution of June 14th, 1914, explicitly states, 
 " Cases have been known in which Government servants 
 related to, or sympathising with, the moneylendiiig 
 classes, have in their official capacity obstructed the progress 
 of Co-operation." 
 
 That admission rather prepares one for the discovery of 
 other curious administrations of justice very unmistakably 
 dispensed with a bandage before Justice' eyes and a very 
 incorrect balance in her hand — that is, judgments by Civil 
 Courts and by munsiffs, who take their cue from those 
 authorities. More will have to be said about this when 
 we come to consider measures to be taken in the future. 
 The attitude taken up by the officers of Justice in this 
 matter stands indeed in glaring contrast with the judicious 
 care bestowed upon Co-operation by the administrative 
 authorities. Such very curious administration of the law 
 has placed great obstacles in the way of co-operative 
 organisers. And it is not surprising that in their help- 
 lessness — only partially remedied quite of late — those 
 organisers should have sought power for taking the law 
 into their own hands and proceeding summarily without 
 previous judgment in Court. 
 
 There is no debtor, of course, who relishes the duty of 
 repaying his debt, if he can in any way wriggle out of it. 
 And certainly raiyats in need of money are not overlikely 
 to form exceptions to the common rule. Indeed, they 
 have shown themselves remarkably quick at learning tricks 
 by which to evade due repayment and to get blind Justice 
 "as she is spoke" to shield them in their contumacy. 
 That is what invariably happens when Justice shows a 
 leaning. We have had a lesson in Egypt, where the fells - 
 heen have quickly acquired sufficient knowledge of evasive 
 
84 CO-OPERATION IN INDIA 
 
 expedients to place the wealthy Agricultural Bank of 
 Egypt in a position which, with about 2,500 debtors in 
 arrear out of 40,000, rendered proceedings in Court practi- 
 cally impossible. Such aptitude in the learning of a crafty 
 defence makes one regret all the more that some of the 
 safeguards of which European experience has- taught the 
 value, and indeed the necessity, were confidingly put 
 aside in India, as being irksome and professedly uncalled 
 for. The Legislature, acting rightly, has refused to 
 co-operative societies the drastic means of recovery which 
 have sometimes been coveted and asked for, and which 
 would soon have been played out, as are ours in England, 
 since a very long time, under the " Friend of Labour 
 Loan Societies Act" of 1840, applications under which 
 magistrates were very soon brought flatly to refuse on the 
 very good and sufficient ground distinctly stated in a 
 Memorial handed in to the Home Office by the Bench of 
 Leeds, that adjudications under such powers only serves 
 to make Loan Societies careless in the examination of the 
 security offered, trusting-rather to the magistrates' order 
 than to their own caution and so spoiling the whole insti- 
 tution. In rpspect of India the Resolution of 1914 
 already referred to states the ground for such refusal very 
 well. To grant such power would have been to denaturate 
 Co-operation. 
 
 However, if our Pandora has been mischievous outside 
 the pudding, she has been no less questionably meddling 
 within. There is a whole handful of bitter almonds that 
 she has managed to smuggle in along with the sweet. 
 Democratic as a co-operative society is bound to be, it 
 must, for practical reasons, needs work through an adminis- 
 trative authority, composed of human beings with human 
 faiUngs. Now the ruling failing of the punches appears to 
 be like that imputed to the Dutch of olden time " in 
 matter of commerce," namely, of " giving too little and 
 taking too much " — that is, of grabbing all the money that 
 they possibly can get hold of for themselves, as a clever 
 carver is understood to keep the best slice for himself. 
 However, some fanches go " one better," keeping the 
 whole joint.^ And then, when the time comes for repay- 
 ment, dog does not eatdog, and fanch will not be hard 
 upon hrotYiei -panch. The fanches readily vote themselves 
 
THE RESULT 85 
 
 a mutual indemnity for leaving the debt unpaid. Under 
 this failing the whole structure of the society becomes 
 deformed and shaky. The essential condition of punc- 
 tuality in repayment is destroyed. The society cannot 
 go on on such lines. Beyond this, under fanch usurpation 
 there is no sufficient checking of objects for which money 
 is loaned, no sufficient supervision of any kind, no business- 
 like administration. The cat has been set to watch the 
 milk. And all this becomes progressively worse as time 
 goes on, because the bulk of the people to be dealt with 
 are stiU, after all, terribly illiterate and ignorant, and do 
 not really understand the principles of Co-operative Credit. 
 They grasp the routine — even aboriginal tribes appear to 
 do that, as Mr. Wilkie Brown, who has worked among them 
 in Jalna, testifies ; but they fail to master the why and 
 wherefore. Government officers are so much mixed up 
 with the business — becoming indeed so more and more — 
 that the raiyat naturally comes to look upon the society 
 as a Government institution, financed, of course, by the 
 Government with public funds, and therefore not requiring 
 repayment until debfs are forcibly collected — an institution 
 in which the raiyats themselves are " members " only 
 fro forma, having no responsibility and no voice. The 
 Ranches are not slow to take advantage of such misappre- 
 hension. And faced as they are by a host of gullible 
 illiterates, they have " literates " at their back of whose 
 mischievous doings Mr. Mitra has rightly complained, 
 who, like pettifogging back-street solicitors, put them up 
 to all sorts of " dodges " and plausible excuses, such as 
 Civil Courts are foolish enough to accept. 
 
 And if these raiyats are ignorant, the staff supplied to 
 instruct them appears scarcely sufficient and in some cases 
 evidently itself wants teaching. From all quarters come 
 in complaints of paucity of officers. Sir Daniel Hamilton 
 would have " 100,000 teachers "engaged, besides " 10,000 
 organisers." We do not really require anything like 
 that number. But manifestly under the twofold evil of 
 ignorance among the raiyats and insufficiency among the 
 staff — which is, be it remembered, only to be-mentor the 
 flock, not really to rule over it — and a natural paucity, 
 at the present stage, of volunteer workers, supervision and 
 guidance appear sadly deficient, and in consequence of 
 
86 CO-OPERATION IN INDIA 
 
 this fact abuses keep creeping in which, threaten,' unlpss 
 there be timely correction, to rot the root and poison the 
 sap. What shall we say of such cases as that reported from 
 the Punjaub in 191 5-16, when there were in two districts 
 only two inspectors to 900 societies, under which con- 
 ditions, of course, " some societies are not inspected at all," 
 and the inspection of those which are lucky enough to be 
 inspected could not under the circumstances have been 
 thorough. There were then 104 societies in liquidation. 
 " In almost all these cases the prime cause is the inadequacy 
 of the staff. . . . Nearly all our liquidations are due to 
 slackness in the observance of one or other of our accepted 
 principles." No wonder. 
 
 To make the work manageable officials have recourse 
 to mechanical expedients which, if followed up, may con- 
 stitute a fresh <ianger and eat the marrow out of the 
 principle, and, if continued too long, bid fair to deprive 
 the movement of its educational effectiveness. Do not the 
 men at the helm perceive that in understaffing necessary 
 offices they directly and forcibly bring, about the very 
 result which they rightly — and no doubt sincerely — 
 protest that they desire to avoid by over- officialising the 
 movement ? An overtasked Registrar, like an overbur- 
 dened Committee, of necessity has to resort to slapdash 
 methods, to mechanical expedients, in the place of careful 
 testing, in order to get through what is put upon him. 
 That necessarily makes his action more rough and ready, 
 more dictatorial, less considered, therefore more apparently 
 arbitrary and capricious, certainly more " official." He 
 is not allowed sufficient time to examine and investigate, 
 to reflect as he should. You waste by sparing overmuch. 
 
 And as it is in official quarters, so it is in societies, which 
 still lack their proper complement of brains and application. 
 They likewise adopt rough-and-ready, mechanical methods, 
 such as are likely to lead to mischief. We see this at all 
 points. Instead of every claim to a loan being carefully 
 examined as to propriety and safety, the haissiyat is coming 
 into fashion as the determining factor. I hope that the 
 references which I see to " Current accounts " (cash 
 credits) do not mean that such are given to individuals 
 in the place of specific loans. For if accorded to individuals 
 they are bound to become dangerous. The Registrar is 
 
THE RESULT 87 
 
 made to decide things which really it is for the Committee 
 to determine. Guaranteeing Unions are introduced to 
 save Committees trouble by a mechanical discrimination 
 not altogether without danger. And it is the Registrar, 
 not the Committee, who is made to decide what credit 
 the "Central Bank" may give to the "Union." The 
 Government does not improve matters by laying down 
 hard-and-fast rules about maximum loans to be permitted, 
 the precise amount to be carried to reserve, the amount 
 of reserve to be kept " fluid," and so on. All these things 
 are really, in principle, matters for the Society or its Com- 
 mittee to decide upon, subject, of course, at any rate in the 
 early stages, to general but elastic rules and supervision by 
 Registrars and their staffs, not altogether as officials, but 
 to some extent as temporary guides, with the official super- 
 vision not to be made progressively more severe but, on 
 the contrary, gradually relaxed in favour of corporate 
 society administration. The rule of maximum credits 
 is within certain limits distinctly one for a society itself. 
 That for " fluidity " of reserve must be a different one for 
 " Central banks " and for what are called " primary socie- 
 ties." Its proper maximum may rightly differ as between 
 bank and bank, even of the same class. The same criticism 
 applies to the ratio of payment to reserve — always bearing 
 in mind that in co-operative banks starting with nothing 
 or only very little, steady and systematic accumulation of 
 reserve funds is a paramount necessity. Under official 
 sanction some things are becoming stereotyped and perma- 
 nent which are legitimate enough — ^it may be even wholly 
 advisable — at the present stage, but which will certainly 
 call for . modification as the movement advances farther 
 and can be more systematically developed. 
 
 Officialism has been carried so far that In East Bengal 
 and Assam, as we read in the Registrar's Report, " in a 
 very heavily indebted part of the country the Government 
 has even made an experiment in forming a new type of 
 bank. These banks are financed entirely by the Govern- 
 ment, and all the debts of all the members have been paid 
 off, and the banks have been granted sufficient funds in 
 addition for the issue of loans for the current agricultural 
 operations. There are no deposits by members, there is 
 no borrowing from any source except the State." Here 
 
88 CO-OPERATION IN INDIA 
 
 is Self-help and Co-operation indeed ! We co-operators 
 have been congratulating ourselves upon the fact that 
 in the Rohika Union on the Darbhanga-Estate, Mr. Collins, 
 active Registrar that he is, has by " drastic " methods 
 adopted successfully corrected the mischievous officialism 
 resulting from the Estate Patwarri financing and managing 
 the " co-operative " societies. " Though done with the 
 best intention, the effect of this was disastrous," says the 
 Report. " This kind of supervisional treatment cuts at 
 the root of self-help and altogether stunts the growth of 
 co-operative ideals." Happily " all this is changed now." 
 But while Darbhanga is saved, a part of Assam is per- 
 verted ! If there are no deposits by members, obviously 
 there can be no training to thrift. Is this experiment 
 being made four encourager les autres ? It will be interesting 
 to learn the result. 
 
 One great drawback to the movement, of course, is the 
 ignorance and illiteracy of the bulk of the people — 90 per 
 cent., according to the census of 1916 of the population. 
 In Europe it has been possible nearly everywhere from the 
 outset to introduce an element of caution and safety In 
 the shape of a supervising council inside the, society. Such 
 Council, so one can well understand, is not generally possible 
 at present in India, and would in all probability, if insisted 
 upon, only serve to make confusion worse confounded. 
 At the same time the superior supervision, so to call it, 
 has — once more necessarily, at the present period — ^taken 
 a direction which should not be permanently adhered to. 
 This is the result, intelligibly enough, of a failure to seize 
 the meaning of distinctions. On the European Continent 
 we have found it extremely difficult to make even co- 
 operators understand the distinctive difference in the char- 
 acter, object, and position severally of our "Co-operative 
 Union " and our " Co-operative Wholesale Society." 
 Organisation and Finance appeared to the Continentals 
 to be all one. A very similar misapprehension appears 
 to prevail, at any rate to some extent, in India. Societies 
 combine for financial purposes, throwing in the adminis- 
 tration as a supplement. That is like making a cashier 
 the managing director of his establishment. A chacun 
 son metier et les v aches seront bien gar dees. 
 
 In truth, there is a good deal that wants seeing' to. 
 
THE RESULT 89 
 
 "There is a good deal of diseased tissue to be cut away." 
 One Registrar has liquidated at one fell swoop 23 out 
 of 236 societies, leaving 145 extremely doubtful ones lying 
 on the dissecting table ready for future treatment, and 
 turning about 1,000 members out of their societies. There- 
 can be no doubt that he was right in doing as h^e did. 
 But someone must have done wrong to bring things to 
 such a ^ass that such a massacre became necessary. 
 
 Looking at the movement generally, there is thus far no 
 actual harm done. However, evidently Indian Co-operation 
 has arrived at a point at which new guide-posts will have to 
 be provided for the path to be followed henceforth. 
 
 Meanwhile we have this to congratulate ourselves upon. 
 By judiciously planned, well supported and sustained 
 effort — for their particular part in which all who have 
 been called upon to lend a hand deserve equal credit — 
 we have seen a structure raised up which will remain 
 a lasting monument to the well-directed labours of the 
 present generation. With justice may the Government 
 of India take credit for it — I cannot help remembering 
 that, as Lord Curzon has kindly testified, I was their 
 adviser on the point — " the policy of restricting State 
 aid within narrow limits has been fully vindicated and has 
 led to an increase of self-reliance and independence," 
 and that " excessive State aid has been avoided, and the 
 aim kept steadily in view has been, not the rapid multipli- 
 cation of societies, but the restriction of the movement 
 within safe bounds." The movement is bound to become 
 a permanent asset of immense value to India. The gift 
 bestowed means for the raiyat population a new lease of 
 life, new hope for the future, a new horizon opened over 
 which the rising sun promises more and more to disperse 
 the choking mist. Debt figures henceforth not as a dead 
 weight never to be cast off, but as a burden which may be 
 removed within reasonable time. Prosperity has been 
 placed within reach. The mere jfinancial benefits con- 
 ferred and further promised by this new Horn of Plenty 
 are incalculable. Sir E. Maclagan did not do half justice 
 to them in his saying already quoted. The mahajan may 
 still lend much more than the village bank ; but he feels 
 the restraining grip upon his arm. And that same mint 
 which in Germany alone places annually crores and crores 
 
90 CO-OPERATION IN INDIA 
 
 of rupees at the disposal of deserving producers may be 
 counted upon with certainty to have treasures of equal 
 amount in store for deserving men in India. It is teaching 
 them thrift and provident habits. It is showing them 
 how of their hidden treasure, now absolutely sterile, they 
 may make a steady source of income enriching not them- 
 selves only. For whatever is done in Co-operation benefits 
 the whole surrounding area. Co-operation has taught 
 these people to -s^t up homes for themselves, and how to 
 settle on the land. By enabling them to shake off shackles 
 of debt it has given many freedom. And, under severe 
 trial, such as was certainly not looked for, when its founda- 
 tion was laid, the new structure has given unmistakable 
 proof of its financial solidity, surpassing in this respect 
 institutions older and commonly considered stronger and 
 better endowed than itself. The new Credit Institution-^ 
 by which, as Mr. Calvert, the Registrar for the Punjaub, 
 assures us that " no depositor has ever lost a pie, whether 
 of principal or of interest," and which, on the showing 
 of Mr. Beatson-Bell, dealing specifically with the matter, has 
 " weathered many a storm already ; it has weathered the 
 crisis when the swadeshi banks failed ; it has weathered 
 the crisis when the greatest war in history began ; 
 in spite of this trial it is going strong," and of which 
 Mr. Mitra has testified that, " while withdrawals from 
 the Ppst Office Savings Bank were fairly large, there 
 was hardly any rush on the co-operative banks for deposits," 
 which fact, Mr. Mitra rightly urges, " speaks a good deal 
 for the confidence of the public in the movement " — has 
 indeed done a vast amount of good among the raiyats. 
 And not among raiyats only. Those widely diffused 
 cottage industries, which are the hope of the working 
 population of the country, and which are saddled with 
 so many difficulties, not the least of which are shortage of 
 money and exploitation by the mahajan, have, on the 
 showing of Mr. G. M. Gupta in his " Survey," likewise 
 profited by it not a little, more particularly the weavers 
 of Benares, Solapur, and Madras. Among these people, 
 who need help badly, according to his account. Co-operative 
 Credit has " done immense good." 
 
 But it has also taught our raiyats what is worth very 
 much more than the money itself which it provides — that 
 
THE RESULT 91 
 
 is, how to put that money to good, profitable use. Co- 
 operative Credit, after all, is only a means to an end. The 
 money itself profits nothing— or India would not be so 
 poor withall its hidden hoards. The new stimulus which 
 Co-operation has already, while still well within its teens, 
 imparted to_ interest in Agriculture, and in the improve- 
 ment of Agriculture, is one of its best titles to recognition — 
 one of its best earnests of future public benefits. Raiyats 
 are clamouring to be taught perfected Agriculture, and 
 to receive the means for doing so. Co-operation is dis- 
 tributing improved implements, improved seeds, fertilisers, 
 feeding- stuflfs ; it is teaching farmers to breed, to turn their 
 milk to better, account, to make more money out of their 
 sugar-cane, to cultivate cotton to better effect, to extend 
 irrigation. All this portends considerably more to be looked 
 for in the future. " The spread of agricultural improve- 
 ment in India is bound up with Co-operation to such an 
 extent that the ever-increasing scope and popularity of 
 Co-operative Societies is an infallible indication of agri- 
 cultural improvement." So writes Mr. J. McKenna, the 
 Agricultural Adviser to the Government of India. " By 
 means of these societies cheap capital is made available 
 for the cultivators' current needs. Implements, manures, 
 and seeds are being distributed through their agency, and 
 organised bodies of agriculturists are being created which 
 are more easily and successfully approached than isolated 
 individuals. ... In short, it may confidently be said 
 that Co-operation and Agriculture working hand in hand 
 have the field of India open to them, and the regeneration of 
 a good part of agricultural India will be due to their work." 
 Improved Agriculture has forced attention upon the 
 existing drawbacks — for instance, the terrible inconvenience 
 of scattered holdings. Feople are beginning to ask for a 
 removal of impediments, towards which no agency in 
 the world can in its turn be more helpful than Co-operation. 
 Say people what they will in favour of the development of 
 Indian Industry — please God, that will come too — India 
 is, and is bound to remain, in the main an agricultural 
 country. Its vital nerve is Agriculture. And whatever 
 promises materially to improve Agriculture — as Co-operation 
 most plainly does — is bound also to prove a national 
 benefit. 
 
92 CO-OPERATION IN INDIA 
 
 However, there will be not a few people who rate the ideal 
 achievements of Co-operation, already plainly discernible 
 in their firstfruits, even higher than the material. The 
 great onus resting upon India — by the side of debt — is 
 Ignorance and Illiteracy. Well, the same agency which 
 has made of the German Bauer of bygone times, the 
 beefwitted yokel poked fun at, an intelligent and present- 
 able creature is already now transforming the Indian raiyat. 
 Nothing is more remarkable among the results of Co-opera- 
 tion in India than the unmistakable eagerness for acquir- 
 inginstruction that it has imparted to those who practise 
 it. " Another remarkable effect it has had," so writes 
 Mr. Collins, in his Report — ^the tale will bear repeating — 
 " is the demand it has created for Education. Wherever 
 there is a co-operative society we find members anxious 
 to educate their children, and we have now many instances 
 where members freely contribute the maximum lo per 
 cent, allowed by the law f roin the profits of their society 
 towards a school. We have several schools entirely 
 financed by the societies." And again : " The enthusiasm 
 among the members of societies is most encouraging. 
 A number of schools have been started by societies during 
 the present year. . . . The arrangement usually made is 
 that if the member contributes the guru^s food and pays 
 fees, the Registrar, under Section 34 of the Act, sanctions 
 the diversion of 10 per cent, of the annual profits of the 
 society towards his pay, and supports an application for 
 a grant-in-aid." " In many places the establishment of 
 the societies has been followed by the opening of village 
 schools. Contribution by societies to village schools is 
 increasing every year." So wrote Mr. Mitra from Bengal. 
 " Education in Co-operation is leading them along fresh 
 and broader paths of knowledge and of thought." That 
 comes from the Central Provinces. The tale is the same 
 in all provinces. The Punjaub, Madras, Bombay — Bombay 
 is very active and has already about 300 schoolboys' societies, 
 besides vernacular teaching — the United Provinces, in some 
 villages of which some years ago already societies made 
 their secretaries take members' children in hand for schooling 
 several days a week — all chime in in the same key. " Co- 
 operation has been," so says Baboo Moti Chand, " in the 
 higljest sense of the term, education both intellectual and 
 
THE RESULT 93 
 
 moral. Where men are associated for business purposes 
 they feel the need of education. . . . Illiteracy is a hin- 
 drance to the movement, and just as Co-operation leads 
 to a demand for literacy, so literacy leads to a demand for 
 Co-operation." 
 
 The co-operative guru and the co-operative pathshala 
 are becoming recognised institutions. What a stimulus 
 for Government to " go and do likewise " ! The good 
 eflEect produced is, however, not by any means limited 
 to what we see in village fathshalas and in societies' contri- 
 butions to gurus' feed and fees. Leaven of this kind once 
 started works its way automatically in larger lumps. Evi- 
 dently from what we read it must be concluded that the 
 desire for learning has been awakened. It should certainly 
 not be starved or stifled. " Compulsory Education," ac- 
 cording to the testimony of Sir Daniel Hamilton, is now 
 " demanded by practically, every Deputation which waits 
 upon the Viceroy and Mr.- Montagu." 
 
 The effects of Co-operation already achieved have gone 
 still farther than that. The " root cause," so it is often 
 said, " of the dearth of vUlage improvement so much 
 complained of is ' the want of community life.' " In Sir 
 James Meston's words, " we hear often complaints of the 
 decay of the old village community in Northern India, 
 one of the most ancient and durable of sociological pheno- 
 mena in the world. Modern influences have at length 
 begun to sap it. It is gone." And there is the raiyat, 
 once a member of a closely united and knit- together family, 
 in which he never stood alone, but all gave one another 
 mutual help, in Oliver Goldsmith's words, " remote, un- 
 friended, solitary, slow " — slow of mind — become solitary 
 as a social unit ! The help that he gets from the mahajan 
 has to be dearly paid for. And who knows but his neigh- 
 bour of to-day, if he were to make a little money, may be 
 his mahajan, oppressor, and bloodsucker of to-morrow ? 
 " Many efforts have been suggested to restore that com- 
 munal life," so Sir James goes on — " the revival of the 
 village fanchayat, the bolstering-up of the lambardar, the 
 encouragement of the mukhya, and so on. We have seen 
 disappointing results from most of these attempts. But 
 in the Co-operative Movement we have a new cejpienting 
 power. It unites the village community, or at least all 
 
94 CO-OPERATION IN INDIA 
 
 the best elements in it, upon the old and only permanent 
 basis of common interest and mutual aid." 
 
 And in this opinion Sir James does not stand alone. 
 "Co-operative societies," so writes Mr. Collins, "have 
 supplied to the village a bond which was badly needed. 
 The old village community, with its excellent unifying 
 fabric, has ceased to exist. With the introduction of a 
 centralised form of government the old institutions died 
 away, the illiterate and ignorant raiyats were left without 
 any cohesion and they became selfish ^nd individualistic 
 in their habits. If there is one thing which can take the 
 place of and supersede the old village fanchayat system, 
 it is the co-operative society. It combines all the unifying 
 principles of the indigenous system with a much superior 
 organisation for material and moral development. The 
 quaHties of self-help which societies call forth, and the 
 training in the management of their own affairs which 
 the conduct of a society affords, are invaluable from every 
 point of view. The co-operative' society has changed the 
 entire environment of those who have the good fortune 
 to be its members. It has supplied the intellectually 
 starved people with a fund of good ideas. Where th^ 
 were without a leader or a guide they have now no lack 
 of sympathetic advice. ... In the place of the blank 
 despair they have now the full assurance of ultimate sal- 
 vation." 
 
 Aye, that is the coping-stone.. Not only has Co-operation 
 brought the population material relief, not only has it 
 greatly whetted their appetite for instruction. It has 
 also raised their status, alike intellectual and moral. Under 
 its influence, as Sir Robert Carlyle has rightly remarked, at 
 one of the Conferences of Registrars, India is becoming 
 " transformed." The population has begun to grasp 
 higher ideals and to aim at realising them. The eflfect 
 of Co-operation upon their litigious practices is one of the 
 most promising indicia of its moralising effects. " I am 
 personally aware," so writes Mr. Collins, " of numerous 
 cases [sc. of litigation] settled amicably, which but for the 
 restraining influence exercised by these societies would 
 have been fought to the bitter end in the courts." Giving 
 actual figures, the Registrar for Bombay Presidency, Mr. 
 Ewbank, reports no fewer than 752 cases referred to 
 
THE RESULT 95 
 
 arbitration in the year 1916-17. He furthermore reports : 
 " There has been a distinct growth in the spirit of mutual 
 help and in the knowledge of all that Co-operation implies." 
 This testimony is by no means singular. The same result 
 is reported by other Registrars from other provinces. 
 " The ideal objects of Co-operation are coming to be 
 realised and appreciated." With the advent of such 
 appreciation a good foundation may be said to have been 
 laid for the hoped-for improvement of country life and the 
 establishment of a modern substitute for the ancient 
 Indian village community. It is the same tale everywhere 
 throughout India. Co-operative Credit has, accord- 
 ingly, thoroughly made good its position. " We no longer 
 shake our heads about the suitability of the co-operative 
 idea to the Indian population," said Sir Edward Maclagan 
 at the Sixth Congress of Indian Registrars. And " Co- 
 operation is now one of the most important branches of 
 Government business." So spoke Sir James Meston at 
 the Eighth Congress in the United Provinces. " Its action 
 has spread over the whole of the province, not only widely 
 but deeply, and it has evoked a genuine, sincere, and slow- 
 burning enthusiasm in the hearts of the people, which is 
 the surest guarantee of its durability and success." 
 
 We have, in fact, the authority of one who knows the 
 Indian native population well — that is, Canon Rivington, 
 as quoted by Sir George Clarke, when Governor of Bombay 
 — to the effect that " the Agricultural and Co-operative 
 ) Departments had made a deeper impression on the life 
 of the people than any of the other measures which the 
 Government are engaged in promoting." 
 
 Surely Sir J. Meston was not wrong when he described 
 Co-operation as " not only a great financial and economic, 
 but also a great social force." Its promise is great. Do 
 not let us grow impatient because the day of ultimate 
 salvation is not as quick in coming as in our eagerness we 
 should desire ! It will surely come in its proper time. 
 The firstfruits which we have thus far gathered in are 
 certaiidy ample and fair and richly promising, and should 
 reassure us, if we have entertained any doubts, as to ultimate 
 success. I must confess that I look upon India as the 
 country of countries to prove the value of Co-operation. 
 In its national and social conditions, in the temperament 
 
^e CO-OPERATION IN INDIA 
 
 and the necessities of its population, it possesses all the 
 elements out of which to raise up good co-operative practice 
 in exuberant plenty. " Slowly but steadily," once more 
 to quote Mr. Mitra, " the Co-operative Movement is 
 working out an economic revolution, the importance of 
 which cannot be exaggerated. The gradual release of 
 the masses from the thraldom of usury, the better use 
 which the members now make of their credit faciUties, 
 the improvement of the indigenous system of money- 
 lending, affording relief every year to an increasing number 
 of people not directly connected with the movement, the 
 inculcation of the principle of thrift and self-help, the 
 check which the system imposes upon extravagance in 
 social ceremonies, are some of the most direct and tangible 
 results N of the movement. Instances can be multiplied 
 to indicate the indirect effects of the movement, how it 
 promotes the moral and social improvement of the people, 
 brings about a reformation of bad characters, creates a 
 desire for education, encourages the settlement of village 
 disputes by arbitration, discourages litigation, promotes 
 a wider outlook on life, and makes village life healthier in 
 all its relations." 
 
 Mr. Mitra knew what he was writing about. Here is 
 his estimate of the value and the prospects of the move- 
 ment, which appears to be ushering in a new era for India. 
 I myself have no doubt as to the accuracy of his forecast. 
 
IV 
 PRECEDENTS GOOD AND BAD 
 
 Some, at any rate, of the looser tendencies — tendencies still 
 rather than actual practices — now foreboding possibilities 
 of mischief in the Indian Co-operative Movement. in all 
 probability are attributable to the desire, naturally enough 
 evinced among those who are interested in the movement, 
 to obtain new light and leading from European systems of 
 Co-operative Credit now in force, so as to be able to graft 
 " improved " European shoots upon the native Indian 
 stock. European practices .:nd aietiiods are accordijigly 
 being studied with great attention, but not perhaps with 
 all that discrimination which the matter calls for. Indian 
 students of Co-operation, in fact, appear a little too ready 
 to accept Etiropeans' laudations of their own several 
 co-operative organisations at face value. Thus, to state 
 but one instance, we find so genuine a lover of Co-operation 
 as Professor Radhamakamal Mukherjee on the one hand 
 ccai-fidingly eulogising the State coddling, very much 
 advertised as it is, of Germany, Austria, and Hungary-— 
 which has lost its patrons a good deal of money, without 
 producing any corresponding genuine good, although very 
 substantial political resultsrrr-and on the other hand in^ 
 consistently echoing the British consumers' cry : " The 
 consumer transcends the producer." Proverbially every- 
 one's geese are swaqs to himself. There is a well-known 
 story of a well-bred courtier who, at his lord's table, very 
 complaisantly sang the praises of the indifferent wines set 
 before hini, but wh«i a. glass of really good wine was given 
 to him remained mute. When questioned upon this, his 
 reply was : " Oh, this wine sings its own praises." So it 
 is with the various systems of Co-operation. To judge 
 rightly of their true quality we want to look at their results, 
 not to the labels, affijyed to them by their authors. The 
 
 97 7 
 
98 CO-OPERATION IN INDIA 
 
 proof of the pudding is in the eating. What " the consumer 
 transcending the producer " means we have had a telling 
 proof of in Ireland, where the Co- operative Wholesale Society 
 of Great Britain laid its shackles upon Irish farmers in order 
 to provide cheap milk and butter for the British industrial 
 consumer, to the Irish raiyat's prejudice. It was Sir 
 Horace Plunkett's resolute action which forced the yoke 
 off the farmers' neck and secured for them their proper 
 due, according to the well-chosen motto of the great 
 American " Fanners' Educational and Ji^o-operative 
 Union " : " To the producer belongs the produce of his 
 toil." We see it again now in the strife unfairly raised 
 by British consumers against the farmers who, in truth, 
 having heavy outgoings to cope with, such as were not 
 previously known, have patriotically done their honest best 
 for food production— strife threatening such breach between 
 industrial and agricultural Co-operation as the Socialist 
 Dr. Hans Mailer, whom Professor Mukherjee unreflect- 
 ingly singles out for special admiration, actually in his time 
 of office bi'ought about between the two interests in Swit- 
 zerland, his adopted country, after we had not without 
 labour brought them into union in one Federation. ■ " If 
 I had my way," so Dr. Mtlller frankly declared at the 
 Co-operative Congress of Dtlsseldorf, some twelve or 
 thirteen years ago, " I would exclude agriculturists alto- 
 gether from recognised Co-operation." He wanted agri- 
 cultural Co-operation cut out altogether out of our pro- 
 gramme in the International Co-operative Alliance. That 
 surely. Professor Mukherjee, is not the sort of man to 
 choose as a special prophet for the Indian raiyat whom we 
 are trying to help. Consumers' Co-operation is in itself 
 an excellent thing, a thing without which we absolutely 
 could not do. However, cultivated one-sidedly, as the sole 
 object of Co-operation, it threatens to destroy almost 
 the best part of that movement. For Co-operation, like 
 everything else of a composite character, wants a fair 
 balance maintained between its component parts. House- 
 wives in my native county of Yorkshire have a rather apt 
 term for the undue predominance of one particular ingre- 
 dient in a dish. They say the di?h "has a master." The 
 " master " to some extent spoils the dish. The " master " 
 in British Co-operation in the present day-is proportionally 
 
PRECEDENTS GOOD AND BAD : 99 
 
 overdeveloped Distribution,: overpowering, other forms. 
 We see the effect in the obscuring— let us .hope only tem- 
 porary — of the_ avowed ideal objects of Corpperation, in 
 favour- of political and one-sided clasi economic interests. 
 There is in truth no .more selfish creature "than the one- 
 sided consumer raised, to .power.. Our British consumers 
 began with a cry for " Justice," proclaiming " Capital " 
 their arch-foe. Once organised, however, the first thing 
 that they — ^very rightly — exerted themselves to secure, was 
 the denounced " Capital." And when they had it, they 
 used it, and still use it, just as the hated " Capitalist " 
 had done- before them. By means of its huge " Capital " 
 the Co-operative Wholesale Society .domweets . oyer the 
 Union. By means, of its .." Capital " if .not only resists 
 independent Co-operative PrQd.tiction-r-the aim of which 
 is to emancipate the working man and turn the wage 
 servant into a free self- employer — but cuckoo- like turns the 
 birds, who by resource and devotion have laboriously con- 
 structed it, out of their nest, when it- is made thoroughly 
 habitable. It is in this way that the Leicester Hosiers, 
 the Hebden- Bridge Fustian Cutters, and the Insurance 
 Society have been swallowed up, not to mention others. 
 And now, in the place of. " Justice," at the Glasgow Con- 
 gress we heard the cry go forth for." Supreinacy " — of 
 course by a Wholesaler.. .To justify such policy, the Dis- 
 tributors contend that it is they and they alone who have 
 the right to carry . on- " Co-operative Production." But 
 to talk of Production only for the service of Distribution 
 as the ideal of co-operative organisation is to use a mis- 
 nomer. Such Production is in itself perfectly, right and 
 proper. However, -it leaves the position of producing 
 Labour unchanged. It keeps employer and employed at 
 issue. The- Swiss economist M. Secretin has sh.own that 
 it does not in this respect matter whether the wage- earner 
 has one master or many- That still leaves him a person 
 dependent upon ■ the will of others. In Production for 
 Distribution we have still had .Labour disputes, even serious 
 strikes-; and we have a trade union of ca-.operative employees. 
 Such Production, in fact,, only represents, an. alternative 
 form of buying, with the purchase price .paid in the form 
 of wages and Taw material instead of in that of money for 
 the ready article.- It is like the housewife bs^Ung her own 
 
roo co-om;ration in tmiA- 
 
 bread, instead of buying it ready bafced., ThsA A^^ RQ^ 
 constitute ker a " baker," any more than, my sewing on a 
 button to my shirt constitutes me a " hosier." The 
 co-operative produce is %hting for en^neipatiQaj in 
 India at the present time for the emancipation of the 
 raiyat from bondage under the mahajan. _ Distributive 
 Co-operation, as we see it in Great !|ritain, is openly 
 opposed to such emancipation. It distinctly taboos even 
 profit-sharing. It is perfectly willing to do business, large 
 business, with non- members for profit— like the middlemen 
 —staking big contracts from the Government. Then why, 
 on the other hand, should not Co-operative Prodijction, 
 in the interest of the einancipation of Labour, b^h indus- 
 trial aijid agricultural, have' its fjee flin^ as well ? We 
 know from the various " Milk-wars "^n Berlin, in Swit- 
 zerland, in Chicago, in New York and elsewhere (in Swit- 
 zerland Professor Muklierjee's friend Dr. Hans MtUler 
 partionlarly distinguished himself by his hostihty^ to 
 fari3iers)-»!rihow seriously Co-operative Distribution and 
 Co-operative Production paay come into conflict;- A^d 
 Distribution, having, as a rule, the better-filled pocket, 
 generally gains the day. It thereby .ensures cheap mill;. 
 The very great improvement in the quality .of .th,e milk 
 sold, liianks to insistence upon cleanliness, of bactgrip- 
 logical examination and so on, has h^a^ the work gi Cp- 
 operative Praductioti. Both cheapness and purity aji^e gains. 
 But there should b? a fair balance between them. 4^d 
 Co-operation should " live and let live " Distjibutiftn and 
 Production alike. 
 
 Consumers' Co-operation by itself leads straight to .that 
 narrow Capitalism which forgets " the rof:^ wh^ce it 
 was h#wn." In Great Britain we have .th,e Cp-Pperative 
 Women's testimony for it==r-the pr<iiof is to b^, found in 
 Sunderland, for one places=rtha.t our distributive Cp-ppera-^ 
 tion, as now organised, does not roinister in anything like 
 a sufficient measvu-e to the wants, of the poor, for whose 
 benefit it was in truth specifically devised. And we have 
 the testimony d^ the la^te J. Ci .Gray, in Im -4ay General 
 Secretary of the Caroperative. U?tLPf > psblisly .^jjjress:^,, 
 to show that oiy: .Ca-pperadan now nieglec^ ^ pppr, its 
 benefits being ppacticallyconfined to the*' well-paid artisans" 
 who, as has been shown, asjs -for " Supremacy." jn the 
 
PREGEbtNTS GOOD AND BAD loi 
 
 days when I attended Co'-operative Congresses, whenever 
 I had a proposition to bring forward, Mr. Gray begged me 
 not to cdrrie before Congress as the representative of my 
 own littk productive society, whose name would coifimand 
 no respect, but to obtain nomination from some impbrtant, 
 well-ifinanced society, which would secure me a favourable 
 hearing. In other words, it was not the cause, or the 
 argument, that was to count, but the person of the ac- 
 creditor. Thus it was when-^^about twenty years ago— =• 
 I asked for a resolution in support of niy demand for Co- 
 operative Legislation for our West Indian Colonies which, 
 with the help of Mr. J. Chamberlain, then Secretary of 
 State for the Colonies, I succeeded in carrying.* 
 
 Co-6peration in Agriculture is in the main a 'producers^ 
 question. However, in genuine Co-operation there is no 
 antagonism whatever between Production and Distribu- 
 tion. Both are equally interested in the same cause, 
 which is emancipation of the weak and equality for them 
 with the strong, the substitution of a fair bargain in the 
 place of dictation. The main aim of the " fathers " of 
 British Co-operation, from Robert Owen downward — 
 Vansittart Neale, Tom Hughes, Kingsley, Ludlow and - 
 so on-^just as of the French, Charles Robert and others, 
 was the emancipation of the weak. Store Co-operation 
 was in trutli to be only a means towards that end. The 
 labourer— =in due course the small farmer-^badly dominated 
 as he was by wealthier interests, was to be made his own 
 master, and dependence was to be turned into equality. 
 The Co-operative Wholesale Society and other declared 
 one-horse consumers have, all along, been opposed to that 
 idea. They want Production and Labour to remain 
 servants to Consumption. According to their demands 
 it is now the land-owning Distributive Society which is 
 to crowd out the independent farmer and till his land for 
 its own profit. That does not appear altogether an ideal 
 progranlme for Indian raiyats and their well-wishers and 
 
 * Unfortunately little beyond the actual passing of such legislation has 
 resulted from the action then taken. I had planned a journey to the West 
 Indies. But the unexpected delay — for some months — in the departure 
 of the first ship of the Elder Dempster Line under the then new subsidisation 
 arrangement, in which I was to proceed in company with Sir A. Jones, 
 the Chairman of the Comipany, and Sir G. Hemming, the Gfbvejnor of 
 Jamaica, upset those plans. 
 
102 CO-OPERATION IN INDIA 
 
 friends. "We shall, -accordingly, in India have to seek for 
 another pole-star to guide us. 
 
 The real foe of Co-operation is not " Capital " — ^which 
 is absolutely necessary for production of any kind — nor the 
 individual producer. The most redoubtable opponent to 
 be destroyed is the grasping middleman with his dictator- 
 ship, his enslaving action and his — according to Professor 
 Mukherjee — ^20 to 200 per cent, profit for himself. Pro- 
 ducer and consumer suffer under him equally, and so does 
 the community. The middleman has in his time rendered 
 very valuable, indeed indispensable, service. But his time 
 is in very many instances now past. With the help of 
 Co-operation small men can do without him, as Lancashire 
 cotton kings have learnt to do without him, closing up 
 middlemen's offices in Friday Street, and substituting their 
 own paid agents. And they are entitled to this. 
 
 For Indian faiyats certainly the Manchester shibboleth 
 so readily adopted by Professor Mukherjee has no justifi- 
 cation or promise whatever. In India it is the agricul- 
 turist, whom Dr. Hans MtlUer would ruthlessly rule out 
 altogether, who first of all stands in need of Co-operation-— 
 the agriculturist, whom the British Co-operative Union 
 now denounces and opposes, even in Co-operative organi- 
 sation. Do not let Indians be led away by deceptive 
 cries sent forth with selfish objects. The type of Co- 
 operation" for them is rather that recommended by Sir 
 Horace Plunkett, by the late E. Vansittart Neale and his 
 companions, than that contended for by narrow-minded, 
 one-sided consumers. 
 
 There is one thing to which I admit the temptation 
 is rather inviting for thinking minds, the example having 
 been set by official reporters — against which I would rather 
 seriously warn Indian students of Co-operation — and that 
 is, to treat the incidental methods of different Co-operative 
 systems as interchangeable parts, 'which may be pieced 
 together at pleasure according to one's fancy. Whatever 
 we may otherwise think of those systems, there is this to 
 be said in their favour, that they are all well thought out, 
 fitted together under the teaching of Experience, which 
 has called for modifications, and are complete in themselves. 
 To try to mix their parts up in a promiscuous way would 
 be to repeat the experiment of Frankenstein. 
 
PRECEDENTS GOOD AND BAD 103 
 
 And another point is this : Do not trust to simple hearsay, 
 do not believe all that advocates of this or that system say 
 on its behalf and what you see advertised. There is no 
 more lying brood than co-operators pleading fro domo suo 
 against other co-operators. In 1894 my friend M. Jules 
 Many, having been commissioned by the French Govern- 
 ment to conduct an inquiry into the several established 
 systems of operating Co-operative Credit, asked my advice 
 and suggestively proposed — "to ask the Schulze Delitz- 
 schers about the Raiffeisen system, and vice versa." In 
 that case, I replied, you will hear nothing but lies. He 
 could not, by the way, proceed far in his proposed inquiry, 
 which was cut short by a change of Government. He got 
 to Mr. Dupernex's model bank of Mentone, and confessed 
 to me : " I could not see anything ' co-operative ' in that 
 bank ; the first thing that greeted my eyes was a notice 
 put up in five different languages : ' Circular Notes may 
 be cashed here ' ; I don't call that ' co-operative.' " My 
 advice is : Go and see for yourselves. I learnt that les-on 
 in 1893 and have stuck to it since. At the French Co- 
 operative Banks' Congress of that year, held in spring at 
 Toulouse, I ventured to propose, in view of the animosities 
 at that time raging among Co-operative Credit organisers 
 of various types, that the French Centre Federatif as a 
 neutral body, should take in hand the collection of com- 
 plete and impartial statistics, the want of which was badly 
 felt. The task being considered beyond the capacity of 
 the Centre Federatif, M. Many, representing the Govern- 
 ment, somewhat rashly undertook on the Government's 
 behalf to do the desired work. Ten weeks after, as I 
 returned home by way of Paris, it occurred to me to inquire 
 at the Ministry of Conimerce how that inquiry was pro- 
 ceeding. Nothing, of course, had been done. But in the 
 course of a conversation with the head of the Statistical 
 Department I was given in great detail an account of the 
 French Savings Bank system, which turned out to be 
 altogether wrong. Since then I have preferred, to see 
 things for myself with my own eyes. Those general 
 statistics of the world's Co-operation, by the way — of 
 which the want is no less felt now than it was twenty-seven 
 years ago — that is, complete, trustworthy, and impartial 
 statistics, we have now some chance of securing. At its 
 
104 CO-OPERATION IN INDIA 
 
 last sitting, shortly before the war, the International 
 Statistical Congress, sitting at Munich, appointed a Sub- 
 committee to consider whether that Congress could under- 
 take the collection of such statistics. The war has, of 
 course, interrupted that consideration. But the war 
 has now come to an end, and it is to be hoped that 
 the inquiry will be resumed. Certainly statistics that are 
 complete, trustworthy, and above all things impartial, 
 would be a boon. 
 
 Now, as regards precedents, Indian co-operators want to 
 be reminded that Europeans are no more infallible in the 
 matter of this movement than are Indians. They are 
 moved in their several organisations by all sorts of different 
 and contrariant motives — altruism, egotism, politics, de- 
 nominational propaganda, labour supremacy, etc. etc. — 
 and accordingly produce the most divers and heterogeneous 
 types of Co-operation. There is, in truth, no bad practice 
 in Co-operation for which a precedent may not be found in 
 Europe. 
 
 As regards specifically Co-operative Credit, there are 
 varieties of Co-operative Credit in Europe almost beyond 
 the possibility of enumeration. And every one of them 
 is in its turn praised up to the skies by its own adherents 
 as the veritable and only genuinely good one. Proverbially 
 everyone cracks up his own goods — chacun freche four son 
 saint. But there is another French proverb, quite as true, 
 which says : Plaideur menteur — ^in Lord Bacon's words, 
 pleaders for a cause think more about " what may be said 
 for it than what ought to be thought about it." You cannot 
 judge of the value of a commodity by the account which 
 its maker gives of it, or of the prospects of a new company 
 project by its prospectus. If you want to know what a thing 
 is really worth you have to test it. Precedents are admirable. 
 But there is an excellent ancient proverb which says : 
 " Optimum est sequi majorgg, recte si frcecesserintP There 
 is great virtue in that qualification. 
 
 It has been my lot to see, I think, in the course of my long- 
 contintied studies, with my own eyes, more, not of course 
 of any one particular system, but generally of all the various 
 systems practised than most other men. My studies 
 naturally led me to do so. And the position which I long 
 held as President of the International Co-operative Alliance 
 
PRECEDENTS GOOD AND BAD 105 
 
 secured to me admirable opportunities for Cicero's -rta-vr 
 etSemt,* the seeing, if not actually the knowing, of all that 
 occurred. Under such circumstances perhaps a brief survey 
 of the principal systems actually at work, summarily 
 characterising their specific aims and qualities, may not be 
 thrown away upon those who are seeking for new light in 
 the matter of Co-operation and specifically of Co-operative 
 Credit. We sometimes find a " red book " useful upon 
 our travels.^ Proverbially " it is not all gold that glitters." 
 And there is mountebanking in Co-operation, as in the sale 
 of patent medicines. 
 
 The task set to Co-operative Banking, so it may be well 
 to recall to mind, is, in the words of Schulze Delitzsch, 
 its first apostle, " to procure capitals without a capital of 
 guarantee," or, as the veteran French economist, recently 
 passed away, M. F. Passy, has put it, to " procure credit 
 for those who have no security in the shape of capital to 
 offer in exchange." 
 
 That task, though at the outset presenting somewhat 
 serious difficulties, was even in its early progress sensibly 
 lightened to both Schulze and his Belgian and Italian 
 disciples, d'Andrimont and Luzzatti, bythe generally recog- 
 nised call for thrift, coupled with an absence in the countries 
 concerned of suitable machinery for promoting such. It 
 was upon that foundation that they all alike built up their 
 systems, getting over the difficulty of the presence of " no 
 capital of guarantee " by demanding the taking up of 
 shares which Schulze Delitzsch and d'Andrimont advisedly 
 made very substantial, insisting upon the collection in 
 this way of at any rate a moderate " capital of guarantee," 
 in order that there might be a " tangible security to 
 pledge " — although in point of amount that capital must 
 for a long time still be trifling in comparison with the calls 
 to be made upon it. 
 
 To Raiffeisen, on the other hand, the problem stated 
 presented itself in absolutely liberidan nakedness, and it 
 was the problem of problems to him. His object was, 
 indeed, to promote thrift ; but of necessity to promote it 
 by slower progression^— since in the field in which he was 
 called upon to operate means were scantier— ^but above 
 all things to bring aid, not specifically to Agriculture as a 
 * His chosen motto was : otSSev ■^KvKvnpw ^ ■ko.vt' eiSefnt. 
 
io6 CO-OPERATION IN INDIA 
 
 calling— although its' reflex effect must infallibly be to do 
 so, since those whom he' had selected as his beneficiaries 
 lived in the main by Agriculture, and were all of them in 
 the end dependent upon the prosperity of Agriculture— 
 but to help the poor in rural districts, to raise them out 
 of misery and set them economically upon their feet in 
 independence. That distinction of objects is essential 
 in the comparison of the several systems, because as a 
 matter of necessity it determined the choice of different 
 means for the attainment of the object aimed at. Agri- 
 culture would be benefited by Raiffeisen's Co-operation, 
 because only in rural districts were his distinctive methods 
 practicable. But it was essentially the foor, as poor, to 
 whom Raifleisen sought to bring relief — the poor, op- 
 pressed and held in peonage by. the German " Jews " — 
 whether Israelite or professedly Christian — ^at that period 
 fully as constrainingly as are the Indian raiyats now by 
 their mahajans and sAhukars. Accordingly, feeling his 
 way step by step, and gradually adapting his method to 
 his purpose, he shaped his system so as to make it fulfil 
 above all things this one condition. He by no means 
 desired to keep out the wealthy, and those supposed to 
 be independent of credit, from his societies. Quite the 
 reverse, he expressly invited them in. But he solicited 
 them to come in, not to take, but to give ; not as intending 
 beneficiaries but as intending benefactors, and dispensers 
 of the purest, the most beneficent kind of benefaction, 
 benefiting those whom it was desired to assist, without 
 demoralising them by gifts and patronage. The cardinal 
 point, the pivot upon which his entire system was to turn, 
 accordingly, must be, in the place of pledgeable capital, 
 to enforce scrupulously careful discriminating selection 
 of members and officers, and studied dividing down of 
 responsibility, from the community to the unit, so as to 
 ensure rigid compliance with duty. Raiflfeisen did not 
 ask what a man had. But he did ask what a man was, 
 what he wanted his money for, and, having judged such 
 employment to be justifiable, and the outlay promising, 
 he took all care to make sure that to that employment and 
 outlay the money would go. 
 
 Now, obviously, this is an object which can have only a 
 limited application. It is not an object which would, 
 
PRECEDENTS GOOD AND BAD 107 
 
 as indicating a- boon to be received, necessarily appeal to 
 wealthy zemindars and substantial farmers, be they ever 
 so " agricultural," and also in need of working funds. 
 But, manifestly, in India, with its millions of poverty^ 
 stricken and usury-ridden raiyats, that application must 
 be a large one, and on the ground upon which it is found 
 suitable there can scarcely be any other. In Germany — 
 and in Europe generally — the area to which it may with 
 confidence be applied is narrower. And the system is 
 naturally irksome in some respects — it may be, painfully 
 irksome to those who by reason of their possessions have 
 easier means of satisfying their need at their disposal. 
 The burden imposed cannot be lightened to the well-to-do 
 benefactors coming in, because that would spoil the system. 
 There must be no distinction made between " patron " 
 members and " benefiting " members, as there has been in 
 some French and Belgian agricultural syndicates and as 
 there still is in that host of Hungarian "co-operative" 
 societies, of the brilliant results of which such a great show 
 is made now, and so many tales are blared abroad. As 
 members all members must be equal. And the wealthy 
 man must shoulder his burden just like the poor, not only to 
 avoid resentment, but also in order that he may be counted 
 upon to contribute his full share to the common stock, in 
 the shape, not of money, but of that which is to the society 
 worth a good deal more— namely, his example, his guidance, 
 the loan of the fruits of his experience, and the use of his 
 credit, the last named to be carefully safeguarded by 
 himself. 
 
 And not only was Raiffeisen's system designed as_ one 
 specifically for the assistance of the poor. But it also differs 
 from others in this, that it distinctly has an ideal, a religious 
 aim in it, as well as an economic. It is to make men 
 better men, under every aspect, as well as better off,_ And 
 it has in practice richly shown its capacity for doing so. 
 And not only are men under it to become more honest, 
 more sober, more thrifty, better educated, more God- 
 fearing ; but they are also to become more brotherly, more 
 mutually helpful, more bound together by close common 
 ties. " Man- making," in Mr. Gladstone's sense,* com- 
 
 * « It is self-help which makes the man,'' so Mr. Gladstone in ^1890 
 phonographed to some promoters of provident action in America ; " and 
 
io8 CO-OPERAf ION IN IN15IA 
 
 munity- creating, it is to w6ld togeth.€t tke village into a 
 sort of family, in which neighbourly feeling of apfactical 
 kind prevails, neighbours willingly fueling with and helping 
 one another and so calling into bdng something like a 
 ' new and better wotld. " I have seen," so the Hungarian 
 Deputy, Professor von Dobransky, wrote in his official 
 Report, after visiting the Raiffeisen societies in Germany, 
 in the course of an inquiry similar to that undertaken by 
 Sir F. Nicholson, upon which he had been sent by his 
 Government, " a new world, a world of brotheAood. It 
 is a world of brotherly love and mutual help, where every- 
 one is the protector and assister of his neighbour. An 
 isolated man here finds himself transplanted into the 
 bosom of a community whose resovirces multiply a hundred- 
 fold the productive power of its labour and crown it with 
 success." The late Eugfene Rostand, although a chaigpion 
 rather, of a different system, has termed it "the happy 
 combination of sound business sijirit with the sentiment 
 of a true, a practical philanthropy."* 
 
 For India, with its recollections of its ancient " village 
 community," that ought to be- a suggestive and self-com- 
 mending object-lesson. 
 
 With such an object in view as has just been described, 
 qtiite naturally Raiflfeisen pursued a laborious and unpre- 
 tending course. He did not care about self-advertisement 
 and the beating of the big drum. " Pushfulness " was 
 the last quality that he could lay claim to. He was content 
 to trudge on humbly in his rut. In 1895 when, after a 
 course of waters at Carlsbad, I made a slxort stay, for re- 
 cuperation, in the Thuringian Forest, and, walking about 
 there, conversing freely with peasants, I discovered among 
 them a distinct desire for something like Raifleiseh Co- 
 operation, I at once wrote to Raiffeisen's successor at 
 headquarters, urging him to send lecturers into that part 
 of the country, where I was in a position to assure him that 
 they would be received with a hearty welcome. The 
 
 nlan-making is the aim which the Almighty has everywhere impressed upon 
 Creation. It is thrift by which self-help for the masses, dependent upon 
 labour, is principally made effective. In them thrift is the syihbol and the 
 instrument of independence and liberty, indispensable conditions of perma- 
 nent good." 
 
 • " C'est I'heureuse union de I'dsprit d'affaires avec les scntiraens d'une 
 veritable, d'une pratique philanthropic." 
 
PRJECIDENTS GOOD AND BAD 109 
 
 reply that I received was that the progress of the move- 
 meat "must be left in the hand of God." RaiflEeisen 
 and hisfoUowers trusted to the goodness of their cause to 
 create its own expansion. "Good wine" was thought 
 to " need no bush," some forty years after its pressing. 
 It was only something like twenty-five years after its 
 commencement that Raiffeisen's good work in his Rhenish 
 villages became at all known to the outer world. And 
 then its growing reputation was due, not to self-advertise- 
 ment, but to the inquiry which WiUiam I. of Prussia, 
 having heard of what was going on, directed to be instituted 
 in 1874 and 1875. l^ was not Raiffeisen who made the 
 " splurge." 
 
 A§ was the m^n, and as was the governing idea of his 
 scheme, so wa-? th,e progress of the raovement. There was 
 na hurry to get on, no touting for adherents, no beating 
 of the big drum. It was of the essence of the scheme that 
 adherents should not be sought for but should be admitted 
 only sp far as th^y were found to be admissible. The 
 conditions iinposed must be strictly observed. Once the 
 scheme had becgrne known, of course, in virtue of its 
 gopdness, it spread:=rrrapidly, too, all things considered. 
 However, what ground it gained, it gained by its own good 
 services, not by any adventitious aids. Public authorities, 
 priests and ministers indeed alike commended it:r^but 
 plai;ii|y.cally. The priests and ministers joined in the 
 n^wlyifprmid ranks. They had no money to bring in, and 
 their patronage extended no farther. Apart from a few 
 thousand rupees ^contributed in two of three offerings 
 from £io.g VViUiam's and his immediate successor's Privy 
 Purse, there was no money, whether public or private, 
 paid in from the outside. And when in 1895 the State- 
 endowed Central Bank-^of the part played by which in 
 the propagation of " Co-operative Credit," I shall still 
 |iave to spealfcr-being then newly formed, pressed its 
 services upon the Ra,meisen Union, that Union^ust like 
 th^ U:ni^ c£ Schulze.Delitzsch spqietiefesyroudly declined 
 S^e .o5|<^ .on ^^e grpup.d that it was fulfy camj^teiit to 
 provide ks: jt^f . Jt was only mi:^h la-ter tlut it 'Suffered 
 it^^ tp be -p^sj^^ded to accept the aid of the State Bank?-- 
 for a very short time. 
 
 Like ptjier Usiojis of t^ sort, the Raiffsis^ Uflio^ l^s 
 
1 10 , .CO-OPERATION IN JNDIA - 
 
 had its setbacks. But these have nof proceeded from thie 
 observance of its principles, but-rather-directlyfroni neglect 
 of th^m, and from excessive regard for what was rather too 
 charitably considered to be " co-operative spirit," diat-is, 
 over -readiness to support " co-operative " enterprises which 
 had- by imprudent management got into trouble, in their 
 need. That was unbusinesslike and proves something 
 against the persons who were at -the heJm ; but it proves 
 nothing whatever against the system. A^a-inst such mis- 
 adventures must be set -the impressive loyalty shown by 
 almost the eijtire array of the societies enlisted in igi2, 
 when the State? endowed Central Bank, greatly overrating 
 its own power, made a brutal atternpt to wreck the Raif- 
 feisen Union, in order^ as has' been -admitted,- to bring the 
 societies, composing it, separated from their parent stock, 
 into subjection to.itself. There was a considerable deficit 
 to make up on the score of the mistakes already alluded to. 
 But as one man the societies rose to the occasion and gladly 
 made a substantial sacrifice— rlong since wiped out -under 
 good,, businesslike management^— to keep their Union intact. 
 Strikingly different f ram Raiffeisen alike in character 
 and in action was his apostate pupil Haas, who subsequently 
 became his rival, promoting his own competing organisa- 
 tion. A man of good position, decidedly good' parts, 
 endowed with an engaging presence, a thoroughly genial 
 companion — especially over a bottle or, two of good Rhenish 
 --^although not by any means an orator, yet a ready- s-peaker, 
 and a iirst-rate organiser, Wilhelm Haas seemed cut out 
 for the part which he was actually called upon to play as 
 the leader of a movement. As a testimony to his capacity" 
 and the general appreciation of-his attainments it may -be 
 mentioned that, while -a member of the Diet of his diminu- 
 tive little country, Hesse, he was elected - Speaker, and 
 that subsequently a post as -Minister of State wa.s offered 
 to him, which he declined, preferring to devote his energies 
 entirely to. the service of -Co-operation. -One great point 
 in his characteristic qualities, which helped him more than 
 anything else, was that,-- as -a- violent, anti- British Pan- 
 .German^ he knew well how to write and speak in the-Tirpitz 
 tone, and to use Imperialist-phrases and catchwords, -which 
 told greatly with fhe Gerinan public, bitten as it was- 
 with -"-kaiserist.". sentiment, and still- more,- and -to-ex- 
 
PRECEDENTS GOOD AND BAD in 
 
 cellent effect, with its rulers. Thus, at the Jubilee Con- 
 gress of his Union at Mayence, in 190.8, under the presi- 
 dency of the Hessian Grand Duke, who is the son of our 
 Princess Alice, with a (Unionist) Irish landlord sitting 
 near him as an invited guest, he had a doggerel song sung 
 denouncing ." John Bull and the Frenchman" as going 
 mad with envy at the thought of German prosperity — 
 " which madness we snap our fingers at, wmle we have 
 William of Hohenzollern to send them to the right about."* 
 Our International Co-operative Alliance Haas would have 
 nothing to do with, avowedly because its Executive Com- 
 mittee was (for purely practical reasons, the seat of the 
 Alliance being in London) composed of " Englishmen." 
 And he. deliberately abused the courtesy of an invitation 
 tendered to him to attend our Congress at Budapest as 
 an honoHired guest in 1904, to get the Austrian and Hun- 
 garian agricultural co-operators away from us, in order that 
 he himself might with their aid set up a purely German 
 Junker-governed " International " Alliance of his own — 
 of which we have not heard much since his death. 
 
 Wilhelm Haas began his co-operative career as a devoted 
 pupil and follower of F. W. Raiffeisen. From the outset 
 probably he cared little for the ideal side .of Raifieisen's 
 programme, nor did he think greatly of. the poor. But he 
 was quick to discern the great commercial utility of Co- 
 operation for the landed interest. Rarffeisen's tenacious 
 insistence upon cast-iron observance of the principles laid 
 down by himself,\nder the maintenance of rigid centrali- 
 sation in matters of direction, may also have gone against 
 the grain with him. And no doubt Raiffeisen had some 
 angularities. In any case, shortly after 1880 Haas, in 
 company with Dr. von Langsdorfi and Herr Weiden- 
 hammer, separated himself openly from Raiffeisen, in order 
 
 * The precise words are these : — 
 
 " Zum Kampf nach aussen mogen d'rum 
 John Bull and Franxmann kollem. 
 Das ficht uns nicht so lang regiert 
 Wilhelm von Hohenzollern. 
 
 " Den Hahn in Ruh ! Die Flinte blanki" 
 Lasst nie die Schwerter rosten I 
 Kein Kampfgeschrei ! Coch wenn es gilt 
 Seid AUe au£dem Pffsten !" 
 
112 CO-OPERATION IN INDIA 
 
 to start a movement of his own which was to be strictly 
 economic, without any ideal aims imported into it, and for 
 the benefit of the landowning and farming interest generally, 
 but more particularly the large ones with the petty 
 cultivators enlisted only as hangers-on, so to put it, elee- 
 mosynary beneficiaries, receiving benefits, but practically 
 not admitted to the right of a say in matters. It is every- 
 thing but a democratic movement. And it is " co-opera- 
 tive " only in the lower, materialistic sense of the word. 
 In 1883 he succeeded in forming in Hesse a small union 
 of about a dozen little agricultural supply societies. How- 
 ever, for about twelve years after, this movement remained 
 feeble and altogether local and scarcely known. Indeed, , 
 by a systematic withholding of information from inquirers 
 and the public, Haas appeared advisedly to be keeping his 
 light jealously under a bushel. 
 
 A great change came about in 1895. In 1894 the German 
 Emperor had decided upon that ambitiously aggressive 
 policy which came to a head Jn 1914. To be able to 
 pursue it, he must make sure of th« support of the land- 
 owning interest and the rural electorate. For both indus- 
 trialists and the working classes had their noses badly 
 out of joint at the time-^the last named on aecbunt of 
 the miscarriage of the pretentiously announced Labour 
 Congress of 1890 and the anti -socialist policy then being 
 rigorously pursued. The industrial and commercial classes 
 were smarting under the effect of the breach over tariffs 
 with Russia only just set right after doing a deal of damage 
 to German commerce and industry. Among the agricultural 
 interest the powerful squirearchy was likewise sulking under 
 the effect of the renewal of the commercial treaty wi-thRussia, 
 which reduced the price of corn in Qermany, but also saved 
 the country from imminently threatwaing famine, for 
 which reason the Empe,ror hims^f ha4 terjned it " the 
 saving deed." However, that was nothing to the squires, 
 who sullied. But those 5ara,e squires were to be propitiated. 
 WiUiam JI. went down.,into their "Society," ana announced 
 his firm " resolve " to makg Germany henceforth " inde^- 
 pendent of foreign supply of foodstuffs." That meant 
 "corn in Egypt -reffectiv^ Protection for the squires, 
 who in Germany g^erally farrn tltieir own estates — dear 
 corn. |n support el tj^t " |;es.olve " William spaced 
 
PRECEDENTS GQOD AND BAD 113 
 
 neither public mcB3:ey= nor favours*- the intended result 
 of all of which was, by the lavish bestowal of benefits out 
 of public resources, to knit the rural population firftily to 
 his Throne, under the rule of the Junkers, that is, the" 
 squires, who were to stand at the head. Forthwith the 
 State-endowed CentralBank was created— the endowment - 
 of which has gradually grown to six crores of-rupees—^to- 
 supply whatever money might be required for the- benefit^ 
 of- the" Junkers. Next, those most' useful institutions — 
 richly useful, apart from their unmistakable political 
 aim-^the Prussian " Chambers of Agriculture," were called' 
 into being* Railway rates—the Government being the 
 owner of the railways— 'were lowered for agricultural pro- 
 duce. And at all points were concessions made, and boons 
 showered upon the^henceforth specially favoured calling. 
 
 However, to make all this material productive of results 
 some effective machinery was needed. To sin^e out 
 only one point :; those six crores of rupees, with all 'the 
 deposit m©n^ that such ample share capital might be 
 counted upon to ^attract, cotdd not be- distributed--among< 
 the agricultural public takiwi fashion in driblets to indivi- 
 duals, by Revenue OiEcers and Deputy CollectbrSi- There 
 must be- organised societies to act as intermediaries-— ^ 
 distributors and re-cdllectors. Now here was the " Elian- 
 gowanheigto," on which " Bertram's right and Bertram's 
 might" might be made to meet. Ail co-operative- organi- 
 sations were- invited to accept the Dana-an gift. The 
 Raiffeiseners, standing first, flatly refused, as did.-- also the 
 Schulze- Delitzschers. The Powerful Peasants' Associa- 
 tions-^H)rganised in imitation of; Raiffeisen's societiesf, oit 
 the same "lines, but with a strong denominational colour- 
 ing-^being. amply, provided by their magnate patrons, 
 stood, in no need -of. pecuniar7 assistance, andy apart from 
 that, were content to trust to'their- devoted leaders alone** 
 
 • It is odd indeed that none of our- official scribes reporting upon Co- 
 operation should have paid any attention to these undoubtedly useful and 
 reaffly -powerful organisations, which stand for a great deal in German Agri- 
 culture and, rural life. Their membership is very considerable and their 
 influence is not small If included in the published statistics,, and :bf acketed 
 with the RaifFeisen societies — the organisation of which they have in'fact io 
 closely copied that officers of the two bodies freely exchange from one to- the 
 other— -they would iswell the roll of such societies and-,the record "of their 
 business considerably, there are, as it happens, no statistics publishisd 
 
114 CO-OPERATION IN INDIA 
 
 Other organisations of any pretensions there were then 
 none in Prussia. And for the time action outside Prussia 
 was still not constitutionally possible. Outside Prussia 
 for constitutional reasons nothing had yet been attempted 
 from Berlin. However, the time seemed come for mobilis- 
 ing the agricultural interest on a wider basis. And accord- 
 ingly, eyidently with such power at his back as the Prussian 
 Government could supply, Haas was the man to employ 
 for mobilising agricultural Germany in the Emperor's 
 interest. He accepted the mission. The rapid growth of 
 his Hessian Union dates from that time, and was based upon 
 that . foundation. Co-operation itself, aptly handled, the 
 prospect of buying more cheaply and selling more dearly, 
 organising the sale of dairy produce, cattle, potato spirit, 
 etc., in the interest of the producer, and the securing of 
 advances in money for convenient periods at a moderate 
 rate of interest — all this in itself was bound to bring recruits 
 to the cadres. But there was more. Prussia, with its 
 numerous " Excellencies," of whom Prince Hohenlohe 
 has written, is the country of all others for titles, decora- 
 tions and similar distinctions. They were showered lavishly 
 upon Herr Haas and his leading colleagues. Princes and 
 high dignitaries of State took an active part in the Congresses 
 and in all the doings of the new Union. And official 
 pressure was strongly brought to bear upon other existing 
 organisations to attach themselves to Herr Haas' Union, 
 which has, like our big joint-stock banks, grown mainly 
 by amalgamations. Thus in Rhineland, Agricultural Co- 
 operation had been moving since the sixties, under Herr 
 von Thilmany and Dr. Havenstein. It promptly became 
 
 regarding them. But it is known that some of them comprise some 
 hundred thousands of members. They are particularly strong in Westphalia, 
 where they took their birth, and Silesia, both being pronouncedly Roman 
 Catholic provinces. Their organisation is, as observed, essentially that of 
 Raifleisen societies, but the denominational idea is in them carried to much 
 further lengths. Their professed aim is to maintain and strengthen the 
 peasantry, as a distinct class of society, and to vindicate its rights. But 
 they are very much led by territorial magnates and priests. And in this 
 respect they rather recall the much-talked-of Hungarian co-operative rural 
 societies, in which likewise the ruling magnate is the dominating factor, 
 being supposed to know best what is useful for his patronisingly governed 
 flock. There is also more Church rule in theln than in the Raiffeisen 
 societies, but less family and community making. But materially they 
 render very con8id«rable services. 
 
PRECEDENTS GOOD AND BAD 115 
 
 a " section " of " Haas.", Prussian Saxony was the native 
 province of Schulze Delitzsch and had drawn in his co- 
 operative teaching almost like mother's milk. All these 
 organisations were now harnessed to Haas' car. This 
 was rendered the easier, since Haas judiciously, from his 
 own point of view, relinquished RaifFeisen's principle of 
 centralisation of command and made " Home rule " the 
 cominon practice for his provincial sections — which policy 
 vvas richly effective in bringing forward local capacity, by 
 giving it free scope, stimulating emulation and humouring 
 provincial patriotism. And as time went on, and Berlin 
 could command more effectively outside Prussia, under 
 official pressure, the great Wiirtemberg, and Baden, and 
 Alsatian Unions likewise came to be tacked on to the same 
 triumphal car. In this way the Haas Union, appropriately 
 rechristened the " Imperial Union," grew to its present 
 imposing strength, fully realising, as we have seen during 
 the war, the Emperor's political aim, which was, by ample 
 benefactions in the shape of money, decorations and other 
 favours, to attach the rural population, systematically 
 organised under Junker guidance, firmly to the imperial 
 policy. 
 
 Apart from politics, Haas' ruling object in co-operative 
 organisation was financial success. He discarded " ideal " 
 objects, special care for the poor, " man-making," "com- 
 munity-creating " and all that. Pounds, shillings and 
 pence became the one dominant note. Under such 
 governing idea there could not- be any scrupulous regard 
 for that " principle " which Raifleisen religiously placed 
 in the forefront of his programme, and by which he scru- 
 pulously held fast. Bulk was what was aimed at. The 
 goal made for was, to bring together under one rule as many 
 adherents as possible. Under the adoption of home 
 rule, the dropping of careful selection of members and the 
 pursuit of purely egotistical aims for every one enlisted, 
 that policy presented no serious difficulties. _ However, 
 as a necessary consequence principle, the ruling feature 
 of Raiffeisen Co-operation, as Haas had found it, fell 
 into abeyance. The strictness, the oneness, the unity of 
 practice and inherent trustworthiness of the organisations 
 were sacrificed. My very first experience in the study of. 
 Haas societies, in 1895, when the Union still scarcely 
 
ii6: CQ-QPERATJON m INDJA; 
 
 extea«i^d, beyond Hiessej was, , to: visit, within:«ait easy- walk, 
 of; thee headquarters of th? time-, that, is, aj? Off ejifeach, 
 two .credit societies, on,e.of which was exc^eat,.the!-..oth^. 
 extremely bad, iadeed a veritable carieatureofGoropera" 
 tioR. Oil my return, to Offenbach. I; remarked upont. this 
 to Herr Ih?ig, Dr. Haas' second-in'-como^nd-,. He could 
 not deny it. But no more could he do anything to correct 
 the mischief. Haas wanted members and bulk in business.. 
 So the, bad must be taken along with the- good. Herr 
 Ihrigi simply; shitu^ed his shoulders. Now that has 
 become a; characteristic, throughout. Bulk, of " business " 
 is th&rteat.- There i| good: ain4s bad intermingled, .allowed- 
 to ^ow ^p. side'J>y sidci 
 
 Inr the; matter of j Supply: and. Production;, , and all r that 
 periaiiis to.; thenar such as the. conversion of raw produce 
 into: more-: marketable commodities, in which business it 
 is bulk.which rmidy.telh, the disregard of principle does not 
 matter. much» Bwlk,thefe is^ and, the movement beiiig- 
 handlediby admirable- or^nisers, .that part of the.business 
 goes on swimmingly and successfuily. 
 
 But:we havecnow to; do. with ^r^dit. And Credit :is-in 
 a different position. Credit is a matter in which principle 
 anicautiott^diierimination and rigorous control, distinctly 
 tell.. Undfwibtedly the liberal assistance given, by the 
 Statesendowed. Central B.ank..has at; times been found, a 
 most valuable help. Indeed-, the. Union could. not have, 
 gone? on, without it. It has tried to.do.so and Jyis; failed. 
 It: isvd-epeicdeat upon., its, Germa.n t^mi> However, this 
 State;.ajd al.so;has its -distinctly dark side< Ithas, in.-fact, 
 created-.a. sortiof peonage, under which; Herr, Haas himselfr! 
 owned to:;me-that he winced. It took himiJe^s than .three, 
 years : to:de$ec$ : the- %: in : the - ointment> and- find, out the-.^ 
 trttth;„ofiStesae'^-rS9yingTthat:" All is, not gain that is got 
 inta the purse.:" In; i%8t he; flattered him.seyt. that his 
 Uhioit . was . strong, enOTJighi. to i shakie-.- off thet State : yoiii^y 
 " -Weshave thisty/miMon m^rks. in depos^its..-" So h^iioasted 
 to? mec AlaSi that? sum— ^ ^ withdrawable-, quantity, , much : 
 of-whi^h waiin fact sopn after withdrawn — was -not :n©»rly; 
 eaough: to; secure." independence-f His attemp.t.tov rebel; 
 cad5?-.-led- th«eS|8tetBanki to ; tighten the- r eim* And: th-ere- 
 was Sindh8d:,the Snilor: with the Old Man of..the-Sea stUl', 
 ftjmly' seated:,upoaalus back ] 
 
PRIGEDE'NTS 'GOOD AMD 'BAD 1 17 
 
 Herr^Haas'" Union," in its close alliance with the State 
 Bani, accordingly represents the very useful principle ■of 
 -Co-operation turned to account, as its main object, for 
 pohtical purposes. It has helped to create a war patty 
 thoroughly loyal to the Kaiser. -Unquestionably it has 
 brought benefit also tofarmers—iiowever, benefit to a great 
 extent at the cost of other interests ; and benefit in the 
 main for moneyed adherents in that calling, with the smaller 
 and poorer men tolerated. Indian co-operators may be 
 truly thankful that their credit societies have been spared a 
 similar degeneration. All in all, inPrussia, the parent country 
 of thispeeuliar coddling policy, spoon-feeding credit has not 
 proved anything like as successful as it was expected to be. 
 The Schulze Delitzsch Union and the Raiffeisen Union, 
 as has been said, declined submission from the 'x>utset. 
 The 'Peasants' Associations {Bauernvereine) were not to 
 be asked. But the Government has tried to attach a 
 number of traders to its cause by offering financial assis- 
 tance from its State Bank to tradesmen's credit societies, 
 to be formed under Schulze Delitzsch's rules but quite 
 wrongly restricted in respect of membership to one dis- 
 tinct trade each, which condition, among- other drawbacks, 
 causes inconvenient alternations of plethora and anamia, 
 all money being wanted, and in its turn repaid, at the same 
 time. The arrai^ement has been tried. But after only 
 a brief time the societies so patronised canre to be told by 
 one of their own chief lead^s, Herr Mager — -himself being 
 a Government employee in the matter, that is, an inspector 
 of such societies on behalf Of the State Bank— that they 
 would do much better to join the Schulze J>elitzsch'Union, 
 which would care for them to better effect. 
 
 Outside- Germany. State and magnate coddling has been 
 freely practised in a number of States—with, as ajgj^ears to 
 me, rather questionable results. In A^tstria and -Hungary 
 Agricultural Credit Co-operation, so far as it is=German or 
 Magyar, is all State or magnate patronis-ed and freely 
 subsidised. -And its results are inferior to the Co-operation 
 of compatriot Slav races, who have to shift for themselves, 
 but, as Herr Wrabetz, at the head of the German Schulze 
 -Delitzsch Union of Austria has pointed out, put much 
 more " back" into their work and evolve not eo- operative 
 benefits only,1>ut ako co-op«ratives-entinrent and' practice. 
 
ii8 C0^0PERATI9N IN INDIA 
 
 The same thing practically may be said of the Polish Credit 
 and Land Settlement Societies in Prussia, which, relyinig 
 on their own resources alone, sustain a fair fight well iji 
 competition with the State-protected a^d State-subsidised 
 German .Land Settlement Societies by their side. The 
 Slavs generally malce admirable co-operators, as we have 
 seen in Russia, once the yoke of absolute government was 
 lifted off them. In Roumania and Bulgaria likewise State 
 assistance reigns supreme. But the results there are not 
 equal to those achieved in Serbia, under a self-reliant 
 system. In Italy State assistance has been applied only 
 where independent initiative appeared hopeless. And its 
 results have not been particularly eiicouraging. As I 
 have ventured to explain in an Italian paper, it was the 
 wrong medicine to employ in a case of undoubted sickness. 
 The proper medicament to apply would have been tenant 
 right, or at any rate more settled tenure. Tenants are for 
 the most part absolutely at their landlords' mercy. In 
 Italy neither the Raiffeisen nor the Luzzatti movement — 
 which latter is an adaptation of the Schulze Delitzsch 
 movement — ^receives any State help whatever. And yet 
 both flourish greatly, more particularly the Luzzatti move- 
 ment, which, by means of its banks, based on the holding 
 of shares by members, renders most substantial services 
 also to Agriculture. The Raiffeisen movement has not 
 inexplicably been for the larger part annexed by the 
 Church." Its aims being above all things moral, and one 
 may say religious, in a Roman Catholic country influence 
 has almost as a matter of course gravitated to the priest 
 and the Bishop, which latter there presides ex officio over 
 each diocesan section. And in Italy the priest stands under 
 the immediate shadow of the Vatican. In Belgium, in 
 the Netherlands, and partly in France, subordination to 
 Rome is still rnore pronounced, for in the " Catholic " 
 banks there the priest is out and out the dominating factor, 
 and members find themselves under strict ecclesiastical 
 discipline, with a patron saint to each bank, also obligatory 
 masses and confessionals added to their duties, and free 
 masses for their souls after death thrown in as part of their 
 reward. However, in all these countries the societies, 
 denominational as they are, do good work and teach t^heir 
 members self-r.eliance. Thjeir dejip|n,in,atippaiisjp;i would 
 
PRECEDENTS GOOD AND BAD ii$ 
 
 probably not be half so strong if there were not the trouble- 
 some Socialists to be barred out by such defensive means. 
 The Belgian "Catholic" societies, of the Boerenbond— 
 which during the war has by no means restricted its helpful 
 action to its own members only, or even only to pronounced 
 brother " Catholics "—take a distinct pride in their refusal 
 of State aid, which was offered to them, but which they 
 scout as unnecessary. 
 
 French State-aided Co-operation deserves a brief word 
 to itself, to be given presently. In general — to wind 
 up this little interlude — it may be remarked : How poor 
 are the resvilts of all this State coddling " with a purpose " 
 in comparison with what free Co-operation has effected 
 under Schulze Delitzsch, Luzzatti, Raiffeisen, and in 
 Belgium, by the free associations, in the Netherlands and 
 in Switzerland — where Governments help to a small extent 
 at points at which help is beneficial and legitimate, and 
 does not injure other interests, but where they do not 
 
 E resume to dictate or interfere — and above all things in 
 >enmark, the country of countries for Agricultural Co- 
 operation, the model from which all other countries have 
 to learn ! 
 
 To return for a moment to Haas Co-operation, excellent 
 as is its organisation of Supply, Production and the like, 
 in which branches it is above all things numbers and bulk 
 which tell, its organisation of Credit is generally speaking 
 not by any means perfect. Naturally enough, under con- 
 stant reliance upon outside support, such organisation is 
 apt to degenerate. And the loftier aims of Co-operation, 
 in the sense in which that term is now generally accepted 
 among English folk, are altogether wanting. There is no 
 " man-making," no " community-creating," no drawing 
 together of members with bonds of brotherhood, no 
 raising of people to a higher social, intellectual and moral 
 level, as in the Raiffeisen societies. And the management 
 is altogether in the hands of big men — whose interests are 
 not by any means at all points identical with those of the 
 peasant or the raiyat. 
 
 Talking of such Credit, I should not wish to be mis- 
 understood. There is excellent Co-operative Credit to be 
 met with in the Haas. Union— none better from a mere 
 business point of view — wherever the businsss is locally, 
 
120 CO-OPERATION IN INDIA 
 
 that is, in ith«i particular province, committed to able and 
 conscientious men governed by co-operative ideas. Thus 
 in Rhineland,' under Dr. :Havenstein,-it.is as .good as can 
 be, and no misadventures- are likely to happen thete. Also 
 •in the Prussian province' of Saxony-'^wiuch, as observed, 
 ihas -had the b«a«fit of ; Schulze .Delitzseh's teaching for 
 nearly seventy years back. The same may be said of 
 Hanover. But such quality is not uniform in the Union, 
 •as you may- generally say that it is. in the Schulze. Delitzsch 
 and in the Raifieisen Unions,. so that membership in; either 
 of thesetUnions may be taken as in itself a sort of voucher 
 for quality-!— which is worth a .good deal when it comes to 
 the 'task of attracting money. :I have already told the 
 story of two closely contiguous hanks in .Hesse. Since 
 ■then we hav^ seen how disastrously the.fabric set up under 
 Herr Haas' own presidential nose ; broke down calami- 
 tously in 1912, in Hesse, destroying for a while all confidence, 
 and filling Germany with dismay. The Secretaiy -of the 
 =Union has of course tried to explain the debacle rawajso^ 
 just as German Ministers of State and German jcMirnafists 
 have tried to explain away Germany's authorship of the 
 great war and the defeats of her army and fleet. The legal 
 inquiry. instituted tells its own tal«. The German papers 
 were full of reports of the. proceddings. .Imtruth Iforesaw 
 that something :of the kind— although -iLOt precisely in 
 the shape in which it actuaEy.came about — must happen 
 as long before .as in ■189-5, when ;I first visited Haas' credit 
 societies and -examined their system. I :found looseness 
 and diversity in it. In the absence of Dr. Haas, I warned 
 Herr Ihrig, the second-in-command in the Union. You 
 cannot take liberties in the matter of Credit. Credit. is a 
 delicate plant and wants to be delicately handled. There 
 can be no stretching of points. You must have security. 
 And the security must be absolute. You ««aj*-have;punc- 
 tuality. You musthuve a keen sense of responsibility ever 
 kept alive, brought home on the smallest provocation. 
 The idea of Raiffeisen .Credit — ^which the Haasists claim 
 to have made their own — is that you lend, not on the 
 security of possessions already realised, appraisable and 
 recordable in haissiyats-^oi which.Indian Registrars appear 
 in danger of growing just a trifle too fond — but on the 
 security of the Jborrowerf-s acharat:ter and :tbe employment 
 
PRECEDENTS GOOD AND BAD 121 
 
 which.heas abo-ut to give to the money borrowed. There 
 IS a story told of a great contractor, all whose sons and 
 grandsons, so far as they are alive, are now very rich men, 
 one ^grandson, gracing the House of Lords, which points 
 the lesson— whether it be true or not, ..for which I would 
 not vouch. _ It is said that he was an employee without 
 means of his own, but known to be endowed with high 
 character and remarkable skill and jndgment. He is said 
 to have had a contract offered to him which, he saw could 
 .be made. to yield a handsome profit. He went to some 
 bankers, to whom he was known, to borrow the money. 
 They were aware, of both his honesty and his capacity, 
 and _wh«n-he explained the nature of the contract offered 
 to him, on the security of the two things-^not one only — 
 the bankers are said to have advanced a considerable sum ; 
 and so practically they started our future millionaire in 
 business which .led straight on to fortune. What the 
 
 possibly :only imaginary B did on a large scale,-members 
 
 of Raiffeisen societies are intended to do on a small, but 
 in millions. of cases. Jt is a question of wealth to be got, 
 not out of wealth, but out of, nothing, what-M. Luzzatti 
 has called " the capitalisation of honesty." However, in 
 the: Haas societies such principle of lending on the security 
 of the employment desigrred s.oon came to be at any rate 
 diluted with easier, but as we have seen— ^andas I -hope 
 we shall never see in India— more risky lending. "Why 
 should we -take _the, trouble to. inquire every time what the 
 money is to be borrowed for ? That means trouble. We 
 want things made-easy. for~us. Xet the man have a current 
 account, an overdraft." That is what has -been openly 
 urged at meetings and in the press^^and has been acted 
 uponinpraGtiee. We have seen the result in Hesse. But 
 a more demoralising failing still is that constant reliance 
 upon .capital coming in from outside. It is that which 
 really brought about the wrecking in Hesse. It led to 
 all a.orts of .financial manoeuvring, which was utterly 
 unsound, rotten as a medlar. There have been criminal 
 proceedings .in consequence. The Central Bank, of which 
 Herr Jhrig was Managing Director, became insolvent, 
 but went on doing business. Itheld plenty of local socie- 
 ties' mon^. The rumour of its difficulties .got -abroad, 
 -anii.itsiUEector, a person itrmisKi:by. all, was :a5k€d what 
 
122 CO-OPERATION IN INDIA 
 
 the rumours portended. " Nothing in the world," was 
 his reply ; " your money is safe." Now, after that, am I 
 right m urging that local societies should rely upon them- 
 selves rather than upon financing central banks — using the 
 latter, but not abusing them ?_ 
 
 The evolving of Haas Co-operation out of Raiffeisen 
 Co-operation has, thanks to the generous patronage and 
 liberal protection of the various Governments, given a 
 most animating fillip to German Co-operation in Agricul- 
 ture generally, and in so doing it has done a great deal of 
 good, although not good without distinct drawbacks to it. 
 But it has also done much mischief. Not only has it 
 shown how the " soul " of high ideals may be taken out 
 of Co-operation, but also the backbone of self-reliance. 
 It has, as Louis Durand, " the Raiffeisen of France," has 
 put it, " adulterated " Raiffeisenism. 
 
 Furthermore, although eventually with the help of 
 Government influence uniting a goodly part of existing 
 Agricultural Co-operation under its own banner, it has in 
 other ways served to split up Co-operation in Germany 
 into aggressively competing camps and forcibly abetted 
 the State-endowed Bank in its Kaiser-like ambition to 
 make itself mistress of the entire country, which ambition 
 led to the great co-operative battle of 191 1. That split 
 has gone far towards destroying confidence in Co-operation 
 in parts of the country. Other new unions crumbling off 
 or setting themselves up afresh, the country came to be 
 covered with rival organisations, each of which, touting for 
 itself, made, more Germanico, a practice of running down 
 its competitors. The very modus vivendi brought about 
 in 1905 by the erst rival Unions of Raiffeisen and Haas — 
 which naturally did not last long — was, as has been owned 
 to me, dictated by a spirit of self-preservation. It was a 
 mariage de convenance. There wers in the small area of 
 Rhindaud at that time no fewer than five distinct unions dis- 
 puting the ground against one another and telling tales, true 
 or otherwise, against their competitors. Successful propa- 
 ganda under such circumstances came almost to a stand- 
 still. It was to put a stop to this mischief and for their 
 own protection that the two chief Unions — both of which 
 felt the effects of the promiscuous " blackguarding " — 
 decided to come to something like an understanding— 
 
PRECEDENTS GOOD AND BAD 123 
 
 which, however, in consideration of the different aims pur- 
 sued by the two, never ripened to a heart union. The 
 ' Union " then constituted was never more than a " working 
 arrangement." The Raiffeisen Union stood firm upon its 
 ideal aims and independent organisation. In 1883, when 
 he had just seceded from it, Haas openly discarded those 
 ideal aims. In 1905, for the sake of the " arrangement " 
 just spoken of, he contentedly once more swallowed them, 
 " religion " and all, and put them in the forefront of his 
 programme-^only to drop them once more very promptly 
 when the " friendly separation " took place in 1912. In 
 a similar way, in 1883, when he stood alone in his weakness, 
 Raiffeisen being the stronger, and Government protection 
 being still only to come, Haas prudently sought support from 
 Schulze Delitzsch — who was then at daggers drawn with 
 Raiffeisen. And, to obtain his countenance, at one of 
 Schulze's Congresses he solemnly pledged himself " never " 
 to accept State aid of any sort. Twelve years later he 
 threw himself body and soul into the arms of the State. 
 In the matter of the holding of shares his inconstancy and 
 indifference to principle have been as conspicuous. He 
 began declaring, with Raiffeisen, shares to be unnecessary. 
 His new ally, Schulze Delitzsch, however, held substantial 
 shares to be essential — as, under his system, undoubtedly 
 they are. Haas accordingly at once adopted the principle 
 of shares in theory. And when, in 1898, financing Govern- 
 ment became exacting — while at the same time deposits 
 grew scarce — the cry promptly went up from him that there 
 must henceforth be large shares, double, treble or quad- 
 ruple the old figure. The change of front has not done 
 much good. Some vigorous provincial Committees have 
 indeed been able to insist upon a substantially larger pay- 
 ment in shares. But on the whole shares remain in the 
 Union pretty much as they were. Why ? I have asked 
 that question. Why ? " Why, there are those plaguy 
 Raiffeisen societies by our side, taking members with small 
 shares— the law does not allow them to form absolutely 
 without— and rendering the same services." There is 
 not much consistency in this. 
 
 Operating, as he does, for large agriculturists, as_ a matter 
 merely of businesiT-which is, of course, quite legitimate-^ 
 Haas in truth would have done better to insist upon large 
 
124 .GO-OPERATION IN INDIA 
 
 shares .from tbe very ,begiimiiig and drQp fithe preteace 
 :of acting still- upon RaifieisenlineSji-beGause heis not doing 
 SO:; and forHs;better.:tOTdo cE'cnteleia^er shaces obviousiy 
 are '.ever, so imuch. more advisaile. iBut-it wascpart of the 
 understanding withithae Xjrovermaent that he^shaald carry 
 the whole rural public, the. voting.pubiie,' with him. And 
 so.he;must do whatihecould to.meet the views of-the small 
 men who count at the polls, and adopt,:in.part at least, the 
 ;Raiffieiaen_programme, which had grown, so popular. ;How- 
 ever,,put thcfmatter to a test! _G'0.tOiaCongress;of:either 
 side, -and you will see the difierence: between the:twoat a 
 glance. . At aJlaifEeisen Congisss-you mmt mainly. jjeasantry, 
 with a sprinkling of men :of superior - social 'position, but 
 without .any pr^tensixais assumed on ^that score. IThe 
 spirit ".pEev,ailing .is . that of .freedom and -©quality. IPhere 
 is not. much, show ;. things are sinjple. ButaUarein earnest. 
 Th^ are thinMngof agricultural improvement, of -social 
 betterment, of .raised moral status. At a ^Haas XJongress 
 yjou,raeet Excellencies and Counts and ^Barons. -All is in 
 frock coat and broatkloth. You sit down -in your^best 
 clothes to. a sumptuous, banquet, at whichGranddtdEes and 
 Ministers :of: State '-preside and choice viands and. select 
 wines are consumed. There will be a pretentious excursion 
 and very -probably fireworks. There will be a dignitary 
 of State in the chair. -And all the -speakers will -te men 
 of position. -It-is a -Congress oof Squires, -thinking, uot of 
 raising the poor peasants of :the country, but -of -making 
 Agriculture more profitable -for the wealthy man with 
 his broad acres, .by -favouring -him at the cost of -others. 
 -For. the small cultivator grows none of that produce vdiich 
 is made artificially dear for the -big man's benefit. -And, 
 further to animate the gadiering, there are denuiiciations 
 of "perfidious John Bull" and "the J'renchman " — 
 Co-ropEeration evidentlyheing held,:not to " mean peax:e," 
 as .the democratic -Schulze -Deiitzsch was in the habit of 
 describing it,, with ifull sincerity, but war on surprised 
 Belgium and unprepared France, -for the purpose of con- 
 quering 'Belgian and ^French coalfields, and supplanting 
 England in the world's colonies and markets. 
 
 J .jcannot imagine that it is such kind of Co--<toeration 
 that -is wanted -or desired -in Jndia. Nor ■ are we -likely to 
 think .more of :th« :zemindar-'s ^millions than of 'the -naiyat* 
 
PRECEDENTS GOCSl AND BAD 125 
 
 debts* Aad weexould not . afford to: put up-'witH\ question- > 
 able; fmaneing, the cofEers for, feeding which have, again-. 
 and_ again to be replenished from the public exchequer— 
 as thePrussian bank's havehadlto be-by perixjdical increases 
 of endowment. A collapse of banks, such- as has- been 
 witnessed in Hesse, would, in India, be fatal to tKe move" 
 meat. Therefore, I hold, Indian co-operators will not 
 find themselrves badly advised^ if they stick to the steqxer 
 andmore thorny but distinctly safer, path of caution: and 
 rigid rule, rather' thaa: allow themselves toj be led astray 
 by the specious., parading of precedents upon thet slippery 
 ways of easy going- 
 
 State-help, systematically pjractisedj has taken a di£Ea^ent 
 sl^pe in Erance-rfrom .whatit'has;done in Germany. Qb- 
 viously, although German precedents as such, may be; 
 welcomed in .India', th^ would not on any account go down 
 "in . France. France-: must, in , appearance : at least, paddle: 
 its own canoe.' Howeyer, at , bottom the: two systems' are: 
 vMy nam:h; alike? tloth bMtg? gpveraeiiby,* a ■ treacherous' 
 regard~for " politics," wMsh is not preeisdy anr" eleyating " 
 principle. 
 
 Some: thirty years a^.,- the: want: of: GjOropseration was: a 
 good; deal, felt among:; the rural population in France. 
 The:Com;paratively-poor— although- with aU that 'contented 
 — living among the^ French peasantry has ; long; been . a 
 favourite: subject for: seoffingr and:, disparagement', among 
 the vindicators of . the. traditional threerstoried: agricultural 
 system- dEi England;^ which assumes that': better food- — 
 in;this casepurelyima^nary, for:our peasantry do not have 
 it — ^will more than compensate homelessaess- and ahject 
 dependence jip on others . Twenty--five?years :agoymE.;might 
 still see the:. most: fertile^ soil in. France, -blessed with.:. an. 
 ideal climate^ lyitig:: hardly- productive : as, to states one 
 instance^ I:have;oir my vranderingsseenan-.thevfarsfamed 
 Lauragaia,. the- original "Gocloigpej." that; is j "land-, of r 
 plenty;^' Money was vranting, . skiil 1 was . wanting? - educa,i- ■ 
 ticm was wanting^- In ,1 883'.the:fet Firench-" AgricuknraL 
 Syndicate" vras:set:up:at .Bloisi ItiwasiortSupplyonly,' 
 UiBJ«r thae-anflueace of a-iavojjringlawpasseiin the fbildw^- 
 ing^year, and an actire-propaganda bylandowners'*— whaare 
 for the ;moatj)art:smalImea'— the moyemeMtspTeadTapidly. 
 It gave-the-ErcndL-cuitivatorvery much .cheaper iertiliaers;^ 
 
126 CO-OPERATION IN INDIA 
 
 feeding'-stuffs, seeds and implements, which were accord- 
 ingly largely purchased and put to use. And that proved 
 a great gain. About the same time a philanthropic timber 
 merchant in the Franche Comt6, M. Bouvet, organised 
 a credit society in his parish at Poligny. That society was 
 very much patronised by himself. " It would have been 
 better," so he frankly wrote to me, "if we could have 
 started a genuine Raiffeisen society at once ; but our men 
 had not sufficient ' go ' in them to" do that." He found 
 some money,, the entire management expenses, and in 
 addition he guaranteed 4 per cent, on deposits. Even 
 under such circumstances the provision of money had a 
 decidedly stimulating effect upon the peasantry. Money 
 is plentiful in France— in the proverbial " stocking." But 
 it does not readily find its way into use. And owners of 
 it like good interest — more especially the " eleven thousand 
 notaries " who used to do the popular moneylending in 
 the French " mofussils." " You may take my word for 
 it," so said to me the late Fournier de Flaix, who became 
 a noted economist ; " for I have been one of them myself." 
 It needed a direct hostile intervention by my friend the late 
 Louis Durandjthe founder of the "Union des CaissesRurales 
 et Ouvriferes," who has been styled " the Raiffeisen of 
 France," to make the small capitalists in French country 
 districts understand that the current rate of interest for 
 mortgage loans has come down. For a time — and only 
 for that purpose—he employed deposits in his Raiffeisen 
 societies to a moderate extent in loans on mortgage, till 
 the bourgeois capitalists came down with their scale in 
 harmony with the times. 
 
 M. Bouvet having shown the way, the Agricultural 
 Syndicates— 'which by that time had become fairly 
 numerous, so as to represent adequate strength — actively 
 took the matter up, often in only a very elementary and, 
 in rather too many cases still a decidedly patronising, way. 
 Thus, for instance. Count Lejdas told me that in his 
 society in Aiseray, in Burgundy, he placed securities of 
 his, representing a certain value, unreservedly at the dis- 
 posal of the society, with authority to pledge them with 
 the banker for the obtainment of credit. He declared 
 himself quite satisfied that he had sufficiently secured him- 
 self against loss. Wisely the Syndicates, however, at the 
 
PRECEDENTS GOOD AND BAD 127 
 
 same time constituted themselves also teachers of Agri- 
 culture to the peasantry, in which capacity they have, 
 according to the testimony of Lord Reay, late Governor 
 of Bombay, and also Under-Secretary of State for India, 
 " accomplished wonders." 
 
 As a result of such teaching, accompanied by facilities 
 for credit,_ the fertile fields of the Lauragais, which I saw 
 unproductive, no longer present themselves under the same 
 saddening aspect — as the Departmental Professor of Agri- 
 culture at that time had -owned to me " as if we were 
 still living in the time of the old Roman plough" — but 
 bring forth by handfuls. And improvement has been 
 equally active elsewhere. Elementary as were many of 
 the methods of credit adopted. Credit told, and it became 
 appreciated, and in due course improved. The Agricul- 
 tural Syndicates now hold to Raiffeisen. 
 
 However, among the leaders of the Agricultural Syndi- 
 cates there are a considerable number of " Royalists." 
 They do not actually make their " Royalism " appear in 
 their work, as I can testify, having been a good deal among 
 them and attended many of their Congresses. Neverthe- 
 less, Republican Governments considered that they could 
 not be implicitly trusted. People in office have themselves 
 given me that as the ground for Government interference. 
 Evidently the Government held that under all circum- 
 stances the rural population — which- practically elects the 
 Senate and has, of course, much to say in the election also 
 of the Chamber — should be kept on its own side. Ac- 
 cordingly in 1894 a plan was submitted to the great Agri- 
 cultural Society of France, which I take credit for having 
 helped to defeat by my criticism at the gathering at which 
 it was brought forward. The Agricultural Syndicates 
 were then already the deter"mining factor in the Agricul- 
 tural Society. And they voted solid — against the proposal. 
 However, an opportunity more favourable for the Govern- 
 ment plan presented itself in 1897, when the Charter of 
 the Bank of France came up for renewal. To provide a 
 bribe for the rural population it was made a condition for 
 the renewal of its Charter that the Bank of France should 
 advance somewhere about two crores of rupees, in the 
 shape of a loan bearing no interest and repayable at the 
 termination of its new Charter (in 1920), and in addition 
 
to coiftribute^as a-frergifta'ceftaiif prt^of tioH of its'annMl- 
 pr&ftts f5f A longp' number oVy&Stri; -by which contributions 
 the eatife' amount advanced ' had some twelve -years ago' 
 infefreased'to sixcrores ; an'd bj theclGSe'of-'i9l7 had grown 
 to more than twelve crores. 
 
 The income oi tht Credit ^^nVtf/i? fund 'has indeed- gfoWn 
 soiarge that a rearrangemeftt has proved called for. Thanks 
 to th'e^fl6urishing- condition ofthe Baffk of Prance'- the 
 annuial revenue'— to be given^ unrepayable^— has grown 
 from the'^origittal' 2,742^3 15 fran<is to 3 6,249,8^5 a francs (in' 
 1917); 'The'entire'amount paid in by 'th'e-Bank^of France' 
 up'tothe-'clo&e'of ■1917'was 220, 154,924 'francs, of which, in 
 spite of' many-'aUurements offered, only ioiji42,452 ftancs 
 hadf'been actually lefit oat. Afccordingiythe'contfibiition 
 from the 'BJnk of Franceis ta be lowered. 
 
 The organisation ad6Kted-f6r the French Credit Ap'mh' 
 oug^ttb interest peoplein Ihdia j inasmuch as the mechanism 
 chos^i is 'almost' idefitical with that to' which some'.Ifadian 
 Regirtfars, deafing'to operate through' " Central Bank?,"' 
 now ass^theptef er^x:^: II is *' Rig^onal Banks " which are 
 degt|;!ied''-tfc> do'theb^jsin-ess. The money coming from 'the- 
 Bank'-'of'Praneeis of^course administered -by a Board: nomi- 
 nated \>Y^ and^'directly responsible toi the Government; on' 
 vMch thV'^flScial element predomin'ates. And; equally of: 
 coursejthaf moft^'goes, not-directly to local sooietiesj but 
 to " regi;Ofial'ban?ksv""which in truth form thepivot of the 
 entire^ system. The "regi^" of such bank may be a 
 Department or else either more or less* It is generaUyj I' 
 believe, larger than the' district' assigned to a "Central: 
 Bank'" in India. At any rate-therens-'a larger population 
 tO' cater for. TKef money comes tc the " regional Hanks " 
 freeof 1nt»esti not'onlybecause th'e<jQvernment doe^ not' 
 consider- itself efttitled' to'^cferge' interest upon what itself' 
 reee^s- gratis j but-also'in ordefthiat the ^"'regional banks" 
 m"ay'iesd^it 'OUt tol6cal'bank^ at aa almost' nomiftalrate^^ 
 2 to ZiFperccffti — so as to enable the** in theitturn toihand' 
 it- over to* Ideal bofrowers-at' a very 'low- rate,- geaerally 
 4 per- cefl?E.*, v^ch iaia great improvement«uppn the^^B and' 
 I2''p€r cest;* previotisly iii voguej All the-sam^f and- 
 although Gbmmittees of "'regional barics'" have'mad^-lighf 
 ofthe'scarcefy- understood obligation to r epay^-'oaccteiir- 
 man' opefily declared-* that he* " did n'Gt suppose* that ■ the 
 
PRECEDENTS GOOD AND BAD 129 
 
 Government would want the money back "—it took a long 
 time to set this borrowed capital in motion, so long that 
 one Minister of Finance, M. Rouvier, boldly claimed the 
 large unused balance for his general Budget. The difficulty 
 of employing the money has since then grown even more 
 marked. Up to the close of 1917, as already shown, the 
 Bank of France had in all paid into the Credit Agricole the 
 sum of 220,154,924 francs. Of this, in spite of repeated 
 mvitations issued to come in and borrow, and new facilities 
 offered and limits extended, only 101,142,452 francs had 
 actually been placed. The local societies are desired to 
 employ all the small amount of their own share capital in 
 purchasing shares in " regional banks," keeping none what- 
 ever for themselves, because for every franc so collected the 
 " regional bank " becomes entitled — subject to the approval 
 of the Board above named — to an advance of four francs 
 from the Government fund. The local bank — correspond- 
 ing to the Indian " primary society " — ^is accordingly a mere 
 " ledger bank " — ^keeping ledgers but no money — which is 
 nothing against it, supposing money communications to be 
 easy, which.in France they are — ^seeing that we individuals 
 likewise habitually keep our money at a banker's and make 
 our payments by cheque. But it is felt as a great drawback 
 that it is not the local bank which decides upon an advance, 
 but the " regional bank," which in this way becomes the 
 real lender, the local bank, with its intimate knowledge of its 
 members and their circumstances, being merely allowed to 
 recommend such and such application, without having power 
 to determine the grant. Inasmuch as just before the out- 
 break of the war it was authoritatively announced that the 
 law was to be once more thrown into the melting-pot for 
 recasting, it need scarcely be particularly pointed out that 
 the system has not fuUy answered expectations. There 
 have been many complaints about its working — complaints 
 on the side of the Government, on the score of banks and 
 their officers not doing their duty ; and complaints on the 
 side of the banks, on the score of the Government authorities 
 failing to discharge theirs attentively and impartially. There 
 were at first many and grave complaints about the unfair 
 distribution of Government " manna." That defect 
 appears to have been to a great extent remedied. Next, it 
 was found that in times of dear money, and consequently 
 
 9 
 
I30 CO-OPERATION IN INDIA 
 
 heavy borrowings — such as we have- passed through — 
 " regional banks " on the system adopted could either not 
 supply all the money asked for, or else were bound to make a 
 dead loss. For the Government advance was not sufficient. 
 And to lend out at 4 per cent, what it had cost 5, 6 and even 
 7 per cent, to raise in the market was manifestly not good 
 Ijusiness. Apart from this the main object of the arrange- 
 ment proved to have been missed. The idea that prompted 
 its introduction was that, with the help of public money, 
 acting as mother's milk, a network of independent societies, 
 more or less of the Raiffeisen type, would be raised up, 
 relying upon their own resources, charging their members 
 with unlimited liability and collecting large quantities of 
 deposits. As a matter of fact nothing of the sort has 
 happened. The societies, " regional " as well as local, 
 receiving their money so cheap from the official Credit 
 Agricole, did not deem it worth while to make any serious 
 effort of their own. No more would they, for the most 
 part, burden their members with unlimited liability. In 
 one region a millionaire, being philanthropically minded, 
 in default of this, undertook to fill the blank by becoming 
 surety indiscriminately for all the advances made to members. 
 
 Now that cannot rank as sound business. However, what 
 went even more against the grain was the very " official " 
 tone imparted — and advisedly imparted — ^to the whole 
 business, for the reason already stated that there is " politics " 
 in the movement. There was also great remissness in the 
 accumvdation of reserve funds. Committeemen declared 
 that with money at all times so freely at their disposal they 
 did not see the object of laying by reserves. Some Com- 
 mittees even went so far as to lend out the money at Uttle 
 if anything more than what they themselves were charged 
 for it, placing reserve out of the question. 
 
 The Agricultural Syndicates after some time rebelled 
 against all this. And in 191 3 they formally determined at 
 their Congress, held at Nice, to cut themselves loose from 
 the official organisation and organise their own independent 
 system, without Government aid and with their own 
 Central Bank, of which at any rate the seed — ^it is as yet 
 no more — ^was at once planted. Generally speaking, the 
 Agricultural Syndicates are in sympathy with the Raiffeisen 
 system, which on the small scale on which it has been 
 
PRECEDENTS GOOD AND BAD 131 
 
 practicable to work under Louis Durand's guidance has 
 answered well in France, in spite of its very ultramontane 
 colouring, which as a matter of course the Republican 
 Government sets its face against and which eventually 
 prompted it to pass a special law excluding most of 
 these societies, registered as they are under an earlier Act, 
 from certain benefits otherwise allowed. Such exclusion, 
 although not attacking any vital interests, nevertheless to 
 some extent acts as a slur upon those societies. 
 
 The Co-operative Credit movement led by the Agricultural 
 Syndicates must not be placed in matters of politics on the 
 same par as the monarchical Haas movement. For France, 
 although possessing some wealthy landowners with strongly 
 Royalist traditions, has no Junker class. And the vast 
 majority of its landowners are distinctly small men and 
 Republicans. At the Agricultural Syndicate Congresses 
 you may see the Breton peasant in his broad-brimmed hat, 
 his frieze jacket and his high boots, the Auvergnat, the 
 Limousin, all in their characteristic and often picturesque 
 country dress, mixing freely with the aristocrats of the 
 ancien regime on a footing of perfect equality and taking a 
 lively part in the proceedings, expressing their views with 
 full freedom. 
 
 In respect of Agricultural Credit we need not, from our 
 present point of view, look any farther. For what else 
 there is is in the main either stiU only a not very successful 
 adaptation of one or other of the systems here reviewed, or 
 else it is still so much in its infancy that it can scarcely 
 come into account. In Germany and Italy the co-opera- 
 tive organisations not quite correctly spoken of in India 
 as " urban " — ^being mainly banks of the Schulze Delitzsch 
 and Luzzatti typ&r-have rendered very substantial services 
 also to Agriculture. However, it is more than doubtful 
 whether, in the present stage of development of rural life 
 in India, they could do so there. We want them in England. 
 Their service presupposes some capital, familiarity with 
 business, and a rather quick turnover. In them the 
 haissiyat is entirely in its place, and cash credit (overdraft) 
 is a decidedly useful institution. But shares growing into 
 substance are a necessity. « . „ 
 
 It is a mistake altogether to distinguish between urban 
 and " rural " societies, as the first Indian Act did, although 
 
132 CO-OPERATION IN INDIA 
 
 as a matter of fact the societies do — and in India must — 
 on the whole divide themselves in that way. That is 
 because the RaiflEeisen system presupposes a stable member- 
 ship, more or less rooted in the soil, with close touch and 
 good knowledge and power of watching and control of one 
 another as a distinctive attribute. These things are to be 
 met with in the country, but rarely in towns. Could you 
 have them in towns the Raiffeisen system would be quite 
 practicable there. Societies of the Schulze Delitzsch type, 
 although the parent stock, are too distinctively German in 
 character and in their conduct of business to make good 
 actual models to serve in other countries — though for 
 organisers of Co-operation they are richly worth studying — 
 on the same ground that in our education we lay the 
 foundation for good mental culture by the study of Greek 
 and Latin as patterns upon which to form our ideas of 
 grammar and syntax. They are so systematically organised, 
 so much attention is in them paid to every detail and every 
 possible conjuncture, that they form a veritable storehouse 
 of economic learning for the intending organiser. And in 
 one point I must confess that I prefer their organisation to 
 that of my esteemed friend M. Luzzatti, which was in 
 substance, faithfully chough copied from the older form of 
 Schulze's organisation, now no longer in use under the new 
 German law. M. Luzzatti has a large Managing Com- 
 mittee, out of which three sindaci are told off to control 
 the daily business. Schulze has a small Executive Body — 
 for the most part paid and in daily attendance — composed 
 of only three men, two of whom must by their signature 
 make themselves jointly responsible for every act ; and a 
 larger Supervising Council, meeting at moderately long 
 intervals to check what the Executive have done. The 
 burden in Italy upon the unpaid sindaci is very heavy. 
 And it appears to me that Schidze's organisation provides 
 more effectively for good supervision and control. Cer- 
 tainly, whatever be the excellence — not to be contested — 
 of M. Luzzatti's best banks, there is distinctly more uni- 
 formity and evenness of quality in those adopting Schulze's 
 rules, whether in Germany or in Austria. They are to a 
 greater extent all of one piece. 
 
 Inventive ingenuity has been active at other points. 
 Fancy schemes have cropped up here and there, often enough 
 
PRECEDENTS GOOD AND BAD 133 
 
 to disappear almost as fast as they came to the surface. 
 In India, where, on new ground, in many respects unlike 
 other grounds, resourcefulness in devising new methods is 
 a distinctive merit, such ingenuity has, perhaps, been busier 
 than elsewhere. That is perfectly right. But when it 
 comes to seeking for precedents in European methods and 
 shaping one's course accordingly, it will be well to dis- 
 criminate and not lightly to choose what may be showy but 
 is not sound. The mere trade mark " European " is no 
 guarantee of goodness. There is in truth not a bad practice 
 yet invented for which a precedent may not be found and 
 eulogists discovered in Europe. 
 
 What has here been said has been put forward with a 
 desire to impress upon intending innovators the caution, 
 that it will be well to look well before leaping ; to inquire 
 into the origin and the true object of the methods which 
 may catch their fancy ; and to study both the peculiar 
 circumstances attaching to their adoption and the practical 
 efiect which they have had before accepting them. There 
 is great virtue, as already observed, in examining whether 
 majores recte pracesserunt or not. 
 
V 
 THE VILLAGE SOCIETY 
 
 The foundation of aU Co-operative Credit is the local, the 
 Village Society. The man to be benefited is the raiyat, the 
 cultivator, on his holding. Therefore the executive organ 
 in the case, the hand to which falls the task of collecting and 
 dealing out the money, must needs be in his own village 
 at his own door. Need and Usury are the enemies to be 
 vanquished. And " Usury cannot be fought otherwise than 
 at close quarters," so says L6on Say. And there is no one 
 to challenge his saying. Co-operation is above all things 
 decentralisation — decentralisation of distribution. It cen- 
 tralises, or concentrates, in collection, so as to place its 
 adherents on a level with the richer individuals. But its 
 main office is decentralisation, thinning out the stream of 
 the water collected, sending it in rills over a broad surface, 
 so that irrigation may be perfect and reaching every root to 
 be watered. 
 
 To the small man, help must be given in the shape most 
 easily attainable, on the spot, where it is most useful, so that 
 asking for it may involve no serious loss of time or of pains, 
 that it may be given promptly, and subsequently watched 
 over with ease, or it will be of no service. Give us good 
 local service and we shall have good credit. Whatever else 
 is organised is created only to assist the local society. The 
 bird coveted wants to be in the hand, not in the bush. 
 Accordingly Co-operation, like charity, will have to begin 
 at a man's own home. 
 
 Apart from this, the governing principle of Co-operation 
 is, to employ a phrase which of late has acquired general 
 currency, " self-determination " — self-determination by the 
 persons engaging in it and to be benefited by it, its own 
 members determining for themselves what responsibility 
 
 '34 
 
THE VILLAGE SOCIETY 135 
 
 they will take upon themselves, what they will have and what 
 not, and what they will do and what not. 
 
 Attention cannot too frequently be called to the fact that 
 Co-operative Credit does not stand on a par with commercial 
 banking, in which there necessarily are two parties with 
 opposing interests, which interests have in some way 
 to be harmonised and reconciled — a lending party and a 
 borrowing party. In the co-operative society lenders 
 and borrowers are united into one. Hence in it ordinary 
 banking precedents can be of only partial application. 
 From all this it plainly follows that, even on purely economic 
 and financial grounds, the pivot on which Co-operation 
 turns, the foundation upon which it is set up, will have to be 
 the local society. 
 
 However, the Co-operative Society is more than a shop. 
 It has more to think of than purely economic and financial 
 aims. It is, indeed, to provide material commodities for 
 those who join in it — ^in the present case that will be Credit. 
 But it is to do much more besides. People often enough 
 lose sight of this. Nevertheless, whatever be the peculiar 
 form given to Co-operation, in its ultimate aim it always 
 remains the same educating and building-up force, with 
 ideal ends in view. Without such it could not retain its 
 beneficent character, but would become degraded to mere 
 collaboration for egotistical ends, such as leave the persons 
 profiting by it not better, but distinctly worse for its 
 achievements — more selfish, more unneighbourly, less 
 solicitous for their own raising, of no more service to their 
 neighbours or the community.- 
 
 Co-operation is to be the educator of the poor — not merely 
 by the means of a guru, paid, it may be, and appointed to 
 teach the children reading, writing and arithmetic, but 
 educating in itself, by bringing persons into closer contact 
 with common objects in view, interested in the same 
 common working, buying, selling — and therefore thinking 
 together. For people who work, buy and sell together are 
 sure also to think and thereby to become educated. The 
 mere common business of itself, conducted on co-operative 
 lines, educates. And one main aim of Co-operation is to 
 train unbusinesslike people to businesslike habits, and to 
 a knowledge of the principles and the conduct of business, 
 in order that they may be enabled to look after and manage 
 
136 CO-OPERATION IN INDIA 
 
 their own affairs and become provident and thrifty, able to 
 calculate in their doings what brings gain and what loss, and, 
 in Mr. Gladstone's sense, to make themselves into " men."* 
 Now none of all this can be done wholesale, by large 
 centralised organisations with a widely dispersed member- 
 ship and a directorate having to do only with goods, not 
 with men. Like the dispensation of Credit, such teaching 
 has to begin at the beneficiary's own hearth, within his 
 easiest possible reach. Wherever we look — in England, in 
 the United States, in Canada, in Germany, in Denmark — 
 and whatever the subject may be on which instruction is to 
 be given to the less instructed — I am now referring more 
 particularly to cases of instruction in Agriculture — ^it is the 
 man of education who can go up to the -person to be instructed, 
 buttonhole him, and enter into private and familiar con- 
 versation with him, without restraint or etiquette, who 
 succeeds best in his educational work. In Germany, where 
 there is no chariness in regard to educational purposes, such 
 as we have sometimes to complain of under the Union Jack, 
 it is the itinerant lecturer who gathers new members into 
 the co-operative fold and makes better cultivators of them. 
 In Canada it is the " county representative," in the United 
 States the " county agent " — the number 6f which officers 
 is now in both countries being largely increased — who does 
 the teaching (in the service of Agriculture) to best effect. 
 In England we have recently had a Departmental Inquiry 
 upon Agricultural Education. And in that inquiry it 
 came out, in such evidence as that of Mr. Fitzherbert 
 Brockholes, an agriculturist "of authority in the generally 
 advanced county of Lancashire, that even there, where 
 knowledge and thought are supposed to be in advance of 
 what they are in the rest of England, it is the instructor who 
 speaks to the small husbandman privately, on his own small 
 holding, driving knowledge home by reference to the small 
 husbandman's own work, who achieves the best results. 
 In Sweden, Denmark, Switzerland and parts of Germany, 
 it is the " Control Society," or else " Control Committee "^ 
 of a more .comprehensive Co-operative Society, acting as 
 an adviser in private on all things interesting the small 
 husbandman, which performs such office. In France, by 
 the side of the emissary of the Agricultural Syndicate — 
 
 * See p, 107. 
 
THE VILLAGE SOCIETY 137 
 
 whose brother- emissary of a corresponding body is equally 
 busy in Italy—it is the Departmental Director of Agri- 
 culture, accessible to all, who renders similar service, in- 
 structing in detail and on the spot. And in the Netherlands 
 Agriculture would not willingly forgo the services of the 
 zuivelconsulent and the fokkingconsulent, appointed and paid 
 by Government as an adviser and controller, who speaks 
 to Tom, Dick and Harry as individuals. Everywhere it is 
 the " mouth to mouth " (ordjua irpos a-rofia) teacher who 
 makes the greatest impression. Our active missionaries of 
 various creeds, working fruitfully among the aborigines, 
 have doubtless similar tales to tell. 
 
 We could not, in India, in view of its enormous extension 
 and its teeming population, hope to provide a staff of 
 qualified teachers ample enough in number to rival those 
 European and American educational agencies. Besides, these 
 men teach Agriculture, and only incidentally, if at all, 
 Co-operation — by precept as by practice. All the more 
 accordingly do we need the educating services of judiciously 
 applied Co-operation in societies — ^and not for educational 
 purposes only, but for uniting, sympathetically, connecting 
 purposes, which promote common interest and strengthen 
 each man's individual efforts by combining them with the 
 efforts of others. And it is one of the great merits of 
 practical Co-operation that more or less in every shape, but 
 peculiarly so in the shape of the organisation which Raiffeisen 
 gave it, it makes of its members, in M. Luzzatti's words, 
 una famiglia onesta e laboriosa (an honest and industrious 
 family). 
 
 Now, knowing all this, and being, so to put it, brought up 
 in an atmosphere of genuine Co-operation, one feels one's 
 breath just a little taken away on reading the following 
 description of Co-operation " as it should be," in a textbook 
 offered to Indian readers : 
 
 " The correct view of our organisation is that of an Army 
 with its General (the Governor of the Federation), its Staff 
 (the Federation Congress), its Corps Commanders (the 
 Directorates of the Central Banks), its Regimental Colonels 
 (the Committees of the Unions of Primary Societies). 
 Without a plan of campaign, without discipline and without 
 a responsible and guiding head, an army would be nothing 
 but a disorderly mob, futile as a fighting machine. Without 
 
138 CO-OPERATION IN INDIA 
 
 a definite policy, without co-ordination of effort, and with- 
 out a liberal allowance of unselfishness, our co-operative 
 system would be futile as a machine for the promotion of 
 the economic welfare of the Province." 
 
 Why, that is Co-operation turned completely topsy-turvy, 
 a structure inverted, with that put at the top which ought 
 to be at the bottom ! It means degrading a great educational 
 and emancipating movement, created to imbue people with 
 principles' of self-reliance and teaching them the way to 
 self-help, to a mere distributing agency for assistance from 
 outside, which makes them more dependent than they were 
 before on the thought, the judgment and the money of 
 others ! You can never estabUsh sound Co-operation in 
 India on such lines. Even in England the late Lord 
 Winchilsea failed in trying something of the same kind — 
 building, that is, from the top to the bottom — ^in his ill- 
 fated " National Agrictdtural^ Union," which came to grief 
 quickly, losing its shareholders something like a lakh of 
 rupees — ^whereas Sir Horace Plunkett's movement, built up, 
 about the same time, in a workman-like way, from the 
 bottom to the top, succeeded well and has stood the test of 
 time and become a model for the English-speaking world. 
 A large movement in imitation of it, bearing the same name 
 with the prefix " American," is now in progress in the 
 United States. We smile on hearing the tale of the ancient 
 Greek citizen who had a house to sell, and who, when asked 
 for particulars about it by an intending purchaser, sent him 
 a brick as a sample of the material of which the house was 
 built. But there is not a little sense in such action. For it 
 is only good bricks which will make a good solid house. 
 Lay a firm foundation of sound material, and you will be 
 able to build a house that will stand. The clever rider on 
 the back of a horse can make that animal more useful, put 
 more nimbleness into its limbs, enhance the eflEect of its 
 strength ; but he can never with his mere horsemanship 
 replace the animal's " timber " and muscle. Just the same 
 •is the relation between the Central Organisation guiding 
 and the local producing. We may set a temporary roof 
 of boards and tarpaulin above a house in building, to shelter 
 the rising walls from wet and storm — and that is what very 
 likely will have to be done in India, to shelter gradually 
 uprising Co-operative Credit under a temporary roof of 
 
THE VILLAGE SOCIETY 139 
 
 official control and centralised supervision. But in such 
 building it is all along understood that that temporary 
 shelter roof, which could never stand the test of wear and 
 weather long, is simply for temporary use and will in due 
 course be made to give place to a more durable fabric resting, 
 not on the after all only fragile temporary scaffolding, but 
 on good solid brick walls, reared up of sound material, which 
 of itself provides a sure foundation. 
 
 Whatever we do, do not let us spoil the chance of Indian 
 Co-operation, greatly needed as it is, by beginning at the 
 wrong end ! Aristophanes could in his comedy set up an 
 imaginary city upon " clouds." But we, who propose to 
 build on Earth, shall have to pay regard to the well-ascer- 
 tained laws of gravitation. It is the good foundation which 
 makes the secure structure. It is the local society, the single 
 brick in the bottom layer, upon which the intended fabric 
 is to rest, which makes the safety of the organisation. 
 
 Those upper organisations, which our author quoted has 
 made the master, are in reality designed as the servants of 
 the real working parts. They are, so to speak, the wholesale 
 house which provides the goods for the local dealer, but 
 which can impossibly direct his business. 
 
 The Education by Co-operation that we are " after," 
 wonderfully effective as it is when allowed free play, is quite 
 necessarily limited to small, local organisations. In a large 
 society, possibly very ably officered, the very fact of its being 
 so officered destroys its educational potency. There are no 
 pupils there for the fully trained teachers who manage, but 
 do not teach. The member is there not called upon to 
 think for himself. He has the thinking done for him. It 
 is in the small society, where simple minds are taught and 
 compelled in a simple way to do the thinking for themselves, 
 to tackle the daily problems, and form their own ambitions 
 and aims, that Co-operation becomes educating. And its 
 educational efficiency under such circumstances is truly 
 remarkable. We see something of this in our British 
 distributive societies. You see very much more in the 
 Co-operative Credit societies among rural folk on the 
 Continent. For Credit is of all the most educative form 
 of Co-operation. So it is in France and in Italy. In 
 Germany a veritable transformation of beef-witted and not 
 over-conscientious bauers has been brought about by that 
 
140 CO-OPERATION IN INDIA 
 
 wonderworking agency into a higher class of being — ^apart 
 from war-time. Universities have their great uses. How- 
 ever, the moral and intellectual standard of a poptdation 
 depends upon its primary schools. And our primary school 
 in Co-operation are our village societies. 
 
 The upper parts of the building, which our author quoted 
 has made the master, are, as observed, in reality designed to 
 be the servants of the lower, not to direct, but to facilitate 
 the others' work, which must in any case be the main work 
 accomplished — ^provide them with the means for doing their 
 business more cheaply or more effectively — ^just as the 
 Co-operative Wholesale Society in Great Britain was 
 designed to serve the local societies with the supply of goods 
 more cheaply purchased in large quantity. The parallel is 
 indeed not absolutely complete. For there is this difierence, 
 which greatly strengthens my point here urged, namely, 
 that, whereas in Supply or Distribution the only point to 
 be taken into account is the creation of bulk — the actual 
 article bought in large quantities being alike in any case — 
 in Credit every single case of decentralised dealing calls for 
 special and separate consideration, so that, although you 
 require " bulk " for the wholesale acquisition of your 
 commodity — which is money — the retail dealing out must 
 throughout stand upon its own merits in each several case. 
 You cannot deal out Credit as you deal out dry goods or 
 hardware, simply deUver across the counter, without asking 
 any questions. On the other hand, in a skilful retailer's 
 hands, who can distinguish between cases, the commodity 
 first purchased in bidk is capable of doing a vastly greater 
 amount of good than the tea and sugar dealt out in a local 
 store. 
 
 In India, no doubt, the problem to be dealt with presents 
 special difficulties. Well, ardua qua fulchra. Germany 
 may be said to have proved almost ideal ground for the 
 practice. For Germany is the country in which — ^barring 
 Switzerland and Denmark,* both of which scarcely stood in 
 need of rural credit societies, their credit wants being 
 already sufficiently provided for — the schoolmaster has for 
 the longest time " been abroad." The educational status 
 of the rural population may be said — ^at any rate in the 
 districts in which Co-operative Credit was first introduced — 
 
 * Denmark has only just begun to organise Co-operatrre Credit Societies. 
 
THE VILLAGE SOCIETY 141 
 
 to have been fairly passable. In any case there was no 
 difficulty about securing the services of competent chairmen 
 and cashier-secretaries. And there was little illiteracy, if 
 any. Moreover, thanks to the division of the soil — ^which 
 was not all in the hands of uncultured men — there was more 
 or less everywhere some man of at any rate moderate 
 capitalist value to sponsor the society. And communica- 
 tions were fairly easy. Roads were manageable. Towns 
 were everywhere within reach and readily accessible. 
 Postal communications were good. Add to this that bank- 
 ing was generally undeveloped and therefore co-operative 
 banks came as a godsend. 
 
 In India scarcely anything of all this applies. We have 
 the proof in the experience thus far collected. Where 
 90 per cent, of the male population (99 of the female) are 
 illiterate — as the last census shows — ^you cannot ex,pect to 
 find men capable of doing the correspondence and keeping 
 accounts in every village — although one late Registrar, who 
 knew his province well, has in a pamphlet published declared 
 the Hindoos endowed with a peculiar natural predisposition 
 for account-keeping. To make up for the want complained 
 of, some Registrars have had recourse to " group secretaries," 
 not necessarily being members of the several societies for 
 which they acted, and doing the "job " of account-keeping 
 mechanically, without personal interest of their own, for an 
 entire " group " of societies. That, so it should be observed, 
 is not by any means an ideal arrangement. Furthermore, 
 there has been plenty of evidence of insufficient qualification 
 of the punches, more especially the sirpanches — men who 
 appear in many cases to have thought only of themselves, 
 how they might turn the disposable funds to account for 
 their own use, without very strict regard for the terms of 
 repayment, whereas the bulk of members appear to have 
 been found generally quite unequal to the task which it is 
 essential that they should perform — the task of vigilantly 
 checking the panches. Nowhere, so it appears, has it been 
 possible to form that body which every Co-operative Credit 
 society in Germany, France, Italy, Belgium, Austria or 
 Switzerland has found essential for the well-being of the 
 society, that is, a Council of Inspection or Supervision. 
 
 Under such conditions it is evident that for a long time 
 to come local societies in India will have to be kept in 
 
142 CO-OPERATION IN INDIA 
 
 a position of tutelage under official " guardians." And 
 desirable as emancipation is, better in all cases is a long 
 tutelage with good results than premature manumission in 
 a state of immaturity. 
 
 However, the greater is the need of tutelage and education, 
 the more pronounced is the necessity of the small society 
 being trained to self- management as an educating agency. 
 We are indeed under present circumstances placed in some- 
 thing of a dilemma between two evils. One great hindrance 
 to aU the progress that might be desired is that the people 
 of India, for whom Co-operative Credit is intended, do not 
 generally yet "understand what is meant by " Co-operative 
 Credit." They have been so used to paternal State care 
 and takavi advances that, especially since, after aU, money is 
 advanced by the State for the new Credit, and the Credit 
 is administered by officers of the State, this new Credit 
 appears to them only as an old friend with a new face, 
 a matter of advances paternally doled out by the Govern- 
 ment, made outwardly conditional, for some undiscernible 
 reason or other, upon the fulfilment of certain forms and 
 duties by the beneficiaries, but not really a self-reliant, self- 
 directed institution. That opinion is all the more likely 
 to be entertained, to the prejudice of the movement, at any 
 rate in the long run, the more clamour there is set up for 
 further State interference in the shape of summary pro- 
 cedure and exemption from civil process. And the interest 
 which it is rightly ' desired that Revenue and Settlement 
 Officers and other officials should show in the work of 
 societies is likely to confirm such false impression. 
 
 It is not only incapacity to keep accounts and to write 
 and read which stands in the way of a wide extension of 
 Co-operative Credit. Disqualification goes farther. The 
 native mind has evidently not yet grasped the true object 
 of the Credit introduced. Now the best way to teach 
 people what their own responsibility, pledged by Co- 
 operation — ^which is the root principle of the whole institu- 
 tion — means, is, seriously to place them upon it, even though 
 it be at the risk of their incurring a casual loss. You cannot 
 really learn to swim without actually being dropped into 
 the water. A man pulling you along while you float with 
 the help of air-bladders will not teach you. However, the 
 risk so to be run we cannot at present quite expect our men 
 
THE VILLAGE SOCIETY 143 
 
 to face. It might fall too heavily upon those pioneers who 
 would have to bear the loss resulting. And it would be sure 
 to damage the movement and destroy confidence in it if 
 any serious loss were to result. Nevertheless, whatever is 
 done — and we know from what has happened in Egj'pt that 
 too much befathering, however benevolently it may be' 
 intended and exercised, leads to mischief — the lesson first, 
 though not in point of time yet in point of importance, and 
 most necessary to be taught to designed beneficiaries, is that 
 these new institutions are co-operative institutions, intended 
 for the good of their members alone, to be eventually 
 managed by those members only, in perfect freedom, under 
 the restraint only of full responsibility ; and that, as soon as 
 they will be qualified to carry on the work, the State will 
 have nothing more to do with them in the matter, either 
 for good or for evil, except to see that the precepts of the 
 law are observed and that the statements of accounts 
 published are actuarially correct. And all this is only to 
 be taught in a local society. 
 
 Evidently what is wanted on this lowest grade of Organi- 
 sation is tuition. In Germany that was a comparatively easy 
 matter. There was generally in every village someone 
 capable of giving a lead. Indeed, so comparatively favour- 
 able were conditions that Raiffeisen might make bold to 
 tell his disciples that if in any place a suitable chairman were 
 found, and a reliable secretary, the two might begin business 
 forthwith, looking for others to drop in as they went on. 
 That would scarcely do in India. Besides, where is the 
 money to come from ? In reality even in Germany things 
 were not done quite in the simple way suggested. 
 Raiffeisen got a little society together, for which he provided 
 some money to start with, by contributing a portion him- 
 self and begging the rest from his friends — ^just as did 
 M. Luzzatti in the case of his firstling bank, at Milan, for 
 which he scraped Rs. 420 together, he himself subscribing 
 Rs. 60, which made him, in his own words, " the Croesus 
 of the group." Services rendered, even by the cashier, 
 were of course at the outset entirely gratuitous. Payment of 
 cashier -secretaries, on a very moderate scale, was intro- 
 duced later. In Italy literate workers were almost as scarce 
 thirty-six years ago as they now are in India. Accordingly 
 at the outset volunteer philanthropists must help. Dr. 
 
144 CO-OPERATION IN INDIA 
 
 Wollemborg, a wealthy man, financed his firstling society 
 at Loreggia with an advance of about Rs. 1,200. For 
 want of someone else to do the work, his brother had to give 
 his services as unsalaried secretary- cashier. At Metzels, in 
 Germany, a place without any wealthy " patron " to assist, 
 I found the pastor leading the society, instructing its members 
 and providing the Rs. 375 required for the acquisition of 
 a share in the Central Bank, which justified its opening a 
 credit account sufficient for its purposes to the little society. 
 The latter, in spite of the poverty of its members, distinctly 
 developed so as to flourish and to do much good. 
 
 If members in India can only be made to understand the 
 nature of such society, it is to be anticipated that the defects 
 of incapacity and illiteracy, now so greatly complained of, 
 will soon come to be sufficiently planed away to allow of 
 good progress. A man may be led to learn good business,-^ 
 punctuality in payment and vigilance in checking others, 
 without becoming a, scribe and a scholar. Such things, 
 under proper guidance, teach themselves. Italy is not so 
 very much less illiterate than India. And the business 
 understanding of the cultivating class there is very primitive. 
 Yet these people have, without much reading, become very 
 good co-operators and punctual and honest repayers. 
 
 People talk of Education. In the Raiffeisen societies 
 of Italy it is made a standing rule that no one is to be 
 admitted as member who cannot at any rate sign his name on 
 the application form for membership \yith his own hand. 
 And as a consequence you find grandfathers learning to 
 write from their grandchildren. I have seen these men in 
 Italy, simple illiterate peasants. I have been shown their 
 early handwriting in straggling, uncouth, roughly drawn 
 characters. However, these men had learnt to help in 
 managing their society and had done very well for themselves 
 with its assistance. Illiteracy is not necessarily a barrier to 
 judicious management of affairs and I would not have the 
 illiterates who know about their neighbours and know how 
 to lay out rupees despised or crowded out of the management 
 on account of their illiteracy. What in this case I assume 
 that they know is worth more for business purposes than 
 what they do not know. 
 
 You learn society management best by helping to manage 
 — ^as the French proverb says that you become an expert 
 
THE VILLAGE SOCIETY 145 
 
 blacksmith by doing blacksmith's work. It is a large order 
 in India to provide volunteer helpers who will sit at the 
 ■panchayet table and explain matters, to show punches how 
 to make entries and to keep correct accounts. And there 
 is also some danger in this, if not quite rightly done. For 
 it tends to prolong tutelage and to undermine the sense 
 of responsibility. Therefore the admonitions addressed by 
 local Governments to their ofHcers to attend in their official 
 capacity, and the right stipulated for them to moot any 
 subject they please at any time, are not above questioning. 
 And the man who, consenting to make the sacrifice, comes 
 only at irregular intervals on flying visits, now and then, 
 just to attend a panchayet meeting, will not do half the good 
 that requires to be done. What is wanted is a " guide, 
 philosopher and friend " in the vicinity, to watch over the 
 society, keep in touch with its members, above all with the 
 managing officers, to give his advice here, there and every- 
 where, without ever becoming dictatorial. Such a man is 
 sure to become a veritable treasure to his society. That 
 being done in skeleton cadres is likely to act as leaven on the 
 inlmense lump to be impregnated, spreading and diffusing 
 its influence abroad. The mere making of the " co- 
 operative " character of the institution understood in its 
 Practical management is about the best education that could 
 e supplied. 
 
 The difficulty of account-keeping may be got over. The 
 practice of having balance-sheets sent up to headquarters 
 for examination, which has become a standing and a very 
 prominent feature in Raiffeisen Co-operation, was in the 
 RaifEeisen Union in truth first taken up because local 
 societies were in many cases found not to know how to draw 
 up the balance-sheets for themselves. The practice was 
 retained, because it was f^ound to possess other advantages 
 besides. It constitutes what is called a " super-revision," 
 that is, " super-inspection." But its original object was to 
 get the balance-sheets properly drawn up, so as to afford 
 trustworthy guides for checking, where local managers were 
 not competent to do this. In the Haas Union Dr. Haven- 
 stein, a very able man of business and a sound co-operator, 
 in the same Rhineland, adopted a different plan. He formed 
 a separate office section which does nothing but put accounts ^ 
 and balance-sheets into proper form for unripe societies. 
 
 10 
 
146 CO-OPERATION IN INDIA 
 
 It 4pes not audit ; it does not inspect. It simply asks for 
 the materials for the accounts, which it puts into proper 
 shape. And in doing this, it teaches societies after a time 
 to do it for themselves, so that its services are in each case 
 only temporary. In the United States the Federal Depart- 
 ment of Agriculture, being keen upon businesslike practice, 
 has adopted a rather different method still with the 
 same object in view, although not as applying specifically to 
 Co-operation. Its operating agency is a distinct section in 
 the Department, known as the " Office of Farm Manage- 
 ment," which is there to show cultivators by the light of 
 their accounts, which it frames for them on the strength 
 of information supplied by themselves, which branches of 
 their farming pay and which do not. That is to lead them 
 to farm, not by routine, but " for profit." 
 
 All this may be done at headquarters. But the main 
 part of the business, the taking of money, the lending out 
 of the same, the watching over its employment, the enforce- 
 ment of recovery and the employment of idle balances, can 
 be done only by the society itself, and, having to do it — 
 though it may have to be for a considerable time under 
 tutelage and tuition-r—will be the very best schooling for 
 its members, the most effective way of teaching them and 
 making them understand what " Co-operative Credit " 
 means. 
 
 Under this aspect obviously the placing of too much 
 power and discretion in the hands of what are called 
 " Central Banb " distinctly militates against good co- 
 . operative practice. There must be supervision, control,- 
 leading-strings. However, those leading-strings ought to be 
 held with a light hand. They do not want to be tightened, 
 as there now appears a disposition to do, but, on the con- 
 trary, gradually relaxed so that by being made to think that 
 they are doing things for themselves members may be 
 gradually taught to do so. It will have to be constantly 
 borne in mind that the object of the tuition now given is to 
 produce, not credit so much as co-operators who will be able to 
 work the credit for themsehes. 
 
 Apart from over-interference prejudicing the work of the 
 local society and really unfitting it for its main task, committal 
 of the actual local work to the distant " Central Bank " 
 involves risk, and tends to the intrusion of that very noxious 
 
THE VILLAGE SOCIETY 147 
 
 bane of credit business, mechanical handling by rote and 
 reliance upon (under the circumstances) improper security, 
 such as the possessions catalogued in the haissiyat. The 
 baissiyat may be a good servant, but it is a bad master. And 
 in a village society it is, as a test of what has been termed 
 " credit worthiness," really out of place. The borrower is 
 to receive his loan because he is known to the managers of 
 his society, who are his neighbours, as an honourable and 
 honest man, who has an outlay in prospect appropriate to 
 his position and promising to repay itsdf with interest out 
 of its own proceeds. Such questions are not to be deter- 
 mined by the amount of the property that he owns. Nobody 
 also can judge as weU either of his character or of his 
 opportunities as his own neighbours. Nobody can keep 
 watch over his mode of life — ^which, if good, distinctly is 
 an element of security — and even his outlay of the money 
 borrowed, and bring influence to bear upon him for punctual 
 repayment of his kists, as effectually as his neighbours. The 
 distant "Central Bank" — which it is now evidently proposed 
 in more quarters than one to make the "pivot" of the system, 
 the arbiter of Credit — however carefully it may collect 
 local information for the purpose, is at a distinct disadvan- 
 tage, which necessarily means risk and prejudicial curtail- 
 ment of the services to be rendered, a retrenching of the 
 flow of business, too meagre a supply of loans. On the other 
 hand, nothing awakens the sense of responsibility so much 
 as practice in such administrative work. Nothing steels to 
 vigilance, to strictness, to careful insistence upon complete 
 fulfilment of duties undertaken better than responsibility 
 for the practice of the economic virtues. I have quoted 
 elsewhere what quite illiterate Italians (who proved good 
 enough co-operators) have said about this, under the 
 operation of unlimited liability, which is the very best 
 stimulus to watchfulness under this aspect. " We are a 
 hundred persons who watch one another like spies (but 
 without any offensiveness ; quite the reverse). It is not 
 possible that any one of us should fail in his duty."*) 
 
 Rome was, proverbially, not built in a day. And it may 
 take a long time to bring up Indian local credit societies 
 to the point here placed before them as a goal to be made 
 
 • " Semo in cento che se femo la »pia un con I'altro, onde imposibile che 
 nessnn fazza un bruta parte." 
 
148 CO-OPERATION IN INDIA 
 
 for. However, that goal should be kept steadily in view and 
 worked up to. If we cannot^ — ^which for the moment seems 
 an established fact — ^have the Raiffeisen and Schulze 
 Delitzsch " Supervising Council," we shall want to have a 
 substitute, or the society will be wanting in efficiency. 
 The " Central Bank " is no substitute. The local society 
 ought to be made the corner-stone, the guarantee of strength, 
 of the fabric and to be set at work at that which is the most 
 urgent point of the entire problem: the education of its 
 own members. 
 
 Now, having postulated the local society as a beginning, 
 we may proceed to its description. The local society, as we 
 all know, ought to be small, and to have a clearly defined, 
 narrowly circumscribed area, without which conditions 
 being fulfilled there could be no close touch nor intimate 
 knowledge of one another, which is the main safeguard in 
 the system adopted under Raiffeisen principles. In India 
 there seems to be at present a disposition to overdo such 
 restriction in respect of size and district, which may become 
 a hindrance to progress. One Registrar has gone so far as to 
 declare that he will not tolerate societies of more than 25 
 members, and if there should be more people in a village 
 anxious to join, he will insist upon there being correspond- 
 ingly more societies formed. That is a mistake. Raiffeisen 
 prescribed smallness, not as an advantage in itself, but as an 
 indispensable condition for the attainment of a well-under- 
 stood end : close touch and intimate mutual knowledge. 
 Otherwise smallness is not a benefit but rather a hindrance. 
 A small society necessarily means small power for work, and 
 proportionally greater expense for necessary outgoings, and 
 a heavier toll upon each member, if any loss by default should 
 occur. It also means greater risk in the event of resignations 
 or deaths, such as we have actually had. For one Registrar 
 only recently reported that in one of the societies in his 
 province out of 25 members no fewer than 23 had been 
 carried away by an epidemic in the course of a year. And 
 having several societies in the village means, apart from a 
 dissipation of force so wasted, possible rivalry, jealousy — 
 it may be even underbidding, such as we have had in 
 Germany, between rival systems. In India, where there 
 are castes, and fatti divisions besides, it may be necessary, 
 human nature being what it is, to maintain distinct societies 
 
THE VILLAGE SOCIETY 149 
 
 side by side — ^let us hope not in serious antagonism to one 
 another. But this is an evil to be kept at its lowest possible 
 point, not a feature to be deliberately adopted and made a 
 rule of. I have shov?n how RaifiEeisen and Haas societies 
 existing side by side, although being shoots from the same 
 stock, compete injuriously with one another. Haas co- 
 operators complain that they cannot insist upon fairly large 
 shares, such as their Central Administration recommends, 
 because the RaifiEeisen societies, working by their side, con- 
 sidering shares unnecessary, cut theirs down to the minimum 
 insisted upon by a semi-hostile law. Let in the evil of 
 undercutting, and you cannot fail to destroy safeguarding 
 against risk, which is the very first duty incumbent upon 
 Co-operative Credit organisations. " More than one society 
 in one village," so writes Mr, Chatterjee, who certainly can 
 claim to have experience in practical Co-operative Credit 
 banking, " crystallises party feeling." All that is really 
 required in the matter of smallness is that there should 
 be sufficient opportunity for supervision and trustworthy 
 knowledge. RaifiEeisen's societies after a time came tp 
 discern the mistake that in some places they had made in 
 keeping their local organisations needlessly small. I ven- 
 tured to point this out to their chiefs more than twenty 
 years ago, and they admitted that there was quid nimis in 
 that, and have since permitted societies to form in larger 
 areas, provided that the essential condition of sufficient 
 contiguity is secured. Even at that time both area and 
 membership had already been in a few cases in some measure 
 extended without bad results. I then visited a society 
 located on territory known to me, whose district embraced 
 contiguous portions of three distinct parishes. And one 
 particularly competent man had, as an exceptional case, 
 organised a society extending over no fewer than five 
 parishes, in one of the most populous parts of Saxony. 
 Accordingly : do not overdo smallness ! 
 
 Whatever be the number of members, it is important that, 
 in the first place, they should be admitted for their moral 
 qualities, as being honest, and, in the second, that wherever 
 liability is unlimited, the society should be assured that 
 each member belongs to that society only. If it should be 
 otherwise, if he should be a member also elsewhere, the 
 measure of the value of the member's liability must at the 
 
ISO CO-OPERATION IN INDIA 
 
 very least become seriously reduced. Being thus based 
 upon the moral worth of its members, their honesty and 
 trustworthiness, societies will above all things have to avoid 
 acting upon the principle of " the more, the merrier," 
 going touting for members, as I have seen it advised by 
 ignorant would-be oi'ganisers in England. Members are 
 no doubt necessary ; but worth is indispensable. 
 
 The mechanism of the local credit society is simple. In 
 essence it is the same throughout, whatever be the system 
 and whatever the form adopted. The governing idea is 
 that the society andits business are the members' collectively. 
 And the members collectively want to be interested in it as 
 much as is possible. For it is interest which evokes vigilance 
 and creates control, and it is vigilance and active control that 
 above all things are wanted. That alone is a conclusive 
 argument in favour of publicity of proceedings — the 
 publicity, of which Sir Robert Morier insisted upon having 
 the " maximum," as a safeguard of good management. 
 Publicity is of double value where illiteracy has to be con- 
 tended with. For it disj:inctly helps to make the illiterate, 
 who may be otherwise useful members, as possessing a 
 knowledge of their neighbours' position, also useful admini- 
 strators. It is publicity which can make them useful. We 
 know that one great abuse in India is that punches keep not 
 tJnly information, but also money, all to themselves. For 
 such abuse publicity is an effective corrective. Even an 
 illiterate member, when he is given a knowledge of the facts, 
 may effectively watch over the punches and, even though 
 he can neither write nor read, his self-interest will prod 
 him to do his part by the society. 
 
 There must be a panchayet, of course, since members 
 collectively cannot transact the current business of the 
 society. The idea is that, since members act in the main 
 collectively, there should be an elective body nominated 
 by the members themselves, from among themselves, to 
 administer the business of the society under their collective 
 authority and general supervision, with an annual rendering 
 of accounts — ^if not a more frequent one — ^for all things 
 acting like the " Board " of a Joint-Stock Company giving 
 an account of its stewardship to its shareholders. That 
 " Board " is generally among ourselves spoken of as " Council 
 of Supervision." That is the German term for what in a 
 
THE VILLAGE SOCIETY 151 
 
 joint-stock company we call " Board." And in this 
 application it in truth conveys a very good idea of the duties 
 which in actual practice this body is called upon to perform. 
 As originally conceived, and as actually accepted, both in 
 Germany and in Italy — and in Germany established as a 
 governing principle by the law in force — the Council of 
 Supervision was between one General Meeting of Members 
 and another — the General Meeting being in all things 
 supreme — to act as master of the society, exercising 
 delegated authority on behalf of the collective body of 
 members. It could not, of course, personally transact all 
 the current business of the society. Its size would in- 
 capacitate it for that. For it was to be large, in order to 
 exercise the greater authority and to be the less amenable 
 to undue influence from individuals. And it could not be 
 expected to meet with sufficient frequency to deal with 
 the required promptitude with the current wants of the 
 society. Accordingly it must have an Executive Committee 
 under it, such as in India goes by the name of •panchayet, 
 to take charge of the current business. However, that 
 Committee must in some respects remain under it, subject 
 to its authority and supervision — hence the name which in 
 English I have chosen for it (which is a literal translation 
 of the German) — say, in the same way that a Commander 
 of a Field Force is subject to the authority of the War Office, 
 which must not, indeed, presume to usurp his functions, but 
 which nominates, and may rebuke, reprimand, and in case of 
 need discharge or cashier him. 
 
 The Council of Supervision in fact is endowed with 
 precisely the same prerogatives. But in practice it uses 
 -the fargoing ones only in very rare and quite exceptional 
 cases. It is of course conceivable that a member of the 
 Executive Committee — a " Director," so to call him— 
 might show himself so criminous and dangerous to the 
 society that the Council might feel called upon, as an 
 emergency measure, to interfere and deprive him Of execu- 
 tive power or dismiss him — subject to confirmation by a 
 General Meeting. However, as an actual occurrence that 
 contingency may pretty well be left out of account. The 
 reviewing and supervising functions of the Council, how- 
 ever, are fully in force, and very much valued as a safeguard 
 for members. 
 
152 CO-OPERATION IN INDIA 
 
 From a practical point of view, however, the fanchayet 
 will always be the administering hody in the society, not 
 only the first to attract attention, but also that upon whose 
 action the success or non-success of the society wiU for the 
 most part depend. That is bound to be so more particularly 
 in India, where there is as yet no Council of Supervision, 
 nor any immediate prospect of such being formed, and the 
 fanchayet accordingly represents really the whole adminis- 
 trative machinery provided. All the greater will have to be 
 the care with which the members of the fanchayet are 
 elected. They are trustees for the society, its attorneys,, 
 authorised to pledge all its liability, making it answerable 
 for their acts ; and in consequence they will have to be 
 chosen with particular scrutiny of qualifications and dis- 
 crimination, in otder that the society, and also the public, 
 may be able to repose adequate confidence in them. There 
 are several dangers to be guarded against. How hazardous 
 under fanchayet government one-man rule may become, 
 resulting from excessive self-assertion on one side, and 
 correspondingly unmeasured weakness on the other, un- 
 happily we know from experience obtained. Also what 
 " carver's greed " may mean, keeping all the good meat for 
 the man who wields the knife. But there is danger also in 
 want of strictness in seeing the terms of employment and 
 repayment of loans observed. And there is danger in 
 careless acceptance of insufiicient security, neglecting to 
 make sure that the sureties' signatures are genuine, in the 
 employment of idle money and in " stretching " of points. 
 The qualities mainly to be looked for will have to be, not 
 superior literacy so much — ^although that is distinctly 
 desirable — as trustworthiness and common sense. 
 
 As a matter of course the fanchayet wiU have to meet 
 frequently, or at any rate be able to do so. There is no 
 occasion for the study of punctilious formality in its pro- 
 ceedings. There must be a written record, no doubt, of 
 the fanchayefs doings, to serve as evidence. But generally 
 speaking the possibility of acting promptly and with perfect 
 freedom as to the qualification of claimants for loans is 
 worth more than all ceremonial observances and red-tape 
 formalism. 
 
 As the right number of members to form the Committee 
 Raiffeisen recommended five, which squares well enough 
 
THE VILLAGE SOCIETY 153 
 
 with Indian habits ; however, for small societies, such as 
 some Registrars talk of giving the preference to, this appears 
 to me to be rather larger than need be. In small French 
 rural credit societies three arp found quite sufficient. 
 German societies are generally rather larger than either 
 French or Indian. And in them RaiflEeisen apprehended 
 that coming down to three — which is the number actually 
 accepted in the Schulze Delitzsch societies, but under 
 distinctly different conditions — might involve danger. As 
 the Treasurer of a British Civil Service Credit Society put 
 it to me — " you can get round three men, but you can't 
 get round a larger number." That really referred to the 
 Council, for which Raiffeisen would have the number to be 
 nine. And his holding so firmly by the two said numbers 
 conclusively shows that he would never have favoured the 
 idea of forming such very small societies as those on which 
 some Indian Registrars appear to have set their hearts, of 
 twenty-five and less — except where no more members are to 
 be got. Societies have begun in Germany with only seven 
 or eight members. But take five Committee men and nine 
 Council men out of twenty or twenty-five, and what remains ? 
 Whether three or five, the ■panchayet men ought to act as 
 much as possible in common and be as accessible to appli- 
 cants and depositors as can be, and as ready to act upon 
 their applications. 
 
 The fact that, after nearly seventy years of its existence, 
 the Raiffeisen Union still maintains the figures of respectively 
 five and nine shows that such apportionment has worked 
 satisfactorily. No change in this respect has ever been 
 suggested. 
 
 For ministerial purposes the panchayet are commonly 
 given the assistance of a Secretary-Cashier, about whose 
 position and duties more will be said presently, but whose 
 services, so it may be remarked at once, it is essential should 
 be kept purely ministerial, no discretion whatever being 
 allowed to him to act of his own motion — or the responsi- 
 bility will be shifted from the Committee upon him, and 
 he, the intended servant, may easily become the dictator. 
 Also, giving him a voice in the disposal of money must 
 manifestly mean serious danger to people among whom 
 bribery and corruption are not altogether unknown. 
 
 Now the first duty of the Panchayet will be to study the 
 
154 CO-OPERATION IN INDIA 
 
 promotion of thrift — ^and that on two distinct grounds. 
 One, of course, is the desirability of accustoming members 
 to habits of thrift, and to'keep them to such, and so to train 
 them eventually to a capacity for acquiring property of their 
 own by provident action. Their comparative wealth to 
 be got is to be of their own making, or it will be fleeting and 
 uncertain. The second ground is this, that the society 
 must needs, to be able to do the work, proposed for it, 
 acquire funds of its own to operate with. Now this it can 
 do only by the collection of sums to be entrusted to it for 
 keeping on behalf of their owners. The idea so widely 
 prevalent in India and so freely acknowledged, that the 
 society should draw its supplies of cash from outside, and 
 in this way come to the members as an endowed or 
 " financed " institution — ^like a takavi — ^rests on an entirely 
 false conception and points to as false a goal. That is the 
 idea which prompted the formation of the Agricultural 
 Bank of Egypt, of the French Credit Agricole, and of the 
 German State-endowed Central Bank — all of which have 
 accomplished certain work, indeed, but not the desired 
 good work. The possibility of help from outside there will 
 have to be. We could not do without it. Indeed, one 
 distinct object in our organisation is to provide for it within 
 legitimate limits and in a legitimate way. It gives strength. 
 It is often enough of material assistance at starting. It is 
 an invaluable resource in times of trouble to fall back upon. 
 However, it is really intended only as an emergency help — a 
 crutch, so to put it, not a natural pair of legs. The sheet- 
 anchor of the society's existence, the foundation upon which 
 it will have to be made to rest — ^if it is to enjoy an enduring 
 existence and do the good that is expected from it- — ought, 
 ultimately at any rate, to be its own strength, by reason of 
 its own command of cash or of the equivalent of such in the 
 shape of economically fully justified Credit. Both Raiffeisen 
 and Luzzatti began with borrowed help, lending part of 
 it themselves in their private capacity. However, to both 
 of them the ideal avowedly worited for was a society 
 possessed of so much capital of its own that it would be in a 
 position to dispense with contributions from outside, a rock 
 of financial strength in itself, able to brave the storms and 
 waves of changes and serving as a horn of plenty for the 
 district. Hence the idea of the " Endowment Fund," 
 
THE VILLAGE SOCIETY 155 
 
 which forms such a striking feature of the Raiffeisen organisa^ 
 tion, and of which more will have to be said — ^which in 
 substance is to be a fund without an owner or a claimant to 
 it, except the community as a whole. There is danger in 
 liabitual borrowing from outside, and prolonged dependence 
 on outside support, as we have seen in the case of the 
 Raiffeisen Union consenting, late in the day, to borrow from 
 the Prussian State Bank. M. Durand has gone so far as to 
 speak of money borrowed from outside, whether it be from 
 a Central Bank or from any other source, as a state of being 
 " in hospital," being on the sick list, in a condition under 
 par, in a state of debility from which it must be the first 
 aim of the society to escape by rousing itself to new vigour 
 and throwing off the yoke of dependence. Now this is 
 obviously going too far. For avowedly it behoves societies, 
 through their Central Bank, so to organise themselves that 
 they may be able to assist one another in case of need, 
 balancing the emptiness of the one by supplies from the 
 over-abundance of the other and drawing upon treasure 
 even beyond their own pale. And even in the local society 
 itself, it is " other people's money " that is wanted. How- 
 ever, such " other people's money," and, on a larger scale, 
 Central Bank or Joint Stock or Debenture-holder's money, 
 is not to be " given," but honestly " earned," " bought " 
 by a return value of recognised liability, purchased as a 
 matter of free bargain and exchange, such as was the loan 
 of three millions which the Bank of England took a few years 
 ago from the Bank of France, not in any way in forma 
 fauperis—iox its own liability was worth at least as much 
 as that of the Bank of France. It would be well for the 
 prospect of Co-operative Banking if people would give up 
 thinking quite so much of local societies being " financed." 
 There is an uncanny sound about " financing." It suggests 
 a state of dependence, such as a co-operative society should 
 not be in, at any rate for long. Its first duty in fact is to 
 think of acquiring sufficient strength of its own to be able 
 to stand upon its own legs. 
 
 That consideration it ir which invests the collection of 
 deposits with so much importance as the means by which 
 the desired strength is to be gained. All credit business^ 
 when traced to its root, consists of collecting money in order 
 to be able to Idnd it out again. But our specific business 
 
iS6 CO-OPERAXION IN INDIA 
 
 also is to help the poor man, by means of his deposits, safely 
 kept for him, and beneficently employed, to raise himself 
 to the status of a capitalist. M. Luzzatti has emphasised 
 this object when calling his credit societies specifically " per- 
 fected savings banks." And both the late Lord Avebury, 
 speaking as Sir John Lubbock in the House of Commons, 
 and Sir Edward Brabrook, a late Chief Registrar of Friendly 
 Societies in the United Kingdom, speaking in the Royal 
 Statistical Society, have echoed that pronouncement. 
 
 Now in collecting deposits our " strength " — to use a 
 Biblical phrase — is not " to sit still." A renard endormi 
 rien ne tombe dans la gueule. The devil of improvidence is 
 too busy sending his tempting emissaries about to decoy 
 people with pies in their pockets away from the path of 
 provident rectitude. German Co-operative Credit societies ' 
 are accordingly exceedingly active collecting from their 
 members and from others whatever they can, even in 
 driblets, down to the smallest denomination. In part I 
 may take credit for such development. For, profiting by 
 Heri- Haas' avowed anxiety to throw off the State Bank's 
 yoke, I helped to lead him on the right way. At the time 
 of the Boer War, by reason of our calling in our advances 
 made to German banks, money in Germany became 
 alarmingly scarce. The Haas Union had practically only 
 the State Bank to depend upon. For its store of deposits 
 was small. And the State Bank was not a pleasant master 
 to have to deal with in time of trouble. Seeking for a 
 remedy, the Haas Union offered three prizes for the best 
 essays upon the subject of developing Thrift in societies. 
 I competed anonymously, and was fortunate in obtaining" 
 a prize, in consequence of which my essay was, as the 
 Secretary of the Union afterwards informed me, circulated 
 among the societies " by the hundred thousand." In my 
 essay I called attention to the most valuable institution of 
 our English " Collecting Banks," humble, unpretentious 
 little bodies that they are, but forming a fair number, which 
 do yeoman's service in the promotion of elementary thrift. 
 Their system is, through their volunteer collectors — ^for the 
 most part young ladies — ^to gather up small deposits from 
 working and other poor folk, at the very time when they 
 happen to be in funds, say, on pay day, or immediately after, 
 before the devil has had a chance of tempting them to spend 
 
THE VILLAGE SOCIETY 157 
 
 their few pence on finery, or sweets, or drink. Those 
 ■collectors penetrate everywhere — ^in the house, the workshop 
 or the field — and will not be put off. And they tell me 
 that they experience practically no difficulty in gaining the 
 poor people's confidence and securing the money, which 
 they carry to the " Collecting Bank." That bank cannot 
 afford to allow any interest upon those deposits. " If it i» 
 interest that you are after," so they tell the people, " then 
 take the trouble of carrying your money yourselves to the 
 Savings Bank, which will pay you interest," However, as 
 fioon as the account of any one person has reached the figure 
 ■of ^5,say Rs. 75, they hand the amount over in the depositor's 
 name to the Savings Bank, which from that day forward 
 pays interest upon it, and the account so opened is not 
 likely to be closed in a hurry. There is another institution 
 that I at the same time called attention to, which has 
 subsequently answered extremely well in Germany. That 
 is the American invention, then quite new, of what is called 
 the " Home Bank." That " Bank " consists of a strong 
 metal money-box, with a good lock to it, of which the 
 institution which issues it keeps the key. In such " Home 
 Bank " people are invited to deposit odd pieces of money, 
 at home, whenever the spirit moves them. They cannot 
 get the money out again. But periodically they carry the 
 box to the society, which empties it, and credits the owner 
 with the amount taken out. In the United States it is 
 found that on an average such a money-box will collect as 
 much as ^^20, say Rs. 300, in a twelvemonth. What the 
 figure is in Germany I am not in a position to tell. But 
 people are satisfied with the result. Our British Post Office 
 has quite recently introduced the same recept^acle in England 
 by the name of " Home Safe." There is not yet sufficient 
 experience to show how the implement has worked. Of 
 course there were other suggestions as well that other 
 competitors and myself volunteered. Some of them were 
 accepted. A vigorous campaign of inviting and collecting 
 deposits was set in progress, and the face of things came to 
 be changed. The new departure proved entirely and dis- 
 tinctly successful. At this point, as well as elsewhere, in 
 Co-operative Credit business, it is pre-eminently ^' elbow 
 grease " which is wanted. Whatever precise expedients be 
 resorted to in India — every country as a matter of course 
 
iS8 CO-OPERATION IN INDIA 
 
 has its own customs and its own peculiar aptitudes, which, 
 want to be considered — ^if a society wants to take much 
 money in deposits, and that is for it both the cheapest and 
 the most dependable source of cash, it will in any case have 
 to lay itself out for exerting itself to that end, spread out 
 its web, as a spider does, so as to catch many flies, rather 
 than wait in its hole for chance flies to come crawling in. 
 
 That deposit money, which means to the depositor 
 eventual comparative wealth, growing up as it does 
 gradually into capital, and meanwhile teaching its owner 
 how to husband his pies so as sooner or later to be able t& 
 take them out again in the shape of rupees, brings to the 
 society the cash that it needs in the most convenient and 
 the cheapest manner, leaving it master of its own affairs. 
 
 However, that money will some day or other have to b& 
 paid back. Now, with regard to paying-back conditions 
 there is an utterly false impression widely prevalent- 
 Societies, which first won't take any trouble to get the money,^ 
 once they have it seem determined not to let it go except 
 at extreme inconvenience to the owner of it, whose dealing 
 with it they study to hedge and fence in with as irksome 
 conditions as they can devise. There must be notice — 
 long notice, the longer the better. What these people 
 appear to forget is that the depositor very naturally has his 
 own views and interests in the matter. He deposits his 
 money as a saving, in order that when he wants it he may be 
 able to draw it out again. And the more you tie his deposit 
 up, the less ready will he be to entrust it to you. You will 
 have your condition of notice. But you will be without 
 the deposit. Now I may presume to say that I speak with 
 some knowledge of facts. For in the nineties I made a very 
 searching special study of Savings Bank usages in all the 
 world, the results of which study I embodied in a paper read 
 before the Royal Statistical Society in 1897, entitled 
 " Savings Banks at Home and Abroad." In the course of 
 that study I found that the most successful Savings Banks 
 throughout were those which, whether bargaining for 
 notice or not, as a matter of fact paid without exacting 
 notice or cutting it as short as could be. They experienced 
 no difficulty in paying out, because their cashbox was 
 habitually full. People trusted them, because they liked 
 their paying-out ways. Even generally speaking, then, it 
 
THE VILLAGE SOCIETY 159 
 
 will be seen that it is a mistake to tie up deposits too 
 tightly. 
 
 However, this matter has a quite special aspect for co- 
 operative institutions. For, if savings deposits anywhere 
 make what one of the highest authorities on Savings Bank 
 practices, namely the late Mr. Meikle, of the premier 
 Trustee Savings Bank of the world, that is, that of Glasgow, 
 has aptly called " good, lying money," it is so in co-operative 
 societies. Mr. Beatson Bell and Mr. Mitra have both 
 testified how, even in India, beginning only with Co- 
 operation, co-operative societies have been found as holders 
 of deposits to weather the storms of recent crises very much 
 better than even the Post Office Savings Bank. Sir Robert 
 Morier noticed something of the same sort in Germany 
 during the war of 1866. And the reports which have 
 reached us lately in London show that the results of that 
 early war have been more than borne out in the late 
 war. It is quite natural. People do not " run " upon 
 themselves. Their co-operative bank is in effect their own 
 pocket. People do not " run " upon institutions of which 
 they themselves have elected the managers, which managers 
 they keep under their own control. Look at the huge mass 
 of deposits in keeping with the two great Co-operative 
 Wholesale Societies of Great Britain ! Mr. Maxwell, the 
 late President, has frankly onwed that the reason why the 
 great , Scottish Wholesale Society went into Production, 
 erecting for the purpose costly productive workshops, was 
 that it really did not know how otherwise to employ its 
 immense wealth of deposits, which came flowing in. Now 
 that is not an employment of deposits that I should like to 
 recommend in India, at "any rate at present. However, as 
 a matter of fact in England and Scotland no harm whatever 
 has resulted. That deposit money has come in " to stay." 
 And it is bearing capital fruit. What in truth is far more 
 important than rigorously hedging in deposits by trouble- 
 some hard-and-fast rules about notice is to exercise due 
 solicitude for the good management of societies by punches, 
 who will not think only of themselves, under the control 
 of members who, even if they cannot write or read, know 
 what is safe, and watch over the employment given to 
 society money. Once you make the tree good the fruit 
 will prove good aUo. 
 
i6o CO-OPERATION IN INDIA 
 
 However, Co-operative Credit societies should not content 
 themselves with savings deposits only. Most of those that 
 I am now thinking of start without, or with only very 
 moderate, share capital. And if they want to have money 
 with which to operate, they will have to try to get all 
 the more in the shape of loan capital. Now the accepted 
 practice is to take such money, provided that it is to be got, 
 from a " Central Bank," which is supposed to be a deus ix 
 machina, or else an indispensable fairy godmother. How- 
 ever, the " Central Bank," whatever it may have been 
 intended for, was certainly never intended to provide 
 " good, lying money " for the society to operate with 
 permanently. Its purpose is to supply casual needs, grant 
 specific loans "for a temporary purpose," as bankers style 
 it, or else open a cash credit, an overdraft, to be drawn 
 upon as occasion may require, but certainly not to remain 
 idle, but on the contrary to keep very much alive, sending 
 money backwards and forwards, or it will be of no advantage 
 to the " Central Bank." The Central Bank cannot deal 
 out nothing but what practically would be " mortgages." 
 Besides, such borrowing places the local bank in a position 
 of dependence — ^which is never a satisfactory position to be 
 in. Better try to secure depositors of your own with whom 
 you may make your own bargain in an independent way. 
 The local bank wiU certainly be stronger if it can obtain the 
 requisite cash upon its own responsibility, to be used in its 
 own way. Such money is to be got in the shape of long- 
 term, fixed deposits, running for a predetermined, more or 
 less lengthened period, during which it is not withdrawable 
 and, being, in consideration of that condition, remunerated 
 with a rather higher rate of interest — ^the rate of which will 
 rise proportionally with the greater length of time. Such 
 deposits are greatly in vogue in Europe. For their employ- 
 ment in local banks in India the time seems scarcely yet 
 come, although in " Central " and " Provincial " Banks 
 they are probably common and should be useful. We may 
 hope that the time for them will eventually come also for 
 local societies. No doubt the employment of such deposits 
 calls for such knowledge of business as only experience, 
 coupled with judgment, can supply. You do not want 
 more of that interest-consuming debt than you kn6w that 
 you will have employment for. Nor do you want it for 
 longer time than you will need it. But wherever a credit 
 
THE VILLAGE SOCIETY i6i 
 
 bank is really in its proper place, wherever, that is, its 
 existence is justified by the business that is brought to it, 
 there is likely to be some ascertainable figure, up to which 
 it will provide a convenient source of supply. And know- 
 ledge with regard to both the proper amount and the proper 
 periods for which such deposits are to be sought, as well as 
 the best time for asking for them, should be likely to come 
 by practice in course of time. 
 
 And there is another point that wants calling attention to 
 in connection with long-term deposits. There are more or 
 less moneyed people in India, no doubt, who wish the move- 
 ment well, but who cannot afford the time required for 
 taking an active part in the management of societies. Well, 
 those people- may help the movement very effectively — 
 much better than by intermittent and desultory attendance 
 — by making fixed deposits, the holding of which will, of 
 course, secure to them sufficient right of insight into the 
 society's doings to constitute something of a safeguard to 
 their own peculiar interests. 
 
 The money having been got together will certainly want 
 to be profitably laid out, so as to earn interest. For it costs 
 such. And such laying out will in the main have to take 
 the shape of advances to members. Only members, of 
 course, are to be dealt with. To manipulate such business 
 is the second task to undertake which the fanchayet was 
 appointed and, to outside eyes, it is apt to present itself as 
 the more important of the two. Needless to say, it calls 
 for very much more circumspection and judgment than does 
 the mere receipt of deposits ; and in the consideration of 
 this business comes out the unquestionable superiority of 
 the handling of the business by a local body, as compared 
 with its transaction by an institution at a distance, be it 
 ever so much wealthier and better officered. For the first 
 and most important point to be considered in the worl of 
 lending out money is the qualification and character of the 
 intending borrower as a man, and the prospect of the use 
 which he proposes to make of the loan. 
 
 Now the question attaching to the value of the man and 
 his qualification for becoming a borrower cannot be judged 
 wholesale, according to a general rule, and regulated by 
 hard-and-fast precept, such as may be laid down by a 
 superior body acting, it may be, at a distance. For obviously 
 
 II 
 
i62 CO-OPERATION IN INDIA 
 
 case is likely to differ from case. And that may in one case 
 be perfectly legitimate which in another case is altogether 
 improper. That is why the business cannot, without the 
 risk of making it miss its object, be left to a Central Bank or 
 to any distant authority. Indeed, it is to be feared that, 
 how«ver well intended — of cottrse, only as general rules- 
 even the precepts of the Committee on Co-operation may 
 be, they may, by their almost unavoidable hard-and-fastness 
 and stereotypedness, lead to unlooked-for grating and jarring 
 and mischief. Under the Diomedean necessity of working 
 the matter under tolerably strict Registrars' directions, 
 too much of the hard-and-fast, mechanical and procrustean 
 rule has indeed already found its way into Indian practica. 
 Only, one does not quite see how, in the present stage, that 
 is to be altogether avoided. , There is the haissiyat, which 
 deflects credit from lending to the man into the way of* 
 lending to his property. Now that is as wrong as can be. 
 For it is not the property which is to be lent to and which is 
 to serve as security, but the ihan with his sureties to back 
 him np. " Real " security, whether in land or in chattels, 
 may have to be taken in an exceptional way. But that had 
 much better be done by way of collateral security. Really, 
 mortgage credit is the last thing that a Co-operative Credit 
 bank, as here kept in view, is qualified for. Co-operation 
 may provide such credit ; but it will have to be in another 
 way. " Real " security is the most inconvenient security 
 for a credit society to hold — ^it may be fatal, if it has to be 
 foreclosed upon. Lord Sydenham's " golden precept " rules 
 it out even for capitalist banks. " Banking," so it says, 
 " is an easy thing enough, once you know how to distinguish 
 between a bill of exchange and a mortgage." 
 
 It has indeed been suggested, in India as elsewhere, that 
 the local fanchayet, knowing the people concerned and their 
 properties, will be particularly well adapted to act as a 
 mortgage society's agent and adviser. And proposals to 
 effect such collaboration have repeatedly been put forward. 
 They have in every instance been very rightly and very 
 resolutely rejected. The fanchayet could not afford to 
 
 f)ledge its security for the mortgage loan. And without its 
 lability for any loes, what is its advice worth f Just as 
 much as the opinion of a jury in a compensation case brought 
 forv»'ard by an individual against a raihvay company or any 
 
THE VILLAGE SOCIETY ' 163 
 
 other moneyed corporation. The local man is the panchayet's 
 friend — or else its enemy. And in either case the advice 
 given will be biassed and wanting in impartiality. As 
 matters are now constituted, mortgage loans should be let 
 alone as much as possible by Co-operative Credit societies. 
 
 But to return to actual schemes for wholesale credit 
 practice. No law on agricultural credit was — apart from its 
 political aspect — more kindly conceived than the French. 
 But we can trace the insuperable difficulties inherent in 
 general precepts from outside the circle of persons themselves 
 interested, in the narrow, purely mechanical restrictions 
 imposed, which, as already observed, would make that credit 
 altogether futile in India, inasmuch as neither advances for 
 the paying off of mahajan's claims or expenses of weddings 
 and sradhs — ^which are what raiyats stand most in need of — 
 could be permitted under that law. And such incapacity 
 for judging attaches to the point of time as much as it does 
 to that of the obj ect. In other applications the hitches may 
 be at different points. But hitches there are bound to be, 
 when so delicate a matter as credit is made to be dispensed 
 under hard-and-fast rules. The coat unmeasured to the 
 body cannot possibly fit. 
 
 The governing idea in makiiig advances is that a member, 
 being admitted as such on the ground of his assumed 
 honesty and trustworthiness, should, within the limits of 
 funds available, receive, for any object approved of, as much 
 as will serve to accomplish that purpose, being allowed 
 proper time for repayment — ^not more, but not less either 
 — out of the proceeds of the employment itself of the 
 money borrowed. Now nobody is really qualified to judge 
 of the fitness of the person, the, appropriateness to his 
 position of the object, the amount necessary under the 
 circumstances, and the time to be allowed for repayment, 
 but the member's own neighbours, directly interested in 
 good employment and in full and punctual recovery by 
 their common liability. At the present time the Registrar 
 interferes. But that is not because he is Registrar — not, 
 that is, as a permanent arrangement — but because the 
 society is still in tutelage, and he is the guardian appointed. 
 The time ought to come when the society will be capable, 
 and therefore permitted, to act for itself. A " Central 
 Bank " cannot judge with confidence, any more than can 
 
i64 CO-OPERATION IN INDIA 
 
 the Governor-General's Council at Delhi. " Pour bienjuger 
 iljaut tout voir" wrote the famous Lord Chesterfield to his 
 son — ^it is true in a Very different application. And 
 certainly nobody can outside the village itself watch the 
 employment of the loan and the borrower's conduct, and 
 determine whether — ^under such vicissitudes as climatic 
 conditions cause in India — a delay is justified or not. 
 To refuse a delay when it is genuinely called for would be 
 cruel — besides which it wovild tend to destroy the entire 
 object of Co-operative Credit, by driving the embarrassed 
 debtor once more perforce into the arms of the temporarily 
 obliging but ultimately relentless mahajan. To -allow it 
 when there is no justification for it would be impolitic. 
 
 In India the determination of objects to be approved for 
 loans asked for has puzzled Registrars and others interested 
 in the movement not a little — ^but really, once the principle 
 of Co-operative Credit is understood, much more than there 
 is need for. Are expenses for marriages to be allowed ? 
 And expenses for sradhs P Is a member to be granted a 
 loan who is still in debt to the mahajan f Or is previous 
 discharge from his liability to that amiable gentleman, who, 
 like St. Martin of Tours, is bonus in consilio, durus in negotio, 
 to be rigorously insisted upon ? To all these, and to many 
 similar questions, which have provoked a good deal of 
 controversy, the general answer can be neither " Yes " nor 
 " No." The legitimacy of making the advance must 
 in each case depend absolutely upon the circumstances of 
 that case. Take the case of indebtedness to the mahajan. 
 The very object for which the society exists is to get rid of 
 such debts, to make members renounce the mahajan and all 
 his works. How is it to do that by refusing election to the 
 debt- embarrassed applicant, until he has disburdened him- 
 self of his debt ? Did we wait to draw the sword for 
 Belgium till the Germans had evacuated that country ? 
 To deny such a man the advance would be to defeat the 
 object of the society. What we want to know is whether 
 our man's case is a good case ; whether the help which we 
 have it in our power to give will be sufficient to get him out 
 of his torturer's toils, however gradually that may be ; and 
 whether, that being done, he is likely to keep clear of similar 
 embarrassments ; whether the use of the loan will make a 
 freer and better man of him. If that be so, he ought to 
 
THE VILLAGE SOCIETY 165 
 
 have the money. If, on the other hand, we find that our 
 loan v/ill in all probability serve only to stave off an evil day 
 by being employed to pay just one kist, leaving our man in 
 chains, and only feeding the insatiable mahajan, we ought 
 decidedly ta say " No." So it is also with the expense for 
 marriages and sradhs. If, practically speaking, the expense 
 has to be incurred — custom requiring it — we shall do better 
 to let our man have his money, at a cheap rate, provided 
 that we have security for his repaying it, than by a refusal 
 drive him into the arms of the mahajan who is likely to be 
 obliging for the time, but eventually to suck our man dry. 
 Under this aspect that appears to have actually happened 
 what at the outset I foretold would come about. Our man, 
 having previously only the mahajan to depend upon for 
 money, with all his friends eager for a good treat, was 
 reckless, because he was urged to be so. The mahajan saw 
 his opportunity and opened his bag freely. Neighbours 
 urged that the thing should be done lavishly. Now that 
 our man has the society to go to, which scrutinises his case, 
 and advisedly limits its advance, and his fellow-feasters, 
 knowing that in the event of a default they may have to 
 make the deficiency good, discouraging improvidence, has 
 ceased to practise such. Our man has grown careful and 
 less money is spent. 
 
 Now that is just as one would wish it to be. 
 
 There will be other cases arising as well. Things advance 
 and the standard of life comes to be raised. People are 
 then likely to want advances for household purposes. By 
 all means let them have them, if the case be good. 
 Advances, so it is said, are to be made only for productive 
 purposes. But a penny saved is proverbially a penny got. 
 If an advance will enable a member to save money by a 
 purchase of some necessary article in larger quantity or 
 with money down — to save more than the interest due will 
 amount to — ^his case must be pronounced good, supposing 
 the advance to be secured. The money will have fructified 
 when it returns, and our man will be the better off. And 
 with him also the country. 
 
 However, in all cases we want to be thoroughly sure that 
 loss on our part is well guarded against. There can be no 
 looseness on that point — say, in respect of limitations as 
 regards the number of sureties — ^which latter will, it is to be 
 
1 66 CO-OPERATION IN INDIA 
 
 expected, and should, constitute the most common form of 
 security given. For all other forms have their drawbacks. 
 Real security, "in other words, a mortgage, is to a credit 
 society, such as is here contemplated, the most insecure 
 security conceivable and should, if taken at all — as it may 
 have to be in exceptional cases — ^be taken by preference as 
 collateral security. There is the question of title — ^that 
 is, of the real pledgeability of the pledge given — to consider. 
 Next, there may be depreciation as well as appreciation. 
 Considerable danger and even loss has been experienced 
 from this cause. Foreclosure, in the event of default, is, for a 
 society like that here spoken of, a most inconvenient process, 
 and may lead to the acquisition of a white elephant. Chattel 
 mortgages, as the Americans call them, are as objection- 
 able. There is the " chattel " to seize and preserve without 
 deterioration. The candle may easily cost more than the 
 game. And in hardly any case does pledge credit, whether 
 the pledge be land or chattel, educate. Personal Credit, 
 on the other hand, can scarcely fail to do so. _ For it brings 
 home responsibility to the borrower, as nothing else will, 
 through his sureties. Of such there should be just as many 
 as are required to make the loan safe. You cannot limit 
 yourself to any particular number. The example of Scotch 
 Cash Credit shows that under good practice sureties must 
 be proportioned to the advance exactly according to 
 their value. The Scotch banks take one, or as many as 
 eleven, perhaps even more. The one standard by which 
 they work is sufficiency. So it must be in a co-operative 
 society. And a thing that wants very much to be impressed 
 upon the attention of newly organised co-operators is, that 
 they must see that the suretyship is genuine, genuinely 
 agreed to by the surety, he being a real person ; and explicitly 
 confirmed in cases of renewal. Cases of forged acceptances 
 by real or bogus securities have occurred. It is not necessary, 
 as some Indians stipulate, that the surety enlisted should be 
 a member of the society. It will be quite sufficient to 
 know that he is " good." If not a member, he will, by his 
 liability engaged, be adding a new outside buttress to the 
 fabric of the society, pledging more money for its liabilities. 
 Now all these things require a close knowledge of the men 
 to be dealt with. And they also require a great deal of 
 delicacy of treatment. Once the loan is out, it calls for 
 
THE VILLAGE SOCIETY 167 
 
 vigilance and absolute, inexorable strictness in insistence 
 upon compliance with the terms agreed upon. Some Regis- 
 trars appear a little over- nervous in the matter of renewals. 
 No doubt this is a fault on the right side. For there is 
 distinct danger in uncalled-for renewals. The concession 
 made is very apt to be abused. And from such abuse may 
 spring a bad habit absolutely fatal to any society. However, 
 there will be many legitimate cases for renewal. And 
 better by a great deal will it be in such cases to grant a 
 renewal than to drive the refused debtor into the arms of 
 the mahajan once more. The point is, to make sure that 
 the case is genuine. And liberties must not be taken with 
 the terms laid down, except with the explicit sanction of 
 the panchayet — ^which body in due course will find itself 
 made answerable for what it does. Those paper transactions 
 known as " re-loans " must not be tolerated. No more 
 benami loans, which are in truth only frauds committed 
 upon the society. For in the securing of a loan all must be 
 above board. If the society a'cts according to rule there will 
 be ample security. In the first place, there will be the 
 guarantee implied by the selection of the member as " a good 
 man and true." In the second, there will be the special 
 inquiry instituted pro hacvice into his character, his oppor- 
 tunity and his case. The opportunity must be distinctly 
 promising, and, in addition, the society will have to make 
 sure that the outlay proposed is appropriate to the member's 
 circumstances and calling. In the third place, there will be 
 the security given by the sureties who, being liable, may be 
 depended upon to watch over the member's conduct. 
 Beyond that, there is the vigilance required of the fanchayet, 
 the Council (where there is one), and the members in 
 general, all of whom, being bound in unlimited liability, 
 have an interest in exercising watchfulness. 
 
 Now, to return to the point of organisation. In the 
 constitution of the fanchayet it is advisable to provide for 
 only a partial periodical renewal of the members, not to 
 make all members to go out at the same time, with the 
 possible prospect of an entirely new set coming in. Within 
 the fanchayet, of course, one-man rule should be altogether 
 " taboo." The temptation to it is in small societies very great 
 — ^which is another argument against a policy of deliberate 
 restriction of numbers. But it ruins the society — at any 
 rate from a co-operative point of view. 
 
i68 CO-OPERATION IN INDIA 
 
 Even the fanchayei — although a much smaller body than 
 what for the moment must still remain an altogether 
 problematical superior body, the Council — cannot be 
 expected to undertake all the work that has to be done 
 itself. It has an executive officer allowed to it, the 
 " accountant," as the Germans call him, the " Secretary- 
 Cashier," as I have styled him, who is designed to act minis- 
 terially for it and execute whatever it may decide. For this 
 reason the Secretary, as I will here call him, as a matter of 
 course plays a very conspicuous part in the business of the 
 society. Then, ought he to be a member of the society or 
 not ? If he is, ought he to be a member of the Committee ? 
 And ought he to be salaried ? A member of the society he 
 ought certainly to be, or he will feel no interest in its doings, 
 nor consider its good to be his own good. That a limine 
 shuts out the correctness of having " group secretaries " 
 to " do the job." A member of the Committee the 
 Secretary is advisedly «oi allowed to be, because his services 
 are intended to be purely ministerial, executive, not 
 directive. Officers' services are designedly made gratuitous, 
 in the first place, because in Co-operation — more especially 
 poor men's Co-operation, in which money is sure to be 
 scarce — ^people are expected to give what they can, what 
 they have got, for the good of the collective community, 
 to obtain with it that which they have not got but want. 
 But another reason is this, that they are to be secured 
 against the danger of being tempted to " stretch a point " 
 in favour of some obtrusively importunate or else some 
 particularly favoured member, which would necessarily be 
 at the cost of the society, whose security would in this way 
 be imperilled. If a Committee man's berth is worth some- 
 thing in money to him, then a member asking for an advance 
 and having a vote might put it to him in this way : If you do 
 not let me have that loan I shall vote and agitate against 
 your reappointment. There must be no d-anger of this. 
 Such consideration does not indeed shut out the propriety 
 of allowing some rewardrto a Secretary- Cashier for his purely 
 clerical and ministerial services, provided that the society 
 can aflford to pay such. Such reward will necessarily have 
 to be small, because there are not likely to be large funds 
 available for the purpose. But it does shut out the pro- 
 priety of the paid officer being a member of the Committee 
 
THE VILLAGE SOCIETY 169 
 
 which allots the loans, or of the Council which reviews them, 
 and so finding himself called upon to assist in determining 
 the issue of loans. There is too much reason for complaint, 
 as It is, of one-man rule in Indian societies; — and not in 
 local societies only, in many of which the sirpanch appears 
 to rule the roast entirely in his own way. There are 
 Registrars who complain that in " Central Banks " likewise 
 there is often enough only one man who rules, the other 
 members of the Committee allowing him to do as he pleases 
 — which fact is said to be responsible for many abuses 
 happening. If the Secretary- Cashier of a local society were 
 to have a say in the dispensing of loan money, it is to be 
 feared that he wovdd soon become the dictator of the society, 
 dealing with its money at his own pleasure. And if he 
 v/ere paid in the bargain the door would be opened wide to 
 partiality and, it might be, to venality. The safest plan 
 is to keep the Secretary- Cashier ia purdy ministerial officer 
 only, having no say whatever in the disposal of money, and 
 only executing the Committee's behests. 
 
 He must be an optimist, indeed, of particularly sanguine 
 temperament, who would argue that in India that checking 
 and controlling of the fanchayet is not necessary which 
 elsewhere, all over the globe, has from the outset been 
 recognised as an absolute, constraining necessity. The 
 fanchayet, be it as good as it please, cannot be left uncon- 
 trolled. Its very popularity with members, if that exists, 
 is calculated to tempt it upon paths which lead away from 
 the society's security. And the society's security must be, 
 like the salus publica, the " supreme law." Therefore all 
 the world over provision has been made for the controlling 
 of the Executive Committee, and that provision has been 
 first applied and most impressively enforced in the society 
 itself. 
 
 There is an outside inspection or supervision also upon 
 which in India very rightly great stress is laid. That out- 
 side supervision is a German invention, which character- 
 istically took its birth in the most methodical of Co- 
 operative Unions or Federations existing, that of Schulze 
 Dehtzsch, as long ago as in 1878. More will have to be said 
 about this in the succeeding chapter, which will be its proper 
 place. It has now found its way into practically all Credit 
 Co-operation in Europe, being eventually' accepted as a 
 
170 CO-OPERATION IN INDIA 
 
 compulsory rule by the Governments of Germany and 
 Austria — ^with Italy booked since 191 3 to follow. The war^ 
 has for the time delayed legislation. And such control 
 is everywhere considered of the greatest value. No one 
 who has got it would willingly forgo it. However, no one 
 as well would allow it to be exercised by officers of the 
 Government. Such mode of supervision is everywhere 
 condemned as not only useless but absolutely deceptive. 
 " Better no supervision at all than Government super- 
 vision." This is what M. Luzzatti exclaimed when the 
 question was put to him. That is indeed going a trifle 
 too far. For, supposing that Unions mil not themselves 
 supervise, there must be some mfeasure of compulsion kept 
 in reserve. As such, and distinctly as a threat of punish- 
 ment, is the prospect of Government interference in the 
 matter regarded by societies. Government ofiicers lack, 
 generally speaking, ahd necessarily lack, proper fitness for 
 the task, and could mbreover not enforce their ruling as 
 Federation officers can. However, rank the " super- 
 supervision," so to call it, as high as you will, after a long 
 and lively discussion kept up in the Continental Co-operative 
 Press some years ago, everybody was found to agree that 
 supervision carried on within the society, by some organ of 
 the society itself, is of greater value still and indeed indis- 
 pensable. 
 
 In India, as it happens, such supervision is for the time 
 still impracticable. There seems no doubt about that. 
 The very smallness of the societies, as already observed, for 
 one thing militates against it. For the moment India must, 
 therefore, still depend upon its active Registrars, as con- 
 trollers, who no doubt do all that they can, to keep societies 
 straight. It may be hoped that some day the time will 
 come when even the sacro-sanctity of the sirpanch will no 
 longer stand in the way of his having his work for the 
 society looked into and himself called to account, so that 
 India likewise may take its place among the international 
 phalanx. In any case it will be worth while explaining the 
 method employed elsewhere. 
 
 Of course some control and supervision — ^in truth, very 
 rigid checking — ^is in a well- constituted credit society 
 expected to be exercised by the great body of members 
 thems^elves. It is for this reason that that *' maximum of 
 
THE VILLAGE SOCIETY 171 
 
 publicity " in the dealings of the society is prescribed, the 
 necessity of which Sir R. Morier particularly insists upon and 
 which, like the admission of oxygen in material things, serves 
 to keep the atmosphere pure and sweet. Those periodical 
 balance-sheets and statements of accounts, which you may 
 see in the office of every rural credit society in Germany or 
 Italy, are not hung there for nothing. Members are to be 
 kept advised of what is going on, what money is lent out, 
 to whom it is lent and so on, in order that they may, as 
 neighbours, check current dealings and, in the event of their 
 scenting mischief, sound a note of warning. There is only 
 one thing connected with the management of a society 
 which must not on any account be disclosed ; and that is 
 the names of depositors with the amounts standing to their 
 credit in the savings department. That information is 
 kept sacredly secret. And it has everywhere proved possible 
 to keep it so. But otherwise there is nothing which is not 
 made public within the society to whoever chooses to 
 inquire into it. 
 
 However, there is a body charged with more careful 
 controlling as its special duty, with a standing direction to 
 report the results of its vigilant examination to members at 
 their annual General Meeting. That body is the " Council 
 of Supervision " already spoken of. Its authority stands 
 next to that of the General Meeting. It exceeds that of 
 the ■panchayet — though its functions are only supervisory, 
 not administrative. It is to meet regularly, but at longer 
 intervals than the fanchayet — say, once every three months, 
 as a minimum — and overhaul all that has been done by the 
 fanchayet. It tk^?^; audit accounts. However, that is much 
 better left to a skilled accountant, working under its 
 authority, and as being responsible to it. We have in the 
 Co-operative World everywhere come round to the con- 
 clusion that, except in very small societies, the work of one 
 skilled accountant is worth a good deal more than that 
 of the two unskilled members of the society which our 
 British Act allows as an alternative. We have in the United 
 Kingdom for this purpose a special class of accountants, 
 fully qualified professional men, but who have made a 
 speciality of co-operative work, which differs in more 
 respects than one from ordinary Joint Stock Company 
 auditing. These men are annually approved by the 
 
172 CO-OPERATION IN INDIA 
 
 Treasury and are found of great service. But auditing, 
 however skilled, is not Inspection. It has regard to 
 actuarial account-keeping. Inspection applies to the use., 
 w^hich the -panchayet has made of its discretionary powers. 
 Situated as it is, with claimants coming to it with requests 
 from all sides, the panchayet wants such a sheltering 
 authority to shield it against improper demands. Neigh- 
 bourly over-kindness is' not, however, the only failing that 
 panchayets are liable to. Indeed the catalogue of short- 
 comings and abuses, such as have actually occurred in 
 India — punches abusing their authority, or granting benami 
 loans, allowing " re-loans " too freely and " paper tran- 
 sactions," and all the rest of it — is a long one. None of 
 these abuses could have occurred if there had been a decent 
 Council of Supervision to check what was being done and 
 to report in case of need to the General Meeting. 
 
 In Germany the Council of Supervisioji is always a fairly 
 large one — ^larger certainly than the panchayet — ^in order 
 that it may appear invested with greater authority. The 
 law prescribes that no member of the Council should be at 
 the same time also a member of the Committee of Manage- 
 ment. The reason for this is plain. Nobody is allowed to 
 be a judge in his own cause. Raiffeisen would have nine 
 members in a local bank. In Schulze Delitzsch societies, 
 of course, you come upon larger Councils. But then those 
 societies are likewise themselves larger, and have larger 
 transactions to deal with. In Italy in the Luzzatti societies 
 the Council really is Council and Executive Committee in 
 one, delegating, however, its executive functions, subject to 
 its own authority, to the three sindaci selected from among 
 its own members, acting as panchayet in respect of current 
 business. In either case the Council stands above the 
 panchayet. In France and Belgium a different system 
 prevails. Therfe is no Council there, but there are Censeurs 
 — ^generally three in number, after the Italian example— who 
 exercise no disciplinary power, but have absolutely free 
 access to all the society's cash, papers, ledgers and whatever 
 else there may be. They are caUed upon to check, and 
 inquire, and report, point out irregularities and bad 
 practice — and the more searching is their scrutiny, the 
 better pleased are the menabers. But they leave the 
 action to be taken on such points to the General Meeting. 
 
THE VILLAGE SOCIETY 173 
 
 The Co-operative Cf edit societies of Germany and Italy 
 stand in quality, generally speaking, so much above the 
 French and Belgian, that on such ground alone one v^.ould 
 feel inclined to award the preference to the Italo-German 
 practice. In any case there is everywhere supervision of 
 sovie sort provided for within the society — ^which on lines 
 of the Vincentian rule appears to argue in favour of its indis- 
 pensableness — ^and in any case no Co-operative Credit move- 
 ment in which such provision has been made would now 
 willingly go without it, whatever be the supervision by a 
 higher authority set above it. Therefore one would hope 
 that in India likewise the time may come when societies 
 will no longer be as diminutive as they are now and when, 
 with the increase of the number of their members and of 
 the bulk of their business, the difficulties will vanish which 
 now stand in the way of its doing as others do with good 
 effect. 
 
 The money having been raised, lent out and recovered, 
 it is to be assumed that there wiirbe a balance remaining 
 over from accrued interest. In early years, and in years of 
 some calamity or else of little business, it may be otherwise. 
 There may be a deficiency. An occasional deficit is regret- 
 table, but it should not necessarily frighten people. 
 Business is at the outset an uncertain factor, and there 
 must be outgoings. The society was not formed for one year 
 only. The business may require building up. 
 
 The question of how to deal with the surplus, and also 
 vvdth the several sections of business which determine its 
 accruing or its failure to result, evidently are questions too 
 big, and involving too much general liability of all members, 
 to be suited for determination by either the -panchayet or 
 the Council — supposing such to exist — or yet by the 
 " Central Bank" ; nor can they be satisfactorily settled by 
 standing regulations decreed by Government. There is 
 too much need of " elasticity " — the " elasticity " upon 
 the necessity of which Sir Denzil Ibbetson rightly dwelt— -in 
 them to admit of such once-for-all regulating. And there is 
 liability involved in them which will fall upon members, 
 and which accordingly only members themselves are com- 
 petent to deal with — once they have arrived at a state of 
 maturity. They are questions for the General Meeting. 
 Not unnaturally have there, in what may be termed the 
 
174 CO-OPERATION IN INDIA 
 
 very patent " infancy " of the societies, been some attempts 
 at dictation from " above." That was scarcely avoidable. 
 You cannot leave a child to its own devices, with a razor 
 in its hand. In its precepts the Government appears to 
 have followed the suggestions of the " Committee on Co- 
 operation," which in respect of these points are not alto- 
 gether above criticism. All this must be regarded as a 
 temporary " go-cart " only, as a " go-cart " in which the 
 child is to be taught to walk under restraint, which would 
 limit its walking power if such were fully developed, but 
 which is applied with a view to methodising the action of 
 members and to developing their power. There is, in 
 truth, nothing to be gained by habitual interference by the 
 Government. The law does well to prescribe that in 
 societies not based upon shares the Reserve Fund, whatever 
 it be, shall be the indivisible property ot the collective 
 number of members, not to be shared out, and that a liberal 
 contribution shall be made to reserve every year as a first 
 charge on all surplus — say, 25 per cent, as a minimum 
 up to a certain point. 
 
 There are a whole number of questions coming under this 
 head to be considered. The rate of interest severally to be 
 charged on advances and to be allowed on deposits is one. 
 Next there is the que'«tion of the maximum of credit to be 
 allowed without special appeal for sanction to the General 
 Meeting, to any one member, and to borrowers collectively. 
 That has nothing to do with the point of security for loans. 
 The necessity for security imposes itself. There must be 
 security. But there must also be a limit to risk for members, 
 who are, by fixing such maximum, limiting their own 
 otherwise unlimited liability. On the other hand, it does 
 not mean that with- the consent of the General Meeting 
 that limit, which is, at the General Meeting's pleasure, 
 a variable quantity, may not in specific cases be raised. 
 Again, there is the question of surplus, how it is to be 
 employed, how much of it is to be treated as Reserve Fund 
 and accordingly kept " fluid," and how much is to be dealt 
 with otherwise. 
 
 Let us take the point of the two rates of interest first. 
 For on them will it depend whether the society is able to 
 make both ends meet with, maybe, something over, or not. 
 
 The rate of interest will, naturally, have to be regulated 
 
THE VILLAGE SOCIETY 175 
 
 by the flow of business. Naturally, however, also, in a 
 country like India, in which custom has since a long time 
 settled the current terms for both loan and deposit interest, 
 there will be good ground for adhering as much as is possible 
 to that popular scale. However, you cannot say, once for 
 all, that a co-operative bank should not lend at more than 
 such a rate, nor allow less than so much on deposits, because 
 you do not know in advance what amount of business it will 
 have. It must keep its business self-supporting. And as a 
 reward for custom, if its rates should by any chance be 
 temporarily less favourable than the ordinary rate, it has 
 more to offer than merely cheap money — ^which cheap 
 money must none the less remain its steadily pursued aim. 
 It promises its customers an institution of their own, in 
 which they need not bee for loans, but have a right to claim 
 them — an institution which will endure, and which, also, 
 will prove useful to them in more ways than one. As has 
 been already explained, some societies, even though com- 
 posed of very poor people, have found it advisable for a 
 time rather to keep above the necessary minimum footing 
 of interest for loans, for the sake of earning what will more 
 rapidly build up a decent Reserve Fund. On the other hand, 
 you cannot accept a fat surplus in itself as a proof of good 
 management. Rather does that surplus indicate that you 
 may have been charging too much for advances and will 
 have to come down with your rate. Your ideal aim is — in 
 contrast with what obtains in the case of moneylenders — 
 the highest possible rate for deposits, and the lowest for 
 advances. For borrowing is to be made cheap, and 
 depositing attractive. However, the coat must some- 
 how be made to fit. Consequently it will have to be 
 considered what the cloth will permit. 
 
 The maximum fixed for advances to be made, either per 
 individual, or per society — ^which is a figure that may be 
 at any time either raised or lowered by vote of the General 
 Meeting, but a figure which certainly wants to be fixed — 
 is designed, as has been said, as a safeguard against excessive 
 risk. There is no other question of principle involved in it.. 
 
 One main point for the consideration of the General 
 Meeting, of course, will be the employment of the surplus. 
 Now with regard to this matter the road to be followed 
 appears to be very clearly marked out, more particularly 
 
176 CO-OPERATION IN INDIA 
 
 with respect to sbcieties without or with only very moderate 
 share capital. Where there are no shares evidently there 
 can also be no dividend either. And where there are 
 shares, such will be entitled, as already insisted upon, to 
 nothing but the bare current rate of " hire " for money. 
 Accordingly any payment out of surplus, if such be decided 
 upon, should go, not to capital, but to " business." There 
 can be no fixed rule. But there is one rule which certainly 
 should be " fixed," and stanchly held by, and that is, that 
 the first claim on surplus, even though it should be to the 
 exclusion of other claims, in all cases must be the claim of 
 the Reserve Fund. A Reserve Fund is an inexorable 
 necessity. You must have it. And the larger it is, the 
 better will you fare. You can never have too much. In 
 early days it will need especial nursing, such as may call for 
 some sacrifice. But you cannot stint it. This is the rock 
 upon which, according" to the parable, you may with con- 
 fidence set up your house. In a Raiffeisen society the 
 Reserve Fund must be indivisible. In societies of other 
 types that is not indispensable. But it had better be so. 
 For it will impart additional value to the liability, upon 
 which you propose to borrow, therefore invigorate your 
 credit and at the same time serve to keep members in your 
 society. You cannot well say that the regulation contribu- 
 tion of 25 per cent, per annum is to be made up to the time 
 only when the Reserve Fund will have reached such or such 
 a figure in proportion to your share capital. For the 
 claims which the Reserve Fund is there to meet are not those 
 of the share capital' but of the existing liabilities. If a 
 measure were to be rightly applied, that measure accord- 
 ingly would have to be, not the amount of the share capital 
 but the amount of the liabilities. Limiting the Reserve 
 Fund by the standard of share capital is likely to lead you 
 to follow the practices bf Joint Stock Companies, which are 
 in a totally different position, being based upon capital, 
 whereas your society is based upon business. There are 
 plenty of co-operative banks which have reserve funds very 
 much larger than their share capital. And they are all the 
 stronger for it and command a better credit. 
 
 Now, just the same as in some other respects, in the 
 matter of reserve funds. Co-operative Credit societies find 
 themselves in a distinctly different position from Joint 
 
THE VILLAGE SOCIETY 177 
 
 Stock Companies. In a Joint Stock Company the Reserve 
 Fund is a fund out of which to meet occasional deficiencies 
 of various kinds, as they occur. The same need of course 
 the Reserve Fund of a Co-operative Society is intended to, 
 and must be kept up at a sufficiency to, meet. However, 
 it is to do more besides. And that point must not be 
 left out of account. So far as a Reserve Fund is designed 
 to serve the purpose indicated, as an ordinary Reserve Fund 
 — no matter in how many separate compartments it may be 
 split up, to answer this or that or the other call — it wants 
 to be kept fairly what is called " fluid " — that means, in a 
 state readily realisable, convertible into cash. That is, 
 by the way, not scrupulously done in all Joint Stock 
 Companies. Many enough of them, contrary to a well- 
 recognised rule, employ their Reserve Funds in their business. 
 A Co-operative Credit society should not do so. One is 
 glad to see attention ^aid in India to this aspect of the 
 question — for instance in Bombaj — the Reserve Fund being 
 apportioned in different sections to this, that and the other 
 distinct risk, and "fluidity" beinginsisted upon. At the same 
 time it must also be insisted upon that " fluidity " is not a 
 point upon which Government can lay down an immutable, 
 Medo-Persian rule. In different cases,^ under different 
 circumstances, there will be calls for different degrees of 
 " fluidity." And to lay down a hard-and-fast rule is to 
 make that stiff and " wooden " which ought to be elastic 
 and pliable. Procrustes is not an ideal adviser on matters 
 of. business. 
 
 However, the Fund to be laid by out of surplus is in a 
 Co-operative Credit society not ail earmarked for " Reserve " 
 in the sense indicated. There is no dividend — not even 
 necessarily upon " business." But there is, or ought to be, 
 what in other businesses goes to dividend. And that is 
 advisedly intended and designed to go into working capital. 
 Eventually at all events. But who is to say — otherwise 
 than the members of the society itself in each case — when 
 that " eventually " is to begin ? Raiffeisen indeed thought 
 more of his " Endowment Fund " — Stiftungsfonds or Ver- 
 einsvemiogen, as he termed it ; and the latter term correctly 
 expressed his meaning ; it is " property of the society " — than 
 he did of his " Reserve " in the accepted sense of the word, 
 although never disputing that a Reserve Fund sufficient 
 
 12 
 
178 CO-OPERATION IN INDIA 
 
 for current purposes there must be. That was suppose'd 
 to be self-evident. However, in a society without capital, 
 necessarily provision must be made for the creation of 
 capital — capital to work with- And just as Distributive 
 societies raise their capital, which our British Wholesale 
 societies — and plenty besides—are there to show, may 
 become exceedingly important, out of their business, so 
 the Raiffeisen society was to create its own capital likewise 
 out of business — ^business of a different sort but business all 
 the same. One part of the annual surplus certainly was 
 intended from the very beginning to grow into capital — 
 capital for working purposes. It was in course of time 
 to replace the borrowed capital, which of course every 
 credit society is compelled to operate with so long as it has 
 not capital of its own sufEcient to answer its purposes. 
 The ultimate destination of the surplus so accruing was to 
 serve as, let me say, unappropriated capital for the collective 
 community, which, likewise, in the hope of the founder of 
 the system, was ultimately to embrace all dwellers in the 
 locality, all having been gradually converted into persons 
 deserving of election, as good men and true. Here they 
 were to find the means of relief in trouble, the supply of 
 cash for any work to be undertaken. M. Luzzatti, though 
 not giving effect to the same idea in the same way, avowedly 
 no less earnestly fixed his hopes on such attainment — ^a fund 
 collectively owned, collected out of the surplus funds resulting' 
 from, in themselves fruitful, transactions, the " blessing; left 
 behind " by other blessings, a Fortunatus' purse gathered 
 up imperceptibly by those for whose benefit it was intended. 
 "That is the ideal. To what extent it may be attainable, 
 the event must show. It does not for the moment appear 
 within a measurable reach of attainment. However, the 
 substantial " Endowment Funds " gathered together in 
 some German societies — where by reason of the easy sale- 
 ableness of property in land, freely taken advantage of in rural 
 credit societies, there is a wide scope for the collection of 
 surplus— show that it is not altogether a vision of dreamland. 
 How much good such a fund, when collected and carefully 
 administered, might accomplish, it needs no visionary's eye 
 to discern. There would be money practically for every- 
 thing — for economy at home, for improved agriculture, 
 improved small industry, improved everything. So far as 
 
THE VILLAGE SOCIETY 179 
 
 the Cornucopia owned in common would hold out, there 
 would indeed be " honesty capitalised," which is M. 
 Luzzatti's favourite expression, money, with the help of 
 which the poor could earn and build himself homes. What 
 would that not mean for our villages ! 
 
 With regard to this particular point one Indian writer 
 — ^himself a very active worker in the cause of Co-operative 
 Credit — ^has strangely misunderstood something that he 
 reports me to have written. He will have it that I have 
 laid it down that, such a state of things being achieved, 
 there will be no further occasion to practise thrift. That 
 is a great mistake. Grow the society as rich as it pleases, 
 for thrift among individual members there will always 
 remain scope and, indeed, a necessity. A rich society doe . 
 not of itself make every member individually rich. It 
 affords him means for becoming so. But it is only his own 
 thrift which can raise him to that point. And in India 
 raiyat folk have still a long way to climb up before they 
 reach that pinnacle. The object of the collective property 
 belonging to the society is not to suppress or discourage 
 thrift, but on the contrary to stimulate it by making it 
 more effective. There is plenty of scope for thrift and 
 probably always will be. It is some seventy years since 
 RaifEeisen conceived the idea of his indivisible " Endowment 
 Fund." His idea has been carried out conscientiously and 
 steadily in thousands of societies, doing well. Large sums 
 have accumulate4 in the " Funds." But the need of thrift 
 remains, practically speaking, as great as ever. If old 
 requirements have been satisfied, new ones have grown up. 
 What was considered a luxury a generation or two ago is 
 now looked upon as a necessary. What outlay in agriculture 
 or business used to be regarded as much too costly to be 
 applied is now practised as a niatter of course. New times 
 produce new wants. And the poor, so we have good 
 authority for saying, we shall always have with us. Do 
 not, while we are sowing the seed, form apprehensions of 
 the harvest growing excessive ! 
 
 The " Endowment Fund " is, as observed, " eventually " 
 to replace borrowed capital, to serve itself as working 
 capital. Then who is to say that such part of it as already 
 exists is not pro tanto to be employed now in the manner 
 designed ? Provided that you have a Reserve Fund sufficient 
 
i8o COOPERATION IN INDIA 
 
 to answer practical requiTements, why are you to lay out part 
 of your property in securities paying a low rate of interest, 
 when you yourself have to borrow for your business purposes 
 at a higher rate ? That is what some French " Regional 
 Banb " were driven to doing during the great crisis of a few 
 years ago, when bank rate in France went up to 7 per 
 cent., but they were still bound under the Act to make 
 advances to local societies at 2 or zi per cent. And they 
 winced under it. We tried the same thing in England more 
 than a hundred years ago, when we started Pitt's " Old 
 Sinking Fund," which was by means of compound interest 
 earned at a low rate to extinguish the National Debt, for 
 which we had at the same time to borrow at a high rate. 
 We, too, found out our mistake^ — and put an end to it. 
 
 In the early days of a society there will be no occasion to 
 separate one half of the surplus fund from the other. It 
 will all be labelled " Reserve Fund " and all practically be 
 " Reserve Fund." Nevertheless, from the very first it will 
 be very well to accept Oliver Goldsmith's bedstead-chest- 
 of-drawers' motto, " contrived a double debt to pay," and 
 bear the two destinations in mind. As time goes on it may 
 be advisable — since the question of the two destinations 
 has been raised — to separate " Capital " from " Reserve " 
 and to treat each half by itself — ^being comparatively 
 niggardly in the apportionments to this particular " Capital." 
 Obviously it would be unwise to reduce " Reserve " for 
 the bendit of " Capital." As manifestly unwise, on the 
 other hand, would it be to starve " Capital," for the sake 
 of an unnecessarily inflated " Reserve." 
 
 What societies in India want to do, so it seems to me — 
 and the Report of the " Committee on Co-operation " 
 affords them no help towards this— is to determine how 
 much of the surplus they will maintain as " Reserve Fund " 
 and how much they will treat as " Endowment Fund " — 
 standing practically as a second reserve, just the same as in 
 German Raiffeisen societies " Endowment " as " Capital " 
 is liable to be made answerable in extreme cases for 
 deficiences occurring. Such cases indeed ought never to 
 occur. Should they all the same occur, in them obviously 
 " fluidity " would not be of thesame urgency as in ordinary 
 cases. In xespect of Reserve Fund proper co-operative 
 societies want to be guided hj the same principle's which 
 
THE VILLAGE SOCIETY i8i 
 
 guide all other business institutions. That is, they will 
 have to regulate its " fluidity " according to their own 
 circumstances, which are likely to differ as between society 
 and society, but which may, in the case of each society, be 
 approximately enough ascertained. 
 
 Enough has, so I hope, been said to show that in a well- 
 ordered system of Co-operative Organisation, the local 
 village society is very much more than that purely dis- 
 tributing station for large societies, to the position of which, 
 by reason of the unripeness of the members wlio compose it, 
 some co-operative organisers in India appear disposed to 
 degrade it ; that, indeed, it is the most essential part of the 
 entire organisation, the object of which is, not directly to 
 "distribute money, but to make the distribution of money 
 by effective means of self-help possible — the only part to 
 educate and the part upon the good constitution and 
 management of which the security and therefore the well- 
 being and success of the entire movement primarily depends. 
 
 A leader is nothing without his army. We have a proverb 
 v/hich says : " Take care of your pence and your pounds 
 will take care of themselves." Take care, then, of your 
 local societies, and your " Central Banks " — which are most 
 useful institutions enough without encroaching upon other 
 institutions' domain — may be trusted to take care likewise 
 of themselves. The making of the Co-operative Movement 
 rests with the local societies. The Co-operative Machine, 
 so to call it, to be worth anything, wants to be an animate 
 machine, composed of live parts, instinct with conscious- 
 ness, lending themselves knowingly, of free will, and with an 
 understanding of what they are there for, and what they are 
 doing, to the work that they are called upon to perform, 
 every spring, every wheel moving, not mechanically, but 
 deliberately with judgment and a knowledge of its work. 
 It is the perfected, Vv? ell- finished parts which make the 
 effective machine. And the only workshop for the manu- 
 facture of such parts is the local society, in which the units 
 which are eventually to grow up into a huge mass are 
 trained and have their habits and characters formed in 
 detail. A movement organised in groups as the essential 
 feature may provide Credit, but it will not provide Educa- 
 tion ; it may provide the form of " Co-operation," but 
 not the " Co-operators," upon whose " Co- opera tiveness " 
 
1 82 f CO-OPERATION IN INDIA 
 
 the success of "Co-operators" must depend; it will 
 not provide that general mutual assistance which alone 
 can make rural society to thrive — espfecially, one would 
 think, in India. And it is by itself apt to prejudice 
 even Credit, because like the proverbial -prcetor, it cannot 
 curare de minimis, trouble about those small points, upon 
 which in " detail business " everything depends. Accord- 
 ingly my advice to Indian co-operators would be : Do not 
 neglect Union, but think first and above all of your local 
 societies, perfect them, put real life, a real sense of responsi- 
 bility, real self-determination into them ! It is the child 
 which is the father of the man ; it is the society which is 
 the maker of the movement. 
 
VI. 
 
 JOINING FORCES 
 
 Individuals having joined forces in their several societies, 
 the idea of joining forces also on a larger scale, that is, among 
 societies, as a matter of coufse presented itself to the minds 
 of practical co-operators even before M. Luzzatti had coined 
 his happy and apt phrase : Independenti sem-pre, isolati max, 
 that is : Study to be ever independent, but never isolated ! 
 It was so obvious that if Co-operation among individuals is 
 useful, as producing strength out of vs^eakness, Co-operation 
 among societies must be no less effective as a strengthening 
 link. 
 
 It was the Germans, as usual, who in this matter led the 
 way. Just ten years before our British " Co-operative 
 Union" was formed at Manchester, that is, in 1858, 
 Schulze Delitzsch presided over a Congress held at Weimar 
 at which a " General Union " of societies adopting his 
 principles was constituted. That was the object for which 
 the Congress had been convened. 
 
 That Weimar Congress was rather a memorable occurrence 
 in the history of Co-operation. It brought the rival forces 
 of State action and independent initiative rather strikingly 
 into juxtaposition. Germany was at that time still full of 
 " Particularism." It was divided into nearly forty " in- 
 dependent and sovereign " States, most of which were at 
 loggerheads among themselves — what has subsequently 
 become the dominating State being the mostgenerally hated 
 of all, but intent upon maintaining the absolute rule of its 
 Government. Saxon would not work together vvith'Prussian, 
 nor Hessian with Bavarian. The very word " union " was 
 tabooed. And one of the Prussian Government's special 
 grievances against Schulze Delitzsch was that, besides being 
 a pronounced Liberal, labouring for the obtainment for his 
 
 183 
 
1 84 CO-OPERATION IN INDIA 
 
 country of a "British Constitution," he was — together with 
 the brother of our Prince Consort, the Duke of Saxe-Coburg, 
 who stood at the head of the " Unity League " — a champion 
 of" GermanUnity." Ten years previously had seen Germany 
 ablaze in plain revolution, crying out for that constitutional 
 Government which, in the hour of peril, in 1813, its 
 Sovereigns had solemnly promised to their peoples. The 
 air was stiU full of Liberal aspirations. The country was 
 as different as could be from what we see it now. Three 
 years later saw a " Constitutional conflict," in full swing 
 in Prussia, which all but drove King William I. from his 
 throne. But for Bismarck stepping in opportunely with 
 his promise of a policy of " blood and iron," he would 
 have abdicated. To be a " Liberal " was among the ruling 
 class considered equivalent to being a traitor. The accepted 
 doctrine was that of the " limited understanding of subjects " 
 and committal of all initiative to the all-wise Crown. And 
 here were private subjects actually presuming to club 
 together under the banner of " Self-help," standing up for 
 the principle of " Self-determination " — blessed word that 
 it has now become in German terminology ! The Congress 
 was to have been held at Dresden. However, Berlin, which 
 was all-powerful in that quarter (having in 1 849, when Saxony 
 rose in revolution, saved the Throne for the dynasty which 
 in 1 866 it was ready to eject) having put in its veto. King John 
 helplessly resigned himself to Prussia's ruling. There was 
 a place of refuge happily to be found among the Thuringian 
 duchies, which have always shown a little leaning to 
 Liberalism. And the Grand Duke permitted the meeting 
 in his capital and gave the Congressists a hearty welcome. ■ 
 The aim which the founders of that first of all " Co- 
 operative Unions " — or " Federations " — proclaimed was 
 a totally different one from that which now seems upper- 
 most in the minds of Indians seeking after " Union" and 
 which has led to collective financial organisation in " Central 
 Banks," " Guaranteeing Unions " and the like. German 
 co-operators were thinking of an altogether different thing. 
 But it was precisely the same thing that our British co- 
 operators were in quest of when, ten years later, in 1868, at 
 Manchester, they constituted their own " Co-operative 
 Union " — which has lately in great triumph celebrated its 
 fifty years' jubilee, as having achieved a quite phenomenal 
 
JOINING FORCES 185 
 
 and unique success. There was no idea of common finance 
 prompting the new departure in either country, although 
 in Germany the great majority by far of the societies joining 
 were credit societies. But there was a strong and general 
 desire for U7iity in frincifles and practice, for a union of 
 forces to produce moral influence and discipline, and the 
 preparation of a common code. Schulze Delitzsch had all 
 his life been, like M. Luzzatti and like his own successor 
 in office of the present day, Dr. Crllger — whom his adversary 
 Dr. Heiligenstadt, President of the State- endov.'cd Central 
 Bank of Prussia, has privately described to me as " out-and- 
 out the best co-operator in Germany, only unfortunately 
 sadly deficient in knowledge of Agriculture " — a decided 
 dec entrails er. " Decentralisation of Credit " was the 
 guiding, the rallying note which M. Luzzatti struck up — 
 with remarkable effect as a young man of only twenty-two 
 — when in 1863 he first entered upon the public scene as a 
 social and economic reformer. " Decentralisation in the 
 distribution of Credit " has been the " leitmotiv " in all 
 Co-operative Credit action which thus far has succeeded 
 as a richly wealth-producing, and at the same time educating 
 and character-forming, force. A decentraliser of distribu- 
 tion and imposer of individual responsibility Schulze, 
 like M. Luzzatti, remained to his dying day. And in 
 matters of finance his successors remained so after him. 
 The majority of them do not even yet care about 
 having " Central Banks " for themselves, though they 
 have an understanding with a great Joint Stock Bank, which 
 understanding works exceedingly well for the " tapping of 
 the general market " when necessary, and the lodging of 
 furplus deposits. In truth, their local banks, working with 
 abundant capital, gradually accumulated, and ample 
 deposits and a rapidly moving business, scarcely stand in 
 need of such central organisations for finance, being ordinarily 
 strong enough to make any requisite arrangements individu- 
 ally with other fina-ncial institutions, off their own bat. 
 
 Nevertheless, the fact that even in Schulze's own Union 
 the societies of two provinces have found it a distinct 
 convenience to possess their own central institutions, which 
 facilitate business, and that the admirable PoHsh societies 
 formed scrupulously upon Schulze's pattern — although 
 not joining his " Union " on nationalist grounds — find a 
 
1 86 CO-OPERATION IN INDIA 
 
 veritable tower of strength in their own " Central Bank," 
 clearly enough indicates that even among societies so con- 
 stituted' a Central Bank may be a distinct benefit. 
 
 The Polish co-operative banks, by the way, carrying on 
 business for Poles in the Polish provinces of the kingdom of 
 Prussia, may be held to deserve a word of parenthetic 
 mention, just to show what in the matter of Co-operation 
 firm resolution, loyal standing together and strenuous action 
 will accomplish. 
 
 The Poles have been in Prussia distinctly an oppressed race, 
 which had no favour whatever to look for from Government. 
 Rather did Government use its power at all points very 
 effectively and not overscrupulously against that Slav 
 nation — as, for instance, in the matter of land settlement, 
 aiming thereby at the displacement of Polish landowners 
 by German peasants. That work has been going on since 
 1886, and has absorbed enormous sums of money, without 
 attaining anything like its desired end. Against this aggression 
 the Poles have operated in a non-combatant way, relying 
 upon their own purely constructive efforts, which bring the 
 power of Co-operative Credit banking into bold relief. And 
 within the limits of what is practicable they have proved 
 altogether successful. Of course in this matter of land 
 settlement, which requires money for very long investment, 
 there must be financial assistance from outside. Co- 
 operators cannot out of their own resources raise all that is 
 needed. The Government has in spite of itself afforded some 
 valuable help — obtained in a moment of administrative 
 somnolence — of which Polish societies have been permitted 
 to avail themselves — through the public Rentenbmik, an 
 institution which advances for the said purpose three- fourths 
 of the purchase price of land and buildings in the case of 
 approved societies in the shape of guaranteed landbonds. 
 However, even so there remains money to be provided. 
 And in many, many cases that remaining fourth proves a sore 
 crux to the acquirer. To overcome that hindrance Polish 
 credit societies afford relief, granting, to approved borrowers, 
 money up to the fuU amount required, as a matter of personal 
 credit. However, even, that taxes their resources. And 
 they need a strong Central Bank, capable of attracting 
 ample deposits and tapping the general market, to assist 
 them. Their Land Settlement Societies, I may say, having 
 
JOINING FORCES 187 
 
 Inspected them myself, have proved distinctly successful, 
 and a great benefit to the Polish population, as entirely 
 independent,^ co-operatively conceived and co-operatively 
 managed institutions. The first so formed, at Pinshin, was 
 wound up a decade or two ago, having wholly achieved its 
 object, with an absolutely clean balance-sheet. The Polish 
 Central Bank is of what Indians term the " mixed " type — 
 that is, it was started, in the main, with private capital, 
 subscribed by individual shareholders, though some co- 
 operative banks took shares at once. As time goes on, co- 
 operative bank capital gradually replaces privately sub- 
 scribed, and the Central Bank becomes more and more the 
 local banks' " very own." 
 
 Obviously banks operating with less capital than those 
 here spoken of, or with none at all, and with slowly moving 
 business — such as those working in rural centres — stand in 
 a totally different position from the well-endowed, fairly 
 capitalised, Schulze Delitzsch banks and their sister societies, 
 the " People's Banks " of Italy — which latter are only just 
 now, after a successful career of more than fifty years, 
 gathering some of their local societies — not the very strongest 
 — together into a central financing organisation. Even in 
 Italy, by the way, all the same, the need of centralisation of 
 some sort, for financial purposes, has long since proclaimed 
 itself. For no fewer than about 300 local banks have 
 sought shelter since many years under the protecting wing 
 of the great Banca Popolare of Milan, acting practically for 
 them 'as a Central Bank — and therefore opposed to the new 
 institution. 
 
 However, we really have not yet got to the point of 
 finance. 
 
 The idea approved in the minds of our British co- 
 operators, headed as they were then by the great founders 
 of the movement, Vansittart Neale, Tom Hughes, 
 F. D. Maurice, Kingsley, Ludlow, Holyoake and others, 
 when in 1868 they formed the "Co-operative Union" — 
 which has proved so remarkable a source of strength to the 
 movement and of power for its expansion — was precisely 
 the same as that which prompted the formation of the 
 German Union ten years earlier. In fact Vansittart Neale 
 and Schulze were close allies and fellow-labourers in the 
 matter, in constant intercourse with one another and given 
 
i88 CO-OPERATION IN INDIA 
 
 to common counsel. Like Schuke, our British co-operators 
 were distinct decentralisers. Not one among them in 1868 
 thought yet of the formation of the " Co-operative Whole- 
 sale Society " which since then has become a great commer- 
 cial power, in the words of an admiring American of great 
 experience in business, the organiser of the visit of the 
 "American Commission" to Europe in 191 3, Mr. David 
 Lubin, " the thing coming nearest a miracle that I have 
 seen." Our forerunners in British Co-opetation were 
 " out " for quite a different thing : to gather the dispersed, 
 ■isolated fragments of Co-operation together, form of the 
 straggling clusters a solid, organised host, with a recognised 
 programme, common principles, a common plan of action, 
 and thereby becoming powerful to influence outside 
 opinion, attract new adherents, and above all things to 
 maintain purity of practice and purpose, some sort of 
 discipline, besides the force which may influence legislation, 
 then still much in arrear. That was our " unifiers' " aim, 
 and that aim they have attained. Our co-operators are 
 a hundred times the stronger for having joined forces. 
 Their Co-operation is purer, much more uniform, and by 
 reason of its uniformity, in essentials, maintained of free will 
 — which adds strength and impetus — much more pro- 
 gressive. 
 
 The principle of Union on such lines is now everywhere 
 accepted and recognised — everywhere where it is the free- 
 will product of those who actually practise it. Wherever 
 the State directs and propagates " Co-operation " — ^like 
 that " Co-operation," which shapes its Army — there is 
 neither occasion nor indeed even possibility for it. For 
 there it is not principle that unites, but precept and leading- 
 strings. Principle makes a democratic organisation, in 
 which members think and act and decide for themselves. 
 Hence it educates and forms character. Officialism malces 
 an autocratic organisation, in which members are puppets. 
 In Germany it is not " Germans " who combine to a Union, 
 but persons of this, that or the other Co-operative " school." 
 So it is in Italy. Among the bulk of co-operative agri- 
 cultural societies in France there is — as matters have stood 
 up to now — no room for such Union. For the main object 
 of collective organisation there is to obtain the assistance of 
 State money. In Great Britain, on the other hand, it is 
 
JOINING FORCES 189 
 
 principle which unites. Our " Co-operative Union " does 
 not stumble at distinctions between different forms of 
 Co-operation, such as we meet with abroad. All forms 
 alike are welcome. But when it sees the " God-blessed 
 Squire and his relations" taking the upper hand in agri- 
 cultural societies, it begins to jib and slinks away. And 
 Agriculture is exceedingly foolish to introduce " the Squire 
 and his relations " and barter away its independence for 
 Government subsidies. 
 
 In Germany the purifying disciplinary efficacy of Union 
 based upon principle is in a manner to be seen at its best. 
 For there the premier form of Co-operation practised is 
 Credit. And it is Co-operation in Credit which needs 
 discipline and strictness most. In handing goods backwards 
 and forwards across the distributive counter the necessity 
 does not arise. Goods are passed and are paid for and the 
 matter is done with. Also the principles of action are for 
 a single dealing far more simple. In dealing with Credit 
 very much indeed depends upon soundness of action. The 
 " Union " inspects, checks, administers, sees that its 
 monitions are paid heed to. It discusses, inquires, lays down 
 common principles. It cannot enter very minutely into 
 details, because the propriety of details varies just as con- 
 ditions do in different cases. It cannot compel members 
 to do exactly as it prescribes. But, in the first place, its 
 judgment will be respected, because it comes from fellow- 
 members experienced in their business. Theirs is a demo- 
 cratic judgment, based upon common agreement and 
 ample experience. And if it cannot compel, the Union can 
 remonstrate, warn — in cases of extreme need expel. That 
 means a good deal more for a credit society than it would 
 for a distributive organisation. If the distributive society 
 sells articles of good quality and cheap, it will still retain 
 its customers. A credit society expelled from its " Union " 
 loses its status, and its credit at once. Hence the truly 
 incalculable value of " Union " inspection, which was 
 introduced by Schulze Delitzsch in 1878, and which has 
 now been adopted by all the Governments of Central 
 Europe, with Italy to join in as soon as Parliament can give 
 its attention to a Bill drafted in 1913. 
 
 It is to be toped that sooner or later Indian Co-operators 
 likewise wiU have " Union " of the British and German 
 
190 CO-OPERATION IN INDIA 
 
 type. .Their Co-operation will be the stronger, the more 
 self-reliant, the better capacitated for getting their many 
 millions together under its banner. But to have such a 
 " Union " Co-operation must be free and self-determining. 
 
 There is, however, a diflEssrent kind of "Union," as well, the 
 want of which is under circumstances keenly felt even before 
 the need of the other form of Union asserts itself. That 
 kind is more particularly wanted among credit societies 
 formed for the use of petty cultivators, and formed, more 
 or less under the Rai£Eeisen system, with a very diminutive 
 share capital or none at all, and whatever there is coming 
 in doing so only slowly and gradually. 
 
 The Co-operative societies dealing with credit for agri- 
 cultural, and generally rural, members, evidently in this 
 matter stand from the outset on a di£Eerent footing from 
 those formed by Schulze Delitzsch and M. Luzzatti. What- 
 ever they were, and whosesoever lead they followed, they 
 began in poverty, for the most part altogether without 
 share capital of any sort. If the Schulze Dditzsch societies 
 under the law of liability as it then stood began with 
 unlimited liability as an unavoidable adjunct — ^limite4 
 liability being not yet known-^and subsequently retained 
 it on the ground that it increased their command of credit— 
 the. Raiffeisen a?ad cognate societies began with it as their 
 indispensable sheet-anchor, their sole financial resource. 
 Now, mere liability without someone who will discount it 
 is like a cheque which cannot be cashed — for the time a 
 mere scrap of paper, however " good " the signature upon 
 it may be. Societies with only such resource could not 
 reasonably make it a matter of complaint if they received 
 no deposits. There were deposits coming in, as it happened, 
 all the same ; however not in anything like sufficient volume. 
 The business of these societies, never anything like as large 
 individually as that of the Schulze Delitzsch societies in 
 popular centres of trade and commerce, was necessarily 
 fluctuating as well as slow and comparatively scanty. 
 There were distinct flood and ebb tides. Accordingly a 
 balancing centre became imperatively desirable. At the 
 start local societies came to one another's rescue in this 
 matter, lending to one another whenever they could, just 
 as now happens sometimes in India. However, that has 
 been rightly condemned, wherever at all avoidable, as 
 
JOINING FORCES 191 
 
 involving danger. It is not recommendable, because no 
 society can quite know for how long it will be in a position 
 to do without its cash, whereas, on the other hand, an 
 advance subject to withdrawal at call is of very questionable 
 benefit to a credit society borrowing, especially to one 
 dealing, as rural societies do, in long-term loans. Of course, 
 also, there is more risk of failure in a small local society than 
 in a Central Bank. Moreover, intersociety business between 
 local societies does nothing to strengthen the movement 
 as a whole, as centralising idle balances in the money-box 
 of a Central Bank generally does. In the possession of a 
 Central Bank the agglomerated cash balances become a 
 source of strength benefiting the entire movement. Two 
 and two in this case make more than four. And really the 
 entire organisation of a local society rather unfits it for 
 intersociety business. 
 
 Consequently local societies without a strong share 
 capital — and often enough with one — necessarily require 
 a balancing centre. But they also require a counter at 
 which their liability may be " cashed." 
 
 Accordingly from an early period in ihe progress of his 
 movement Raiffeisen, setting the first example, endeavoured 
 his best to form a " Central Bank " for his societies. He 
 had formed a " Union " in the Schiilze Delitzsch and 
 Manchester sense, as a matter of course long before. And 
 such " Unions " of the same sort were, equally as a matter 
 of course,set up wherever Co-operation came to be organised. 
 Accordingly the number of distinct " Unions " becam.e 
 larger and larger as time went on. For, like Haas, everyone 
 who had " ideas " on that subject desired, like Caesar, 
 rather to be " first in a village than second or third in 
 a larger community." In truth, in course of time the 
 number of " Unions " became rather bewildering. Panger- 
 manism has lately been whittling it down by " patriotic " 
 amalgamations under Government pressure, uniting at anj^ 
 rate the host of State-inspired " Unions " into one still more 
 amenable to State guidance and the propagation of Prussian 
 political opinion. The Unions based upon principle retain 
 their independence. 
 
 Central Banks, likewise-, introduced first by Raiffeisen, 
 as almost a necessity to a movement like his, have long since 
 become a common feature, at any rate in systems having to 
 
ig± CO-OPERATION IN INDIA 
 
 do with Agriculture. In other movements the urgency 
 is not so marked ; however, under more systems than one 
 the advantages accruing from the possession of a Central 
 Bank have made such coveted and, when secured, 
 appreciated. 
 
 Raiffeisen's own path, as the pathfinder in the matter, to 
 the creation of his Central Bank, as we now see it, was not 
 by any means strewed with roses. It proved on the con- 
 trary distinctly rough, causing many a jolt and many a 
 stumble, and even one or two breakdowns. Schulze 
 Delitzsch's difficulty, when bound upon a similar errand, 
 was this, that Co-operative Credit society business, although 
 generally safe — ^provided that the co-operative principle is 
 fully observed — ^yields only a small profit, such as a com- 
 mercial bank, working for gain, may scarcely consider it 
 worth its while to labour for. But it was such a bank that 
 he wanted, as a support fpr his own societies, just because 
 he would not have a Central Bank proper. The " Co- 
 operative Societies Bank" which he at length succeeded 
 in organising, broke down, not over its co-operative, but 
 over its speculative business, which it had taken up to 
 satisfy its shareholders covetou? for " profits," but which it 
 was^ not fitted to manage. Raiffeisen's difficulty was of a 
 very different description. His bank was to be a bank for 
 the business of his own co-operative societies only, owned 
 by them, and satisfying their own modest requirements. It 
 was indeed also to form a link with the open market, to supply 
 excess needs of local societies in either of the two ways in 
 which they will present themselves — either as a receiver of 
 excess deposits, to afford a safe repository for such, or else 
 as a supplier of excess funds needed beyond such as the 
 movement itself could produce, to come to local societies' 
 aid. Also it was to become a financing bank in the way of 
 providing cash against security to incipient societies which 
 were themselves still bare of liquid means. But first of all 
 it was to be a useful balancing centre in two ways. The 
 first was to adjust superfliiidity of funds and want of them, 
 as already indicated, but within the movement. The 
 second was, to balance differing rates oi interest — which in 
 Germany contrast very strikingly with one another between 
 different parts of the large country. For this last-named 
 purpose, so it may at once be pointed out, its proixoiinced 
 
JOINING FORCES 193 
 
 centralisation of business in one hand has proved of in- 
 estimable benefit. Money is generally more plentiful, and 
 accordingly rates of interest for borrowing it are lower, in 
 the wealthy and industrially developed West than in the 
 more purely agricultural East, where cash is scarce, in 
 larger demand for the particular purposes of the credit 
 societies, and rates of interest run correspondingly high. 
 The difference between the two rates is much what it is 
 between the rates current severally in Great Britain and in 
 India. We know how great an attraction that difference 
 proved at the time to the intending promoters of the All- 
 India Central Societies Bank proposed some years ago. A 
 Central Bank operating from one centre throughout this 
 large German area is in a position to balance between the 
 financial land of Goshen and the barren wilderness of Kadesh 
 just the same as between bank and bank, securing to the 
 more heavily burdened district the advantages of cheaper 
 money by drawing upon the resources of the less encumbered 
 and far more richly endowed, without making any charge 
 such as would be made by an intervening outside institution 
 or even an institution of a different section of the same 
 movement. That, however, was in the early seventies, 
 when Raiffeisen began his groping for a scheme, still a thing 
 of the future. Meanwhile he had the great initial difficulty 
 of finding the requisite money to endow his central insti- 
 tution with to contend with. And that proved rather 
 serious. It took him more than four years to overcome it 
 successfully. However, in 1876 we find him presiding over 
 a Central Bank, still comparatively weak in capital, but 
 nevertheless so far successful that within a few years we see 
 imitation Central Banks cropping up among congenerous 
 organisations all around it, shaped more or less on the very 
 same mould. Dr. Haas carried the idea of imitation with 
 him into his secessionist camp, and started a Central Bank 
 similar to that of Neuwied at once on the formation of his 
 incipient Union, at Darmstadt, in 1883. The Westphalian 
 Societies, organising independently, about the same time, 
 grafted the Neuwied institution on their system in 1884. 
 Others followed rather later — the Rhenish Peasants' Union, 
 a powerful, and distinctly Roman Catholic organisation, 
 in 1892; the WUrtteiiiberg Societies in 1893, ^^'^ some 
 more not long after. The modus operandi followed was 
 
 13 
 
194 CO-OPERATION IN INDIA 
 
 throughout more or less the same. The local societies 
 themselves could not raise much capital out of their com- 
 parative impecuniosity. They were at first not even 
 absolutely required to take shares in order to become 
 entitled to the services of the Bank, so far as such could be 
 given, although they were urged to do so. The Central 
 Bank could not afford to be overexacting. Supposing that 
 they did take shares the actual dernand made Upon their 
 purse was not oppressive, being limited to lo per cent, of 
 the face value of a share, something under Rs. 200, with 
 liability to pay up the balance by easy instalments. In 
 very poor societies some fairly well-to-do member joining — 
 it might be, the parson — would advance that sum. In view 
 of the nakedness of the land itself, friends had to intervene, 
 taking up shares — ^however, on the understanding that such 
 shares should sooner or later be passed on to societies, as 
 society capital became equal to the outlay. And since the 
 last reorganisation, shares in the Central Raiffeisen Bank 
 (now domiciled at Berlin) other than those held by societies 
 are allotted only to members of the Governing Council. 
 So constituted the Central Bank has proved quite equal to 
 all demands made upon it, although at first, while its share 
 capital was small, at times with difficulty. Soon, however, 
 the Bank established so good a reputation as to lead the 
 Imperial Bank of Germany' — corresponding in position to 
 the Bank of England at home — to concede to it preferential 
 terms for advances and discounts. The late President of 
 the said Imperial Bank, Dr. Koch, has publicly borne 
 testimony to the goodness of its business. His institution 
 had previously given similar testimony to Sir William 
 Mather, who, as a large contractor operating in Germany, 
 had a business account there and inquired, when completely 
 staggered by the to him astounding figures which I had 
 given him-— indicating the business of the Raiffeisen societies 
 — to assist him when acting as chairman at a public meeting 
 on the subject at Manchester. The Imperial Bank fully 
 confirmed those figures. The situation changed a little 
 in 1895, when the Prussian Government established its 
 State- endowed Bank, which was, by taking over Co-operative 
 Societies' business, to relieve the strain upon the Imperial 
 Bank. The Raiffeisen Union would have nothing to do 
 with the new institution till much later. And after it had 
 
JOINING FORCES 195 
 
 been caught in its toils it managed to slip out again very 
 quickly. In the meantime the Union had also grown strong 
 enough to shift for itself. And when its ephemeral relations 
 with the State- endowed Central Bank came to a close, it 
 coiild easily, just like the Schulze Dehtzsch Union, arrange 
 terms with the powerful Dresdner Bank, an independent 
 Joint Stock Bank, worldng of course for profit, on terms 
 really more favourable to itself than those allowed with a 
 pompous pretence of patronage and favour by the State- 
 endowed Bank — which terms at the same time left the 
 Raiffeisen Central Bank in full independence, whereas the 
 State Bank's terms had bound it to its own monopolistic 
 dominance. 
 
 The Haas Central Bank, founded in 1883, in 1895 at once 
 fell in with the State Bank's proposals, which have brought 
 it some gain, but also very much inconvenience and absolute 
 dependence. It was partly in deference to the demands 
 of the State- endowed Bank that the Haas Union cut up its 
 Central Bank business into local sections, so that the State- 
 endowed Bank had in every instance a provincial Central 
 Bank to deal with, as well as the Central Bank at Darmstadt, 
 which latter underwent such a shock in 1912. Most of the 
 score or so of provincial Central Banks of the Haas Union, 
 carrying on business independently in their own district, 
 were formed after 1895. However, such arrangement was 
 also altogetherin accordancewiththe decentralising principle 
 set up by Haas, as opposed to Raiffeisen's centralisation of 
 finance. In course of time, as. business grew so much as 
 to become unmanageable from one centre, Raiffeisen's 
 successors likewise yielded on this point — however, so as to 
 leave the unity of the " Union " unbroken. Accordingly 
 its Central Bank, now situated at BerUn, still remains the 
 centre of the entire business and secures to the Union the 
 advantages which the original organisation adopted was 
 selected to ensure. 
 
 We have, then, in Germany, the following Central Bank 
 arrangements. The Schulze Delitzsch Union, with its well- 
 endowed societies, has no Central Bank proper, although 
 two of its sections maintain such locally and find them 
 useful. But it employs the strongly capitalised Dresdner 
 Bank in lieu of a Central Bank, supplying itself _ two 
 Directors to its Board, as having seats and votes in its 
 
196 CO-OPERATION IN INDIA 
 
 distinct " Co-operative Section." The Polish Union in 
 Prussia, formed on Schulze Delitzsqh lines, has its highly 
 useful Central Bank, still on " mixed " lines, but with the 
 proportion of societies' shares in the holding of share capital, 
 continually increasing. The Raiffeisen Union has its own 
 really central " Central Bank," in which, apart from 
 Directors., only societies hold shares, directing in a manner 
 the entire busihess, and finding a ready support when needed 
 in the Dresdner Bank — ^Directors of which have expressed 
 to me their entire contentment with the arrangements 
 concluded with both the Raififeisen Union and that of 
 Schulze Dditzsch. The arrangements, so I have found, give 
 equal satisfaction in either case to the contracting parties 
 on both sides, so that it may be taken as a well-established 
 fact that a sufficiently-capitalised Joint Stock Bank may 
 very well answer the purposes of what I will for the moment 
 term a " supercentral " or " apex " bank — a bank, that is, 
 serving as reserve, discounting bills, making advances and 
 accepting deposits, but not interfering in co-operative bank 
 business. The only weak point in this arrangement is that 
 such Joint Stock Bank, standing outside the co-operative 
 connection, might give up the business, if it were so minded. 
 That is what in fact has occurred in the early arrangement 
 made by the Schulze Delitzsch Union. 
 
 The co-operative banks of theNetherlands and of Belgium, 
 both of the Raiffeisen type— with a pronounced denomi- 
 national aim added, by the side of the social and economic — 
 have Central Banks on a much reduced scale, organised 
 similarly to that oi the Raiffeisen Union, but with a pre- 
 dominance for the present still of private share capital, 
 subscribed in part on denominational grounds. The same 
 thing may be said of the Roman Catholic casse rurali, of 
 Italy, with the proviso added, that they are organised 
 according to dioceses, with the diocesan Central Banks doing 
 by far the larger part of the business. The so-called Central 
 Bank of all, established at Parma, if it still exists, has never 
 had much business. Among the Roman Catholic gentry of 
 Italy denominational feeling is so strong that the diocesan 
 banks are not likely to be left high and dry. Two other 
 Itahan connections, the Luzzatti^ lanche fopolari'^v/loxch is 
 the mostimportantof all — andtheP,aiffeisen casse rurali,li3ive 
 Central Banks still only in embryo, ojE very recent origin. 
 
JOINING FORCES 197 
 
 Barring the Dresdner Bank, and the earlier Schulze 
 Delitzsch Bank, " Sorgel, Parrisius and Co.," both of them 
 distinctly Joint Stock Banks, all the Central Banks in 
 Germany here spoken of were started on what in India 
 passes by the term of a " mixed " type, private endowing 
 capital predominating at the outset, but permitted to do so 
 on the distinct understanding of its giving place, wholly or 
 in part, as societies would become wealthy enough to take 
 up shares, to societies as shareholders. Outside the Schulze 
 Delitzsch Union then — which differs from its sister unions 
 in the matter because its entire position is distinctly 
 different — the ideal aim is, that the societies should as much 
 as possible posses' their own Central Bank, which is to 
 render all facilities possible, but not to domineer over them. 
 It is entitled to information and the right of inspection, in 
 virtue of its being a creditor, or potential creditor, but not 
 otherwise. Local societies take their audit, their inspection, 
 their admonitions and their precepts — as laid down in 
 Union resolutions — from their Unions, that is, collectively 
 from themselves. 
 
 Coming now to India, so far as I can gather, it is causes 
 different from those which proved effective in European 
 countries which have first suggested a policy of combination 
 and have thereby led to the creation of " Central Banks " 
 and " Guaranteeing Unions," and already to the formation 
 of some " Provincial Banks " as coping-stones to the entire 
 provincial fabric, centralisers of existing forces. There has 
 also already been talk of an " Imperial Bank," as super- 
 coping-stone ; and since Provincial Banks are reported to be 
 doing business with one another, that is a further develop- 
 ment which we may look for with something like satisfaction. 
 The reason for forming these centrepieces, so far as I can 
 see, is that local societies — " primary societies," as they 
 are called in India — could not succeed by themselves in 
 attracting sufficient deposit and loan money. 
 
 That is just v^'hat happened among our at the time still 
 numerous and correspondingly sparingly equipped com- 
 mercial banks in the era extending from about i860 to 
 about 1880, when they found that in their isolation and 
 consequentcomparative v^eakness theycould not individually 
 attract sufficient deposits to answer their growing business 
 needs. And that v.'as the beginning of our " amalgama- 
 
198 CO-OPERATION IN INDIA 
 
 tions," which, by combining forces, and thereby strengthen- 
 ing security for depositors, remedied the defect. 
 
 " I could not get many people to invest money readily 
 in the rural bank, but some came forward and paid their 
 moneyinto the Central Bank which financed the rural banks," 
 So wrote some years ago the Registrar at Shillong. But I 
 think it was Mr. Hope Simpson who, showing generally 
 distinct resourcefulness, first introduced Central Banks in 
 his own district, the United Provinces, on the very same 
 ground. And what Mr. Ramachandra Rao stated at the 
 third Congress of Registrars, in 1909, with regard to Madras, 
 seems to come to much the same thing. " There is a good 
 deal of surplus money in some areas of this Presidency 
 (Madras), notably in the Delta. People there feel the want 
 of a sound bank for investment. People have also recognised 
 that it is perfectly safe to invest in co-operative societies. 
 So specific proposals have already been made to me in two 
 districts, to organise Central Banks." It was thought— 
 and in practice found — that a cluster of local societies, 
 grouping themselves together to a " Central Bank," would 
 command a readier access to the pockets of the public than 
 the unfaggoted single societies. Against this Mr. H. R. 
 Crosthwaite, writing in " Co-operative Studies," sets up 
 the following argument, as being urged by " some " : 
 " If a co-operative society is not trusted by those who live 
 close to it, there must be some good reason for the fact, 
 and the Central Bank should not gr^nt credit." However 
 conclusive such reasoning may appear, he himself by no 
 means subscribes to it. And in truth it cannot under 
 present conditions be held to apply in a general way to 
 India as a whole, however sound it is in the abstract. If the 
 argument in favour of combination has force in other 
 countries, certainly in India experience has shown that 
 combination for credit purposes is necessary. The credit- 
 raising power residing in each local society is still so puny 
 and, whatever its force may be, its value is still so generally 
 unknown, so little realised, that, generally speaking, very 
 much reliance cannot yet be placed v\pon it. The local 
 societies are after all still new. Some of them have had 
 to be dissolved, as not worth preserving. The members of 
 pretty well ail are still new to their business. There are, 
 moreover, difficulties about communications, and the quite 
 
JOINING FORCES 199 
 
 accoiantable shyness of depositors Is probably not a little 
 aggravated by the ingrained Indian habit of hiding money 
 away unfructifyingly rather than carrying it where, under 
 the care of some other responsible person, it will bear fruit. 
 One may hope that some of these reasons will disappear in 
 course of time— that Indians will realise how much in- 
 excusable national waste is incurred by the practice of 
 " stockinging " (though the favoured receptacle in !^ndia 
 is not a stocking) money ; that they themselves and their 
 neighbours, their own national, racial, tribal cause, will be 
 benefited by that money being made available for pro- 
 ductive purposes ; that, furthermore, local societies having 
 been made thoroughly dependable — in the keeping of their 
 own friends and neighbours, elected by themselves, on the 
 ground of their trustworthiness— their money will be safe — 
 safe from thieves and safe also from impressment for other 
 purposes in which they have no interest. But for the 
 moment the time for this has not yet come. Even when it 
 comes there will still be a great, and enduring, call for 
 financial union for the purpose of creating greater financial 
 strength. The want of such has indeed been shown to have 
 been already greatly felt. The tendency generally is 
 distinctly in the direction of centralising financially. Only, 
 under pressure of such centralising tendency, the need of 
 maintaining decentralisation in distributive action appears 
 in danger of being lost sight of — ^if such aberration has not 
 indeed already taken place, as the passage quoted from a 
 book written by one of a late Registrars of societies in the 
 preceding chapter gives one reason to suspect that it has. 
 Over the satisfaction of one want we should take care not 
 to forget the existence of the other. 
 
 Comparing the office of financial centralisation in India 
 with that applying in Europe, it may be said that Central 
 Banks in India, although necessarily formed in principle 
 on more or less the same lines as those known in Europe, 
 represent an essentially different kind of organisation. 
 They are necessarily smaller, operating in a reduced district 
 and accordingly with reduced means and on a reduced 
 scale. There appears to have been some difference of views 
 as to the proper form of their formation. Indian Registrars 
 argue and dispute quite unnecessarily about " three distinct 
 types " — which subject does not trouble us in Europe at all, 
 
200 CO-OPERATION IN INDIA 
 
 because there is very little matter of principle hinging upon 
 it. You cannot lay it down that a " pure type " Central 
 Bank is inherently better than a " mixed " or "capitalist " 
 one. The " capitalist " one has this against it, that it may 
 come to an end when that is very inconvenient to the 
 local banks to which it ministers, and that " capitalism " 
 in it may spell " profiteering " — if there is not a Government 
 to lay an embargo upon high interest, as has been done in 
 Bombay. However, one vrould rather leave Government 
 interference out of the arrangement altogether. It may 
 be a safeguard, but it represents an interference. The late 
 Eugfene Rostand's motto is a good one : Acce-ptons le con- 
 trole,' refusons V intrusion. Obviously that will be the most 
 proper form of organisation in every case which most 
 readily provides the required amount of capital under 
 suitable conditions. As a rule probably the " mixed " 
 type will be practically the only form practicable, because 
 by it alone the necessary capital for starting can be got 
 together. But, being so started, the Central Bank ought, 
 among rural societies, if possible, to become steadily trans- 
 formed more and more into a " pure " type institution, 
 though even in the later stages of its progress there is 
 absolutely no necessity for private capital being excluded. 
 The danger involved in private capital, of course, is that it 
 may seek its own advantage too greedily and make the bank 
 a preserve in which to pursue its " dividend-hunting." 
 We have seen " Central Banks " formed with special 
 preference shares — which are quite unco-operative — allotted 
 to private — i.e., capitalist — shareholders. In a co-operative 
 society members should throughout stand on an absolutely 
 equal footing, without any distinction between them. 
 Accordingly preference shareholders with a privileged status 
 must be ruled out of place. " Our preference shareholders," 
 so rightly objects Mr. B. A. Collins, "are an element anta- 
 gonistic to the rest. They are not exactly an evil, but they 
 are a defect, according to the ' co-operative idea.' " Then 
 there is a note from the Punjaub : " Central Banks, when in 
 private hands, at first looked mainly for dividend — ^the profits 
 earned came to be regarded as their most important 
 feature." 
 
 Otherwise one hears complaints about Central Banks, 
 some of which — at any rate so far as one can judge from a 
 
JOINING FORCES 201 
 
 distance — do not seem altogether to justify reproach, 
 although, certainly, they do represent a defect. It ought 
 to be borne in mind that men who come forward to take 
 shares in Central Banks do so all the more readily because 
 they believe themselves to be running no serious risk of loss 
 of principal or interest in taking up those shares. The 
 number of such — and other — ^volunteer supporters of the 
 co-operative cause is in India undoubtedly still limited. 
 More is the pity. For it is just volunteer workers that 
 are most wanted. Now, when it is said that Directors of 
 Central Banks sometimes show " too little interest " in the. 
 cause, and that they allow one or other among them, who 
 has sufficient time and energy, to " rule the roast," that 
 indicates a regrettable fact,but it cannot be made, altogether, 
 at any rate, a serious subject of blame. For a volunteer 
 v/orker can only be expected to give what he can, and not 
 what he cannot. It is very much indeed to be hoped that 
 more volunteer workers will come forward and help, among 
 other things, in conducting the business of Central Banks 
 on businesslike lines. For the local societies do not yet 
 appear in a condition to furnish a sufficient contingent of 
 competent Directors. It is for this reason that those who 
 actually direct the movement will do well to bestir themselves 
 to enlist and train up capable men for the position. But for 
 the time beingwe shall have to be content to takewhatwe can 
 get. And as for the future, it seems to me that the trend of 
 things is rather in the direction of the Central Banks gradually 
 losing their pre-eminence as Provincial Banks develop and 
 gather force. And that I take to be on the whole a move 
 in the right direction. For finance wants to be centralised. 
 We do not need the opinion of great bankers like Sir E. 
 Holden and the example of European banks to teach us that. 
 It proclaims itself. Everyone can see that a Provincial 
 Bank with a crore of rupees at its command, acting through 
 Central Banks as distributing agencies — ^with other not 
 unimportant functions to discharge — ^will for financial 
 purposes be worth more than ten independent Central 
 Banb operating with ten lakhs each. Our Co-operative 
 Societies in the United Kingdom have after rather long- 
 continued hesitation discovered the valufe of such centralisa- 
 tion. They now rightly centralise all their liquid resources 
 in the Banking Department of the Co-operative Wholesale 
 
202 CO-OPERATION IN INDIA 
 
 Society, in whose hands every pound so collected possesses 
 a considerably larger working value than it would possess 
 in the keeping of the local societies from which it was 
 contributed, while leaving each- local society taking part in 
 the centralisation just as well equipped, because after, all 
 the pound remains its own and may be -drawn out without 
 notice at any time whenever it is wanted. It is the residue 
 not wanted, the balance remaining over, which tells in the 
 Central Bank's holding. 
 
 But what I must confess that I do regret in the organisa- 
 tion of Indian Central Banks is that they, financial institu- 
 tions that they are, are being put to uses for the performance 
 of which purely financial institutions are manifestly not 
 qualified, and set to discharge duties which it may be 
 temporarily unavoidable to saddle, them with — since there 
 is no one else yet to take charge of them — ^but for which 
 they are not really fitted, but which nevertheless they 
 appear to consider themselves charged with for good. 
 
 Local banks require, even for mere business purposes, 
 -more than mere financing. Indeed they require something 
 else in priority to financing, which latter conceivably in a 
 state of perfection they might manage to do for themselves. 
 They want to be audited, checked, supervised — and this 
 all the more, since under present conditions local super- 
 vision by a Council seems altogether out of the question. 
 It is perhaps unfortunate that we started by dubbing these 
 humble little credit societies " banks." I am afraid that I 
 am, at any rate in part, responsible for the ambitious mis- 
 nomer, having borrowed the name from the Italian banche 
 fofolari, the creation of M. Luzzatti, to whom I dedicated 
 my first book on the subj-ect. In Great Britain, in the 
 second version of my Bill placed before Parliament (and 
 adopted by the House of Lords), we corrected the mistake 
 by styling our societies " Credit and Thrift*" Societies." 
 The name of " bank " has set people supposing that, since 
 " banking " was to be done, skilled bankers must be the best 
 advisers to resort to — altogether overlooking the fact, which 
 in truth is still daily escaping notice, but which requires 
 careful impressing upon minds, that Co-operative Credit, 
 
 * This title in itself oilght to dispose of the unfounded conception that 
 I look for the extinction of an " incentive to thrift " from the accumulation 
 of an " Endowment Fund " by the local society. 
 
JOINING FORCES 203 
 
 which, bases itself upon character and opportunity for 
 remunerative employment, and should by preference not 
 engage pledge security at all, is a different thing altogether 
 from capitalist banking, which looks less at the man than at 
 his possessions. 
 
 Now the Co-operative Central Banks — using that term 
 generically, not in the narrow specifically Indian sense — of 
 all co-operative institutions, come nearest in character to 
 commercial banks. Forming, as they are intended to do, 
 the connecting-link between the co-operative distributors 
 and collectors of funds and the great market, they are bound 
 to accommodate themselves in the general organisation of 
 their business to commercial banking ways. And therefore 
 their officers and Boards or Committees are considered the 
 best suited to undertake the task of tutoring the humble 
 village banker in his petty business and of auditing, advising 
 and generally supervising the village societies. Now, so 
 far as auditing is concerned, of course the " banker " wiU be 
 thoroughly in his element, though it may be in the discharge 
 of duties which a technically less skilled man might perform 
 practically equally well — by which I do not mean to say 
 that in societies of any size and pretensions a skilled account- 
 ant will not be far preferable to an amateur auditor. But 
 when it comes to co-operative credit business, our skilled 
 banker is not only as much, let me say, above his element, 
 as an eagle upon a pond would be above the much less 
 pretentious duck, and a Savile Row tailor above an East 
 End clothes botcher, but the proper nexus of common 
 interest desirable in such transactions is altogether wanting. 
 And among humble folk it is the clothes botcher that is 
 wanted, and not the Savile Row coat cutter. True, the two 
 classes of institutions do business with one another and are 
 intended for that very purpose, and seem thus in a sense 
 harnessed together in the same team. However, their 
 business is not altogether that of partners in the same 
 concern. The representative of the Central Bank will look 
 at things from his own point of view — which is not quite 
 the same as that of the village bank. And his own institu- 
 tion distinctly has a different office to discharge, calling for 
 different rules of action and has also different interests from 
 those of the village bank. The large electric tractor plough 
 cannot operate with the same effectiveness on the raiyat's 
 
204 CO-OPERATION IN INDIA 
 
 narrow headlands and contorted angular little plots as the 
 much less pretentious bullock plough of the raiyat himself, 
 supplemented by a spade. The cobbler works with an awl 
 whereas the miner employs an auger. Besides, the interests 
 of the two classes of institutions are essentially different, 
 and everybody works first for his own interest. 
 
 After the collapse of the Hessian banks, my whilom friend 
 Herr Ihrig, who had long been Herr Haas' second-in- 
 cOmmand, and vVas actually Managing Director of the 
 Central Bank at Darmstadt, and generally trusted, had 
 criminal proceedings instituted against him because it was 
 found that he had given false information and advi'ce to . 
 local societies, being depositors in the Central Bank. The 
 officers, and indeed also the members of those societies, 
 naturally looked up to him, as village bankers are told to 
 do to officers of Central Banks, as to a disinterested and 
 thoroughly well - informed and skilled friend. He had 
 represented his own bank to them as being in perfectly 
 sound condition, fit to be entrusted with deposit money, 
 when in fact it was already hopelessly insolvent. Conduct 
 very much less reprehensible than this might still be dis- 
 tinctly detrimental to a credit society. For really trust- 
 worthy advice you must have a man with your own interest. 
 Divergence of interest necessarily incapacitates for advice. 
 
 Supervising village societies' business — which may involve 
 questions of great delicacy — calls for careful judgment and 
 absolute absence of separate interest. It is a matter of 
 course that it will be conducted, not by officers of the 
 village societies themselves, but by chosen representatives 
 or officers, the best skilled for the purpose that can be found, 
 free from all prepossessions — ^knowing, as M. Luzzatti puts 
 it, sHghtly misquoting a Biblical text, " neither father nor 
 mother" — and having only the village society's own best 
 interest at heart. It is in part for this purpose that 
 European credit societies have their " Unions " with the 
 wide district of each cut up into sub-union sections to make 
 it manageable, and skilled officers — who in the advanced 
 state in which the matter now stands in Europe, are made 
 to pass through special training — to do the inspecting work. 
 These men are the societies' servants. Th^ have no one 
 to think of except the societies. Their representing the 
 " Union," instead of weakening their interest in the 
 
JOINING FORCES 205 
 
 societies inspected, as the haunting thought of the separate 
 interest of the Central Bank might do, greatly quickens it. 
 For, if it is to the interest of the local society that it should 
 not become a " black sheep," it is still more to the interest 
 of the "Union" that it should have no" black sheep" 
 among its flock. And let alone the fact that a supervisor 
 so appointed and so skilled will bring to his inspection 
 special knowledge and experience, far more extended and 
 varied than that which any of his local clients could command, 
 knowledge of a specifically co-operative character — which 
 is an important attribute — as the representative of the 
 " Union " — membership in which is a valuable asset to the 
 local society — ^he has, by means of his representative 
 authority, the best means of impressing his lesson upon the 
 local society and subsequently enforcing compliance with his 
 judgment. That is far more eflfective than the Burmese 
 " money stick " brought to bear by a Central Bank, whose 
 directors have, as observed, in some instances in India, been 
 taxed with thinking too much of their own dividend, gs they 
 have in others with " showing too little interest," and who 
 have, in truth, no other weapon in their hand against a refrac- 
 tory local society than the rather brutal one of the " money 
 stick "—whereas the representative of a " Union " is able 
 to vary his pressure according to the nature of the defect 
 and the recalcitrancy of the peccant society. 
 
 For the present India possesses no co-operative " Union " 
 of the European type. One is bound to be glad to see a 
 movement in favour of the formation of such in progress. 
 The appointment of a Committee resolved upon by the 
 ninth Conference of Registrars seems to point in this 
 direction. In Europe, wherever co-operative organisation 
 appears to the authorities of the land not sufEqiently com- 
 plete to warrant " Unions " to be entrusted with the task 
 of inspection as responsible organs recognised by the law, 
 the State reveals extreme eagerness to grasp the reins and 
 claim the sole right of inspection for itself. That tendency 
 has very distinctly shown itself and has had to be resolutely 
 resisted both in Germany and in Austria, One rnay be 
 thankful that in India there is no danger of sufih an attempt 
 beijig made. For I cannot count the supervision now 
 entrusted to the Registrars ajnd their staffs as such. In 
 exercising it they are acting rather as tutors than 3s political 
 
2o6 CO-OPERATION IN INDIA 
 
 authorities. Officers appointed for the discharge of such 
 duties by the State as general administrative authority are 
 by common consent condemned as of all conceivable 
 inspectors those least fitted for the work — so much so that 
 with excusable exaggeration M. Luzzatti has laid it down 
 that no inspection at all would be better than inspection by 
 officers of the State. And it is in deference to his obj ection 
 that a Bill, shown to me at Rome by the Minister in charge 
 of it in 1914 — and which appeared to me quite acceptable 
 — ^keeping inspection by officers of the State in reserve only 
 as a last resource, has been withdrawn. An inspector 
 appointed by the State brings no sort of the required 
 interest to his task, nor, probably, sufficient knowledge. 
 His interest will be limited to sufficient formal, it may oe 
 perfunctory, discharge of his duties, in order not to forfeit 
 him his place. His interference is accordingly sure to be 
 resented, very likely to remain unheeded, since he has no 
 means of enforcing compliance with his admonitions — 
 except it be by dissolving the society, which would evidently 
 only make bad worse, by depriving the district of an institu- 
 tion that is wanted and may be capable of improvement. 
 The State has a right, and a duty, to see that the precepts 
 of the law are carried out and that balance-sheets are issued, 
 and that those balance-sheets are correct. That is what our 
 Registrars of Friendly Societies do in the United Kingdom. 
 They do it well. And societies fully appreciate their 
 supervision as a benefit. They have even asked for a 
 tightening of the reins. But our British Registrars do 
 not go farther. In India Registrars necessarily have to 
 exceed such limits by a great deal, because there is no one 
 else to do the work required. They direct, guide and 
 restrain, not in all instances as officers of the State, but as 
 guardians and tutors appointed to -educate beginners in 
 Co-operation in their new, craft. However, with all their 
 energy and activity, their power of work is necessarily 
 limited ; and, besides, their appointed duty is not per- 
 manently to do things for societies, but, on the contrary, 
 to teach co-operators to do" things for themselves. So, in 
 the absence of " Unions " in the European sense, " Central 
 Banks " have not inaptly been chosen to act in their place. 
 There is probably at ..'the time no better alternative within 
 reach. But their supervising action should be understood 
 
JOINING FORCES 267 
 
 to be temporary only. For from what has aheady been 
 quoted, it is evident that " Central Banks " do not, in spite 
 of the no doubt excellent intentions of their officers, and 
 the unquestionably most useful services rendered by some, 
 give all the satisfaction everywhere that might be wished 
 for. Some of them have been accused of want of interest 
 and energy ; others with placing the interest of " Central 
 Banks " before that of local societies ; others again with 
 ignorance. It has been openly said that the teachers 
 themselves rather urgently require teaching. These 
 charges may be exaggerations. They may even be alto- 
 gether groundless. But they exist and they indicate a 
 ctirrent of prevailing opinion. 
 
 However, so closely wedded are some of the champions of 
 the Co-operative Movement in India to the idea of the full 
 sufficiency of " Central Banks," as now formed, to function 
 as leaders and mentors, that not only is their functioning 
 generally accepted as a necessity, but one Registrar, as 
 already observed, has actually gone so far as to propose 
 that they should be made obligatory and the " pivot " 
 around which the entire Co-operative Movement is to be 
 made to turn ; and furthermore that every society recog- 
 nised under the Co-operative Law should be compelled 
 to join the particular " Central Bank " allotted to its 
 district and that local societies should in this way be brigaded 
 like an " army," each group with its own commanding 
 general appointed from " above," whose dictates societies 
 are to be made to obey. And since even " Central Banks," 
 even in comparatively small districts, cannot without risk 
 take charge of the financing of all the local societies 
 " affiliated " to them, an additional class of institutions has 
 been pressed into service in the shape of " Guaranteeing 
 Unions," to answer collectively to the " Central Bank " for 
 the advances taken from it by any particular local society. 
 Now in this proposal, which distorts co-operative organisa- 
 tion — or rather suggests organisation wholly opposed to 
 co-operative principle — we can well discern the general 
 trend now asserting itself in the Indian Movement, and 
 threatening to deflect it and spoil its co-operative character 
 — of course without any consciousness whatever of wrong ' 
 going. 
 The tendency so indicated is — almost naturally among 
 
2o8 CO-OPERATION IN INDIA 
 
 human beings — to avoid trouble as much as possible and 
 partly therefore — ^partly perhaps also from the .force of 
 habit — to adopt capitalist methods of credit, in the place of 
 co-operative. The capitalist gives credit to a person, as 
 representing " property," on the security of some con- 
 vertible pledge committed to his keeping, which reduces 
 his trouble involved to a minimum. He may, in the case 
 of " personal " credit — ^which in this application is stiU 
 based upon the knowledge of the presence of actual wealth 
 — ^have to inquire whether his borrower and his sureties are 
 " good " for such or such a sum. But that is only to make 
 doubly sure. That is an easy way of giving credit. But it 
 is of no use to the small man, whom I take it that we are 
 thinking of. The co-operator gives credit on the security 
 of the assurance that a man may be trusted with the money, 
 and of his undertaking to employ that money for an outlay 
 which will more than repay itself. That, of course, involves 
 trouble — ^both of inquiry and of watching. However that 
 is the only way to help a small man. And that is what 
 Co-operative Credit was invented to do — to provide, as 
 both M. F. Passy and Schulze Delitzsch have put it, 
 " capital without the presence of a capital of guarantee," 
 to entrust money, as Sir R. Morier, quoting these authorities, 
 has expressed it, " on the security of labour," which, he 
 added, has been found " as good a security for credit as the 
 broad acres of a landed proprietor." 
 
 The policy based upon " Guaranteeing Unions " — the 
 joining one of which one impulsive Registrar would make 
 comp^sory upon every society — is designed to avoid the 
 trouble referred to, by substituting a collective guarantee. 
 At the ninth Congress of Registrars we have even had the 
 proposition put forward, in the same temper of mind, that 
 as security for every loan a mortgage on landed property 
 should be given. Now mortgages constitute a form of 
 security which leaders of every Co-operative Credit Move- 
 ment, whatever its form, distinctly and strongly disadvise. 
 So here we see Capitalism rampant given the preference 
 over Co-operation. 
 
 However, there is another idea obviously underlying the 
 proposal already partially given effect to in the formation 
 here and there of " Guaranteeing Unions." Union within 
 the larger " Unions " already spoi:en of, may undoubtedly 
 
JOINING FORCES 209 
 
 undef circumstances be a very desirable institution, in 
 certain cases even almost a necessity. And India, with its 
 small societies, its undeveloped means of communication, 
 the very elementary mastery of co-operative and business 
 principles by those who practise Co-operation, and its 
 wide distances, plainly appears to provide such a case. 
 " The problem of finding the effective intermediary between 
 the large district bank and the remote primary society," 
 so writes Mr. R. W. D. Willoughby, as Registrar in the 
 United Provinces, in his annual Report for 1915-16, "is 
 about the most difficult we have to face, and there is as yet 
 no solution in sight." As the only alternative solution — 
 in this sense, as providing for financial service between the 
 two — ^he mentions " branches of the district bank." That 
 is practically what — ^although under another name — ^has 
 been applied with very good effect in Europe. However, 
 as Mr. Willoughby rightly reminds his readers, " this 
 postulates a thoroughly trustworthy and energetic local 
 manager with supervision and check by at least one local 
 director of the central institution " — a condition the fulfil- 
 ment of which under present circumstances presents 
 distinct difficulties in India. Nevertheless, it is by such 
 or similar means that in all probability the " problem " 
 propounded by Mr. Willoughby will have to be brought 
 to a solution. It wiU have to be realised that, however 
 much Central Banks or Unions and local societies may be 
 dependent upon one another, and be linked together, under 
 one aspect, by common interest — in respect of business they 
 form, and must continue to form, two distinct and separate 
 institutions, each possessing its own interests and haAdng 
 its own responsibilities — to whatever extent they may be 
 formed by the same persons and one institution may be a 
 shareholder in the other. In business matters each institu- 
 tion, whatever it is, wiU have to form a distinct, self- 
 governing, independent concern, with clearly delimitated 
 powers, possessions and responsibilities. Entanglement of 
 interests or responsibilities necessarily means confusion, 
 breeds^ carelessness, and may bring about disaster, just by 
 reason of the absence of clearly marked delimitations. 
 
 As a second " alternative " — ^which in truth is no alter- 
 native at aU, inasmuch as it very rightly drops all idea of 
 finance — Mr. Willoughby suggests " supervising and organ- 
 
 H 
 
210 CO-OPERATION IN INDIA 
 
 ising committees under a district officer or subdivisional 
 officer, which, while not undertaking finance, would control 
 and pay a supervisor, arrange^ for receipt and despatch of 
 money and direct propaganda." 
 
 Now, drop the " district officer and divisional officer," 
 and the " arranging for the receipt and despatch of money," 
 and you have a scheme such as Mr. Gourlay prepared and 
 submitted in the early days, when he was Registrar in 
 undivided Bengal, and which certainly deserved approval. 
 Whatever be the form of organisation selected, the district 
 and divisional officers certainly have no proper place in it. 
 Quite the reverse. We ought by all means to try to keep 
 clear of " officialising." However, for supervising purposes 
 local unions are decidedly desirable. They may continue 
 so even after India has succeeded — as we must hope that 
 it will — in grafting the institution of a " Union " in the 
 European sense — as a controlling, correcting, propaganda- 
 making body— upon its system as a means of facilitating 
 supervision and the other tasks indicated. But it wiU have 
 to be a collective body formed of societies themselves, which 
 will have to be the authority controlling such controllers, 
 or the institution will cease to be co-operative. For the 
 time we may accept the Registrar as a substitute. But we do 
 not want to penetrate farther into the official hierarchy. 
 
 The difficulty of Mr. WiUoughby's " problem " will of 
 course become alleviated as organisation in the co-operative 
 banking apparatus becomes effected, until, after completion 
 of such process, it may be expected to cease entirely and 
 things will begin to work smioothly as they do in Europe. 
 
 Meanwhile there appears to me to be serious objection 
 to the employment of " Guaranteeing Unions " as inter- 
 mediaries, just because they make finance their business, 
 which appears to be to some Indian Registrars their main 
 recommendation. 
 
 A supervising Union of the type proposed by Mr. Gourlay, 
 so it is quite true, could not be expected to answer all 
 the purposes of inspection by a larger " Union " of the 
 European type. It could not command the services of as 
 fully skilled and experienced inspectors. It could not hope 
 to exercise the same constraining authority. But it would 
 certainly be a beginning. And while societies' dealings 
 are restricted, " little things are great to Uttle men." On 
 
JOINING FORCES 211 
 
 the other hand, it might to a certain extent replace Society 
 supervision — not fully, but working up to it. 
 
 " Guaranteeing Unions " apparently had their birth in 
 Burma — a peculiarly situated province, in which societies 
 are very small and intelligence exceptionally general — and 
 they appear to have gained some foothold also in the Pun- 
 jaub and the Central Provinces, and quite lately also in 
 Bombay. In them inspection appears to be regarded only 
 as a secondary object. The governing idea is that a certain 
 number of local societies join together in order to give a 
 certain collective guarantee to the " Central Bank," which 
 on such security will advance the money asked for. That will 
 save trouble, of course. The " Central Bank," desiring to 
 be made the " pivot " of the whole system and practically 
 direct local credit, but having discovered that at its distance 
 from the localities to be dealt with it cannot sufficiently 
 gauge local conditions, by this means obtains a guarantee 
 which it considers practically " good enough," vv'ithout 
 necessitating further trouble. 
 
 Parenthetically I would point out that the principle of 
 directing loaning from central points has not elsewhere been 
 found altogether successful. Central Bank pivoting is the 
 principle underlying the French scheme of Agricultural 
 Credit, which has indeed succeeded in putting money in 
 circulation — ^less than half of what was provided for the 
 purpose — but, according to the testimony of its own most 
 interested champions, has not generated any co-operative 
 spirit nor stimulated people acting in common to undertake 
 the liabilities demanded from them. Quite the reverse, 
 it has led them to fight shy of them. 
 
 Now, when the idea was first broached of committing the 
 combining societies to unlimited liability, of course, no 
 one would hear of them. We have the testimony of one 
 Registrar to this effect. In no organisation in which 
 members have not the entirely free disposal of their own 
 liability, and can personally check its engagement, should 
 liability be allowed to be unlimited. You may lump 
 finance together as much as yon please. As a rule you will 
 in so doing strengthen its power. But responsibiUty wants 
 to be divided down to the very units, so as to enable you 
 to fix it upon the individual member, but at the same time 
 also — that is a necessary corollary — leave him a free dis- 
 
212 CO-OPERATION IN INDIA 
 
 cretion in engaging it. The Store lumps finance together 
 by buying collectively. It divides responsibility down by 
 asking every purchaser to pay cash on the nail for his goods. 
 The Credit Society works in the reverse direction, but must 
 work on the same lines.. It borrows collectively, but it 
 is careful not to interlock liability. It was the danger of 
 interlocked liability which caused Schulze Delitzsch to meet 
 the repeated proposals made to form a Central Bank for his 
 " Union " with such determined opposition. For during 
 his lifetime limited liabiUty was unknown in Germany. 
 
 Well, our Indians have in some way limited liability for 
 " Guaranteeing Unions." Each society joining is required 
 to engage its liability only up to the amount of money that 
 it has had in the preceding year received from outside its' 
 own resources. That is rather an arbitrary limit, which 
 may not in all cases answer requirements. For a society's 
 need of credit is not by any means a fixed quantity. It 
 should not be. It varies according to circumstances. 
 What was enough last year may not prove enough in the 
 next. And to lead a society to count upon the." Central 
 Bank " always, as a matter of course, and make drafts upon 
 it a fixed quantity, is a mistaken policy, which may lead to 
 mischief. For borrowing from a " Central Bank " is 
 intended to be something' comparable to an emergency 
 measure. The " Raiffeisen' of France," Louis Durand, has 
 not inaptly, but with some little exaggeration, put the 
 matter in this way, that a society in debt to its " Central 
 Bank" should consider itself "in hospital," and make it 
 its earnest endeavour to get out as fast as it can. You are 
 not likely to exert yourself to become a capitalist — ^which is 
 what co-operative banking is to stimulate its members to do 
 '■ — so long as you know that you can always rely upon a certain 
 amount of borrowed money to operate with. On the other 
 hand, a " Central Bank" is there also to satisfy local societies' 
 needs on the occasion of great emergencies, when a good deal 
 may be wanted. It is such uncertainty which makes the 
 management of a " Central Bank " a difficult matter. The 
 Bank wants to be prepared for all contingencies. 
 
 There is another point still to consider : Will all those 
 guaranteeing societies be equal to their guarantees ? They 
 were last year, but that time is gone by. The " Central 
 Bank" knows positively very little about the financial 
 
JOINING FORCES 213 
 
 position of each, or it would not ask for a collective.guar- 
 antee. But a guarantee that is uncertain in its fulfilment 
 is not worth very much. 
 
 However, the main objection is that of liabilities being 
 interlocked. It is contended — seemingly with fuU con- 
 viction — that interlocking does not take place, because 
 liability is " limited." That alters the effect, but it does 
 not remove the objection. As matters stand now, you no 
 longer give your comrades a blank cheque, but you give them 
 a cheque made available up to a certain fixed sum. Up to 
 that sum you are committed to them without reserve. You 
 have lost the command of your own money. Up to the 
 point named the disposal of your money is in other people's 
 hands. Within such limit liability certainly is interlocked, 
 and that should not be in Co-operation. It involves one 
 of the " risks " which co-operators are by all their masters 
 impressively adjured to avoid. 
 
 " Guaranteeing Unions " are reported to have been 
 successful in Burma. That is very satisfactory for Burma. 
 But we have not come to the end of our tale. The " book " 
 is still in our mouth only. There it appears " sweet as 
 honey." The true proof of its quality will be found at a 
 later stage, when it reaches our stomach. One cannot be 
 altogether surprised at the fact that elsewhere, in Provinces 
 not so favourably situated as Burma, " Guaranteeing 
 Unions " have not been found to go down quite equally 
 well — not even in the United Provinces, in which the 
 late Registrar, a very thoughtful and intelligent man, 
 had constituted himself their devoted champion. On 
 this point the late Registrar, Mr. Willoughby, writes : 
 "The Guaranteeing Union has not yet been tried on a 
 scale from which any conclusion can be drawn. One such 
 union is working in Bijnor and working successfully ; but its 
 establishment was not really necessitated by difficulties of 
 supervision or finance and it does not relieve the district 
 bank of anything except some of the risk of finance. .In- 
 spectors were instructed to keep in constant view the 
 possibility of organising unions of this type, but conditions 
 in which their establishment were possible do not seem to 
 have presented themselves. The survey of the Basti 
 societies has been concluded and three nuclei have been 
 selected for the establishment of experimental Guaranteeing 
 
214 CO-OPERATION IN INDIA 
 
 Unions. There is as yet no indication that the Guaranteeing 
 Union will supply the type of association necessary to fill the 
 lacuna." In a very similar strain, the Registrar of Bihar 
 and Orissa, who evidently has a strong leaning in favour of 
 " Guaranteeing Unions," reports : " The idea has not yet 
 captured the imagination of our societies, because they 
 appear to feel that they have enough to do in guarding 
 against the dangers of joint liability in their own society 
 without incurring additional risks." " The view," so 
 Mr. Collins adds, " is of course superficial, but still it is 
 clear it will be some time before these unions catch on." 
 That, of course, remains to be seen. 
 
 There is marked shyness also in Bengal — and there was, 
 until last year, when a favourable effecf was noticed, in 
 Bombay. And from Madras Mr. Swamikannu Pillai 
 Avergon reports " Guaranteeing Unions " to be still 
 disliked, even after unlimited liability — which at first was a 
 fatal stumbling-block — ^has been discarded. " The suffi- 
 ciency of the security given by borrowiijg societies," so he- 
 says, " is probably the reason why unions are unwilling to 
 give further security by way of guarantee." They are 
 right. And societies elsewhere should make it their aim 
 to provide for the same " sufficiency of security." The 
 security given by borrowing societies should be sufficient. 
 If it is not, it ought to be mended up to that point. Where 
 " Guaranteeing Unions " are welcomed as a help, I 
 apprehend that it may be on the same ground on which in 
 Belgium under the late Leon d'Andrimont, the founder 
 of Belgian Co-operative Credit, UnHmited LiabiUty, as 
 borrowed bodily from the German model, was accepted 
 without demur, because members failed to understand its 
 meaning. When in one such Belgian People's Bank after 
 a time the proposal was made to limit liability to twenty- 
 five times the value of the share, members cried out in 
 alarm that that would be far too much, that they could 
 never undertake so large a liability. And yet, up to that 
 time they had, without being aware of it, been liable for all 
 that they possessed. 
 
 At the annual Co-operative Conference in the United 
 Provinces, the Registrar of the time, Mr. Chatterjee — a man 
 who threw heart and soul into his work — ^gave a' most 
 eloquent and eulogistic account of " Guaranteeing Unions," 
 
JOINING FORCES 215 
 
 which he had shortly before been to study in Burma, They 
 were accordingly put to the test at once with glowing hopes. 
 However, in his annual Report of 1917 we find Mr. Chatter- 
 jee's successor, Mr. W. D. Willoughby, writing as follows : 
 "The year has been fruitful in* instances of the defects 
 inherent in the small Central Bank, as will be seen later. 
 We are not much nearer solving the problem of replacing it. 
 The Guaranteeing Union has not yet been tried on a scale 
 from which any conclusion can be drawn. One such union 
 is working, in Bijnor and working successfully, but its 
 establishment was not really necessitated by difficulties of 
 supervision of finance, and it does not relieve the district 
 bank of anything except some of the risk of finance. In- 
 spectors were instructed to keep in constant view the 
 possibihty of organising unions of this type, but conditions 
 in which their establishment was possible do not seem to 
 have presented themselves. The survey of the Rasti 
 societies has been concluded and three nuclei have been 
 selected for the estabHshment of experimental Guaranteeing 
 Unions. There is as yet no indication that the Guaranteeing 
 Union will supply the type of association necessary to fill the 
 lacuna." In a similar strain Mr. Langley, when Registrar 
 in the Punjaub, wrote : " The weak point about the unions 
 is that, just as in the village societies, most of the work is 
 done by the President. It is the exception to find any other 
 member exerting himself." And this is what Mr. J. T. 
 Donovan, Registrar in Bengal, reports from his province : 
 " The work of the Santhia Union in Pabna has always been 
 unsatisfactory and the constituent societies applied to my 
 predecessor to have it closed. Its existence was deprecated 
 by those for whose benefit it was brought into existence. . . . 
 It may be noticed that the affiliated societies of this Union 
 pleaded, when asked, for its dissolution, that hitherto they 
 had not fully understood the liability clauses in the Union 
 by-laws and that they were not willing to be responsible to 
 the Central Bank for other societies. The Union has not yet 
 been closed, but the Circle Inspector has recommended 
 that its work should be immediately stopped." 
 
 In Co-operation no one should be allowed to make himself 
 liable beyond what he can himself control. Centralise 
 finance if you choose, but decentralise responsibility! Db 
 not shirk trouble ! Elbow grease is your equivalent for the 
 
2i6 CO-OPERATION IN INDIA 
 
 pledgeable security which the capitalist can give, but which 
 you yourself do not possess. You must not grudge it. Ex 
 nihilo nihil fit. Inquiry and vigilance in each, case are your 
 only safeguards. 
 
 I hope to see " Unions " multiplying in India — ^but as 
 supervising Unions, to be eventually merged into larger 
 Unions, of the European type, after which they may remain 
 in existence and continue to do admirable work as sub- 
 unions, a most useful category of organisations — ^just as the 
 present " Central Banks " — useful in all cases, and under 
 present conditions absolutely indispensable, are likely to 
 continue, although eventually brought to play only a 
 secondary part under Provincial Banks, once such become 
 well established and strong. You can scarcely centralise 
 finance too much in the sense of providing clearing and 
 intercommunication. The lakhs of rupees that our British 
 co-operative distributive societies possessed in their separate 
 cashboxes have become an incomparably more potent 
 financial instrument to work with, of immense benefit to 
 the movement, since they have become merged in the 
 crores of the great Banking Department of the Co-operative 
 Wholesale Society, which acts as the societies' banker, 
 leaving them free still, all the same, to exercise unfettered 
 their useful activity within their own local sphere, not 
 hindered, but rather strengthened, for the purpose. 
 
 Such local autonomy is essential, if societies are to remain 
 co-operative. To what lengths unchecked fancy for Com- 
 bination may carry enthusiasts is seen in the suggestion made 
 by one superardent champion of Centralisation, to the effect 
 that societies should actually be compelled to " squad " 
 themselves willy-nilly into " Guaranfeeing Unions," the 
 " Guaranteeing Unions " in their turn to be brigaded to- 
 getheiL^under " Central Banks," and the whole phalanx so 
 brought together to be commanded by a Provincial Bank 
 as Generalissimo. Now this is Centralisation run wild, a 
 veritable caricature of Centralisation. Local societies are 
 to have no choice, no discretion, no free will of their own. 
 Into the "Union" they must go — unless indeed the 
 " Union," on some groundf or other, right or wrong, reason- 
 able or unreasonable, chooses to reject them — in which case 
 they are ipso facto to cease to exist. And so into Central 
 Banks. It is all to be impressment and Prussian office rule. 
 
JOINING FORCES 217 
 
 To what friction and conflict, what intrigues and 'patti 
 bickering, would that not open the door ! It would in 
 truth sign the death-warrant of the Indian Co-operative 
 Movement. No such thing, nothing coming at all near it, 
 has been heard of even under the Russian Tsars. And what 
 few instances we have of anything even only remotely 
 resembling it certainly cannot serve as a recommendation. 
 Under a rule of such principle, watered down ten or twenty 
 fold, in Russia, Co-operation would not develop. ° I have 
 already instanced the case of the French Credit Agricole — 
 which is very domineering within its own boundaries, but 
 which leaves Frenchmen absolutely free to form whatever 
 other co-operative organisations they may choose. Union 
 is good, and Centralisation is good in its place- However, 
 once more I would urge : ne quid nimis — surtout fas trap de 
 zele ! In planning organisation boldness is a merit. But 
 it does not want to be carried to excess. Let us keep our 
 societies their own masters, above all things masters of their 
 own liability ! The author of the proposal referred to 
 points with apparent admiration to the case of Hungary, 
 which somehow has by means of exaggerated spoon-feeding 
 acquired a reputation in matters of Co-operation for 
 Agricultural purposes that it does not by any means deserve. 
 He quotes from Count Mailath's paper read at our Inter- 
 national Congress at Budapest in 1904. But I can tell him 
 that at the close of that Congress the Hungarian spokesmen 
 explicitly thanked us, of the International Co-operative 
 Alliance, for having shown them that they had carried 
 resort to State help and magnate domination too jar. 
 And Herr Haas himself, violent advocate of State inter- 
 ference that he was, owned privately to me, during the 
 Congress, that what he had seen of Hungarian Co-operation 
 had not satisfied him. A "co-operative" gathering in 
 Hungary under the existing system is, in fact, like a village 
 school meeting, in which the master lays down the rules, 
 which the assembly meekly accepts. Nevertheless, even 
 in Hungary magnate rule stiU leaves people free to join 
 magnate-ruled societies or not, as they please, and to join 
 other Unions, such as actually exist — Schulze Delitzsch 
 Unions with absolute freedom in Hungary proper ; an excel- 
 lent Raiffeisen Union in Transylvania and very vigorous Slav 
 Unions in the Antemurale Christianitatis — that is, Croatia. 
 
2i8 CO-OPERATION IN INDIA 
 
 In India you already labour under the disadva&tage, in 
 comparison with other countries, that the driving force 
 behind your Co-operation is not the free initiative of men 
 of distinct " schools," like Raiffeisen, Schulze, Luzzatti, 
 d'Andrimont, Vigano and so on, each of them bent upon 
 pushing his own views with all vigour, but a movement 
 promoted from " above," with paternal benevolence, 
 without much pfeferehce for any one system or other, 
 accordingly with less steam at the back of it. In one 
 respect that may be reckoned an advantage — an advantage 
 such as, under J. C. Gray's intelligent General-Secretaryship 
 our British Co-operative Union has learnt to appreciate. 
 Although in the main distributive, and productive only in a 
 sense ancillary to Distribution, that Union would now have 
 all the various forms of legitimate Co-operation represented 
 in it, while allowing societies free scope in all their internal 
 arrangements — even to join the Co-operative ' Wholesale 
 Society or not — as they might please. I myself have 
 laboured for such full and free comprehensiveness in a still 
 wider sense in the International Co-operative Alliance. 
 However, whatever the merits of such comprehensiveness 
 in a larger collection of co-operative organisations may be, 
 it cannot in any one organisation replace that pushing force 
 of propagandist zeal which the adoption of one particular 
 code of co-operative principles carries with it. With all 
 that, I prefer it in ,the one shape in which it is usefully 
 practicable — that is, as a tolerant organisation. 
 
 However, toleration is the one thing which our Indian 
 proposer of a new system of organisation will not allow. 
 Societies are to be made to join Unions, Central Banks, and 
 so on. And the whole movement is to be clothed in a tight- 
 fitting martinet uniform, with the old stiff black stock, the 
 pigtail and the rest of it retained, and exclusion as the one 
 alternative to passive submission — ^which submission, being 
 passive, is not likely to represent much value. If these are 
 to be " thy gods, O Israel," you had better turn away from 
 them. 
 
 There is no Co-operative Movement possible on such 
 lines. The very first condition necessary for true Co- 
 operation is that it should be free, leaving people free to 
 join, free to go out, free to accept liability, free to refuse it, 
 free to accept one programme, free to accept another, free 
 
JOINING FORCES 219 
 
 to co-operate on wider lines, free not to do so. There can 
 be no compulsion in Co-operation, except for a member to 
 carry out the duties freely accepted. All sections of the 
 Co-operative Movement ought to be brought together, so 
 far as that is possible, for common action. 
 
 Nowhere, surely, is Union in Co-operation more required 
 than in India. One may hope to see " Unions " growing 
 and multiplying — but it must be Unions for Inspection and 
 Supervision, for Common Counsel, Discussion and Propa- 
 ganda, clustering together, let us hope, in larger Unions 
 still, so as to form in course of time a veritable Co-operative 
 Commonwealth, such as we have in the United Kingdom. 
 Central Banks, likewise, one should hope to see multiplying, 
 and growing in strength and in influence, but rather as 
 paving the way for the superior government of Provincial 
 Banks — ^with, it may be, an All-India Bank at the top of all, 
 since already occasion appears to have arisen for inter- 
 provincial business. However, each form of combination 
 should be left to do its own business independently. A 
 chacun son metier, et les vaches seront hien gar dees. According 
 to Macaulay's simile, " pianomakers should be left to make 
 their pianos and bakers to bake their bread." So we shall 
 have a well-regulated and what the Scotch call a " well- 
 kempt " movement — but in the same way in which we got 
 them together in the International Co-operative Alliance, 
 which explicitly declined to interfere in the internal matters 
 of any organisation joining -it — in the same way in which 
 we are in political organisation now forming a British 
 Federation, which leaves full self-government to all its parts, 
 but knits them all the more closely together for /common 
 action by common interest. 
 
 It is 'principle and common interest which must lead 
 societies into Union, of their own free will. On the 
 European Continent, where there are different systems, we 
 have Unions composed of adherents to thi« or that system. 
 There are Schulze Delitzsch societies, Raiffeisen societies, 
 Haas societies, Roman Catholic societies. Peasants' Unions 
 and so on, all independent of one another. But there is no 
 reason why they should not in essentials work fraternally 
 with, and mutually support, one another. In the United 
 Kingdom things are rather different. We have one " Co- 
 operative Union," which societies are free to join or not as 
 
220 CO-OPERATION IN INDIA 
 
 they please. There are a good number which have not 
 joined. At one time it looked as if the comparatively small 
 cluster of productive societies might have to go out. They 
 remain in — ^to a certain extent on sufferance. However no 
 one denies them the right of free existence. In the 
 " Union," they are free to buy where they like, to bank 
 where they like, to maintain what rules they like. The 
 Wholesale Societies are there to welcome them in and serve 
 them, their Banking Department is there to do their 
 banking for them. Compulsion is completely absent. It 
 would spoil the principle. Surely Indians are not so 
 different from other folk as to require to be put into strait- 
 waistcoats and made to do what their own inclination rejects. 
 
VII. 
 NON-AGRICULTURAL CREDIT 
 
 In a country, the overwhelming majority of the population 
 of which supports itself by Agriculture, it W£.s not to be 
 expected that the non-agricultural form — so to call it — 
 of Co-operative Credit would develop to anything like the 
 same extent, or make its way so rapidly as the agricultural. 
 I accept for the occasion, for convenience sake, the officially 
 approved distinction between " agricultural " and " non- 
 agricultural " credit, although it is apt to mislead, and has 
 in point of fact in India led to not a little confusion of ideas, 
 just the same as has that between " rural " and " urban " 
 improperly introduced from France. There is just so 
 much justification for the distinction, that that particular 
 form of Co-operative Credit which has rightly been generally 
 adopted for practice among the rural population is prac- 
 ticable only amid rural surroundings, inasmuch as, together 
 with a smallness of membership such as it would be difficult 
 to maintain in populous centres — where, moreover, it 
 would be out of place^ — it requires as precedent conditions 
 general fixity of the population on the soU, such as is only 
 to be met with of a certainty in rural districts, and 
 very close touch among members, such as likewise is an 
 exceedingly uncertain quantity elsewhere. However, that 
 does not imply either that the other form of Co-operative 
 Credit known is not applicable also amid rural surroundings 
 or for agricultural purposes, or that only persons agri- 
 culturally employed should form part of that actually 
 adopted. Country districts have their artisans as well as 
 towns, to whom presumably credit would be a boon, but 
 who would not by other means than that of joining one of 
 the agricultural credit societies have access to it. And it is 
 not by any means the occupation of a man v/hich marks him 
 
 221 
 
222 CO-OPERATION IN INDIA 
 
 out as a fit subject for either one or the other form of 
 Co-operative Credit, the distinguishing f eature fprming the 
 dividing-line betv/een which is the form of liabiUty selected. 
 There is in practice too much distinction made between 
 different calHngs. In truth, it may be accepted as a general 
 rule in Co-operative Credit that the more mixed is the 
 component membership, the broader accordingly is the 
 basis on which wants and offerings present are made to 
 meet, the more stable and the more easy to manage will the 
 society be, because in such a society wants and superfluity 
 dovetail into, and more nearly balance, one another than 
 in one confined to only one or a few callingf. A telHng 
 instance of this, specifically with respect to the Raiffeisen 
 type of organisation, which is so generally accepted in India 
 for rural districts, occurred some time ago in the iUpine 
 district of France, in Louis Durand's " Union of Rural and 
 Working-Men's Societies," -organised on pure Raiffeisen 
 lines. The farmers organised were owners of herds which 
 are annually replenished to some extent with the help of 
 borrowed money — and driven up on the Alps for their 
 summer pasturing, to come down again for wintering in the 
 autumn, when the culls are sold. These farmers were all 
 good men. However, their busiaess requirements were such 
 that at one season deposits would come in from them in 
 embarrassing abundance, whereas in other seasons money 
 was asked for — to buy cattle with — beyond what the 
 societj^ could supply. Something similar, only on a larger 
 scale, had occurred previously in the French Nivernais, 
 where the fine Charolais cattle are fattened on the luscious 
 pastures of that fertile district. In that case the Bank of 
 France met the difficulty by non-co-operative means, but 
 likewise by the use of credit,* which helped the farmers not 
 a little and brought the Bank in a fat little profit. Durand 
 induced the Alpine societies to broaden their basis and take 
 in others besides men of their own calling, which move at 
 once rectified the matter, and created a balance. On the 
 same ground it is not altogether desirable that one-class 
 credit societies should be formed, such as Continental 
 European Governments advisedly favour — from not by any 
 means ^purely altruistic motives — -among distinct classes of 
 tradesmen, who are by such means to be kept under Govern- 
 ment influence, away from the dangerous inspirations of 
 
NON-AGRICULTURAL CREDIT 223 
 
 Liberalism. What we meet with in India — namely, societies 
 composed exclusively of members of a public or municipal 
 service, or of one or other industrial or commercial 
 establishment — ^is far more excusable, although it stiU does 
 not correspond to the ideal conception. If it were a 
 distributive society, there would be absolutely nothing to 
 object to in it. And it is excusable also on the ground that 
 in point of fact its doings constitute rather provident than 
 co-operative action. The idea of depositing is at least as 
 dominating in such societies as that of occasional loans. In 
 Great Britain we have found societies of this sort in the 
 public service distinctly convenient and exceedingly useful. 
 For in one prosperous Civil Service Provident and Credit 
 Society I found that, thanks to combination among members, 
 advances might be obtained .from banks by pledging the very 
 same securities at a very considerable reduction of the rate 
 of interest to what had been demanded for advances to an 
 individual. It was a matter of 5 or 6 per cent, difference. 
 The pledge here referred to was good securities such as well- 
 estabUshed railway debentures. Administration of such 
 societies is easy and risk is infinitesimal because, in view of the 
 position of the members in the public service, in which they 
 are on their good behaviour, so that bad conduct might mean 
 for them " the sack," compUance with the duties under- 
 taken is readily obtained. The rendering of such is not 
 absolutely as certain among men in employment in factories 
 and commercial houses. However, in the case of such men 
 likewise there is still a moral pressure from colleagues to be 
 reHed upon with a fair amount of confidence, to hold them 
 to their duty. In India, unfortunately, the same condition 
 of things does not appear to obtain. For we have it on 
 evidence that, at any rate in some cases, members of the 
 kutcheri have been found distinctly unreliable repayers. 
 " They will not repay," as one witness has put it. That 
 ought not to be allowed to continue. 
 
 The point mainly to be borne in mind is that a varied 
 composition of membership, implying a variety of wants, 
 asserting themselves at different times, and bringing back 
 money likewise at different times, is really the ideal condition 
 of a credit society, whether it be rural or urban. Con- 
 venient disposition of ebbs and tides of money, dividing 
 these so as, as nearly as possible, to make them balance one 
 
a24 CO-OPERATION IN INDIA 
 
 ^another, is a standing rule of all well- managed financial 
 establishments, and should be observed as such also in our 
 credit societies. A late Comptroller of the National Debt 
 one day showed me with what meticulous care and nainute 
 forethought his Department manages this matter, dis- 
 tributing payments and receipts so as to necessitate the least 
 holding of unemployed cash, and to make inflow and out- 
 flow balance — ^without which the business must be un- 
 manageable and, moreover, extremely costly to the State. 
 So far as is possiblej administrators of credit societies should 
 do something of the same sort. 
 
 I have thus far referred to only one form of Co-operative 
 Credit, for which rural surroundings are imperative, and 
 which accordingly has gained a sure footing in India on 
 rural ground. The other form is, however, in its 
 application by no means confined to urban or densely 
 populated districts. It is applicable anywhere where con- 
 ditions are otherwise favourable — that is, where money is 
 wanted and " capitals of guarantee " are scarce. To quote 
 instances, I have seen more or less orthodoxly formed 
 Raiffeisen' societies in country districts in the South of 
 France deliberately turn themselves into Luzzatti banks 
 because local people somehow would not take to the 
 Raiffeisen system. Something of the same sort is now going 
 forward in Ireland. The Raiffeisen system has there 
 rendered admirable service. However, to a certain extent 
 it has done its work. People who have profited by it are 
 better off now, and can afford to take up shares. Their 
 business also has become 'more brisk. Their borrowing is 
 not only once in a long while and for a " dead " loan running 
 for a long period. It is frequent, and much of it for short 
 periods. Accordingly in such districts people are now 
 turning their thoughts to the formation of societies more or 
 less on the Luzzatti pattern. In England — where the whole 
 thing has been badly mulled under incompetent guidance, 
 partly official and partly squirearchical — my impression is 
 that even in country districts the limited Hability form of 
 Co-operative Credit will be found the more acceptable. 
 People have been so broken in to limited liability action by 
 their Stores and their societies for the purchase of agri- 
 cultural reqmrements. And there is no reason why they 
 should not organise on such lines. 
 
NON-AGRICULTURAL CREDIT 225 
 
 I, however, in the present instance dub the Credit now to 
 be spoken of as '* non- agricultural," because, naturally, I 
 have in the foregoing chapters directed my attention almost 
 exclusively to Agriculture, the present wants of which, 
 declared at all points — ^which wants Co-operation, and 
 probably only Co-operation, is quahfied to satisfy — ^in 
 point of comprehensiveness and urgency far surpass those 
 of other callings and really constitute the predominating 
 motive for Indian resort to Co-operation at all. 
 
 Non-agricultural Credit appears, as already observed, 
 thus far to have found its way into Indian econoniy mainly, 
 although not exclusively, in the shape of single- employment 
 societies, above all clerks' and employees' societies. We 
 read also of societies formed among small tradesmen and 
 •jobbing working folk such as ekka-drivers, ubbarvuri, salt- 
 loaders, fishermen, scavengers, sweepers, rickshaw wallahs, 
 etc., some described as " the most degraded class of wage- 
 earners." All this appears to me, writing at a distance, to 
 be rather of a provident than a co-operative character, 
 representing an employment of money laid by in the shape 
 of deposits for loan purposes rather than what the Americans 
 call " merchandising with money " (or, in this application, 
 with security for raising such) — ^raising funds outside, on the 
 strength of the capital or liability at the society's command — 
 acting, that is, like a bank, which borrows from others in 
 order to lend. All this is not only legitimate, but perfectly 
 proper. And we find a deal of it in operation abroad — 
 more particularly in Italy, under the shadow of M. Luzzatti's 
 influence, where employees, schoolmasters, members of the 
 musical profession and similar categories of persons club 
 together, as in Slate Clubs or Loan Societies, to assist one 
 another, making the economics of all subserve in turn to 
 the wants of any particular one who may stand in need of 
 such help. But such collaboration does not produce much 
 of a productive force ; it has not much economic effect upon 
 the country ; it does not stimulate trade ; and its educative 
 effect is next to nil. And, seeing what prodigious results 
 Co-operative banking of a non- agricultural character carried 
 on on a bolder scale has produced in Europe— more 
 particularly in Germany, Austria, and Italy, where the 
 movement is strongest-r-one cannot help thinking, with 
 Lord CarmichaeL who has publicly expressed himself to 
 
 15 
 
226 CO-OPERATION IN INDIA 
 
 that effect, that in a country like India, which for the 
 moment is not over-banked, but in which industrial effort 
 has actively roused itself and is manfully struggling upward 
 to shake off its fetters and become a useful national force, 
 sooner or later pushing small trade and small commerce 
 should discover the substantial assistance which is to be got 
 for it from Credit co-operatively organised, so as to place 
 those funds within reach of the striving workman without 
 which he cannot hope to succeed, but which now he cannot 
 obtain the free use of for want of capital of his own to serve 
 as guarantee. 
 
 In truth, one cannot help regretting that thus far so very 
 little attention should have been paid to this appHcation of 
 Credit. It seems to have been treated as a Cinderella. I 
 am sure that the Registrars are not in fault in this matter. 
 Probably they could not, amid their many engrossing 
 occupations, find time to do more. But it is painful to 
 read what Mr. C. F. Strickland, Assistant Commissioner in 
 the Punjaub, writes in the Agricultural Journal of India. 
 " The progress of all industrial societies," so he writes, " has 
 been hampered by the employment of the Industrial 
 Inspectors in Agricultural Societies. ... I think the 
 position of the industrial societies would have been more 
 satisfactory if the Inspectors had taken pains to learn the 
 elementary principles underlying industrial Co-operation." 
 That judgment, although severe, is probably not unjust. 
 Indi-a does not appear yet to have got the " grip " of the 
 industrial co-operative problem. Agricultural Co-operation 
 has overshadowed industrial. And no doubt war-time is 
 not a favourable season for the development of industrial 
 activity apart from ammunition-making. 
 
 The subject of Co-operation in connection with what are 
 technically known as ■ " small industries " — ^in which the 
 want of credit is probably most felt and which, as one would 
 think, constitute one of the greatest hopes of India — as a 
 matter of industry will be discussed elsewhere. Suffice it 
 here to point out that, just the same as small Agriculture, 
 without the use of Co-operative Credit, which secures cash 
 to the honest and trustworthy worker who has none, such 
 small trade — for the development of which there appears to 
 be almost unlimited scope-— must be hopeless. However, 
 we need not draw the line limiting the utility of Co-operative 
 
NON-AGRICULTURAL CREDIT 227 
 
 Credit too low down. There is plenty of trade, not of the 
 cottage industry type, trade which does not — ^like the 
 cottage industries — need to be organised industrially for 
 the prosecution of its calling on co-operative lines, to which 
 Co-operative Credit would prove as great a boon as it has' 
 proved to the small traders of Germany — on the remarkable 
 benefits produced in which country to this class Sir R. 
 Morier reported in glowing terms to our first British Co- 
 operative Congress in 1868, and the business of which now 
 runs into crores and crores, and acts as a truly marvellously 
 fertilising stream, moistening soil which not many decades 
 ago appeared barren. 
 
 It may also not be amiss to call attention to the use made 
 of Co-operative Credit by traders in France, where — ^in the 
 absence, practically speaking, of such active and powerful 
 Co-operative Banks of a mixed cornposition as Germany can 
 boast in plenty — co-operative societies of tradesmen have 
 formed their own Co-operative Credit banks, to supply 
 their member-societies with Credit. Co-operative pro- 
 ductive societies are comparatively strong in France and 
 take particular pride in their existence, which they trace 
 back to the time of the second Revolution. They do not 
 turn out more work than productive societies do in Great 
 Britain, but they enjoy greater prestige in the Co-operative 
 World, because the distributive societies are not nearly as 
 strong or as much in evidence as our British distributive 
 societies. And the connecting-Hnk being wanting, which 
 has happily in our country brought societies of various forms 
 into close fraternal fellowship, they form something of a 
 co-operative world of their own. With plenty of " go " 
 in them, these societies — some of which began with collabora- 
 tion of labour only — from an early hour felt the need of 
 credit, to provide the . means for their carrying on inde- 
 pendent business. Unfortunately Co-operative Credit of 
 a non-agricuftural character and of a general kind is very 
 poorly represented in France. People are so much accus- 
 tomed to look to " the State " for assistance, with money 
 or otherwise, that private initiative shows httle force and 
 self-reliance is only weak. Barring the two co-operative 
 banks severally of Mentone and Lorient in Brittany, there 
 is extremely little to show in France of industrial Co- 
 operative Credit institutions. And the People's Bank of 
 
228 CO-OPERATION IN INDIA 
 
 Mentone is, as has already been shown, not altogether of a 
 truly co-operative complexion. It caters a great deal for 
 large hotel keepers and commercial houses, but I have on 
 inquiry found the local tradesmen shy of it, as being too 
 " big " and pretentious for them. The bank of Lorient 
 operates in the main for the local fishermen and does good 
 work among them— on a smaller scale and of a rather 
 fluctuating character. When I say that elsewhere in France 
 Co-operative Credit is little developed, I do not mean to 
 imply that on a reduced scale it does not render very useful 
 services, which are duly appreciated by small folk. Artisans 
 find them extremely serviceable in advancing them money 
 for the purchase of tools or raw material and yielding to 
 small folk the same grateful assistance which I have instanced 
 elsewhere — the poor woman receiving there the money 
 for buying the sewing-machine which will earn her her 
 living ; the hawker borrowing from the bank the money 
 wherewith to purchase, by instalments paid week by week, 
 the barrow in which he hawks his wares ; the small silk- 
 spinner who pledges his cocoons while spinning his silk out 
 of them, and more such like. One would think that there 
 ought to be room and scope for services of this kind also in 
 India. But generally speaking in France, under the in- 
 fluence of habitual looking for spoon-feeding, all this is only 
 little developed. Accordingly the pick of the French 
 productive co-operative societies some decades ago made up 
 their mind to face the matter and act for themselves. Both 
 in Paris and in Lyons they have formed Banquet Ouvrieres 
 (Working-Men's Banks) of their own.. The bank at Paris is 
 by far the strongest. Bvit that is in the main owing to the 
 happy windfall of some Rs, 300,000 left to it by a philan- 
 thropic gentleman of the name of Moigneu. The societies 
 had not been able to scrape together among themselves 
 more than about the tenth part of that sum. Their 
 co-operative stamina have been not a little weakened 
 by the financial assistance which of late years the State, 
 for political purposes — ^since working-men have votes, and 
 the co-operative vote tells at the polls — has rendered them 
 rather freely. But certainly they have found the services 
 of their Bank a very substantial support in their various 
 undertakings-^some of them of a very ambitious character. 
 It would have been far preferable, of course, if those 
 
NON-AGRICULTURAL CREDIT 229 
 
 societies had had powerful mixed banks like the German 
 to fall back upon. They would have been in a position to 
 do much more for them. And their self-help would have 
 remained pure. However, they found the locker bare and 
 had accordingly to look for bread where they could find it. 
 Talking of Co-operative Credit such as is adopted for 
 industrial purposes, we shall have to bear in mind that 
 Co-operative Credit organised for such purposes, is rather 
 a different kind of Credit from that which we are so familiar 
 with from its application among rural folk. It rests on the 
 same foundation. The underlying principle is the same. 
 However, its practice is necessarily accommodated to its own 
 environment. In the case of the small artisan or employee, 
 who will need a small loan only occasionally for some 
 exceptional, special purpose, the office and utility of the 
 society remains much the same. And so should its 
 mechanism remain unaltered. However, when we come to 
 that small trade which ought to lead a busy existence, with 
 money coming in and going out, to which a Co-operative 
 Credit society is to serve as the commercial bank or the bill- 
 broker does to the commercial man or manufacturer in a 
 larger way of business, the case becomes essentially different. 
 Such a man's credit business will not necessarily be as slow 
 or as long-termed, as widely staged off and calling for as 
 much patience, as the raiyat's. Such a man may want his. 
 money, be it in large amounts or small, far more frequently, 
 very promptly, cheaply, of course, but not nearly for as 
 long a period. His account will, and ought to, be, what is 
 called a " live " account. Now for such business the 
 troublesome inquiry in each particular case into the object 
 of each particular loan would be manifestly a crippling 
 hindrance, and that not only to the borrower but also to the 
 lending institution. And it is not necessary. To the small 
 shoemaker or ekka-driver, or a similar artisan, it means 
 nothing. In his case it is essential that there should be 
 such inquiry, that the borrower should be specifically pledged 
 to obey precepts, and that he should be watched, as a means 
 of preventing abuse. To the busy tradesman it would mean 
 a clog. And the committee which is to apply such interro- 
 gatory and exercise such minute vigilance is likely soon to 
 wish the whole apparatus to Jericho. It will be enough if 
 the managing body of the society can satisfy itself that the 
 
230 CO-OPERATION IN INDIA 
 
 credit will be generally employed in the way for which it 
 was intended, for productive and self-repaying purposes, with 
 discretionary power left to it, wherever a case may appear 
 doubtful to it, to employ the more rigorous, inquisitorial 
 process. That shows how much more important it is to 
 have a properly con!stituted Supervising Council in such a 
 society than even in agricultural societies. And one is 
 glad to see that in Bombay Presidency, where there is an 
 active organising power at work, a beginning has actually 
 been made with the addition of a Supervising Council to 
 the administrating -panchayet. In such connection indeed 
 one cannot see how any reaUy active society — or " People's 
 Bank," as these societies have come to be called — can exist, 
 for any length of time or without great risk of loss, without 
 such Supervising Council, for which in truth there will be 
 not a little to do, once the business develops as it should 
 do. For in proportion to the business expanding, becomi'ng 
 more brisk, lively and varied, the office of the panchayet 
 will become less discretionary and more purely administra- 
 tive. In such connection the h aissiy at viiW. be fully in its 
 place. And so will be the guaranteed cash credit — a cash 
 credit running from year to year, secured, of course, whether 
 by promissory note or otherwise, certainly by an adequate 
 number of sureties — placing funds up to a certain figure 
 at the disposal of the member — always provided that he 
 fulfils all his engagements and conducts-himself properly. 
 For in the case of misconduct or failure to fulfil his 
 engagements, or to employ the funds borrowed in the' 
 proper way, the society must have means at its disposal for 
 promptly stopping the credit. German Co-operative Credit 
 Societies for this purpose employ promissory notes undated, 
 drawn by the borrower, running on and on at the Society's 
 pleasure. When they want to stop the credit, they simply 
 fill in the date and present the note. Now the preparation 
 of the haissiyat cannot be the work of the panchayet, but 
 wants to be given in charge to a body like the Supervising 
 Council already spoken of, or else to a special " Committee 
 of Credit," nominated for the purpose — that is, a body 
 brought less into direct personal contact with possible 
 applicants and in a position to judge of their merits at 
 greater leisure, under less pressure of other work, in judicial 
 seclusion. That shelters the panchayet. It makes things 
 
NON- AGRICULTURAL CREDIT 231 
 
 safer. And, indeed, as societies grow large — we have not 
 come to that point yet in India — and their business, and the 
 business of their individual members, grows, it will be well 
 to have other records still of business besides the haissiyat — 
 records of " risk," as the Italians term them — showing 
 what has been the conduct of members in past transactions 
 and also of their sureties, whether such be members of the 
 society or not, in order that a judgment may'be formed as 
 to their presumable further trustworthiness. A society 
 operating with such small funds as we must suppose a 
 Co-operative Credit society to have at its disposal wants to 
 be assured in such a way as it can, at all points. 
 
 The haissiyat should not be based, as appears to have 
 become the custom in India, upon a man's actual possessions. 
 That is the way in which a capitalist institution would 
 operate. The co-operative institution wants to apply a 
 different test : what is the man " worth " in point of 
 character, what is his trustworthiness, as judged by his 
 neighbours who know him, and also what is the volume and 
 remunerativeness of his business ? That is what Schulze 
 meant by that peculiar term, which sounds so uncouth in 
 English and which, I see, has found its way into India 
 co-operative terminology, the word " creditworthiness " 
 (Creditwiirdigkeit). Only unfortunately our Indian trans- 
 lator appears not to be quite clear in his mind as to the 
 distinction very carefully drawn by Schulze between 
 " deservingness " and " capacity for credit " {Credit- 
 fdhigkeit). The man who h creditfdhig (has a capacity for 
 credit) — that is, possesses material qualities to entitle him to 
 credit — ^is not necessarily also creditwilrdig (deserving of 
 credit). A man may be very poor and yet " creditworthy." 
 It is to determine the measure of his possession of that 
 quality that a " Committee of Credit " — ^in- certain cases 
 a Supervising Council discharging the functions — ^is called 
 upon to act. That is a very responsible office, requiring a 
 knowledge of members' positions and doings, not a matter 
 to be dealt with offhand. (Wherever the district is large 
 there may be local committees or local advisers to assist 
 with their opinion and supervision.) The -panchayet could 
 not discharge that duty along with its administrative work. 
 And it would not be fair to expect it to do so. The 
 ■panchayet wants to be told in plain words, in such cases as 
 
25? CO-OPERATION IN INDIA 
 
 are brought under the haissiyat: supposing that all appears 
 to be square and in order, you are authorised to trust A, B, 
 or C with such or such a measure of credit. Accordingly 
 the Supervising Council wants to be elected with dis- 
 crimination, so as to make it consist of men enjoying the 
 confidence of members generally. 
 
 And, credits being dealt with in this more commercially 
 businesslike way, the business done will also have to be more 
 carefully reviewed than in the case of small rural credit 
 societies, by the same Council. The larger the society 
 grows, the more supervision and division of labour will there 
 have to be. 
 
 The Act of 1912 appears to presume that Credit Societies 
 of the non- agricultural order will be formed with limited 
 liability only. And so do I. As for them limited liability 
 is unquestionably the most appropriate form, especially if 
 the shares be intended to be very small. Unlimited 
 liability is practicable — as we see by its actual adoption and 
 great utility in the majority of societies of the Schulze 
 Delitzsch type in Germany and the smaller, but most 
 powerful, 61ite of societies of the same type in Austria. Only, 
 when liability is unlimited in such application, you should 
 have rather substantial shares, to make things safe. Schulze 
 would not willingly allow shares under about Rs. 370, but 
 preferred them larger still. As a matter of fact there are 
 many societies in his Union with shares down to about 
 Rs. 225. But even that must appear to us a rather sub- 
 stantial figure. Shares there must of course be in any case, 
 since liability is limited. In Italy, under M. Luzzatti's 
 system — ^but it is really the law of the land which limits the 
 amount — there are no shares for a higher amount than 
 Rs. 60. However, members may hold more than one share, 
 up to fifty of that highest denomination. But I know an 
 excellent small folk's society operating over a wide area with 
 excellent results, which has shares of something less than Rs. 3 
 — that is, 5 lire. Where there is less security given in the shape 
 of capital, the measure has to be made up by caution in 
 action and vigilance in supervision. There is no limit to 
 operating districts necessary in societies such as are here 
 contemplated, of the limited liability type-^none except 
 such as consideration for the convenience of the society 
 management may prescribe. Limitation of liability does 
 
NON-AGRICULTURAL CREDIT 233 
 
 away with the necessity to start local limitations. And 
 there is no occasion whatever for making members leaving 
 the district to resign or else forgo the services of the society 
 — which services ought, as things develop, to become equal 
 in variety to those of any commercial bank. The variety 
 exhibited by such societies acting as banks, both in Germany 
 and Italy is not altogether approved of ; but it is readily 
 to be accounted for by the fact that when the Co-operative 
 Banking Movement began in the two countries, in Germany 
 there was a decided paucity of banks, and in Italy, if banks 
 were not precisely few in number, banking practices were 
 extremely behind time — a wonderful fact, considering that 
 of all countries banking found its birth in Italy. However, 
 so it was. In both countries the Co-operative Credit 
 so'Seties have been active and most useful pioneers of more 
 modern practices, more particularly leading the way in 
 Germany to the interconnection of banks at different 
 points, which has since been so generally adopted and has 
 paved the way for amalgamations, proving meanwhile a 
 very substantial convenience for business. It was the 
 Co-operative Banks which introduced the use of cheques — 
 still worked there in such a bungling, primitive way — in 
 Germany. It is they which began the mutual free collect- 
 ing and advising business," so that a man may have his bills 
 cashed free at some hundreds of other places and can learn 
 about the trustworthiness of intending customers at a far 
 distance. There is now in fact no sort of banking transac- 
 tion which the Co-operative Banks of this type will not 
 exercise. In agricultural credit societies that would be 
 wholly out of place. But in " urban " societies — so to call 
 them for once — -it seems right and fair. And there is 
 nothing in it which need frighten larger banks, so long as 
 such are prepared to do the same thing on their own larger 
 scale, since in India certainly — ^just as in the United King- 
 dom — Co-operative Banks could be expected to cater in such 
 matters only for small folk with small means. 
 
 There can be no temptation among societies of this type 
 to form " Guaranteeing Unions." Union there should be, 
 but on a larger scale and for other purposes. And the 
 societies will probably gain by the existence of " Central 
 Banks," to which they might well be affiliated without a 
 special new order of Central Banks being created for the 
 
234 CO-OPERATION IN INDIA 
 
 purpose. People in India appear to think habitually too 
 much of Central Banks as essentially superior officers in the 
 agricultural banking army, which they ought not to be, at 
 any rate, permanently. Their role is quite clearly marked 
 out by the requirements of the case. They are to serve 
 as balancing-centres and clearing-house? for Co-operative 
 Banks, whatever their type, and tapping-channels whereby 
 to draw upon the outside market — transformers, so to put 
 it, such as in electric machinery convert high-tension 
 current into low — in other words, which assimilate the needs 
 of Co-operative Credit societies to commercial banking 
 practices outside, with one Janus face turned towards Co- 
 operation and the other towards Commercialism. Accord- 
 ing to the transaction to be performed will one door of the 
 temple be open or the other. Now no Co-operative Credit 
 societies are more likely to have occasional use for additional 
 credit froin outside than those operating forTrade,as distinct 
 from Agriculture ; because the fluctuations in their business 
 are larger than in the business of agricultural credit societies. 
 They are as a matter of course directly and greatly affected 
 by the fluctuations of general trade. India does not probably 
 yet stand at all near such development. That will come 
 with the development of business. 
 
 In India we are still only on the threshold. Until 
 business begins to come ii; anything like good earnest, 
 transactions are likely to be only small and to continue so. 
 But we shall want to have the organs for more highly 
 developed transactions ready, at any rate in germ. And in 
 times of violent fluctuations or in early years of meagreness 
 the help of Central Banks is likely to prove as useful to credit 
 societies of the non-agricultural order as of the agjicultural. 
 That appears to open out an ambitious prospect for the 
 future. But indeed Co-operative Credit applied to trade 
 and commercial and industrial purposes may still have an 
 important role to "play in the future economic development 
 of the country. 
 
 In XhtEconomic Reviezooi October, 1905, 1 called attention 
 to the powerful effect which decentralisation of banking 
 operations, to a great extent effected by means of Co-opera- 
 tive Banks of the type here spoken of, has had upon the 
 economic development of Germany. We have seen the 
 result lately, during the war, in the remarkable equipment 
 
NON-AGRICULTURAL CREDIT 235 
 
 and enduringness of German trade and finance under trial. 
 There has proved to be enormous wealth accumulated in 
 Germany — wealth produced by trade, much of it small — 
 wealth not all lumped together in those giant establishments 
 favoured by the State, which strike the eye and which 
 produce manufacturer princes, but very, very much small 
 trade scattered all over the country, distributed like rills of 
 water in an irrigation system, which reach every furrow and 
 bring grateful moisture and fertility to every plant. In the 
 same way decentralised institutions carry the fructifying 
 material of gold into millions of channels with millions of 
 credits thoroughly mobiHsed — ^gold, as it happened then, 
 drawn to a very large extent from our home country, and 
 for which without such an apparatus for decentralisation 
 we, lumping up all our cash in Lombard Street and Thread- 
 needle Street, to our cost, had no use. I told the tale by 
 the light shed upon facts in an official Report given by the 
 Imperial Bank of Germany in its Jubilee number publica- 
 tion, celebrating the conclusion of the first quarter of a 
 century of its existence as an all-German institution, by 
 the name of " Die Reichsbank, 1875- 1900." We had had 
 no use for our money because, as I have said, we lacked the 
 means for applying it. So we lent huge sums to the 
 Germans, who possessed such means — among other institu- 
 tions in the shape of their Co-operative Banks — and who 
 turned it to excellent account for producing more German 
 wealth — and fighting us with our own gold in our own 
 industries. The fact that it was our gold which did the 
 work, and the use of which we despised — as we did the 
 possession of Java, when we had it, and of Louren?o Marques, 
 when it was offered to us for a song before the Boer War — ^is 
 provided in the tale of the " Reichsbank" quoted. That gold 
 had flowed to Germany in streams since 1895. In that year 
 I found the German Co-operative Banks overflowing with 
 money — so seriously embarrassed that some of them stopped 
 instalment payments on their shares and refused to take 
 further deposits. However, 1900 came, bringing with it 
 the South African War and its many needs, which then 
 appeared to us enormous though in comparison with what 
 we have had to spend- lately they really appear, as 
 Mr. Chamberlain at the time called them, a mere " fleabite." 
 Needing our gold for that purpose, we called in what we 
 
236 CO-OPERATION IN INDIA 
 
 had lent to Germany— and Germany felt the withdrawal, 
 as the Imperial Bank admits. 
 
 Ought not that to be a stimulus to us to resort now at 
 length to the use of that very same " perfected implement " 
 which has shown its capacity for producing such veritable 
 wonders ? Concentrating finance in the sense of collecting 
 its force as in a great reservoir supplied with channels 
 through which water may be discharged and carried in 
 millions of rills to the spots requiring irrigation and fertilis- 
 ing is an admirable thing. We ought to welcome and support 
 t^at. It makes money go ever so much farther. However, 
 its utility is absolutely dependent upon the presence of 
 those distributing channels. You want to be able to draw 
 upon that national reservoir. For there is no rice field 
 which will be one whit the better off for the water remaining 
 in the great reservoir. The water wants to be at the roots 
 of the plants. Centralisation of possession wants to be 
 balanced, and well balanced, by decentralisation in use. 
 And in that application it is Co-operative Banks which 
 decentralise most effectively and most beneficially, carrying 
 the gold to just the points on which, in small trade, small 
 agrculture and small commerce, it will fructify best and 
 produce the largest results by operating at the base of the 
 great social pyramid, vAere its beneficial power affects the 
 largest number of social particles and becomes mixed to the 
 largest extent with the second, quite indispensable, factor 
 of production — ^intelligent labour. 
 
 Italy likewise has a tale to tell of progress made, prosperity 
 achieved, by democratised, decentralised banking. A visit 
 to its cities and townlets now proclaims the fact. But I will 
 give here just one proof of the remarkable change brought 
 about. Some years ago I was warmly- interested in the 
 " Democratisation of Consols " — which has now, under the 
 pressure of the great needs of the war, been effected and has 
 proved a magnificent success. Six and eight years ago, 
 however, all the world, except the late Lord St. Aldwyn, who 
 supported me, objected. Even Mr. Lloyd George, who, as 
 Chancellor of the Exchequer, ovyned to me that he did not 
 see his way to getting over the difficulty of Income Tax. I 
 then applied to the Italian Ministry of Finance, among other 
 Ministries of Finance, in countries in wliich Consols were 
 then already issued in small denominations and to bearer, 
 
NON-AGRICULTURAL CREDIT 237 
 
 for information on the results. The Ministry obligingly 
 caused a special inquiry to be made. And the result astonished 
 it. It was found that issuing Consols in a form which made 
 them accessible to the great public, including " the million," 
 had, coupled with the means made available for earning 
 much owing to the decentralisation of credit, resulted in 
 a great change in the holding of the National Debt which, 
 from being a claim predominantly held against Italy by 
 foreigners, had become converted into an asset held for by 
 far the largest part by Italians. The " million " had, with 
 the use of decentralised credit, made money and bought up 
 those Consols from the foreigner. It was a true word 
 which Jules Simon spoke when he wrote : " Le -plus grand, 
 hanquier du monde est celui qui dispose de Vobole du fro- 
 letaire," which means, " The greatest banker of the world 
 ii he who disposes of the proletarian's mite." There is 
 magnitude in numbers. It is drops which make the ocean. 
 
 While such grandiose results, which tempt the imagina- 
 tion, but are not purely its creation, remain in reserve for 
 the future, there is ample useful work of a humbler but no 
 less valuable description in store for industrial Co-operative 
 Credit societies, 
 
 Non- agricultural Co-operative Credit, as observed, is still 
 lamentably backward in India. More is the pity. It is 
 really only just beginning to rouse itself. One is glad to 
 read of a more lively spirit stirring, as is reported, for 
 instance, in the last Report from Bombay Presidtency. 
 But it appears to be stirring elsewhere also. . However, one 
 cannot help hoping that, as time goes on, what has already 
 proved so useful a help to Agriculture and rural economy 
 wiU find its way also into non- agricultural employment, 
 assist in the development of small trade, come to the rescue 
 of small folk desiring to establish stores with their productive 
 annexes, serve as a further stimulus to thrift, provide 
 employment for at present idle hands, assist such struggling 
 crafts as fishing, and generally scatter the seeds of greater 
 prosperity, emancipate from usury, sweating and fraudulent 
 trade, and generally contribute to the raising of national 
 well-being. 
 
VIII. 
 GRAIN BANKS 
 
 Even before what may be termed the Co-operative Idea, 
 as we know it now, had taken actual shape in the heads of 
 those responsible for the government of India, before 
 Sir F. Nicholson had been sent out on his fruitful errand 
 of inquiry, and before I had gained the benevolent ear of 
 Sir Charles Bernard on the subject of the best way to 
 tackle the credit problem, it occurred to a philanthropic 
 zemindar of Bengal, Rai Paravata Shankar Chaudhuri, - 
 whether he could not come to his countrymen's aid in their 
 sore need in a simpler — which of necessity meant also a 
 more primitive — manner than that which was subsequently 
 adopted. lam anxious to put the matter in this way, 
 because to Mr. Chaudhuri belongs the credit, whatever his 
 organisation may now be thought worth, of having broken 
 the ice and been the first in the field to dig a sod, instead 
 of his device being regarded as a mere ex post facto alter- 
 native to credit given in the shape of cash. 
 
 Quite naturally Mr. Chaudhuri put his idea into the shape 
 of an institution supplying grain in the place of cash. 
 Grain is what the raiyat grows, sells, lives on, thinks and 
 reckons in. Trading man in the course of his evolution 
 generally began with an exchange of goods, by what 
 economists call " barter," before he took to reckoning in 
 coin. To the mind of the raiyat the seer of paddy is_ 
 probably a more real thing than the rupee. He reaps his 
 grain and sells it — ^because he must do so, to be able to pay 
 his revenue kist and purchase his few necessaries of life. 
 Then comes the time when he wants his grain back. He 
 sold it to the mahajan for money. He buys it back from 
 the mahajan, and considers it a mercy that he can secure 
 it at all, on the siwai system — ^if not at still greater cost to 
 
 Z38 
 
GRAIN BANKS 239 
 
 himself, paying 25 per cent, for the loan, which is not cheap, 
 considering the time, besides what he is often made to throw 
 in as a supplementary gratuity, and apart from the loss 
 which he may conceivably find himself exposed to, by fraud 
 in measurement or by return of inferior grain. 
 
 Repositories of grain are institutions of very ancient 
 origin. We have heard some men of archaic frame of mind 
 clamouring for their re- establishment in the United 
 Kingdom — for a different purpose from that kept in view 
 by Mr. Chaudhuri. The patriarch Joseph stored grain 
 assiduously as a convenient means of " stealing the common 
 from the goose " in favour of his master. Italy has had its 
 monti frumentari, and Spain its fositos. 
 
 Mr. Chaudhuri was thinking philanthropically, not 
 economically, not like King Pharaoh. And like our British 
 co-operators, like Raiffeisen, and like his own forerunner in 
 Japan, Ninomiya Sontaku, he thought of what Mr. Glad- 
 stone has called " man- making," as well as, if not more than, 
 "man- feeding." So he surrounded his economic idea with 
 a religious halo, placing his institution under the patronage 
 of the Hindoo deity Lakhmi, and prescribing, in addition 
 to certain ceremonies and functions to accompany acts of 
 business, a rule of conduct for members of his intended 
 society which, if one could only make sure of its being duly 
 carried out, would conduce greatly to the improvement of 
 mankind. The home for the proposed institution was by 
 preference to be a temple — as in fact it is, to state one 
 instance, in the village of Kodi, in the district of Belgaum, 
 where the grain store has found a shelter in the temple 
 dedicated to the local deity Shri Bhairavanath. If I read 
 Mr. Chaudhuri's explanatory pamphlet aright, Lakhmi is 
 the deity of " Abundance." Not to give offence to non- 
 Hindoos, so he explains, he altered the name of his intended 
 grain store from Lakhmi Gola to Dharma Gola. Naturally 
 Mr. Chaudhuri drew up a set of rules — ^which do not err on 
 the side of simplicity — ^in which good Hving — ^in a moral 
 sense, virtuous, honest and pure — ^figures as the chiefest 
 essential. 
 
 When in 1905 — at a time when Co-operative Credit 
 societies were not yet, but were just about to be formed — 
 ■Mr. Chaudhuri opened his first Dharma Gola aj Jayganj, 
 in the district of Dinajpur, in Bengal, we read that there 
 
240 CO-OPERATION IN INDIA 
 
 were great rejoicings among the local population — and also 
 in the press, as Mr. Cobden Ramsay has related in a report 
 which he presented to the Government — ^and a ready 
 welcome was accorded to the new institution. That grain 
 bank has apparently done well. And some few others 
 appear to have been almost equally favoured by Fortune 
 — ^for instance the " Moberly Grain Gola " at Sohela in 
 Bihar. The last-named bank was started in 1910 by 
 another native philanthropist, Babu Paresram, on the advice 
 of Mr. A. W. Moberly. Others evidently have met with 
 a less kind fate, and, generally speaking, the record of the 
 institution is not an over-good one. 
 
 On the face of it, grain is not by any means a convenient 
 commodity to store and to handle, taking in andgiving out, 
 for the most part, in small quantities, and one on which 
 there is likely to be loss in measuring backward and forward. 
 Moreover, it requires space.^ It is exposed to various risks. 
 It deteriorates even in mere keeping. Indeed, in the 
 Dharma Golas special safeguards have been found indis- 
 pensable, to prevent loss to the establishment, for instance 
 by old stores being exchanged for new grain to be received. 
 The Moberly Grain Bank from 1910 to 191 3 increased 
 its grain capital from the Rs. 1,000 with which it was first 
 endowed to Rs. 2,577. But that was probably done at the 
 cost, not realised but yet endured, of the depositors. Other 
 .grain banks have lost what they had. 
 
 Some Registrars, I find, have in recent days taken, not 
 the actual grain bank as it is, but the idea of forming such in 
 an ideal shape, into something like favour, basing their good 
 opinion of it upon the precedents of Italian montijrumentari 
 and Spanish fositos — about which latter things have been 
 written in India which do not altogether square with facts. 
 By such means an entirely false idea has been created about 
 their character, which it jnay be expedient to correct. The 
 Italian monti frumentari have long since been converted 
 into monti nummart, that is, cash institutions — on the ground 
 of their not being any longer in keeping with modern usages, 
 under which commerce, transports and communications 
 have become much easier and the nummus has asserted its 
 monopolising sway. And so have the Spanish fositos, after 
 a careful inquiry instituted by a Royal " Delegation " — 
 corresponding to a British " Royal Commission "—occupy- 
 
GRAIN BANKS 241 
 
 ing not a little time and concluded in 1908, when an official 
 "Circular" was issued. That Report sets forth accepted 
 views, for the time regulating the matter. The opening 
 portion fully explains the conclusion arrived at, and may 
 therefore be worth quoting. It is as follows : 
 
 " This Royal Delegation has satisfied itself that the con- 
 version of all the values in which the positos deal into 
 metallic values will yield indubitable benefits to these 
 estabUshments, alike on economic and on administrative 
 grounds. That idea is neither new, nor is the proposal 
 novel ; no more can the result be doubtful, because the 
 adoption of methods for consolidating and unifying the 
 property of the positos has been studied with great care and 
 ample consideration for a long time past, v?ith a view of 
 arriving by such means at a settlement on grounds of 
 scientific correctness, of expediency and of beneficent 
 action, such as are to-day accepted without reserve of any 
 sort by economists, sociologists and agricidturists alike. 
 Data are in possession of this Royal Delegation which 
 demonstrate this fact very clearly. Towns and villages 
 frequently solicit -the conversion of the grain stored in 
 granaries into metallic values, justifying such request with 
 very reasonable arguments. A large number of the now 
 extinct ' Commissions ' (administering the positos) have 
 supported such requests on repeated occasions, and this 
 Centre has again and again found itself under a necessity of 
 according its sanction to arrangements in this sense, as a 
 means of avoiding very serious loss to the property of the 
 positos. There was a time when railways were not yet and 
 roads were scarce, and when means of communication were 
 correspondingly far from being either economical or 
 expeditious. A year of dearth in those times meant for the 
 agriculturist a seed-time without seed, and generally severe' 
 embarrassment and privation under the conditions men- 
 tioned such privations represented a trouble for which it 
 was difficult to find a solution, because transport across long 
 distances presented in those times a certainly insoluble 
 problem on economic grounds. At that time, accordingly^ 
 plainly the keeping of grain in such establishments was fully 
 justified. It was a necessity imposed by a backward state 
 of things such as then prevailed. It represented a secure 
 means of averting serious ills and of carrying on an agri- 
 
 16 
 
242 CO-OPERATION IN INDIA 
 
 culture poor, routinifere, and without much life in it. 
 There was no reliance to be placed upon industries which 
 had contributed to it, and are indeed dependent upon its 
 production, and on the higher prices which at present 
 prevail in the commercial movement, and which are 
 necessary for its prosperity. To-day the causes which 
 previously justified the method adopted for rendering 
 assistance in the antique way have completely disappeared, 
 and to want to maintain the old method is to misjudge 
 altogether the economic position of towns and villages in 
 the present day, their necessities, and also the agricultural 
 requirements of the country. Once such archaism is 
 destroyed, and the grain stored in the fositos is transformed 
 into money, assuredly many anomalies so well known as 
 almost unavoidable under present conditions vrill vanish. 
 The waste occurring in measuring, turning and other 
 manipulations, >fvhich the keeping of corn involves, will 
 come to an end, and the property of the fositos will no 
 longer be exposed to the losses and leakages to which through 
 various causes the grain kept in them is now exposed. The 
 capital of the establishments will come to be known by an 
 exact and unchanging figure, instead of being, as is now the 
 case, subject to the fluctuations not to be foreseen following 
 the vicissitudes in the price of grain. The danger of abuse 
 such as is apt to occur in the recovery of quantities of grain 
 repaid in lots of inferior quality will likewise disappear. 
 And the capital of the positos wdll be increased by the sale 
 of the buildings which now serve for preservation of the 
 grain. With grain it is impossible to satisfy the many 
 requirements called for in the labour of weeding, of harvest- 
 ing, of ploughing, for the necessary purchases of machinery, 
 fertilisers, live stock, store or plough cattle, repairs of wagons, 
 of ploughs, of harness and countless other things indispen- 
 sable on every farm, whatever cost they may represent ; with 
 grain it is not possible to satisfy such wants, unless indeed 
 the farmer himself first converts that grain into coin, saddling 
 himself with all the trouble and risk which in many cases 
 attaches to such operation — ^which is what as a matter of 
 fact happens now. On the other hand, in their present 
 organisation, fosUos are not by any means able to lend their 
 help to farmers beyond that number of them who devote 
 themselves to the cultivation of cereals, so excluding from 
 
GRAIN BANKS 243 
 
 their benefits the vine-growers, the gardeners, the olive- 
 growers and all those who carry on the smaller agricultural 
 industries — ^in fine, those who live of their field, without 
 devoting their labour and skill to that particular form of 
 production, and fpr whom wheat and rye have no specific 
 meaning, nor indeed any value except by the fact that their 
 price regulates other prices in the market. Once the 
 agriculturist has come within their reach, he may lay himself 
 out at his own choice for progressive evolution, carrying to 
 his fields those progressive methods which translate them- 
 selves into economic benefits improving and increasing 
 production, and ministering in such ways far more widely 
 to all his wants, while at the same time contributing by such 
 means to the increase of national wealth. The transforma- 
 tion of the property of the positos into coin is therefore a 
 necessity felt and claimed by public opinion, and above all 
 things by the exigencies of our Agriculture, and we have 
 to begin the metallisation of the grain preserved, and 
 continue it, with the help of the State bonds, which these 
 establishments now possess, with grants in their favour, 
 with the rural and urban properties which form the patri- 
 mony of many a-mong them and with the liquidation of the 
 Credits which the State and Provinces and Municipalities 
 hold against them." 
 
 This document sums up the situation clearly enough. 
 Auires tem-ps, autres mceurs. Alia vita, alia diaeta. Times 
 have changed. Our first parent Adam reckoned in fruit 
 and in corn and went to beasts and fig-trees for his primitive 
 clothing. Those simple things no longer suit us. And 
 there is no use in harking back to anachronistic practices, 
 which may have served their purposes well enough in olden 
 days, under totally different circumstances, but will not suit 
 us modern men. Rather is good to be done to people in the 
 position of the Indian raiyat population by training them 
 up to the adoption of modern customs of business. 
 
 The Spanish " Delegation " Circular incidentally shows 
 that the Spanish fositos did not altogether correspond, as 
 has been hastily assumed by Indian advocates of their 
 practices, to Dharma Golas, as these were intended to be. 
 They were not credit institutions— nor co-operative, nor 
 yet strictly speaking thrift institutions. They were 
 patronised provident establishments. Their object is 
 
244 CO-OPERATION IN INDIA 
 
 frankly declared to be to serve as casus de ahorros — that is, 
 savings banks. The new regulations adopted by the 
 Government on the motion of the " Delegation " expressly 
 exclude transactions in grain in the case of all new fositos, 
 only tolerating such as a diminishing quantity in the case 
 of the older stores, for a certain time. The discontinuance 
 of such business cannot present any difficulties, seeing that 
 the fositos are governed by political and ecclesiastical 
 authorities — mainly political. As has been quite rightly 
 stated — among other authorities by Mr. W. R. Gourlay in 
 a Report which he drew up in 1905 — the positos were 
 originally introduced by the Crown. Their formation and 
 administration was then taken up with some ardour by 
 Bishops, who directed them in their own way for the relief 
 of the faithful. Later MunicipaHties came in as founders 
 and administrators. And that is explicitly put forward as a 
 ground for the refusal of the " Delegati.on " named, given 
 to the late Louis Durand's proposition, stated in his book 
 " Le Credit Agricole," that they should be converted into 
 co-operative Raiffeisen banks. How are they to be con- 
 verted, so asks the " Delegation," when they have to be 
 managed by the Municipalities which provide the money f 
 The financial position of the pSsitos, as ascertained by the 
 " Delegation " for the date June 30, 1908, clearly proves 
 the predominance of gift over loan property. It was this : 
 
 Pesetas 
 
 Assets in grain of various kinds .. 43,689,311.61 
 
 „ in cash . . . . . . 47,263,684.27 
 
 in State and other bonds and 
 
 similar values . . . . 35385,238.92 
 
 94.338,234.80 
 Fund contributed by the State, by 
 
 Provinces and by Municipalities 206,396,617.74 
 
 Total .. ... 300,834,842.55 
 
 The two cases, brought into comparison of positos on the 
 one hand — ^about which I have only spoken at such length 
 because they have been so very pointedly held up as a useful 
 precedent — ^and Dharma Golas on the other, accordingly 
 are not at all on all fours. 
 
 5J 
 
GRAIN BANK8 245 
 
 The Indian Dharma Golas have in truth made very little 
 way. If there are some doing well, there are others — 
 the majority — ^languishing, moribund or defunct. If the 
 DharinaGola of Jangypur has flourished, its sister institutions 
 at Shaitgurh Teota and Rahatpur — in the Dacca district — 
 founded by the same philanthropist about the same time, 
 have done badly. So it is elsewhere — only with the 
 unfortunate ones generally in the majority. It is not every 
 Registrar's Report that gives even a few lines to them. 
 " The grain banks have not been able to effect any consider- 
 able improvemejat among their members." So writes 
 Mr. Donovan in his last Report out. There are one or two 
 " doing good work." Two are " in a moribund state." 
 Two new ones have been formed. " Although the raiyats 
 pay a heavy toll upon graiu advances," so wrote Rai Mitra 
 in his Report for 1914-15, " there has been little demand for 
 separate grain banks even from areas where the co-operative 
 movement has obtained a firm footing ; in some areas I 
 have, however, noticed a demand for grain annexes in con- 
 nection with the credit banks." 
 
 That is probably the proper solution of the question. 
 Allow such members as find it easier to begin their practice 
 of thrift by depositing grain to do so. That is in a manner 
 on a par with what our most deserving " collecting banks " 
 do in England, whose emissaries whip up the odd pence of 
 labouring folk when they are fresh from the pay-table, 
 leaving the owner no time to be tempted to spend them 
 improvidently. The grain is there. There is probably 
 too little to convert conveniently into money. Snatch it 
 up before it has a chance of being wasted ! The bania, so it 
 is true, who is the only person to convert it, is likely to 
 dissuade from the transaction, which takes expected bread 
 out of his mouth. But for the sake of a beginning, by all 
 means, where necessary, allow the people who prefer to do so 
 to deposit in seers of grain rather than waste them. The 
 mischief is that in some places, where this has already been 
 tried, the handfuls of grain deposited under an impulse of 
 thrift appear to have been readily withdrawn as soon as the 
 moment of temptation arrived. You cannot tie down 
 grain deposits in respect of time as you can cash deposits. 
 And in transactions in grain all is absolutely bound to depend 
 upon the energy and firmness of the manager. The success 
 
246 CO-OPERATION IN INDIA 
 
 of Rai Chaudhuri's first bank at Jayganj, so writes Mr. Mitra, 
 " has been entirely due to the keen interest of the organiser 
 and to the supervision which he and his officers have main- 
 tained over its virorking." On the other hand, the Teota 
 Dharma Golas, which were likewise started by Rai Chaudhuri 
 about the same time as the Jayganj bank, have proved 
 failures, because he was unable to maintain there the same 
 amount of active control over them. 
 
 The future undoubtedly belongs to cash business. 
 
 There is another point to be taken into account, which 
 has become of considerable importance. Since Mr. Chau- 
 dhuri conceived his idea to form grain banks, we have raised 
 our aims and ambitions considerably with regard to the 
 perfecting of our Agriculture. We know now what good, 
 pure grain, of the best " breed," suited in respect of its 
 species to its particular locality, means as a matter of com- 
 mercial value — whether it be for seed or for food. What- 
 ever our wise men at home may decide to do after the war 
 by way of heaping coals of fire on the heads of our enemies 
 by completing their U-boat " blockade," so as to keep out 
 the corn that we stand so greatly in heed of for feeding our 
 people, in order to give Germany a monopoly of importation 
 of corn from alien countries, we shall certainly want to look 
 to India more and more for a supply of wheat. However, 
 our British market is squeamish — as the Danes have found 
 in respect of their butter, eggs and bacon. It will only 
 accept the best and purest of its kind. An experiment quite 
 recently made with the exportation of Pusa wheat to the 
 English market has given promise of a good business con- 
 nection to be developed. Co-operative granaries of the 
 German type— not those which Mr. Crosthwaite has justly 
 denounced, but real co-operative ones, which exist to help 
 the sellers — assist greatly in the purification of grain produc- 
 tion, both as to unification of standards in various districts 
 and as to grading for intrinsic quality. Dharma GolaS do 
 neither. The object of the Dharma Gola being such as it is, 
 no goladar could refuse dheri grain. , Whether it be wheat 
 or rice or millet, it all comes to the same thing. Indian 
 paddy grossly diluted with the wild species ^nd of a mixed 
 kind altogether is not nearly equal to a perfected sample, 
 kept pure. This is not only a matter of fancy, or of market 
 price. The good grain represents much more feeding value. 
 
GRAIN BANKS HI 
 
 Since, however, gola grain is collected to be lent out for 
 seed, the terribly mixed condition of the store cannot fail 
 to keep our field crops in a very " mixed " condition. All 
 that goes straight against that agricultural improvement to 
 which we are aspiring by means of the perfecting of our 
 plant " breeds." There is no similar adverse effect in cash. 
 " Cash," so wrote Lord Byron, " rules the Camp, the Court, 
 the Grove." Cash is useful for all purposes. It requires 
 no storing, no turning, no stirring, no buildings. It is safe 
 from rats and mice and other vermin. It does not rot. 
 And it is far more suggestive of thrift and fructifying 
 investment than grain, just because it is employable for all 
 purposes, does not waste or tempt directly to consumption, 
 and is a convenient commodity to hold. Then let us employ 
 thrift dealings in grain, where such seem called for, as a sort 
 of infant education, but always only as a preparation for 
 cash business. And as our population advances in knowledge 
 of business lead them on to dealings at the cash counter 1 
 
IX. 
 
 THE WIDER OUTLOOK 
 
 Co-operation is capable of more applications than that only 
 of Credit. Indeed, Credit should in it in truth serve only 
 as an avenue leading up to further employment of the same 
 method — employment in which really to find its main use. 
 In highly industrialised countries, such as England and 
 Scotland, it is Distribution— Supply, as it used to be called 
 — ^that appears best qualified to act as pioneer Co-operation. 
 Profitable employment there is already for the classes so 
 co-operating, and the aim ?et to Co-operation by them is 
 to make the proceeds of that employment go as far as possible 
 and out of their yield gradually to build up little fortunes. 
 Under such circumstances the population requiring the help 
 of Co-operation, in order to emancipate itself and economi- 
 cally, socially and morally to raise its status, is a different 
 class entirely from that which claims first attention in the 
 great Asiatic Empire. 
 
 In India there can be no question that it was Credit which 
 was of all forms of Co-operation the one most urgently and 
 most pressingly needed. And therefore rightly did the 
 Government beginwith promoting Credit. 
 
 However, Credit can, as observed, impossibly stand as an 
 end by itself. You can do a great deal with Credit. You 
 can stimulate faculties with it, make the most of oppor- 
 tunities, create employment for yourself and for others. 
 But you cannot sit down upon it or live upon it. That is 
 in truth one of its best recommendations, and under a not 
 unimportant aspect its greatest merit. For it compels to 
 good employment. Give a man money, and he may sit 
 down upon it and spend it, or live upon the interest which 
 it will yield in idleness, a mere cumberground and drone, 
 from whose life the world derives no benefit. Assist a man 
 
 248 
 
THE WIDER OUTLOOK 249 
 
 with Credit, and, if it were only to keep himself going, he 
 will have to turn the money so got productively to account. 
 In this sense Credit, though not itself " Capital " — ^as it has 
 been maintained that it is — ^is in truth better than Capital. 
 
 Credit in itself is worth a great deal. The world could 
 not to-day go on without it. But it is worth much just as 
 an implement or a fertiliser is. You cannot cat a bag of 
 bone-dust or of guano, or clothe yourself with it. But you 
 can grow much corn or cotton with its aid, to feed and 
 clothe you. Credit is worth much — ^but it is worth less 
 than nothing, if not put to use. 
 
 Accordingly, the terminal point of our wealth-bringing 
 journey must needs lie farther than Credit. Like seed, it 
 has to be sunk in the ground to produce the well-filled ear 
 that can be threshed to yield us bread to be consumed, 
 making in the process new flesh and blood. 
 
 It will be well from the outset to hold fast by this 
 principle, that the object for which Credit — ^in this case 
 Credit to be raised by a number of people out of their own 
 resources, with men to a certain extent answering for one 
 another, for their own purposes — is raised must be produc- 
 tive — ^productive, let us say, by the creation of new values 
 or by ensuring economy. For proverbially a penny saved 
 is a penny got. That is the only employment which is 
 legitimate for it, and in truth the only employment, within 
 the range of Co-operation, which requires it. Other Co- 
 operation can do without. Distribution, for instance, 
 requires no Credit. It may be said to end where Credit 
 begins. It has been asked for on the European Continent 
 for purposes of Distribution, and in France it is about to be 
 given — ^to secure votes ; but that is manifestly wrong, For 
 we do not need Mr. Micawber's philosophy to make us 
 understand that no man should live beyond his means. 
 Our working-men combine in Co-operation in order — ^at 
 the outset, at any rate — ^while spending the same money 
 , ^ for their requirements that they would at the shop, out of 
 that purchase at the store instead to economise what will 
 in course of time build up a little fortune for them. They 
 have to begin with the money. They go on, as they grow 
 wealthier and better organised, to other forms — ^Production, 
 Insurance, and so on, all of it out of their profits already 
 gained. 
 
250 CO-OPERATION IN INDIA 
 
 For Production, on the other hand, we require money. 
 When the Board of Trade, in 1895, charged one of its most 
 capable officers, the late D. F. Schloss, with an inquiry into 
 the organisation and work of working-men's co-operative pro- 
 ductive societies abroad, shortsightedly limiting the reference 
 to enterprises in which these men supplied just only their 
 labour, there turned out to be pfactically nothing to report 
 upon under that narrow view. For Labour alone is found to 
 be best prized for its work paid for by wages. The very 
 first thing that, according to their own account, all these 
 productively co-operating working-men did was, out of 
 their earnings as labourers, by stinting and pinching-^-often 
 severdy-^to lay by some little nest-egg of capital, with the 
 help of which they turned themselves into contractors. It 
 was, according to their own testimony, money which 
 yielded to them the best profit. Wonderful rises 
 in position have under such circumstances taken place 
 with the help of skill and Co-operative Credit. Societies 
 composed of the poorest of poor earthworkers in Italy, 
 known as braccianti — because ' they have nothing to 
 bring to their job but their arms — ^also others of better- 
 skilled crafts, such as stonemasons and bricHayers, have with 
 the help of Credit — supported of course by steady resolution, 
 diligent application and in the initial stages self-denial — 
 become powerful organisations undertaking large contracts. 
 And they have succeeded in shaking off both the burden of 
 debt and the shackles of dependence. They have become 
 self- employers. Only four years ago I saw one of these 
 associations, raised up out of pure Labour, in Rome executing 
 an independent contract for the construction of a railway. 
 I have seen them undertaking large building contracts — ^as 
 for a " watertower " and the like-^in Milan and elsewhere. 
 And I have seen them farming a large property, under a 
 long improvement lease, for themselves, at Ostia. In 
 France the productive working-men's societies, raised up by 
 the use of Credit, possess their own bank — co-operative in 
 this sense that it belongs to them all and exists for the 
 purpose of financing them in their enterprises. They carry 
 out large contracts. Should small industries develop and 
 wax strong in India' — as we may fondly hope that they will — 
 such a bank as this— ^there is a similar agricultural-indus- 
 trial one in Denmark — ^might prove a useful adjunct to them. 
 
THE WIDER OUTLOOK 251 
 
 It is the sa me thing in Agriculture. Mr. T. H. Middleton, 
 of the English Board of Agriculture and Fisheries, has 
 recently in a masterly " Memorandum " shown how German 
 Agriculture has managed for the time to outstrip British — 
 from which it first learnt its lesson ; and miles behind which 
 I still found it fifty and sixty years ago. There can be no 
 doubt about the march which it has stolen upon our own 
 husbandry. However, the foundation upon which that 
 mighty structure of progress was reared up clearly was 
 Co-operative Organisation and, above all things, Co- 
 operative Credit. The lesson wants to be taken to heart. 
 For with the same means the same results may be achieved — 
 the. same and better. For in the matter 01 soil Germany 
 is at a disadvantage compared with other countries, certainly 
 with India. Now, like India — ^and for the same reason — 
 in the matter of the Organisation of Agriculture, Germany 
 began with Credit. Before there was Co-operative Credit 
 there was no Organisation — ^absolutely none, as I can vouch 
 for, having seen Germany at the time. And so long as 
 Germany lacked Organisation in Agriculture, its Agriculture 
 remained backward. Even that boasted " Science," which has 
 indeed effected veritable wonders for German Agriculture 
 (as also for Germaa Industry), remained sparingly developed 
 because, without sufficient money to use it, there was not 
 sufficient demand for it. Co-operative Credit entered upon 
 the scene and the whole face of things came to be changed. 
 With the purchase of fertilisers, implements, seeds, 
 machinery, and so on, placed within the reach of farmers — 
 even poor ones — ^there was scope, not only for Organisation 
 — which has come to be as perfect as any known — ^but also 
 for the scientific work of analytical chemists, engineers, 
 entomologists, bacteriologists and the rest of them. One of 
 the results of this evolution is that at the present time, as 
 an expert writer in the United States has recently pointed 
 out in the Journal of Economics, " the German farmer 
 now uses six times the quantity of fertilisers to the acre 
 that the United States farmer does, besides ever so much 
 more animal manure." And of course he reaps the result. 
 Because it is the additional fertiliser which tells most. 
 Hence, with the accompaniment of a corresponding amount 
 of careful tillage, macmne labour supplied in great part by 
 electric power, and an admirable organisation of sale, the 
 
252 CO-OPERATION IN INDIA 
 
 wonderful progress which German Agricvilture has made, 
 the height of prosperity to which it has been raised. 
 
 Given the same endowment, there are the same oppor- 
 tunities open to the Indian agriculturist. The same 
 advanced goal cannot be reached in a day. But with an 
 earnest will and perseverance it may be reached. Agri- 
 culture is, as a matter of course, the first interest that, 
 in respect of material progress in India, people think of. 
 For Agriculture, with about ninety per cent, of the population 
 dependent upon it, is the main nourisher, the sheet-anchor 
 of Indian economic life. There is really in the development 
 of Co-operation in India no feature more promising and fuU 
 of encouragement than the close Hnk which has already been 
 forged between Co-operation and Agriculture, twin patron 
 goddesses that they are of economic progress. Without 
 Agriculture, Co-operation would in India lose its chief est 
 field of action. And without Co-operation, Agriculture, 
 however well officered, would lose its best instrument to 
 work with. The researches and discoveries of Pusa, Cawn- 
 ppre, Lyallpur, Poona, Nagpur, Coimbatore and the rest 
 of them, exceedingly valuable as they are, and a thing to be 
 proud of, would remain addle eggs if there were not the. 
 means for putting them to practical use. And to be able 
 to put them to practical use Co-operation and Organisation 
 are imperatively needed. Just the same as in Egypt, under 
 the auspices of the whilom "Khedivial Agricultural Society," 
 agricultural authorities in India have begun by taking charge 
 themselves of the distribution of seeds,improved implements, 
 fertilisers and the hke. However, just the same as in Egypt, 
 as the use of the articles supplied extended, the work is 
 likely to grow too exacting for tho^e authorities. Besides, 
 such distribution is not really their business. And one may 
 hope to see Co-operation, which has begun in that way, 
 developing so as to carry on the business on a large scale. 
 It can do so better than the agricultural authorities and 
 bring the knowledge of the utility of the articles supplied 
 better home. We in England cannot " talk " in this 
 matter. For we still remain unorganised, and our Agri- 
 culture suffers accordingly. Men like Sir Horace Plunkett 
 — ^who has shown in Ireland what Co-operation is worth to 
 Agriculture — ^and myself have been preaching Co-operation 
 to the agricultural community for something like twenty- 
 
THE WIDER OUTLOOK 253 
 
 five years. However, John Bull takes a long time moving 
 out of his well-worn groove. Unorganised, the farmer buys 
 in the dearest market, under the most fettering conditions, 
 and sells in the cheapest. In India, where debt broods 
 depressingly over the entire rural community, things are 
 even worse than elsewhere. Co-operation reverses the 
 process just denounced. It makes the farmer buy in the 
 cheapest market and sell in the dearest. Hence that 
 remarkable uplifting, that astounding ascent from poverty 
 to prosperity of which, as witnessed in Germany, Mr. Middle- 
 ton has told the tale. Agriculture and Co-operation, acting 
 as twin sisters, should move in double harness keeping the 
 spring bar well balanced. However, one could not wish 
 to see the one placed permanently under the other, as has 
 been suggested. Co-operation has other tasks to tackle 
 besides the agricultural. We have had complaints that in 
 India it has already grown over-agricultural in this sense 
 that its inspectors are insufficiently instructed on industrial 
 work and that industrial Co-operation is in consequence 
 kept back. That ought not to be. 
 
 For the moment Central Banks, which are having much 
 committed to them which is not their real business, have 
 taken charge of what beginnings there are — ^promising 
 enough in themselves, one would say — of co-operative 
 buying. They have done quite right. For there is for the 
 moment no other body to do the work ; and it has to be 
 done. For co-operative purchase — " supply," as it used to 
 be called — ^is an admirable elementary schoolmaster in the 
 art of Co-operation, and makes a most useful stepping-stone 
 to further common action, lending itself at the same time 
 readily to combination with almost any other form of 
 Co-operation. The one form to be excepted — ^as a general 
 rule — ^as it happens, is just that with which in the present 
 case it has been coupled together — ^that is, Credit. Credit 
 is a business calling — more particularly when it is under- 
 taken without any considerable capital to serve as its basis — 
 for so delicate handling, so careful consideration of all 
 merits in each particular case ; it requires to be made 
 adaptable to so greatly varying circumstances and will so 
 little bear subjection to hard-and-fast rules-, that in the 
 generality of cases it will not stand coupling with any other 
 form. Selling and buying, dairying, production of any sort 
 
254 CO-OPERATION IN INDIA 
 
 will readily blend. Credit must in ordinary cases be 
 regarded and treated as a matter altogether ^^y se. 
 
 However, there is proverbially no rule without exception. 
 And in the case of very small societies, or on new, thus far 
 uncultivated, ground, where it may usefully be made to act 
 as pioneer, I hold the title for exceptional action to be good. 
 If there must be Credit, there certainly also must be Supply 
 — ^and, if possible, I should say, in poverty-stricken districts 
 also Distribution — ^that is, Supply for purposes of the pro- 
 vision of household requirements, as distinguished from 
 Supply, for purposes of Production, in which it cheapens the 
 provision of raw material. Supply in this twofold sense is 
 sure to yield a surplus, the easiest " profit " — as it has been 
 misnamed — ^to be at all got out of Co-operation. And it is, 
 as observed, an admirable preparative for all other Co- 
 operation. It breaks the spirit in to co-operative feeling ; 
 it teaches mutual help and common action on the lowest, 
 the most accessible, the most easily organised plane. 
 
 When we think of the organisation of Agriculture — on 
 co-operative lines — ^we instinctively turn to two strikingly 
 different models, both of which have achieved remarkable 
 success, the one in Denmark, the other in Germany. Which 
 of the two shall we follow ? Denmark may be termed the 
 premier co-operative country in the world, in what concerns 
 Agriculture. It has thus far possessed no Co-operative Credit 
 except for mortgage purposes, because it was assumed to 
 need none. Its mortgage Credit was so well organised, 
 more particularly so well democratised, as to supply-^ust 
 as has happened in Switzerland — ^to a great extent the office 
 of personal Credit. And with the stimulus of even such 
 comparatively heavily moving and cumbrous credit. Agri- 
 culture had come to be so much improved that in his 
 " Andelsbevoegelsen I Danmark " (Co-operation in Danish 
 Agriculture) Mr. H. Hertel, writing quasi- officially, can say: 
 " Without the loans in question Danish Agriculture would 
 have been unable to enlarge and rebuild farm buildings, 
 to increase very largely the number of live stock, to improve 
 the dairy cattle so as to yield twice or three times as much as 
 before, to carry out permanent improvement by draining 
 and marling, to accommodate the farming system to the 
 altered conditions in the world's markets, to buy farm 
 implements and machinery and to build and equip many 
 
THE WIDER OUTLOOK ?55 
 
 hundred co-operative factories. Although cases of abuse 
 of the facilities for raising loans offered by the Credit 
 Associations do undoubtedly exist, the benefits accruing from 
 the Associations have secured for their members constantly 
 improved conditions, and externally have gained unpre- 
 cedented confidence, so that the security offered to capitalists, 
 even in the minds of the investors abroad, approximates 
 to that offered by the Government. The Danish Credit 
 Associations therefore may be said to have fulfilled their 
 object in a very satisfactory manner, and to have con- 
 tributed in no insignificant degree to the economical 
 prosperity of the country." That is much the same as what 
 Mr. H. Dunning Macleod has testified of the effects of 
 " Cash Credit " on the " far-famed Agriculture of the 
 Lothians," the cynosure of the agricultural world, and what 
 the late Leon Say wrote in praise of Italian Co-operative 
 Credit reanimating Italian Agriculture (and Industry) in 
 his "Dix Jours dans I'ltalie" : "La mutualite a tout cree 
 (Co-operation has created it aU)." It shows how exceed- 
 ingly furthering Co-operative Credit is to Agriculture. 
 However,quite lately — only since 1915 — ^Danish farmers have 
 become convierted also to a very firm belief in that " per- 
 sonal " Co-operative Credit which has worked such wonders 
 in some other countries. The matter was first mooted 
 about the year 1898, when ParHament voted something 
 like half a crore of rupees for the purpose and a Parhamen- 
 tary Committee was appointed, under the chairmanship 
 of my friend Mr. Blem, to investigate the matter. Among 
 others I was then invited to hand in a Memorandum on the 
 subject. A change in the Government occurring soon after 
 nipped the project in the bud. However, it has now been 
 taken up once more and has by its intrinsic merits secured 
 so powerful a hold upon agricultural opiiiion in Denmark 
 that, in Mr. Hertel'a words, "it loob as if another co- 
 operative movement, started in the West of Jutland, were 
 going to sweep over the country, as the co-operative dairy 
 system did a generation earlier." 
 
 The peculiar characteristic of Agricultural Co-operation 
 in Denmark is that, in the main, every branch in business is 
 in Co-operation dealt with as a branch per se. There is 
 dairying, bacon^curing, egg^raising, selling, buying and so 
 on. A farmer may be at the same time a member of nine 
 
256 CO-OPERATION IN INDIA 
 
 or ten di$tinct Co-operative Societies, each providing for 
 some separate need. Then, are we to do like the Danes, 
 organise in bulkheaded departments ? I ask whether in 
 India that would be practicable. Denmark is a quite 
 peculiarly situated country. In its present form its national 
 Agriculture is a creation of the last fifty years called into 
 being by German protectionist policy — ^and called into 
 being, as its chronicler, Mr. Anders Nielssen explains, 
 piecemeal, branch by branch, just as necessity called for the 
 one or the other. The rural population of Denmark is the 
 best educated in the world — ^better educated than the 
 industrial. 
 
 Another distinguishing feature of Danish Agricultural 
 Co-operation is that, as Mr. Hertel admits, it leaves out of 
 account all the ideal objects which to co-operators elsewhere 
 are the dearest among the aims of Co-operation. Like 
 American Co-operation — of the old sort ; for a new era has 
 begun to dawn across the Ocean — it thinks only of business. 
 There is no educational object in it. That object has been 
 provided for otherwise. There is no community building, 
 no drawing together of people, no replacing of " village 
 communities." All these things are, so far as Danes want 
 them, there already. 
 
 In Germany, under circumstances far more resembUng 
 those of India, acting for a humble class of people— likewise 
 in similarity with what has to be done in India — ^Raiffeisen 
 struck out a different path, in our present sense in the 
 opposite direction to the Danish. His system has likewise 
 proved exceedingly successful, and very much more stimula- 
 ting on new ground, and has in consequence been adopted 
 generally in Europe — ^and I may say also in Japan, which is 
 coming very conspicuously to the front as a co-operative 
 country, after its emissaries, despatched by their Govern- 
 ment, have made a careful study of co-operative institutions 
 in Europe. In the small parish societies — as they are 
 intended to be — of small cultivators, Raiffeisen made his 
 co-operative organisation a " maid of all work " — except for 
 industrial concerns such as dairying, sugar- making, distilling 
 and the like, which have to be managed by themselves, but 
 which certainly have everywhere kept in close touch with 
 the original " Raiffeisen society " — " Raiffeisenverein," as 
 it is distinctively called— borrowing the funds requisitefor 
 
THE WIDER OUTLOOK 257 
 
 their establishment from it. The most striking feature of 
 Japanese rural Co-operation, when you come to look at the 
 table of its societies, is the very common combination of 
 various branches — ^purchase, sale and so on, and almost in 
 every instance also Credit — in one and the same society. 
 In German Raiffeisen societies Supply figures very promi- 
 nently in the business done and answers for very much of 
 the success achieved — ^but not, thus far. Distribution. The 
 societies have power to engage in it, and hold such in reserve, 
 should the bania be found to use sharp practice. For the 
 present they hold that he does not do so, and accordingly 
 hold their hand. In India the bania is not likely to be 
 counted equally immaculate. And there, accordingly- 
 just as in Ireland, where the gombeen man rules fleecingly 
 over the rural population — I hold Distribution to be, not 
 only legitimate, but distinctly called for — called for on 
 economic grounds and also because it is so effectively 
 educative. 
 
 However, when you come to the higher grades of Co- 
 operative Organisation — ^as in Central Banks — combination 
 of Credit with Supply or Distribution, or in fact any other 
 form of Co-operation, not only ceases to be legitimate, but 
 becomes downright dangerous. Combination opens the 
 door to grave and easy abuses. One form of temptatiorx 
 very frequently occurring is this — ^which ought to be 
 famihar to Indians from their dealings with banias and 
 mahajans — of an improper and improvident purchase being 
 pressed upon the customer, because there is the Credit 
 department conveniently handy to afford the necessary 
 credit. Of course the member who joins the society for 
 the purpose of obtaining credit and also to purchase is 
 entitled under proper conditions to do both the one thing 
 and the other. However, that may be legitimately done in 
 a different way, which excludes danger. (In a different 
 form the two kinds of jaggery societies organised in Bombay 
 Presidency provide for this.) Under a system first intro- 
 duced in Italy by M. Luzzatti, the intending purchaser 
 goes to his Co-operative Credit society, giving the required 
 security and so obtaining his credit. That credit, or so 
 much of it as is required, he assigns to the supply association, 
 which deals with him practically for cash on that basis. 
 Under such conditions the temptation spoken of dis^pears. 
 
 17 
 
258 CO-OPERATION IN INDIA 
 
 For the credit society is not in the least interested in the 
 sale of the article which its member desires to purchase, 
 but only in its own security. And the supply society can 
 exercise no influence upon it to determine it to stretch a 
 point for the sake of enabling it to sell its wares. 
 
 Above the very lowest grade of dealing there is such very 
 serious danger in the combination of Credit with Supply, 
 and also Sale, that I have felt constrained to warn most 
 emphatically against it. And we have telling cases in point. 
 Both the Raiflfeisen and the Haas types at one time practised 
 such combiiiation at the apex of their organisation in the 
 several Central Banks which at that timelfunctioned also as 
 apex Supply Societies. The Haas Union probably simply 
 copied such arrangement from the Raiflfeisen Union, in 
 which it had been for some time established. The Raiffeisen 
 Union adopted it for want of anything better, because 
 slanderers, alleged that Raifleisen himself and a few of his 
 friends, who in a public- spirited way carried on the central 
 trading as a private company, made an illegitimate profit 
 out of it. At our International Co-operative Congress at 
 Budapest in 1904 1 singled out this subject for my paper and 
 offered a strong remonstrance against such combination, 
 which then boded danger. The danger, in fact, came almost 
 immediately after, in the shape of complications which 
 involved loss in both quarters. The two central organisa- 
 tions in consequence took my advice and separated the two 
 departments, after which things Went on smoothly. 
 
 You cannot in India permanently retain your Central 
 Banks as Supply Associations. They already undertake 
 more than they are quite equal to. They have not, in any 
 case, a superfluity of capable men at their command with 
 sufficient leisure to attend to Board duties. Complaints are 
 heard of their being often one-man institutions. It would 
 be a mistake to overtax them. Let them stick to their bank 
 business and do that well, and leave Supply to others ! 
 
 In India, apart from Credit, and even from Supply, there 
 ought to be ample scope for the application of Co- operation 
 to Agriculture. We see the first shoots sprouting — in some 
 variety — in the fields already. Raiyats have begun to feel 
 the want. And Agricultural Authorities are rightly stimula- 
 ting. Supply answers for a great deal, but not nearly for 
 all. By all means let us organise Supply-r-carrying, I hope, 
 
THE WIDER OUTLOOK 259 
 
 Distribution in its train. The wants of raiyats are few. 
 But they are sufficient for banias to make a fine living out 
 of. And we must hope that the raiyat's standard will come 
 to be raised, as Professor Stanley Jevons has urged. 
 
 Here is just one instance of what combination of Co- 
 operative Distribution with Co-operative. Supply may do. 
 The Agricultural Co-operative Union of Eastern Switzer- 
 land, now a very powerful and progressive organisation, 
 was on the point of collapse when confining itself to the 
 supply of agricultural requirements only. It took up 
 distribution of articles for domestic use as well, and its 
 failure was almost on the spot converted into brilliant 
 success. And as a consequence banias are disappearing 
 from village after village in its district, the Co-operative 
 Store, which sells cheaply and, of course, of genuine quality, 
 taking their place. For do not let our Indian agriculturists 
 ignore the fact that cheapness is by no means the only thing 
 that they stand to gain by practising Co-operation. It is 
 the gain that is most apparent and that in itself justifies 
 Co-operation. However, in addition. Co-operation ensures 
 quality. And it places skilled advice and the service of skilled 
 experts at members' command, endowing them vicariously 
 and without cost with the various mental faculties necessary 
 for their business, which they do not possess, and so 
 enabling them to do full justice to their calling. Their 
 chemist analyses their fertilisers and feeding-stuffs for them, 
 their botanist tests their seeds, their engineer examines 
 their implements. Where they can organise their sales, it 
 is their expert salesman, who knows the markets, and is a fuU 
 match for the wil^ dealer, who places their produce, live or 
 dead, animal or vegetable, on the right niarket, bargaining 
 for the full value, instead of their allowing themselves to be 
 gulled by a crafty dealer up to all tricks. In Europe we have 
 already distinct co-operative markets for agricultural pro- 
 duce, live or dead, for which the co-operators lay down rules. 
 They have proved highly successful and are very much 
 resorted to by buyers. 
 
 Combined with the sale of goods to members, there should 
 be instruction as to their use. We scarcely need that in 
 Great Britain. But in India I should say that it is distinctly 
 called for — ^just as it is, for instance, in Italy, where the 
 peasantry are backward and where systematic attention to 
 
26o CO-OPERATION IN INDIA 
 
 this particular service is found highly beneficial and stimu- 
 lating. The societies— not the makers of implements — 
 have their officers stationed at suitable points, ready to 
 instruct members in the use of new machinery and imple- 
 ments and to supply new parts. That is half business, half 
 education— in respect of which latter Co-operative Societies 
 have opportunities open to them which the educational 
 staff of the agricultural authorities do not possess. We 
 should remember what Lord Reay said of the Agricultural 
 Syndicates of France — ^being organisations, mainly for 
 CO- operation, with which I have been familiar almost since 
 their first formation— namely, That in the matter of educa- 
 tion " they have worked wonders." Co-operative organisa- 
 tions do not teach from the teacher's desk, but in button- 
 holing conversation. In India they appear to be already 
 assisting to some little extent by demonstration, which is 
 the most effective educator of all in practical things. But 
 they want to be doing a great deal more. " The matter of 
 adapting the teachings of the Department and the Colleges 
 to local conditions is one of the most difficult problems that 
 the apostles of the new Agriculture have had to meet." So 
 writes Mr.C. S. Vrooman, Assistant Secretary of Agriculture, 
 in the United States in tlxe Yearbook for 1916. 
 
 Now that is just the sort of work that Co-operative 
 Societies seem cut out for. They can do a great deal 
 towards the distribution of good seed — which evidently is a 
 great want in India, whether the seed be rice, or wheat, or 
 cotton or anything else. We in England are expecting to do 
 a large business with India in wheat. The first experiments 
 which have beeh ventured u'^on with the exportation of 
 Pusa No. 12 wheat to England are said to have proved 
 encouraging. India is, if not actually the original home 
 of wheat, at any rate next door to it. There are now in 
 India over 35,000,000 acres under wheat already. If trade 
 with Great Britain expands, there will probably be more. 
 And, with the aid of Co-operation, we may anticipate that 
 that same area will soon yield considerably heavier crops. 
 However, our purchases depend— as they did in the c^se 
 of butter, eggs and bacon, which we take from Denmark — 
 on good, and permanently good, quality. Denmark has 
 learnt the lesson. Ireland is learning it now. No doubt 
 India in its turn will do the same. 
 
THE WIDER OUTLOOK 261 
 
 There are special branches in Agriculture that want to be 
 pushed by Co-operation, and for pushing which Co-opera- 
 tion has already proved its exceptional capacity. 
 
 Take irrigation. You have ithelar ; you have Nawada ; 
 you have advancing co-operative irrigation in the United 
 Provinces and elsewhere. Scattered and subdivided as 
 territory is in India, Co-operation is almost, if not altogether, 
 necessary, certainly most helpful, if irrigation is to be 
 extended as one would wish it to be, and as in truth it ought 
 to be. Give Indian soil water, and under a forcing sun you 
 can do almost anything with it, at any rate somewhere or 
 other. In the United States — ^which possess their ample 
 allowance of genuinely arid soil, useless without water, 
 yielding well when irrigated, co-operative irrigation is the 
 only form of irrigation which has really answered. It was 
 begun in Utah, where the Mormons were assigned a 
 territory, dry and sun-scorched, on which to settle. The 
 land needed water badly. To supply such the Mormon 
 settlers could expend no money, because they had none. 
 But they had their arms. They set to work with them 
 co-operatively, one working for all and all for one ; and so 
 working they completely transformed their province. Inci- 
 dentally they discovered, as 1 may mention, with their cute 
 Yankee alertness, how to turn that pestilent and noisome 
 reh, from which they suffer as much as do arid parts of India, 
 to good account — ^industrially, though not agriculturally — 
 by extracting from it its alkaline salts, for sale in the market. 
 However, the main point was that they made their territory 
 cultivable and set an example which the rest of the United 
 States have not been slow to foUow. It is Co-operation 
 there which governs irrigation. Mr. Herbert M. Walter, 
 of the United States Geological Survey, in his Report on- 
 " Indian Irrigation " prepared for his Government, points 
 out the rather striking similarity in the conditions bearing 
 upon Irrigation, which prevails severally in his own country 
 and in India. He writes : " In general there is a great 
 similapty between the character and topography of the 
 great northern plain of India and parts of our arid West, 
 especially the eastern slopes of the Rocky Mountains and 
 the great Californian valley. Central India and the Deccan 
 have many features in common with the central portion 
 of our arid region, particularly portions of northern Arizona 
 
262 CO-OPERATION IN INDIA 
 
 and southern Utah. The climate is as similar to that of 
 our Middle Western States as is the topography." Mr. 
 P. E. Fuller, Irrigation Engineer in the Office of Public 
 Roads and Rural Engineering of the United States, refers 
 to the> same point when, writing in the official Tearbook 
 of 1916, he remarks : " In obtaining a water-supply for 
 irrigation Co-operation has many advantages." We have 
 likewise found Co-operation useful for purposes of water- 
 supply in England — ^witness Mr. F. Graham Fairbank, of 
 York, who has organised several co-operative irrigation 
 schemes in the North. And in Belgium they have their 
 wateringues, in Germany their Deichgenosenschaften for the 
 same purpose. Co-operation, so I should say, in connection 
 with this matter promises more particularly to be hdpful 
 in the regulation of water-supply, where irrigation is prac- 
 tised, as between various usufructuaries interested, so "as 
 to ensure a fair but not wasteful apportionment and the 
 utmost benefit from the valuable water secured. There 
 appear to be difficulties about that at present. 
 
 That application of Co-operation naturally leads on to 
 one which exhibits the same feature, only in a modified 
 shape. 
 
 Co-operation in Irrigation is Co-operation in work. And 
 assuredly in a country with land so snipped out, so cut up 
 into fragments, as is that of India, there is room and call for 
 organised labour, such as is supplied, for instance, in the 
 numerous associations syndicates, and in some cognate 
 organisations which, under a European sky, smoke the vine- 
 yards to keep the night frosts off and bombard the welkin to 
 bring the hail-clouds down in the harmless shape of snow 
 powder. India already possesses Co-operation of really 
 an identical kind as that commonly practised by the French 
 associations syndicates and the corresponding associations in 
 Belgiuni and' the Netherlands — ^that is, in Professor Radha- 
 kamal Mukerjee's words, of villagers " uniting to dig and 
 clear out watercourses, turning out together to protect their 
 rice embankments from floods," or else combining to work 
 for a time at " deepening the pond " or " dig kachha Wells 
 and to work them for the village cattle and often to make a 
 -pakka well," or to " dig the village ditch, to repair the village 
 hedges, to build the dharma golas or 'to put a new gate on 
 the entrance to a village," or even to " dig long inundation 
 
THE WIDER OUTLOOK 263 
 
 canals." That is excellent. Only, as Professor Mukerjee 
 rightly observes, it wants to be organised and be made 
 permanent and general. There is distinct promise in it of 
 more being done in this way in India — ^as more is certainly 
 wanted there— than in Europe. There is likely to be some 
 diflference in the application in the two quarters of the 
 globe. However, Providence has so portioned out our 
 troubles that no climate escapes perfectly without them. 
 
 In Italy co-operative labour has become a leading feature 
 in economic organisation. It is there, indeed, the landless 
 dwellers in the country who combine — ^in the first instance 
 to take labour contracts in common, as a means of bettering 
 their position and acquiring some capital, though it be at 
 the cost of pinching and stinting. But they have long since 
 advanced beyond that. For they acquire or rent land, and 
 often farm it, in common. As a rule, however, their co- 
 c^eration is limited to the mere acquisition — 'in Italy it is in 
 the main by tenancy, but for long terms, with fixed tenure. 
 
 That, again, leads on to another point. Indian administra- 
 tors and economists are much exercised now about the con- 
 solidation of holdings, which at present lie distributed in 
 small patches over a wide area. There can be no really 
 remunerative husbandry uiider such conditions. Nor can 
 there, so one would think, be much peace of mind or sense 
 -of comfort for the occupiers. We have had the same 
 fragmentation all over Europe, and the same troubles 
 arising from it. If Sir Henry Maine is right, it came to us 
 from India, parts of which are supposed to form a proportion 
 of the " cradle of the human race," the nursery from which 
 human seedlings have been sent forth to people the world, 
 just as baby oysters are sent into aU waters from La Teste, to 
 produce a world-wide oyster crop. Wisely we have got rid 
 of it — in England indeed in so rough and ready a way that in 
 his evidence before the Agricultural Pohcy Sub- Committee 
 Lord Milner has quite recently proposed " re-enclosure," 
 to get rid of irregularities produced ; but in any case we have, 
 even in unmethodical England, lumped those ancient 
 " strips " of Mr. Seebohm's charts together into workable 
 holdings. That has indeed left a heritage of hardship for 
 the class of our population corresponding to the Indian 
 raiyats. But that injustice we are now labouring to 
 redress in a more methodical manner. One may be thank- 
 
264 CO-OPERATION IN INDIA 
 
 ful to reflect that meanwhile at the present time Co- 
 operation is at work healing the wounds that were then very 
 ruthlessly struck to so large and important an interest of 
 the community, a class surely deserving more considerate 
 treatment. For both in England and abroad — more 
 specifically in Germany — Co-operation has begun to restore 
 in an improved shape that common pasture which is so 
 much Heeded for the small cowkeeper, the present President 
 of the English Board of Agriculture, Mr. Prothero, setting 
 the example on the Duke of Bedford's estate at Maulden 
 in Bedfordshire. There is a cry in India at present in 
 connection with the movement in support of a better supply 
 of milk, for more pasture for the gaolis. Co-operation may 
 provide that. Outside England the oper-ations performed 
 for getting rid of the puzzle pictures of intricately entangled 
 small properties have been-far more methodical and con- 
 siderate in respect of the humbler occupiers of the soil. 
 There are no precedents worth recording to refer to, except 
 from that storehouse of landholding lore, Germany — ^loath 
 as we are at the present time even to mention that country. 
 What has been done in Germany really forms part of the 
 enlightened policy opened up by that great Minister whom 
 Professor Sidgwick has made his hero, Stein, who, by his 
 land legislation emancipated the millions of German serfs 
 from their bondage and so created a free peasantry, to the 
 existence of which Germany owes much indeed of its 
 agricultural greatness and prosperity. France is suffering 
 greatly from the same evil of over-subdivision of the soil," 
 the effects of which are, however, there mitigated by the 
 lamentable diinning of the population by Malthusianism, 
 which keeps land comparatively cheap for want of applicants 
 for it. The French Legislature applied itself to dealing 
 with this matter only just before the war. Nothing actually 
 has yet been done. France has since about ten years or a 
 little more its Bien de Famille — that is, an adaptation of the 
 American "homestead," which keeps a rural property, 
 when registered under the proper law, indivisible and intact, 
 and therefore goes farther than the various I-and Alienation 
 Acts of India. (Germany has of late years adopted some- 
 thing of the same sort.) That is, h owever, a different matter, 
 and presupposes holdings already consolidated. Common 
 sense has helped the Swiss, a very agricultural race, over the 
 
THE WIDER OUTLOOK 265 
 
 difficulty in another way. They have their common 
 pastures on the Alps and the Jura, but in the valleys their 
 properties are for the most part self-contained. Germany 
 has a whole armoury of measures appropriate to the purpose 
 at Its command, which have rendered excellent service 
 among a naturally docile race, such as is greatly appreciated 
 by the persons affected. I have been a witness to some of 
 these consolidations, for which, of course, as Sir Claude Hill 
 has suggested at a recent discussion of the Indian Board of 
 Agriculture, the consent of those concerned in the re- 
 arrangement of the several fields should be obtained ; how- 
 ever, that consent need not in Germany be unanimous. It 
 is the majority which determines the matter — ^the majority 
 within a certain area of which the applicants draw the limits. 
 However, that majority is not a majority of landholders, but 
 the majority of " assessment units," which gives to the more 
 valuable field larger voting power than to the less valuable 
 of the same dimensions. Since there must be consent and 
 collaboration of the parties interested. Co-operation should 
 be at any rate a valuable preparative for it — ^let alone that 
 Co-operation is an effective educator, more particularly 
 upon matters of Agriculture. But it also brings people 
 together and teaches them to accommodate their several 
 interests one to another, instead of leaving them to stickle 
 for small points magnified by personal feeling into matters 
 of vital importance — ^the substance of which is often only 
 that of a soap bubble. The fact that in Italy common 
 holdings {aflttanze collettive) are now, in progressive ratio, 
 not exactly replacing the historically highly interesting but 
 economically most wasteful parteci-panze — ^which are to a 
 certain extent replicas of the minutely divided Indian 
 village area — ^but growing up by the side of those decaying 
 relics in their place, seems to be adducible as another 
 evidence of the probablity of Co-operation proving helpful 
 to'Consolidation. And there is one more reason for making 
 such assumption, which for a moment takes us out of our 
 present agricvdtural sphere. Professor Stanley Jevons has 
 rightly suggested that a general raising of the standard of 
 living will dispose coheirs to property in land rather to 
 sell than to claim their own inheritance. No doubt it will. 
 But if there is to be a higher standard of living there will 
 first have to be better earnings, more openings for the 
 
266 CO-OPERATION IN INDIA 
 
 removing coheirs to employ their labour upon remunera- 
 tively. Such openings with corresponding earnings may be 
 found in those numerous hand industries, for the practice 
 of which Indians appear to possess a special aptitude as well 
 as leaning — shared in an equally full measure probably 
 only by Japanese — ^and for the prosecution of which India 
 offers a market such as it would be difficult to find elsewhere 
 — ^provided that those hand industries can be made to pay. 
 And to that potential treasure-house Co-operation provides 
 the only acceptable key. Limiting the minimum size of 
 holdings — such as has been proposed — can be of little use. 
 " Slim " people can get round such provisions. And 
 limitation mechanically bars the way to further progress. 
 I made a study something more than twenty years ago of 
 small holdings in the most subdivided part of Germany, 
 the south-west. And I found holdings such as English and 
 probably also Indian economists would have pronounced 
 absolutely uneconomic, on account of their diminutive size. 
 However, in Germany they " maintain their man " by means 
 of highly perfected small cultivation, which produces heavy 
 outputs of exceedingly valuable produce, grapes for pressing 
 of superior quality, good choice tobacco and so on. Ad- 
 vancing in its course of the creation of small holdings, with 
 the help of Government credit, the Prussian Government 
 has found itself led, almost compelled, to reduce the 
 minimum size further and further, because it turned out 
 that very small holdings were wanted and that people had 
 learnt to make a Hving out of them. Bringing neighbours 
 together to work, buy, sell and cultivate in common, 
 teaching them thereby to look at things from a collective and 
 from other people's point of view, and to take broader views 
 of matters, appears to me to be the best preparation for 
 that consolidation of holdings which, agriculturally speaking, 
 is a necessity. 
 
 However, we have not yet quite done with Agriculture. 
 Next to labouring in common, one would think that in India 
 there must be a splendid opening for the common employ- 
 ment of implements and machinery — quite apart from the 
 employment of machinery for purposes really industrial 
 such as cane-crushing, in dairies, and so on. Once more, 
 there are beginnings in India which promise most encourag- 
 ingly and only want to be systematised and extended to 
 
THE WIDER OUTLOOK 267 
 
 become exceedingly useful. Sir Denzil Ibbetson has shown 
 us what has been done in this way in the Karnal District,* 
 where lanas, rathas and dangwaras, uniting neighbours for 
 the common use of their ploughs, cattle and sugar presses, 
 indicate a natural desire and leaning of the native population 
 to common work and teach the utility of such work. In 
 Europe the war has given a powerful fillip to such form of 
 Co-operation, because hands have become scarce, and also 
 draught cattle, and the very most has accordingly to be 
 made of such working power as remains available. But that 
 is rather Co-operative employment of a more pretentious 
 sort — ^motors, tractors and the like. Similar common 
 employment has, however, been practised for a considerable 
 time back with the use of less bulky implements by small 
 husbandmen abroad on a large scale. I have been preaching 
 it in England for more than twenty years back. It is, how- 
 ever, only lately that it has been at all taken up in our 
 country. But our small-holders have now come to appre- 
 ciate it, because they decidedly find their account in it. 
 Be the implement ever so humble, so long as it is not 
 required for daily use on one farm, there is profit in acquiring 
 and owning it co-operatively. And small beginnings may 
 lead to great undertakings. I know of a Co- operative Society 
 in Ireland which now owns a fuU equipment of valuable 
 machinery of all sorts, besides smaller implements, aU of 
 them saving the members a good deal of money and labour, 
 y/hich began with laying down two rupees each member for 
 the purchase of a binder. The saving made on the use of 
 that binder in the first year proved sufficient to permit of 
 the purchase of some other implements. And accumulation 
 went on — ^the whole amount of machinery worth some 
 hundreds of pounds standing the members of the society 
 in only two rupees apiece. Of course where there is 
 Co-operative Credit— such as there was not in the case 
 referred tor-r-that helps greatly and accelerates the process. 
 I have seen steam threshing machines with engines repre- 
 senting substantial value in Germany owned by Co-operative 
 Societies, to pay the price of which no member^ of that 
 society has ever been required to put his hand in his pocket 
 
 * See " Report on the Revision of Settlement of the Panipat and Karnal 
 Parganah. Karnal District." By Denzil Charles Jelf Ibbetson. Allahabad, 
 1883. 
 
268 CO-OPERATION IN INDIA 
 
 for so much as a pie. Credit has bought the machines, and 
 their own hire, at so much an hour — a. little more for non- 
 members — has paid for them. Now the employment of 
 electric power and light on co-operative lines is in great 
 vogue in Germany, and it saves very much labour and 
 money, and at the present time renders many a troublesome 
 or unpleasant job easily bearable that used by its irksome'- 
 ness to frighten people. We have one society in England 
 which owns its draught horses in common and experiences 
 no difficulty whatever in apportioning their use to the 
 several claimants. And it is wonderful how even in the 
 us^ of motor-ploughs, of reapers, of drills and sowing 
 machines and threshing machines, members can without 
 inconvenience or loss make their time fit in with that of 
 others. Indian Agriculture, of course, has other uses for its 
 implements and machinery than we have in Europe. But 
 the principle remains the same. 
 
 And then there is common sale, be it of the original 
 produce of the farm or be it of articles manufactured out 
 of such produce. Indians are now trying their hand at 
 dairying. And one is bound to hope that they may succeed. 
 For inquiry and research have shown of what truly vital 
 importance a supply of sufficient and^enuinely good milk is 
 to the nation. Indian? appear by long habit to have become 
 accustomed to milk which is not only strongly diluted with 
 water, but also dirty and unsanitary. However, there can be 
 no question but that a supply of good, wholesome milk is, 
 as Lord Willingdon has recently pointed out, a great 
 national interest. " The whole of the population requires 
 xailk." So he put it. At least what is supplied ought to be 
 of good quality. But that is, unfortunately, just the weak 
 spot in Indian economy. And it is to be feared that bad 
 milk is there accountable for very, very much of what 
 bad health and what poor growth of the rising genera- 
 tion is to be met with. Therefore too much attention 
 can scarcely Ipe paid to the subject. Indians generally 
 do not appear to realise either the great nutritive value of 
 milk and its necessity for htinian nourishment nor the serious 
 danger that lurks in the diluted and contaminated liquid 
 which they actually consume— so far as they consume any. 
 Our British labouring population is now so keenly alive to 
 these points that our co-operators — a section of the com' 
 
THE WIDER OUTLOOK 269 
 
 munity representing millions, the elite of the working 
 class — are making special efforts to provide for a pure milk 
 supply by farming their own land for dairy purposes. " So 
 much depends upon the milk-supply," says the Co-operative 
 iV^?^/, justifying the heavy outlay incurred by the Co- 
 operative Wholesale Society — and other large co-operative 
 societies besides — on the acquisition of land (the Co- 
 operative Wholesale Society already owns over 45,000 acres 
 in England alone, in addition to large tracts for grain- 
 growing purposes in Canada), " that, after bread-supply, 
 there is no other food more essential for the Co-operative 
 Movement from the production to the sale." One is glad 
 to learn that in such places as Benares there' are people 
 willing to pay a better price for pure milk. In such places it 
 appears to be only the difficulty of transport which stands 
 in the way. The war beiiag ended, that, at any rate, ought 
 to prove capable of being got over. It has been suggested 
 that municipalities should take the business in hand as a form 
 of " gas and water socialism." One or two such enterprises 
 as mere " demonstrations " and experiments might not be 
 amiss. But one would riot like to see milk-supply made 
 generally a municipal matter. Municipal baking has not 
 proved altogether a success in Italy. Milk is not produced 
 as gas and water are. However, there are such things as 
 motors, to be worked by co-operative enterprise. Among 
 our individualist British farmers co-operative motor service 
 has not proved altogether a success. But on the Continent 
 there is not a little of it, and milk is there, even where there 
 are no railways to forward it, by such means drawn from 
 wide districts. In the United States, under the new system 
 of centralised country schools, school children are carried 
 backward and forward, to school and back home, in publicly 
 owned motor-cars from long distances, being picked up in 
 their rural homes. 
 
 It has been pointed out that the fact of cattle being in 
 India prized and kept mainly for draught purposes need not 
 stand hopelessly in the way of due consideration being paid 
 to a sufficient supply of milk. In Germany and Austria 
 cows are very commonly employed as draught animals besides 
 yielding milk for the family — and it may be a little for sale. 
 And there are authorities to justify what otherwise one 
 would think only poverty and not will would consent to. 
 
270 CO-OPERATION IN INDIA 
 
 Cattle are bred accordingly and fed and tended ac- 
 cordingly. 
 
 Generally speaking, certainly, good quality in milk appears 
 to be very little appreciated in India. How far it might 
 be possible by artificial means to stimulate a taste for good 
 milk it is not easy to conjecture at a distance. 
 
 We have in England a National Clean Milk Society, the 
 researches of which have disclosed even in London a state 
 of things in connection with the quality of the milk — ^and of 
 course, though that can only be inferred, the resultant bad 
 health— which has been declared " a disgrace to civilisa- 
 tion." In India things are known to be very much worse. 
 Our Clean Tvlilk Society has no power of coercion or punish- 
 ment. In the United States local authorities are armed 
 with such of rather a stringent character. People con- 
 versant with the matter assure us that milkdealers in New 
 York would have been locked up in jail for misfeasances 
 such as London dairymen have made themselves guilty of 
 every day in the supply of unsanitary milk, which cannot at 
 present be visited upon them. Milk is there (in the United 
 States) — since 191 1 — classed in three grades : the best fit 
 for infants, the segond for adults, the third for cooking. 
 The effect of official control introduced is set down as truly 
 startling. When the service started, in 191 1, about 40 per 
 cent, of the milk supplied was found to be not even good 
 enough to be included in class 3. Now there is scarcely 
 any " class 3 " milk at all. In Canada authorities are as 
 vigilant and as exacting, and the effect upon the rising 
 generation and on general health is said to be manifest. 
 Generally speaking, so it should be remembered, it was 
 Co-operation in dairying which brought in the purification 
 of milk, because, in the first place, improving the quality 
 evidently must be the most effective -means of winning in 
 the competition with the established trade ; and secondly, 
 because, once co-operative dairying was practised, insistence 
 upon cleanliness as well as a high proportion of butter-fat 
 became indispensable in the interest of co-operating 
 members themselves, so as to keep the balance fuUy even. 
 The gaoli dealer can blend good milk and bad, and so make 
 things balance for himself ; the Co-operative Society has 
 to judge between member and member and see that the 
 supplier of bad milk does liot intercept the due reward of the 
 
THE WIDER OUTLOOK 271 
 
 supplier of good. The matter, it is true, has not quite 
 the same importance in southern countries as in the north. 
 At Ostia in 1895 I found fifty-nine Romagnole labourers' 
 families, a healthy race, " doing themselves well," as they 
 themselves owned, with only one cow among them all. How- 
 ever, after all, we must have milk. That seems one of Nature's 
 ordinances. In European countries co-operative dairying 
 has become common on the very ground of its great utility 
 to the public, apart from its economic advantage to those 
 who practise it. Even in the case of comparatively large 
 herds it is found more advantageous than separate dairying. 
 An old Italian proverb says : Latte di vacca -pessima; latte di 
 vacche ottima (Milk of one cow, very bad ; milk of many cows, 
 excellent). And the consequence is the more general supply 
 of a genuine superior article. It is not surprising that in 
 India agricultural co-operators should have tried their hand 
 at such form of Co-operation — ^nor yet that, the state of 
 the market being as it is, the breeding of cattle as it is, and 
 the practices of the gaolis and various toll-taking inter- 
 mediaries as they are, that they should have experienced 
 considerable difficulties in applying it. Nevertheless one 
 cannot help thinking that in due course co-operative 
 dairying, if adhered to, is likely to prove of at any rate 
 nearly the same benefit in India that it has proved in Europe. 
 Even if it were only to extend the consumption of milk, 
 and make the milk milk indeed, that would represent a large 
 hygienic gain for the population. The evidence given 
 before the Bombay Milk Inquiry Committee reads curious 
 to a European. Co-operators have in India begun co- 
 operating in this matter on the productive principle, which 
 is the principle generally adopted in Europe, where it is 
 primarily farmers who desire to gain by acting in common, 
 and where there is a market grown fastidious to keep the 
 quality up to the mark. In India the latter condition is 
 for the present stiU absent. It needs to be created. And 
 that fact certainly justifies Dr. Mann's warning not to 
 attempt too much at once. Juvenal's precept that if you 
 want to hit the moon you should aim at the sun does not 
 hold good in all cases. Allo^ for a time " the consumer 
 to transcend the producer." Eventually, no doubt, co- 
 operative dairying will be best practised on the productive 
 basis. But as a beginning, a consumers' society may, with 
 
272 CO-OPERATION IN INDIA 
 
 the power which it is likely to be found to wield, after all, 
 prove the easiest means of creating a market promising to 
 be at the same time receptive and critical. A ready, and 
 at the same time discriminating, market having been created, 
 gaolis are likely to accommodate themselves to its demands, 
 intermediaries will be compelled to desist from Unjust toll- 
 taking, and breeders of cattle wiU then try; to adapt their 
 breeding to public requirements. Co-operative dairying 
 without regard to quality would be a questionable acquisi- 
 tion. In any case it will be well to think of creating the 
 market first and leave bacteriological examination and the 
 like for a later day. 
 
 But it might be advisable to do something in the way of 
 Milk Inspection. Co-operative Dairy Societies in Denmark 
 — model of all models that it is for co-operative institutions 
 in the service of Agriculture — ^since 1902 have their own 
 arrangements for " milk-testing " — quite distinct from 
 " cow-testing " — ^as a protection of one another among 
 themselves. " There are now," so writes Mr. Hertel in his 
 " Andelsbevoegelsen I Danmark," " fourteen such societies 
 with 291 co-operative dairies as members. A Milk-testing 
 Society appoints a " milk-judge," whose duty it is to visit 
 the dairies comprised in the society in irregular rotation and, 
 jointly with the manager of the dairy visited, to taste and 
 test the milk from each co-operator as it arrives at the dairy. 
 The result of each judging is sent to the members of the 
 Co-operative Dairy Society, and these are instructed in the 
 proper treatment of the milk. The idea is to ensure a 
 supply of fresh and clean milk to the dairy. In some 
 societies deductions in the price of milk are made in cases of 
 unsatisfactory milk ; in others a small money premium is paid 
 to the co-operators whose milk has come out best as the result 
 of the year's testing, which premium is generally given to 
 the person responsible for the milking and care of the milk." 
 There appear also to be productive openings for the 
 application in the sale of cotton, in respect of which a very 
 promising beginning has been made in the organisation of 
 markets in Bombay Presidency ; and in the employment of 
 the juice of the sugar-cane — out of which, according to the 
 opinion of the German expert Dr. Kaufmann,* the United 
 Provinqes are in a particularly favourable position to produce 
 * W. Kaufmann, " Welt-Zuckerindustrie." 1904. 
 
THE WIDER OUTLOOK 273 
 
 a superior article. In Germany arrangements approaching 
 to Co-operation are much in vogue for the making of beet- 
 root sugar, the mere sale of the raw article being replaced 
 by something like copartnership, securing, in the opinion 
 of some people, proportionately the greatest advantage to 
 the " cow peasant " — that is, the peasant who is so poor that 
 he has to employ his cow or cows in ploughing his fields, 
 besides giving milk. In the West Indies some twenty years 
 ago we were in hopes of arranging something in respect of 
 cane on the same basis. But it fell through. And cotton 
 is co-operatively dealt with — ^in a very commercial spirit 
 — ^in the United States on a large scale. It is there the 
 " Bureau of Markets " in the Department (Ministry) of 
 Agriculture which plays on a larger scale the beiieficent 
 role which in India Mr. Keatinge has meritoriously made 
 his own. The Director of that Bureau, Mr. Charles J. 
 Brand, writes on this point : " Within the last three or 
 four years a number of such co-operative associations have 
 been formed throughout the Cotton Belt, and these have 
 succeeded in the production of uniform lots of cotton, the 
 building of gins for the ginning of the cotton, and the 
 employment of graders to give them expert assistance in 
 the marketing of their cotton. Examples of such organisa- 
 tions are found in the Imperial Valley Long Staple Cotton 
 Growers' Association, El Centro, CaHfornia ; Terape Cotton 
 Exchange, Tempe, Arizona ; Scott Cotton Growers' Asso- 
 
 • ciation, Scott, Arkansas ; Beulah Marketing Association, 
 Beulah, Mississippi ; and the Denton Marketing Association, 
 Denton, Texas. When practicable, the services of cotton 
 experts are furnished by the Bureau of Markets to communi- 
 ties of cotton-growers for the purpose of demonstrating the 
 use of the official cotton standards and the value of knowing 
 the grade of their cotton before sale. County demonstra- 
 tion agents also have been suppUed with sets of these 
 standards, which are available for the use of the growers in 
 marketing their cotton." Particular attention is paid to 
 the keeping of pure seed and the estabbshment of uniform 
 cotton standards, which make the produce so much^more 
 saleable. " Keeping pure seed," says Mr. Brand, is a 
 problem that has been solved by some commumties where 
 eins handle cotton of only one variety. There is one 
 
 county in South Carolini where it is said that ninety per cent. 
 
 j8 
 
474 -CO-OPERATION IN INDIA 
 
 of the cotton grown is of one improved strain; This gives 
 an advantage in marketing, as buyers know what they are 
 getting even if the crop is sold in the seed." 
 
 On the top of this Co-operation has stepped in to sort 
 and grade cotton for the market, just as wool is sorted -and 
 graded. It makes the cotton sell very much more readily. 
 However, the reference to co-operative dairying at once 
 suggests a point to which Lord WiUingdon in his recent 
 address to the Board of Agriculture likewise called attention 
 and in respect of which certainly Co-operation might be 
 m-ade to render very valuable service. That is the point of 
 the breeding of live stock. There can according to all 
 accounts accessible be absolutely no denying that the 
 general condition of live stock, of all kinds, is in India 
 backward and uneconomic, and therefore wasteful. 
 " Underbred ponies — ^bad breeding, bad feeding, bad treat- 
 ment, undergrown bullocks — show animals which set the 
 pace to the country" — such is Lord Willingdon's descrip- 
 tion of the existing state of things. To this must be added 
 cows which yield little milk and indiflferent buffaloes very 
 liable to rinderpest. That means more than a mere 
 biological eyesore. 
 
 No doubt there are also splendid herds of excellent breeds 
 in India, better suited to the country than our European — 
 which Europeans are in the habit of regarding as a necessary 
 condition to good cattle-breeding — ^would be, just as there 
 are splendid horses and, it may be, some fine sheep and , 
 useful poultry. But they appear to be few and far between, 
 the property of large landowners who, like their British 
 compeers, make show herds of them. Now there can be no 
 economy in the keeping of poor live stock. Professor Leitch, 
 of the Agricultural College of Ontario, an institution of 
 authority, in his " Summary " of a very instructive " First 
 Canadian Farm Survey," recently instituted by the 
 Canadian Government, very active as it is in the promotion 
 of agricultural interests, thus puts the point : " The quahty 
 of live stock determines the amount of food which may be 
 fed profitably. Heavy feeding of stock of low quality means 
 a loss rather than a gain." We have, in Great Britain, still 
 much inferior, and therefore wasteful, live stock. However, 
 within my recollection we have always taken good stock as 
 a standard and, accordingly, to anyone directly interested 
 
THE WIDER OUTLOOK 275 
 
 in Agriciilture good breeds— whatever be the particular 
 species of animals — ^have all along been the standard by 
 which we have gauged things. However, I remember how 
 greatly I was struck, during my residence of some years in 
 Germany, fifty years ago, by the miserable state of .the 
 peasant's cattle there, the unimproved pigs and the non- 
 descript horses. When, on the farm which I held there 
 during six years, I introduced Shorthorn cattle and South- 
 down tups, people wondered and said they would never do. 
 But when I left the farm, my neighbours were very glad 
 to bid for my stock, and they breed plenty of stock of the 
 same kind now. Indeed, they have mended their live-stock 
 keeping all round and do very much better financially in 
 consequence — ^as Mr. Middleton has shown. Indians should 
 proceed in something of the same way, if they desire to have 
 more rupees in their pockets — ^using, of course, their own 
 better breeds for crossing purposes. Generally speaking, 
 they are not on the standpoint of the Swiss small owners of 
 cattle, who have about 850 co-operative cattle-breeding 
 societies, enabling the small man, with his one cow, or a ievv 
 of them, to rival his lordly neighbour in breeding herdbook 
 beasts, which sell at about five times the price of the 
 ordinary market stock — ^when the market is favourable — ^the 
 breeds there kept being in demand for breeding purposes 
 practically aU the world over. But in respect of all species 
 of live stock there is quite evidently very much good to be 
 done by improvement, for which Co-operation provides the 
 most convenient — ^and under some aspects the only — ^means, 
 ^ not only by the keeping in common of good males to serve 
 as sires, but also by impressing the utility of selecting good 
 females upon breeders. That applies, of course, above all 
 things to milking- cattle and laying-hens. In respect of 
 cattle the question appears a Uttle coniplicated in India by 
 the fact that it is at the time still mostly draught cattle-that 
 is there required. However, even in the case of draught 
 cattle breed is breed. And breed tells in the case of 
 buffaloes as well as in that, of cattle. Herds under both 
 heads seem in general terribly backward. And that means 
 loss where there should be gain. For a good cow, after all, 
 is a most paying animal. Our Italian peasant, who borrows 
 money from the Co-operative Society to buy it, says that it 
 " repays it? own price out of its milk, leaving the calf over 
 
276 CO-OPERATION IN INDIA 
 
 as net profit." In this matter the formation of what our 
 British farmers still in their elementary way term " cow- 
 testing societies " — ^which are, of course, all co-operative, 
 or else there are " cow-testing committees " of agricultural 
 societies, but which abroad, more particularly in Sweden, 
 but also in Germany, Belgium, Holland and Denmark, are 
 known as " Control Societies " — have rendered and still 
 render quite admirable service. Even the mere testing 
 of the cows as milkers, with regard to quality, hygienic and 
 nutritive, as well as quantitive, have brought about an entire 
 revolution. A poorly milking cow consumes precisely as 
 much food as a well milking one, and therefore costs in keep 
 the same amount of money. But whereas the well milking 
 cow yields a good prpfit, the poorly milking one causes a 
 direct loss. Where " Control Societies " or " Control 
 Committees" extend their advisory practice farther, they 
 will tell the farmer how to feed more economically — ^for 
 there are considerable differences in the feeding value of 
 substances costing the same amount of money— how to 
 tend their beasts most appropriately — ^indeed, how to farm. 
 Here comes in most strikingly the point already noticed, 
 that Co-operation places at the command of humble, poor 
 raiyats, with their small holdings, and their minimum 
 quantity of live stock, all the resources of perfected science, 
 the brains and experience which have cost much money, at 
 practically no cost whatever. 
 
 In Europe the sale of live stock is likewise carried on to 
 great advantage on co-operative lines. Expert salesmen 
 know exactly on what market to place beasts of a certain 
 description, how to bring them there most economically 
 and at the right time, and how to defeat the wiles and tricks 
 of the dealer. For India that is at present still " Music of 
 the Future " — ^far future, it may be. And it would be out 
 of place, therefore, to go into details on all these matters, 
 which I have discussed at greater length in " Co-operation 
 in Agriculture." However, principle remains principle. 
 And if in India the cattle trade is not what it is in Europe, 
 there is trade in other commodities governed by the same 
 principles. For Agriculture everywhere lives by selling 
 what it produces. 
 
 But there is one thing certainly in which India can learn 
 from Europe — and will, if it does so, learn to some purpose. 
 
THE WIDER OUTLOOK 277 
 
 And that is live-stock insurance hy co-operative action, 
 liiat has in a sense revolutionised small men's live-stock 
 iJeeping m Europe, not only reducing loss by animal mor- 
 tality—such as is only too well known in India— but also 
 reducing cost by the greater vigilance and local and personal 
 knowledge enlisted. Co-operation has proved itself not 
 only a remarkable cheapener of insurance, but also a means 
 A^-j ^°^ insurance far more effective. In the American 
 Middle West practically all insurance, of all kinds, is mono- 
 pohsed by co-operative organisations— -just as in the case 
 of Irrigation, Co-operation has " swept the board." In 
 our British Co-operative Union co-operative hfe insur- 
 ance has been brought down to such cheapness that only 
 5 per cent._ of the premium income is lost on management 
 expenses — ^in the place of the 30 or 40 per cent, lost 
 on such service in joint stock company dealings, and at any 
 rate of 10 per cent, sacrificed in the best cases of the quasi- 
 co-operative handHng of the matter practised in the German 
 Working- Men's Accident Insurance directed by the State. 
 While I was still an active member of the Agricultural 
 Organisation Society in London, we introduced for affiHated 
 societies a method of co-operative insurance, which has 
 proved both effective and cheap, under which the actual 
 executive service is in each district entrusted to a local 
 committee, which is of course in the best possible position 
 to judge of the value of an animal insured, of the amount 
 of loss sustained, and of the portion of it to be recovered by 
 sale of the hide, etc., and which can also best supervise the 
 owner of the beast in question, so as to guard against fraud 
 and the incurring of needless risk by carelessness. It is a 
 great merit of Mr. English, the late Registrar of Burma, to 
 have there introduced and so well organised live-stock 
 insurance with a re-insurance scheme at the back of the 
 whole arrangement, towards which the assistance given 
 from public funds is by no means out of place for the time. 
 This is an important point, which our people in England and 
 Scotland have long overlooked ; I particularly impressed it 
 upon their attention in my " Co-operation in Agriculture." 
 Mr. English has another claim to Indian gratitude and 
 recognition. There is at the present time, when there is 
 " land-hunger " asserting itself everywhere, no more valu- ] 
 able service to be rendered to the community than by land 
 
278 CO-OPERATION IN INDIA 
 
 settlement on co-operative lines. The use of Co-operation 
 I hold to be essential in it. For not only does it greatly 
 faciUtate settlement in itself, by planing the way for the 
 acquisition of the land — ^be it by purchase or by tenancy — 
 on something of an independent basis. Independent it is 
 notwithstanding financial assistance from outside, which in 
 such matters, where money has to be parted with for a long 
 period, is not only indispensable but also financially legiti- 
 mate, since there is good security, and a valuable public 
 service is to be rendered. In addition also it is desirable, 
 because it infuses from the outset a co-operative spirit into 
 the undertaking, and provides a foundation to be built upon 
 in the- organisation of further forms of Co-operation so 
 necessary to-day for small husbandry. Settlers' poverty 
 will not stand in the way, provided that they are men of 
 the right sort, selected or judged as such. All depends 
 upon that. The remarkable success of such settlement in 
 Italy, including the very poorest parts, in which conditions 
 bear some resemblance to those prevailing in India — for 
 instance in Sicily — ^testify well to the utility of this kind of 
 settlement and augurs well for the success of co-operative 
 settlement in India. One may indeed hope that the example 
 set by Mr. English in Burma will be widely followed, 
 although of course it may well be that in provinces differ- 
 ently situated the work will not prove quite as easy and the 
 schemes adopted may have to be modified. 
 
 Housing is near akin to land settlement, and it is encourag- 
 ing to find that housing likewise has been taken up on 
 cd-oper»tive lines and in a co-operative spirit by those who 
 are at the head of the Co-operative Movement in India. 
 Housing seems to take us across the dividing boundary into 
 the urban area-— although I should like to poitit out that 
 Mr. Rao Bahadur Taluaki, of Bombay, is under a mis- 
 apprehension in laying it down that co-operative housing 
 is not practicable in rural areas. We haVe very good co- 
 operative rural housing in Europe, which has proved entirely 
 successful — ^o successful, that in Germany Directors of 
 National Social Insurance Corporations, Which dispose of 
 immense sums of money, have found it possible and safe to 
 advance up to the limit of 97 per cent, of the value of the 
 newly built houses, provided that they are set up by Co- 
 operative Societies. Other bodies are not trusted to the 
 
THE WIDER OUTLOOK 279 
 
 same extent. However, the main field for co-operative 
 housing will no doubt have to be sought in more densely- 
 populated areas. And in such certainly Co-operation will 
 be in place. 
 
 It is in towns, likewise, of all places, that one will want to 
 look for the estabUshment of those " Stores," the value of 
 which Civil Servants, municipal and mercantile employees 
 and other regular salary-earners with average wants and 
 limited remuneration, have already found out in India. 
 Such societies, as is well known, have contributed immensely 
 to the social enrichment, emancipation and intellectual rais- 
 ing of our working classes in Europe. We are now hoping to 
 see stores breaking new ground and pitching their tents-— to 
 stay — ^also in country districts in England — ^just as they 
 have done with remarkable success in Switzerland, where 
 they are progressively crowding out the bania. We have 
 them in fact already active in some districts, for instance in 
 Lincolnshire, where capable men have taken up their forma- 
 tion. How readily farming folk take to these " Stores," 
 which cheapen things materially and ensure genuine 
 quality, may be judged by the fact that when I first pion- 
 eered the amicable relations happily established between our 
 Agricultural Organisation Society societies and the Distribu- 
 tive Movement, our farmers one and all showed themselves 
 more eager even to buy from the " Stores " than to sell 
 to them. And the last Report of the Agricultural Organi- 
 sation Society shows that as a result of the understanding 
 effected between the two movements our agricultural 
 societies have in the last year sold about Rs. 1,20,000 worth 
 of goods to the Co-operative Wholesale Society, but bought 
 from it wares to the value of about Rs. 7,50,000. Thus far 
 " Stores " appear to have been established in India mainly 
 among employees, as above mentioned. Distribution being 
 Distribution, and not Credit, there is no earthly reason why 
 separate classes should not form separate" Stores." The 
 considerations which make a mixed constituency advisable 
 do not in this case apply. But, at the same time, we see in 
 the United Kingdom that the distributive societies formed 
 for distinct classes— such as the " Army and Navy " and its 
 imitations, and the Civil Service Stores— which began with 
 a strict exclusion of all not belonging to the particular clas& 
 named in their title, are now extremely glad to secure the 
 
zBo CO-OPERATION IN INDIA 
 
 support of customers from outside, since it is after all 
 " bulk " that tells in such business. These " Stores," by 
 the way, are not really co-operative. They are composed 
 of shareholders who draw enormous dividends, and an out- 
 side circle of ticket-hdlders who patronise the stores because 
 on the whole they find that they buy things cheaper there 
 than elsewhere. Like other " Universal Providers " these 
 " Stores " are simply what the French term " £conomats " 
 — ^that is, shops which by means of bulking an enormous 
 mass of business can afford to reduce prices. There is no 
 co-operative spirit in them, nor is any possible, or, indeed, 
 wanted. 
 
 The Co-operative Dispensaries, Libraries, etc., which one 
 sees tentatively rising up in India, are really an adjunct to 
 the distributive branch — ^though the Libraries, just the 
 same as the schoolboys' societies, really deserve to be ranked 
 rather among educational institutions. There is un- 
 doubtedly something to be done in this way. In Europe 
 we, have got as far as to maintain Co-operative Restaurants, 
 Sanatoria, Seaside Hotels, Holiday Resorts and the like. 
 
 There is one great operating field for Co-operation still 
 to mention in India, which to me seems full of rich promise. 
 India has often been called a " A Country of Small Indus- 
 tries." It has been so called by so many authorities that 
 that fact alone would appear to vouch for the accuracy of 
 such nomination. Indeed, in company with Japan — in 
 which country the tireless energy and fare application of 
 small folk, laying sea as well as land under tribute for cease- 
 less productive exploitation, have found a grateful outlet 
 for creative ingenuity and deftness of fingers in a variety of 
 small handicrafts — ^India appears above all countries to 
 deserve the name which has been given to it. And in view 
 of the peculiar bent and aptitude which its fteople possess 
 for its cultivation, in it small industry appears to have a 
 prosperous future before it. 
 
 Elsewhere, whatever may be imagined by sanguinely 
 disposed readers in India of foreign reports — ^which are often 
 enough rather highly embellished official phylacteries to 
 extol supposed official well-doing — small industries are 
 more or less on the wane. Electric power and the steam 
 engine, the demand for cheap goods of uniform pattern, 
 more or less all of a piece, and, by the side of these potent 
 
THE WIDER OUTLOOK 281 
 
 forces, capitalist power and the juggernaut of modern 
 labour policy, crushing individualism under its huge wheels 
 of insistence upon collective fighting with an ever- mobilised 
 army, which grudges individual workers their freedom — 
 have wrought sad havoc in this once fruitful field of human 
 industry. Oh, there is small industry still more or less 
 everywhere. On inquiry you are surprised at seeing how 
 much remains, at any rate in the shape of relics, how much, 
 at any rate in respect of variety, has managed to survive 
 capitalist pressure and trade unionist coercion. Nearly 
 forty years ago I took up the study — Shaving all along been 
 warmly interested in small industry, on the ground no less 
 of its picturesqueness as of its economic importance, in 
 what was then my county of Sussex — ^as unlikely a county, 
 one would think, for the discovery of such survivals as well 
 might be, since it is almost all given up to Agriculture and 
 ViUadom. And I found enough small industries surviving 
 to fill a book* with accounts of its various forms, much of 
 the matter so interesting that some of the chapters have been 
 wholly or partially reprinted almost all the world over. 
 A little book recently brought out by the " Rural League " 
 of England, in support of the rehabilitation of small in- 
 dustries, tel!s the tale of a good many cottage industries 
 which have maintained themselves. And abroad small 
 industries are petted and pushed by Governments with 
 the utmost zeal for more reasons than one. Oncj of course, 
 is laudable solicitude for the welfare of the rural population. 
 I got much insight into what more in particular German 
 Governments were at the time doing in this respect — ^and 
 they are still on the same tack, only perhaps with more 
 money — ^in the course of my very painstaking inquiry into the 
 condition of the rural class of small-holders about thirty 
 years ago. And I cannot help remembering that at that 
 time — ^when I had written something upon the subject — 
 it was an' Indian Settlement Officer who encouraged me to 
 carry my studies farther, since he clearly detected the value 
 which the promotion of small industries might have for 
 India. Ministers associated with the work in the countries 
 chiefly concerned show themselves most obligingly communi- 
 cative in respect of the matter, and I could gather from what 
 * " Quaint Industries," 1882, and « Sussex Industries," 1883. Both at the 
 Sussex Advertiser Office, Lewes. 
 
282 i CO-OPERATION IN INDIA 
 
 they freely told me that they were extremely anxious to 
 make a great feature in their several countries of the exten- 
 sion and the prosperity of cottage industries. They spared 
 no pains. And the carefulness with which they prepared 
 plans and followed up cues was enough to excite admiration. 
 More particularly were they even then bent upon sound 
 and minute technical training. That work has been carried 
 farther. And really in this respect German Governments 
 set an example deserving of being taken to heart and, where 
 possible, followed. The schoolmaster, so we know, is 
 habitually " abroad " in Germany. But when it comes to 
 restilts — other than in respect of quality, which unfortu- 
 nately does not alone determine success — my informants 
 had to shake their heads. There are certain small industries 
 which pay those who carry them on a good wage. But on 
 the whole the battle is little more than a rearguard action. 
 And even the Governments stepping in to manage the sales 
 — ^as they do in some parts of Germany — ^has not mended 
 matters. People interested in the subject will do well not 
 to take aU the rosy accounts which official pubhcations 
 and English inquirers .accepting information from official- 
 quarters rather readily give of vdiat is being done, for pure 
 gospel. 
 
 On the other hand it is a gross mistake to assume — as 
 is sometimes pessimistically done — that small industry — 
 looking at it collectively, not merely as a rural by-pursuit — 
 is yielding ground hopelessly to large. Inquiries in various 
 countries — the United States, Belgium, Switzerland — ^have 
 made this clear. Large industry is growing imposingly 
 and rapidly. Small industry is compelled to yield ground 
 to it in many places. But it successfully manages to dodge 
 and evade it, skilfully creeping out of one place only to crop 
 up once more slily in another. It bends but it does not 
 break. However, the industry which so maintains itself, and 
 even flourishes, is generally speaking what corresponds to 
 the Indian spinning and weaving — ^in the United Kingdom 
 it is likewise weaving, the weaving of Harris tweeds and 
 Ulster homespuns, which bravely maintain themselves 
 because large industry cannot compete with them in what 
 requires personal taste and close attention in every piece. 
 Abroad it is lacemaking and that tasteful embroidery which 
 — in Lorraine, for instance — earns the women who ply their 
 
THE WIDER OUTLOOK 283 
 
 needles upon it a very handsome wage. Many other small 
 industries go to the wall — ^that is, they continue to exist, 
 but not as small folk's independent industries, being kept in 
 bondage by some dominating financial bania. Thus it is with 
 that picturesque clockmaking in the Black Forest. There 
 is, however, a useful lesson in that. For if those clock- 
 makers — or rather the makerv of parts of clocks and putters 
 together of them — ^had known in time how to combine in 
 co-operative societies, so as to face the bania and organise 
 their own market, as the Irish working under " Pat the 
 Cop " — ^that is, Patrick Gallagher the Co-operator, of 
 Templecrone — ^have done, they would in all probability 
 have managed to evade the necessity of bowing their necks 
 under the yoke. The famous watchmakers of Switzerland 
 are still free. To the clockmakers, however, that very 
 intended helpfulness extended to small industries by German 
 Governments formed an obstacle. Government patronage 
 can create the form of Co- operation — ^which in this case was, 
 however, scarcely attempted ; it cannot create the substance. 
 And Government aid was given in Germany and Austria, 
 in order to fr event the s all industries from organising them- 
 selves to a force which might have had to be reckoned with 
 politically. With the same aim in view it was that the 
 French Second Empire prohibited the formation of Working- 
 Men's Co-operative Societies and temporarilysquashedthem. 
 Small industries were, and still are, petted in Germany, in 
 order that those who practise them might be kept out of 
 the claws of Trade Unions and Socialists, and maintained in 
 a state of isolation. Co-operation will not grow on such soil. 
 On the British side of what once went by the name of 
 " the German Ocean " we are likewise bestirring ourselves 
 greatly to revive small industries in rural districts. Towns 
 are no place for them. Sheffield has its host of small cutlers 
 working with hired electric power subdivided so as to serve 
 the purposes of even the smallest man. But that is about 
 all that we have in urban areas. And even the work so 
 done goes to the big dealer. But in the country districts 
 small industries appear urgently called for— all the more, 
 it may be, that the rule of limiting working hours in paid 
 employment threatens to leave much idle time on workers' 
 hands. Shorter hours are all very well. However, there 
 are people who value pence above idleness. And what an 
 
284 CO-OPERATION IN INDIA 
 
 immense amount of time is there in the winter season, in 
 which small industry work, being interesting and stimulating 
 to the mind as well as remunerative, would be a godsend. 
 And that it is which seems to mark out India so particularly 
 as a land for small industries. Here is a population of many 
 millions, ninety per cent, of whom are riveted to the soil, 
 which, in its fragmentary small-holdings, husbandry provides 
 employment only during part of their time, and yet- prevents 
 the raiyats from going away to seek a living elsewhere. They 
 have skill, these men and women. What remarkably attrac- 
 tive toys and knick-knacks, but also what charming and artistic 
 articles of silver and ivory, do they not manage to turn out ! 
 Andthere is much small industry surviving, not only of the 
 comparatively " heavy " kind, to which we are bound to 
 look specifically for popular breadwinning in the future, 
 such as spinning and weaving. Mr. B. A. Collins has in a 
 recent number of the Bengal Co-operative Journal reckoned 
 up a whole host of such industries. Professor Radhakamal 
 Mukerjee supplies even a fuller list, showing the great 
 variety in which indigenous small industry survives. And 
 Mr. Ewbank found in the course of a recent inquiry that 
 small industry figures very largely indeed in Indian economic 
 life as a whole. There were a short time ago, so he shows, 
 of the 315,000,000 peopling India, 35,000,000 depending 
 on Industry. Of that number 18,000,000 were dependants, 
 leaving 17,000,000 actively employed. And of these only 
 823,000 were known to be employed in power mills, leaving 
 16,693,000 occupied in small workshops. That clearly 
 shows the capacity of Indians for small industry, and the 
 readiness with which they take to such industry as to a con- 
 genial calling. But those 17,000,000 do not remotely repre- 
 sent the total of only partially occupied employable labour 
 that the country has to deal with. However, there is no 
 reason why the balance should remain so very insufficiently 
 employed. For, if India, on the one hand, possesses the 
 requisite working power in the shape of many millions of 
 only partially occupied arms and hands, directed in many 
 cases by very capable and in almost all cases very docile and 
 teachable heads, on the other hand the wants of its popula- 
 tion are so simple, so few, and so primitive, that hand power 
 and the skill of a simple rural worker, working with simple 
 implements, will suffice to turn out what wUl meet them 
 
THE WIDER OUTLOOK 285 
 
 without any further material paraphernalia. They do not 
 want to be prepared in parts, like a piano, to be eventually 
 put together by the last highly skilled worker, but may be 
 fully completed in a simple village workshop. 
 
 Conditions therefore appear to be favourable from the 
 outset. However, it is not primary elements alone which 
 make the successful industry. People tallc of organisation. 
 And, rightly enough, they are very busy with appropriate 
 instruction. That is the feature in respect ot which 
 Germany, with its elaborate teaching apparatus, with its 
 technical schools, its itinerant teachers, its exhibitions and 
 denionstrations, can teach us a useful lesson. There can 
 never be too much instruction. India already possesses 
 something of the kind. Those weaving schools, those fly- 
 shuttle demonstrations and the like, of which we read, are 
 admirable institutions in their way, full of promise, which 
 want to be pushed. However, the crux of the problem lies 
 in the market. That is in every country, wherever small 
 industry and co-operative organisation, both being neces- 
 sarily in the same boat, exist, the governing fact of the 
 problem. And it presents a hard nut indeed to crack. 
 We, in the United Kingdom, are likewise exerting ourselves 
 to push small rural industries. We likewise possess the 
 available power in the shape of only partially occupied hands 
 and arms — ^not to the extent that India does, but quite 
 abundant enough — especially in Ireland, where small-hold- 
 ings are common. We too have men and women of un- 
 deniable skill and creative capacity, brimming over with 
 ideas, and manufacturing most tasteful, often quaint, 
 generally original, articles. In our Exhibitions of such 
 goods, held periodically, people who see the things wonder 
 at the skill and taste which have presided over their making. 
 Our " Rural League " is active, promoting the matter. In 
 Ireland the United Irishwomen— a most deserving body of 
 women workers— are doing all that they can to push it. 
 We " organise," too — ^although not as we should. But it 
 is the want of a receptive market which forms an obstacle to 
 success. That is, of course, the trouble in connection with 
 all co-operative production. And Indian small industry 
 must— like all small industry— be co-operatively organised, 
 or it becomes — or rather remains — a bania business almost 
 necessarily impregnated with " sweating "—which is just 
 
286 CO-OPERATION IN INDIA 
 
 what our weavers and shell and conch and lac workers, 
 silversmiths, ivory carvers and the rest of them, want to get 
 away from. The only hope of Indian small industry as an 
 economic power, a breadwinner for the raiyat population, 
 lies in Co-operation. 
 
 In the United Kingdom we have found a capital remedy 
 for the want of a market in our distributive societies. One 
 may be very thankful to Lady Carriiichael and her fellow- 
 workers, and other kind people like herself, for organising 
 the " Bengal Home Industries Association " in Calcutta. 
 And one would wish it a hearty " God-speed." It wiU 
 certainly 'help to advertise small industries. And it may 
 lead to a limited number of sales. However, we have tried 
 similar institutions in England and in Ireland. I have seen 
 them tried abroad, at Rome, at Milan, at Paris, at Lyons. 
 Lady Brabazon has one store in the West of London. 
 We have had one in Bethnal Green. Our productive 
 Co-operative Societies have had one in Bloomsbuty. 
 Nowhere have the results been of any magnitude. Really 
 such stores and exhibitions produce only comparatively 
 trifling sales. And in all such sales there is a smack of 
 patronage and favour. Things are bought, not because 
 they are wanted, but because kind people wish to assist a 
 good cause. There is only little bona fide free marketing. 
 Our productive Co-operative Societies find the main outlet 
 for their wares in the distributive societies, which, indeed, 
 take them in part from a feeling of fellowship. However, such 
 sentiment is accountable only for a small part of the deter- 
 mining motive. The distributive societies have actively in- 
 terested themselves in the matter by taking up shares. And 
 they have done so, because the productive societies produce 
 articles that they want, of good quality — not knick-knacks, 
 toys, shellwork and similar articles, but boots and shoes, 
 clothes, furniture and the like. So profitable has the custom 
 of our distributive societies been found to be — although 
 in their members' interest they insist upon cheapness — but 
 on the other hand they have proved very loyal customers — 
 that one large clothmill in Yorkshire is actually credited 
 with having transformed itself into a co-partnership concern 
 — ^which makes it a Co-operative Spciety— ^for the sake of 
 thereby securing the custom of the great Co-operative 
 Market. Now Indian weaving and spinning would appear 
 
THE WIDER OUTLOOK 287 
 
 to stand on the same footing as " useful " industries, for 
 the products of which a large market is conceivable. But 
 unfortunately in India you have not yet got those powerful 
 distributive stores, which, indeed, up to quite recently 
 constituted in their power a speciality of Great Britain. 
 That seems one reason the more for seeking to establish 
 " Stores," one more tempting beacon light shining for them 
 in the distance. Create a distributive market, and you will 
 not have to tout for customers for your small industries. 
 Meanwhile, it must be admitted, there is a stiff soil to 
 plough. When Mr. Hope Simpson took up the co-operative 
 organisation of weavers in his province — the United 
 Provinces — at his instance I exerted myself in London to 
 find customers for them. I was given to understand that 
 there was no difficulty about getting rid of the kashi silks 
 in India, but that brocade was difficult to place. I knocked 
 at more doors than one that seemed likely, but found them 
 all barred. All this business is so rigidly organised that it 
 is not easy to get one's foot in — especially while there is no 
 certainty about the reliability of the goods and the regularity 
 of supply. That reliability may, according to the class of 
 wares handled, consist in uniformity, or certainty of supply 
 in stated quantities, or in some other attribute. 
 
 Our productive agricultural societies secure a market by. 
 grading their goods, ascertaining and scrupulously meeting 
 customers' wants and likings, supplying goods of the 
 required uniformity, or else variety, and with the required 
 regularity and so on. Without that they would have to beg 
 for a market. It is these things which want impressing upon 
 those whom it is hoped to interest in small industry. And 
 organisation and instruction will do it. Instruction and 
 demonstration in small industry — agricultural or other — 
 is a thing about which the Government need not be chary-. 
 There is a great deal of that done at the public charge 
 in Europe and in the United States. _ And it is found 
 to bring in its reward. Some of that instruction goes to 
 the benefit of Agriculture. And with the variety of produce 
 raised in India, much of which is distinctly racy,_ of the soil, 
 it must be odd if one or other agricultural speciality could 
 not be found that might be cultivated and pushed in the 
 way of a help for slack time. 
 
 And by the side of weaving and spinning,' toy- making. 
 
288 CO-OPERATION IN INDIA 
 
 silverwork and the like, there is the great industry of small 
 folk, fishing, in which, according to Mr, Southwell's testi- 
 mony, Indian fishermen get very badly treated indeed by 
 their salesmen. We have a similar tale to tell of small folk's 
 fishing in Europe, including England, Scotland and Ireland. 
 Existing organisation is so strong. Billingsgate and its 
 provincial counterparts dominate and are so tyrannical, and 
 fisherfolk are so timid and so difficult to organise, that it 
 proves a tough job to make head against this organised 
 sweating. On the enemy's side Organisation arranges itself. 
 Mr. Fremantle has recently been busy trying to do some- 
 thing for our fisher folk on our West Coast. But it does not 
 seem to me that our Board of Agriculture and Fisheries set 
 him on quite the right tack there. However, quite recently 
 an Irish priest in a very remote part of his country, the Aran 
 Isles, has by very simple organisation, into which he threw 
 his head and his heart, taking the lead personally, scored on a 
 small scale a great success, emancipating the local fishermen 
 slaves from tlieir hard taskmasters and securing for them a 
 greatly increased return for their produce— very nearly 
 doubling the price — which makes a very considerable 
 difference to the toilers of the sea. Irishmen somehow 
 have the knack of hitting upon the right method in these 
 things, over which we in Great Britain bungle till they show 
 us the way. In the same way as Father Farragher in Kilronan 
 has Patrick Gallagher — ^grown famous in Ireland as "Pat 
 the Cop "—defied, braved and overcome the Irish banias 
 by means of Co-operation and converted his erst seemingly 
 godforsaken des,ert, with scarcely anything in it but stones, 
 far away from railways, into a prosperous industrial beehive, 
 in which women and girls now earn previously undreamt- 
 of wages, knitting gloves for the War Office. " Pat " 
 began with selling eggs — over the heads of the banias, who, 
 supposing their monopoly to be unassailable, would not give 
 the price. He got it elsewhere by taking trouble. From 
 one thing he advanced to the other. And now he is at the 
 head of a flourishing co-operative concern. Everywhere 
 where Co-operatiVe Production, including the collection 
 and sale of domestically produced small handmade wares, 
 has been made a success, that has been due to the effects of 
 some level-headed capable man who has thrown his whole 
 heart, and what people call his " back," into the work. 
 
THE WIDER OUTLOOK 2^9 
 
 These things do not work themselves out by themselves. 
 Technical schooling, extremely valuable as it is, will not 
 alone ensure success. You must have a man devoted to the 
 cause. Here labor omnia vincit. Co-operation fortunately 
 can produce all besides — and it ought to have it in it to 
 produce such men also, since there is nothing to generate 
 enthusiasm like it, once it fixes its eyes not on the material 
 gains only to be got out of an enterprise, but upon ideal 
 aims. Co-operation will supply the money needed. It knows 
 how to organise, even under difficult conditions. It can 
 purchase raw material cheaply, collect ready wares, place 
 them on the market. Please God, local leaders will be 
 found for it also. For it must mean a great deal for the 
 people of India, with much idle time, much national need, 
 generally speaking good aptitude, and, one would think, a 
 ready disposition to urge to it. To the country it would 
 mean pure gain if it could be organised. All the other 
 industrial schemes that we have heard of, which are to take 
 bread out of " foreigners' " mouths — as in the fable greed 
 took the piece of flesh out of the dog's mouth who dropped 
 it into the water snapping at its reflection — give up 
 something in order thereby to secure something else. 
 Mr. Chamberlain urged us not to spend our money abroad 
 for things that we might make for ourselves at home. How- 
 ever, our people are occupied. If they are to take up some- 
 thing new, they will have to give up something that they 
 do now, which may be worth more to them. I remember 
 the late Lord Airedale, one of our engineering kings, 
 remarking to me at the time of the Milan Exhibition : 
 
 "There is S-. (the British Exhibition Commissioner) 
 
 worrying me to exhibit at Milan. Why should t do so ? 
 It would cost me ;^i,ooo or more. And I have as much 
 work as I can do." But here is idleness to be turned into 
 employment, with nothing to lose by it. Ex otio negotium. 
 Those hands to be employed have nothmg to do now. It 
 is not exportation, as Professor Taussig has only a few months 
 ago, in a magnificent address, explained to a Congress of 
 Members of the United States Chambers of Commerce, 
 which enriches a country. " Balance of Trade," he says, is 
 an illusion. It is Production which creates wealth and 
 prosperity. WeU, here is wealth to be got out of poverty, 
 production out of idleness. God grant it prove possible 
 
290 CO-OPERATION IN INDIA 
 
 to organise these small industries and bring prosperity to 
 them. If the administrative authorities will help with 
 instruction, it is Co-operation, and only Co-operation, 
 which can bring the happy result about. And a brilliant 
 triumph it wiU be for Co-operation if it can succeed in 
 doing so. 
 
X. 
 
 THE FUTURE 
 
 Thanks to the vigorous action of the Departments and 
 officers concerned — akeady supplemented by very welcome 
 and highly useful support from volunteer workers — and the 
 declared appropriateness of the co-operative institutions 
 recommended to the conditions of the country, a great 
 deal has already been accomplished in the creation and 
 expansion of th6 Co-operative Movement in India — quite 
 enough to entitle those concerned in the matter to a feeling 
 of pride in their success. 
 
 There is, as already indicated, disappointment expressed 
 in some quarters, to the effect that our " great deal " is 
 not a very great deal more. There is a colossal empire to 
 be captured, and thus far only handfuls of seed have been 
 strewn out and brought to sprouting point. Good people 
 like to aim high. And fond reformers hope to see the 
 world changed as by a touch of magic. The most impatient 
 critic for the present, Sir Daniel Hamilton, has himself 
 avowed that " when I called the Young Men's Zemindars' 
 Society " into being I seemed to see the vision of a new 
 India rising from the old. Well, that " new India " which 
 was to reach " from Burma to Bombay, and from the 
 Himalayas to Cape Comorin," with "villages linked 
 together into Unions, and Unions into larger Unions, 
 reaching up to a golden dome above," has not yet come. 
 Please God, it mil come. But such transformations are 
 not to be completed in a day.. We are, as Sir Robert 
 Carlyle has rightly pointed out on one occasion, at a 
 Registrars' Conference, building, not for the present only, 
 but for a long— let us hope, a very long— future ; and 
 we have to take care that our plans are correct and our 
 materials sound. Jerry-building, which runs up pretentious 
 fa9ades in no time, will not ansvv'er for the purpose. We 
 have to see above all things that our foundation is sound. 
 
 291 
 
292 CO-OPERATION IN INDIA 
 
 However, even when all this impatience is discounted, it 
 win have to be admitted that vastly more remains to be 
 done than has been already accomplished. And by the 
 light of the experience thus far collected we shall do well 
 to reflect on what will have to be done, or may be done, to 
 acceler-ate future progress and widely to expand operations. 
 We are engaged upon ~a great work, which is not purely 
 economic or finaneial. The best part of it really is social. 
 
 Now, the roots of the social system lie deep, and branch 
 out far, and, to reach them requires careful, as weU as 
 patient and steady labour. The merely partial success of 
 the well- meant Inquiry in the United States instituted by 
 President Roosevelt's " Country Life Commission," under 
 which prolonged, and certainly skilful and intelligent, 
 investigation and reflection proved powerless to bring about 
 anything like unanimity among the inquirers, and therefore 
 ended in the submission of a Report which is weak because 
 avowedly- it represents only " a compromise," indicates the 
 gravity of the difiiculties to be grappled with. However, 
 the breadth of the programme set before us wants to be 
 continually borne in mind. 
 
 Let us consider the work to be accomplished. Be the 
 number of the villages to be affected what it may, be it 
 700,000, less or more, there can be no denying that we have 
 a work before us of colossal magnitude, a field to cultivate 
 of almost boundless extension, an immense lump of dough 
 to leaven with the Co-operative Spirit, which is to convert 
 it into good wholesome bread. Now let us begin by asking 
 what is the relation between our " dough " and the " leaven" 
 that we are employing. 
 
 Let us for the moment assume that )We are using the right 
 leaven and that we are using enough of it. What is the 
 condition of the "dough"? Much must depend upon 
 that. For it is the " dough " for the benefit of which the 
 leavening is to take place. What receptiveness does it show 
 for that ferment ? On this point pretty well one and all 
 witnesses heard agree that the " dough " is not by any 
 means in an ideal condition to " take " the leaven and to 
 respond to its stimulating action. There is a favourable 
 natural disposition, no 'doubt, and there is unquestionable 
 willingness. But the burden of all reports received is to 
 the effect that Illiteracy and Ignorance stand almost hope- 
 
THE FUTURE 293 
 
 lessly in the way, constituting a hindrance omnipresent, 
 paralysing, and in itself productive, like acidity in the soil, 
 of all the rich crop of poison-weeds actually to be found 
 luxuriating in the shape of economic and social abuses — 
 the selfish greed of the administrators, the impotence of the 
 administered, called upon to check such action, and — to 
 name but a few further items in an abounding crop — the 
 mistaken impression prevailing as to the state of the law, 
 which gives the mahajan so easy a handle to use against his 
 victims, which makes fishermen, as Mr. Southwell com- 
 plains, reluctant to accept the proffered hand of co-operative 
 help, and which deters raiyats from irrigating their fields 
 because the mahk's consent is supposed to be necessary, when 
 it is not. " Against Ignorance," according to the Latin 
 proverb, " even gods fight in vain." If progress is to be 
 made, such as is desired, that Ignorance will have to be 
 overcome. It is Illiteracy and Ignorance which stare us 
 in the face in the fanchayet, at the General Meeting, in the 
 wide surroundings from which new members are to be 
 recruited. The coveted gold is within their reach ; they 
 need but stoop to pick it up ; but in their ignorance the rock 
 which contains it appears to them to be but worthless 
 rubble, such as the South African mineral appeared to local 
 residents before an English traveller by chance detected the 
 precious ore concealed within its stony crust. " Nobody 
 can work for any length of time among the societies without 
 being struck by the great drawback which the movement 
 suffers by reason of the illiteracy and the ignorance of the 
 members of the rural societies. Those members must be 
 educated, if they are ever to learn their rights." So wrote 
 a Registrar early in the present year. 
 
 There is great trouble about finding a man learned enough 
 to do the secretary's simple work of very elementary book- 
 keeping. And when a man equal to that task has been 
 discovered, his fellows' ignorance generally makes him, to 
 their hurt, their master and the arbitrary disposer of their 
 funds. That it is which has led to the appointment of 
 "group secretaries," who, often enough, lord it over 
 members in an even worse fashion than does the society 
 secretary, a^d with even less right, inasmuch as they have 
 no personal interest whatever in the society for which they 
 keep accounts and write minutes as salaried servants. 
 
294 CO-GPERATION IN INDIA 
 
 It is Ignorance and Illiteracy everywhere. That prevents 
 people understanding the principle and object and character 
 of Ca- operation, and it prevents the practising of Co- 
 operation, as it should be practised, to secure them its full 
 benefit. 
 
 Now this cannot be left to continue. If you want to 
 grow a remunerative crop of wheat, you want to make sure 
 that you have awell- tilled field, ploughed, cleaned, harrowed 
 and with a well-pulverised tilth, upon which to strew your 
 seed. Indian Registrars are still compelled to strew theirs 
 among unbroken clods and on couch-covered Waste. The 
 " tilling " of the mind is Education. 
 
 Now there is no one who knows anything about Co- 
 operation who will not readily attest that Co-operation in 
 itself educates — that in one sense indeed no better educator 
 is to be found.' It is not belying its character in India. 
 Evidence to this effect has been quoted in a preceding 
 chapter. One of the most remarkable, the most promising 
 results of its action there indeed is the inspiration which it 
 has infused into those who in the rudimentary way still 
 only possible to them practise it, of an intense keenness for 
 the acquisition of knowledge — general knowledge as well as 
 technical. It is not only that they want to do better for 
 themselves materially. It is not only that they want to 
 learn the methods of Co-operation — ^the " Nine Points," 
 or whatever the number may be, prescribed to them hy 
 Registrars. They want to learn to read, to write, to under- 
 stand. And they also want to know how to carry on their 
 trade of Agriculture better than they do now.~ Many 
 societies, to do them justice, readily and heartily respond 
 to that eagerness according to their power. They willingly 
 apply to the Registrar for permission to expend the " lo 
 per cent." of their annual surplus which the Act allows 
 them to employ on works of common utility, for educational 
 purposes — money for the guru, for whose accommodation 
 societies have out of their funds set up humble residences ; 
 money for the society pathshala, which is becoming a familiar 
 feature ; for classes, libraries and the like. There are societies 
 which have required their secretaries to give lessons to the 
 children of members on several days in the week as one of 
 their official duties. From more villages than one comes 
 the information that, if p<irents can only manage to pay the 
 
THE FUTURE 295 
 
 ^ru's modest fees, thanks to the society's fostering care, 
 Jtdiication wiU be at the call of every one of their children. 
 1 o state one instance, from Ranchi, where missionaries are 
 active among a generally backward population, comes the 
 advice that soon enough " every child wfiom its parents can 
 spare for the purpose from the fields, and for whom they 
 can pay the smaU fee, will have Education within its reach." 
 Here is recognition of the fact that it is not purely co- 
 operative training that is coveted, but general education — 
 and, once more, not merely the elementary' knowledge for 
 which a very unlearned Lord Mayor of London, Alderman 
 Curtis (believing in his ignorance that he was quoting the 
 very initials of the words), coined the well-known title " the 
 Three R's," but through them, and through the instruction 
 acquired with their aid, to secure the rudimentary formation 
 of the mind, the awakening of the intellect, automatically 
 extending the sphere of learning. " There is not a man 
 who has done work for the cause," so writes one active 
 Registrar, " without broadening his mind and his sym- 
 pathies, while acquiring much fresh knowledge. . . . Our 
 village societies with unlimited liability, once started, 
 commenced to improve in quality and to show a spirit that 
 had not been expected to appear so quickly. From the 
 ranks of the society capable men commenced to appear.' ' 
 Our British Co-operative Societies teach their children 
 co-operative principles. They have special courses, and 
 award prizes to the winning competitors. But of the crore 
 and a half of rupees that they expend annually upon 
 " Education " — inclusive, it is true, of a certain quantity 
 of " entertainments " — a. goodly portion goes to general 
 schooling, with the endowment of " purses," " exhibitions " 
 and " scholarships," even at Universities. In the famous 
 " High Schools " of Denmark — ^which are quite unique as 
 manufacturies of learning for the rural population, raising 
 Danish youth to the highest standard of mental culture 
 known anywhere among people of the same station — ^it 
 is, as a rule, neither Agriculture nor Co-operation that 
 is taught, although both Agriculture and Co-operation 
 benefit phenomenally by the teaching so given — but 
 general knowledge. The seedbed is thus prepared, carefully 
 pulverised, drained, irrigated, subsoiled, hoed and fertilised, 
 upon which intellectual seed of any kind may be strewed, 
 
29^ CO-OPERATION IN INDIA 
 
 and will thrive — as will also that real , Agriculture and real 
 Co-operation of which it is the type, and for which it is the 
 preparation. It is not " coaching " or " cramming " ; it 
 is real forming of the mind, which produces capacity for 
 the acquisition of all knowledge. 
 
 No doubt better use might be made of the education 
 which Co-operative Societies in India are evidently only too 
 ready to impart. One Registrar writes to me : " I am vejy 
 glad to see that you think Government should do more to 
 help the educative side of the movement. It is now pouring 
 out crores on elementary education, the great bulk of which 
 is expended on children who get no farther than an im- 
 perfect mastery of the alphabet — ^which is no distance at 
 all. The teaching of a Co-operative Society to run its own 
 business, whether through propaganda staff or through 
 audit staff, is an economic education of considerable value, 
 and a few thousands of rupees spent in this direction would 
 give Government much more tangible results for the 
 expenditure." 
 
 Aye, but that rather confuses matters. For Co-operation 
 is indeed there to teach. But to teach as this gentleman 
 would have it is not its proper business. It does it now as 
 well-meaning people teach as a service to their kind — say, 
 in a Sunday-school. They render this voluntary service, 
 yielding it because there is no one else to do so. However, 
 in truth, such teaching, bringing the youth of the nation up 
 to the mark of being prepared for acquiring more, even 
 though that only stiU be purely rudimentary, knowledge, 
 clearly is the duty, as we now understand it, of the commu- 
 nity. It is the whole community that stands to be 
 benefited by it. The teaching that Co-operation can 
 give, and is called upon to give, is in the main that 
 which it imparts in the practice of Co-operation. A 
 force de forger on devient forgeron. The blacksmith, the 
 carpenter, the bookbinder — ^the man of any craft — ^learns 
 his craft, not by having " nine points," more or less, dinned 
 into him, till he can repeat them by rote, very probably 
 without their conveying very much meaning to his mind ; 
 but in practising his trade. It is in practising Co-operation 
 that people learn to think as members of a community, with 
 due regard for others ; that they are brought to understand 
 the value of collective progress, collective improvement, 
 
THE FUTURE 297 
 
 the raising of the status of the community, giving up some- 
 thing to its service, not as a sacrifice, but as a duty to the 
 ^^^6~7besides that principle of business, without a knowledge 
 of which no one can expect to do well ecoriomically. That 
 IS why we are right in welcoming those schoolboys' Co- 
 operative Societies, formed in imitation of some students' 
 Co-operative Societies in England — Oxford leading the way 
 — as preparatory ,teachers of Co-operation. The petty 
 savings which the boys mate in their purchases of stationery 
 and the like very probably will fill their young hearts with 
 joy, though they amount only to rupees. However, the 
 boy that has been a member of one such society, and taken 
 an interest in its doings, is likely to take an equal interest in 
 the doings of a larger society in after-life, to prove a better 
 jnan of business, a better citizen, a better man. He may be 
 assumed to leave school fairly well grounded in the rudiments 
 of Co-operation. If he belongs to the higher grades of 
 society he may be expected to become an active apostle of 
 Co-operation, like the University students of Finland who 
 have, with their unselfish and devoted zeal, proved the main 
 making of that admirable Co-operation of which we admire 
 the rapid expansion and fruitful results in their country. 
 However, when all is put upon Co-operation that Co- 
 operation can carry, general education of the child still 
 remains a matter for the community at large. Co-operation 
 win come in to help, so we may be sure. But the ordinary* 
 school is a department for the public administration to take 
 charge of, since, as observed, it is the community which 
 gains the benefit from a better taught, better mannered, 
 better morally schooled, and therefore more easily governed 
 population. There is elementary Education wanted before 
 Co-operation steps in to improve it. It was Switzerland 
 which first taught the world the lesson that public money 
 spent upon popular Education, even to the extent of 
 opening to every child in the country, assuming its capability, 
 a free road up to the highest points of University Education, 
 is not by any means money thrown away, but on the 
 contrary money exceedingly well laid out for the benefit 
 of the community. 
 
 Regrettable as it is, it is a striking fact that, as compared ' 
 with other civUised countries, it is the countries in which 
 the English language is spoken which are particularly back- 
 
298 CO-OPERATION IN INDIA 
 
 ward in specifically rural elementary education. In no 
 other civilised country does the same state of things prevail. 
 Everywhere else — in Germany, France, Denmark, Belgium, 
 Switzerland and so on — is rural teaching treated as a speci- 
 ality with a distinctly rural tone given to it. Among 
 English-speaking people it is not so. The United States 
 are now putting their shoulder to the wheel, having dis- 
 covered the defect, which was as glaring there as it is in 
 India or, for the matter of that, in England. For we in 
 England are in precisely the same case. There is plenty of 
 education among us. But what is sadly, badly wanted in it 
 is what Mr. Brooke Hunt, of the Board of Agriculture, has 
 in his evidence, given in the course of an inquiry on the 
 subject recently held, aptly termed " a rural atmosphere." 
 The consequence is that young folk so educated either fix 
 their gaze upon some other calling — ^for which in fact they 
 have been virtually prepared in their schooling — and 
 accordingly desert the fields and villages ; or else that those 
 who remain behind, being mainly the dolts, whose deficient 
 intelligence does not fit them for such ambition, remain 
 practically the dolts that they were, forgetting in verj' little 
 time the unsuitable learning that was mechanically filtered 
 into them. We are now trying to amend our educational 
 system in England by a very thorough reform. But who 
 can tell whether amid all that thinking and scheming for 
 the raising of future softas proper justice will be done to the 
 denizens of the fields ? In America they have become 
 aware that strenuous labour in that direction is required. 
 " We want," so a leading agriculturist. Professor at an 
 Agricultural College, exclaimed at one of the latest Con- 
 gresses on " Marketing and Farm Credits "—that is, 
 practically, Co-operation in Agriculture — ^held in the 
 United States, " a veritable campaign of Education." 
 
 In India the situation is even more serious. For not only 
 is there, as Mr. Wynne Sayer has shown, no rural tone in 
 rural Education, but there is much too little teaching 
 altogether. " The rural pupil," so Sir James Meston has 
 put it, " is at present the Cinderella of our educational 
 system." " Teaching," says Mr. Wynne Sayer, Assistant 
 to the Agricultural Adviser to the Government of India, 
 " should have more relation to the environment of the 
 children. Textbooks suitably for urban primary schools 
 
THE FUTURE 299 
 
 are not suitable for village schools and at present they are 
 common. Hence children in village schools become rapidly 
 di\^orced from their father's profession. In arithmetic who 
 teaches should deal with sums relating to payments of rent, 
 real measurement of fields, calculation of fields' products, 
 etc. " It is only developed intelligence," so he goes on, 
 " that can follow the abstract. Children should go from 
 concrete to abstract, and from practice to theory." The 
 matter is understood to be now occupying the attention 
 of Government. Let us hope that it will be satisfactorily 
 settled. Education is a wide field to operate in. 
 
 Mr. Wynne Sayer's remarks of course have reference 
 specifically to Agriculture. But the interests of Co- 
 operation and Agriculture in respect of rural Education 
 run upon very much the same lines. At its tenth meeting 
 the Board of Agriculture in India passed some very emphatic 
 resolutions exposing the absolute insufficiency of the present 
 educational system for rural wants. One resolution there 
 passed explicitly declares that " the present system is wholly 
 inadequate in respect of the provision of suitable textbooks 
 and premises and, above all, in respect of the training, and 
 pay of teachers." Another resolution rightly reminds the 
 Government and the public that " an improvement in the 
 economic condition of the agricultural population of India 
 is a matter of the most fundamental importance to the 
 country." And it freely speaks of " revolutionary improve- 
 ments needed in the system of Education." Writing as a 
 Registrar of Co-operative Societies (in Bihar and Orissa) 
 Mr. E. L. L. Hammond, in his interesting and suggestive 
 Report for the year 1912-13 points out the various troubles 
 to which want of education exposes the rural population, 
 alike in their practice of co-operation and in the abominable 
 and extortionate fleecing which they are made to undergo 
 at the hands of the mahajan, who methodically trades upon 
 their ignorance. Mr. Hammond quotes cases of the 
 grossest injustice and says that " the only permanent 
 remedy lies in Education, not necessarily in an increase in 
 the number of colleges and law classes, but in an increase 
 in the number of village schools and an attempt to make 
 them popular. Primary education must precede any 
 improvement in village life, whether agricultural, or eco- 
 nomic, or sanitary." The sooner it is recognised that, a? 
 
300 ' CO-OPERATION IN INDIA 
 
 Mr. Hammond here points out, it is ignorance rather tlian 
 absolute need which hands the raiyat over helpless to the 
 Shyloclc mahajan, the nearer shall we be found to be to ,a 
 solution of the troublesome social and economic problem 
 which lies like an incubus on rural India. The very help 
 that we are endeavouring to give in the shape of Credit 
 Societies has been shown to be useless so long as the raiyat 
 does not fully seize the knowledge how to avail himself of 
 such assistance. However, there lies needless trouble beyond 
 that. The mahajan has made the notorious Arthur Orton 
 philosophy his own, which lays it down that by a wise 
 ordinance of Providence there are " sharps " and " flats " 
 in the, world and that the natural mission of the " sharps " 
 is to exploit the " flats " — the " flats " in this case being 
 the ignorant raiyats. Mr. Hammond goes on : " Unless 
 Government is prepared to pay the bill, villagers in the 
 interior will be disinclined to employ the trained guru. . . . 
 On the other hand, they are genuinely anxious that their 
 children should not suffer as they themselves do from the 
 want of elementary education. The problem is to make 
 our system fit in with their ideas. If the boys were taught 
 in the Roman character, I believe the parents might be 
 prepared to welcome the innovation and feel that they were 
 getting something new for the extra payment. The present 
 system leads to no real use. Some textbooks are in the 
 Kaithi, some in the Devanagri. Any * peshkar ' takes a 
 long time to decipher a document written in Kaithi. Our 
 police reports are now written in Roman character. The 
 idea of a smattering of English is very attractive to the 
 people. As one man put it to me, when his sons went on to 
 Assam, during the cold weather, they could not read their 
 railway tickets nor the names of the stations. If they knew 
 the Roman character they could." Against this last- 
 rriade argument it may be quoted that in Bombay Presidency 
 the new institutions teaching in the vernacular are reported 
 to have proved a valuable and welcome innovation. In any 
 case Mr. Hammond appears to be fully right when he insists 
 upon the necessity of multiplying, pushing and popularising 
 primary village schools. That is the root from which the 
 educational plant will have to spring and through which to 
 draw its sap. The Board of Agriculture some months ago 
 Stressed the necessity of more Middle Schools, That may 
 
THE FUTURE 361 
 
 be tight from its professional point of view. But for 
 Co-operation certainly it is primary schools education which 
 IS above all things called for. And Co-operation promises 
 to do more for Agriculture generally than Middle School 
 teaching. 
 
 In truth a great point, alike for the prosperity and the 
 extension of the Co-operative Movement, would be gained 
 if you could manage to catch your co-operator young, to 
 instil CO- operative ideas into him and impregnatethe growing 
 generation with a knowledge and love of co-operative 
 principle. That would probably do more for the expansion 
 of the Co-operative Movement than the attempt advocated 
 to force adults, grown up amid other ideas, which h^ve 
 become hardened in their minds, into organisations which 
 under such circumstances would in all probability be co- 
 operative only in name. " Unless the people are taught in 
 their villages what Co-operation is and what they can gain 
 by it," so rightly remarked Mr. L. E. Buckley at the fifth 
 Co-operative Congress held at Madras, " they cannot be 
 expected to come forward and ask for societies." That 
 applies, of course, to adults as. well as to children. For 
 adults a staff of travelling teachers is wanted, steadily on 
 the move from village to village, capable of explaining the 
 benefits, in the first instance economic — because such are 
 the most alluring — to be secured by Co-operation. The 
 United States and Canada are at present working that 
 method of instruction with studied energy with regard 
 specifically to Agriculture, doubling the number of their 
 " county agents " and " county representatives." There 
 is now scarcely an elementary school in the United States 
 in which some agricultural instruction is not imparted. 
 The French apply the principle in the matter of Forestry. 
 In their scolaires forestieres, set up in wooded parts of the 
 country, they systematically bring up their young children 
 to a knowledge of silviculture and forest work — and get a good 
 deal of the latter done by the young folk gratis. The 
 growing generation wants to be taught something about 
 Co-operation in the same manner in their schools — more 
 particularly if the pathshala is run in part or altogether by 
 a co-operative society. However, such theoretical teaching 
 will not go far enough. What is required is practical 
 demonstration and elementary practice. One is glad, as 
 
302 , CO-OPERATION IN INDIA 
 
 observed, to see schoolboys' Co-operative Societies finding 
 their way into Indian organisation. There is not much 
 money to be saved by co-operative distribution among 
 school children. However, in Oliver Goldsmith's words, 
 " little things are great to little men." But the great point 
 to be gained is that such Co-operation — Co-operation of 
 the most elementary sort as it is — is bound to awaken an 
 interest in those who practise it. At the same time these 
 children learn the rudiments of co-operative practice, 
 elementary book-keeping and the like, and come to be good 
 recruits for the great co-operative army that we hope to 
 see rise up in course of time. Mr. Ewbank deserves the 
 thanks of co-operators for having encouraged this elementary 
 Co-operation in his Province of Bombay, where, a little 
 while ago — apart from the well-known instance of Belgaum 
 — there were reported to be some 270 schoolboys' societies 
 in existence. 
 
 However, the side of Co-operation which is most likely 
 to interest Indian raiyats is not the distributive, but the 
 productive, and specifically the agriculturally productive, 
 side. Now in this respect the United States and Canada 
 once more can give India very useful instruction. The 
 material to which such infantile Co-operation should be 
 applied will of course in many respects be different in the 
 oldest part of the old world from what it is in the new. 
 But the practice and principle will be the same. American 
 Agriculture and American Co-operation, on both sides of 
 the St. Lawrence River, owe a great deal indeed to those 
 didactic pig, and calf, and corn, and poultry and canning' — 
 also gardening — clubs, to which with good reason Mr. Fre- 
 mantle has called attention in his pamphlet on Education. 
 Gardening clubs are now becoming a great feature. Those 
 clubs — often called " Demonstration Clubs," because they 
 teach by demonstration^-which are, according to their 
 several composition and occupation, in use for both sexes, 
 have done not a little good in the new world. A recent 
 report shows that there were nearly a year ago certainly 
 about two million boys and girls enrolled in such organisa- 
 tions ; and the number kept continually growing. Mr. 
 Joseph Hirsch, a gentleman in a position to know, says that 
 *' it was the work of little boys and girls in corn, cattle 
 and pork production that created a veritable agricultural 
 
THE FUTURE 303 
 
 metamorphosis in the South. We had been sending 
 millions of our dollars out of our borders for meat and for 
 other food and foodstuflEs. To-day that is rapidly being 
 changed." To a great extent these clubs are fathered by 
 bankers, who supply the money — by way of advances — 
 finding themselves conscientiously repaid, and looking for 
 a reward for their services in the banking custom to be 
 expected from the new young folk as they grow up. The 
 clubs, rendered more attractive by periodical competitions, 
 turned into feasts, with money prizes, certainly have a 
 remarkable effect in stimulating interest and teaching good 
 practice. There are the pig clubs, in which each boy takes 
 charge of a pig, to be either fattened or, if it be a sow, to 
 be made to bear a good litter. Then there are the calf 
 clubs, in which a calf is treated in the same way — already to 
 a not inconsiderable extent by girls as well. There are cow 
 clubs and poultry clubs for both boys and girls. Besides 
 learning how to do things, the young farmers in this way 
 earn a good profit, which they themselves as well as their 
 parents value. An American paper tells of a boy who in 
 1917 borrowed 50 dollars wherewith to buy a pig. " Last 
 autumn " (still in 1917) he sold 245 dollars' worth of pigs, 
 yielding him a net profit of 195 dollars. A fact of perhaps 
 greater importance from a public point of view is that, as 
 the Department of Agriculture officially reports, through 
 the medium of boys' clubs pure pig breeding has become 
 common in the South, " where formerly a well-bred hog 
 was scarcely known. Thousands of pure-bred pigs have 
 been distributed among the boys with excellent results." 
 The pig is not in India held in the same estimation that it is 
 in America. But what has been done with one species of 
 animal might be done with another. The main point is 
 that breeding of live stock may in this way be rapidly and 
 efEectively improved. There might, for instance, in the 
 hilly country of India, be bee clubs. Then there are seed 
 clubs, greatly favoured in America, and doing a deal of good, 
 which might, as one would think, prove applicable also to 
 India. Children are set to select with care the best ears 
 in a field of wheat, or whatever the crop may be, of their 
 parents, and collect a certain quantity, sufficient to " breed " 
 from, which bagful is duly used for " plant- breeding." 
 That instils a great deal of useful knowledge into infantile 
 
364 CO-OPERATION IN INDIA 
 
 minds. Children learn to distinguisK one " breed " of plant 
 from another, so as to be able to keep their seed pure, and 
 acquire a great deal of botanical knowledge, apart from an 
 interest in corn-growing. Then, again, there are the 
 canning clubs for girls, which, in a country like India, which 
 has so much — mangoes, lichis, jack-fruits and the like — to 
 bring into the world's market, ought to be acceptable as 
 an instructive institution. Such canning clubs are now 
 multiplying fast in America, where people proverbially 
 " eat what they can, and can what they can't." And they 
 lead to practical results. 
 
 ^Here is one instance, quoted from the Secretary of 
 Agriculture's last Tearbook, as being reported by the well- 
 known authority Mr. Bradford Knapp, who is at the head 
 of the " Teaching and Demonstration Bureau " : " In 
 Florida, club girls are taught to preserve figs. Those figs 
 are so well preserved that in one village an order promptly 
 came in for 5,000 jars of them. Girls are also taught 
 dairying, household work and sanitation. The result of 
 teaching the last named was, as Mr. Knapp reports, that 
 during the school term following this service not a single case 
 of contagiovis or preventable disease occurred." That would 
 surely be an achievement in India. In his last Yearbook 
 the Secretary — ^that is, the "Minister" — of Agriculture 
 writes in favour of the clubs generally : " The boys' and 
 girls' pig and poultry clubs are valuable agencies for enlarg- 
 ing the meat output, as well as for training and developing 
 the coming generation of farmers. The membership of 
 both classes of clubs more than doubled during the year. 
 The pig clubs now have more than 21,000 members, and the 
 poultry clubs 8,500." In respect of plant-breeding, the 
 production of good, pure strains of wheat and other produce, 
 likewise such clubs are known to have rendered useful 
 services, such as certainly, one would think, must be accept- 
 able in India, whether the crop be wheat or rice, cotton 
 or jute. 
 
 Certainly there is, under this aspect, a great deal to think 
 of and to reflect upon. The great commandment to be 
 steadily borne in mind will have to be : Educate ! The 
 trouble is that questions of this sort are as a rule taken in 
 hand, not by those who have well explored, and therefore 
 know the territory to be cultivated, its needs and the tastes 
 
THE FUTURE 305 
 
 and likings of the people to be benefited, but by men of the 
 " superior " sort, dons and " great guns," who have not thfe 
 requisite touch with the units of the flock to be shepherded. 
 Now it is extremely difficult for a " superior " man to think 
 for "inferiors." It may be hoped that the ball set in 
 motion by Mr. S. N. Roy in Bengal may be made to roll on 
 in the rural direction. For without Education of the right 
 complexion, to begin with, we cannot look for very perfect 
 Co-operation, nor for very rapid advance and extensive 
 spread of the same. Once fairly good. elementary education, 
 of a rural character, is provided. Co-operation may be 
 trusted to perfect itself effectually, as it has done in France — 
 witness Lord Reay — eminently so in Switzerland, in Ger- 
 many, and above all things in Denmark, which decidedly 
 leads among nations in Agricultural Co-operation. The 
 question is even more serious for India than it is for countries 
 in Europe or in America. On either side of the dividing- 
 space Agriculture is bound to suflEer under the want of 
 Education. But in India there is for the rural population 
 practically no other outlet, as there is for ours in our several 
 industrially more developed countries. 
 
 With appropriate Education provided, the native leaning 
 of the population of India toward common action, and the 
 motive power of its needs may, one would think, be relied 
 upon to secvire to Co-operation a freer course and so to lead 
 to a multiplication of beneficent co-operative institutions. 
 
 That may be held to dispose generally of the question of 
 what in my simile I have called " the dough." Let it be 
 well kneaded with instruction, and it wUl be ready to 
 receive the leavening ferment and respond to its action. 
 But now, how about the " leaven " to be used ? Is that of 
 the right sort ? And is there enough of it ? I will put 
 the last point first. 
 
 The general import of the iriformation coming in from 
 the quarters most capable of judging — that is, from the men 
 who are in constant and immediate touch with the " dough " 
 and on whom the task directly falls of " leavening " it- 
 appears to be that there is not. And the fact that there is 
 not enough appears to account for the further, rather sad- 
 dening, fact that, as a natural consequence, those who guide 
 the movement seem a little in danger, under pressure of the 
 work put upon them, of falling away from their original 
 
 20 
 
3o6 CO-OPERATION IN INDIA 
 
 high, ideal and aim, and straying on to paths on which 
 there may be danger to be encountered. "Co-operation 
 started at the outset with a quite diminutive piofteer force 
 to plane the way. It seemed " a large order " indeed to 
 expect so small a band of missionaries to convert India, with 
 its " 700,000 villages," to the gospel of Co-operation. 
 Since then the task to be accomplished has assumed very 
 much more formidable proportions. We have indeed got 
 Co-operation — at any rate the skeleton framework of it, 
 the dry bones, waiting for sinews and flesh to be laid upon 
 them,' and the breath of enduring life to be breathed into 
 .them. We have got an army. We have the chief officers, 
 with whom no fault is to be found. But where are the 
 musketry ijistructors, the driU sergeants, the non-commis- 
 sioned officers ? Without their instruction, without their 
 drilling, the army — ^host of untaught recruits that it is, 
 however large — cannot accomplish its task. The want of 
 such instructing, such watching, such calling to order, and 
 putting torights appears to be felt at all points, not in one 
 place only, but everywhere. 
 
 The one thing above all others now most urgently needed 
 evidently is inspection — ^frequent, searching' inspection, 
 coupled with impressive, methodical instruction, such as 
 may be relied upon to leave a mark upon minds, very much 
 more than those printed handbooks, " nine points " and 
 so on, which are now issued from headquarters, can impart. 
 However, there is no sufficiently skilled staflE to carry out 
 such inspection with anything like the thoroughness, the 
 intelligence, the regularity and the frequency that there 
 should be. Hence in great part the rather ominous results 
 to which allusion has been made more than once in what 
 has been here written. Registrars appear to me to be in 
 danger, for the sake of expediting and multiplying business, 
 of falling away from the genuine co-operative standard, 
 introducing, one after another, mechanical devices and rule- 
 of-thumb methods, to make things more manageable, so as 
 to enable them to get through their work^-easing such for" 
 those who have to perform it, but at the same time un- 
 fortunately also rendering k less safe, less educating, less in 
 accord with co-operative ideals. Some of these practices 
 have been incidentally commented upon. The matter is 
 of specific importance because, as will have to be borne in 
 
THE FUTURE 307 
 
 mind, Co-operation in India occupies a totally different 
 position from what it does in those European countries , 
 which can alone be compared with it, inasmuch as they are 
 the only other countries in which Co-operative Credit is 
 the principally accepted form of Co-operation. In those 
 countries Governments do a great deal in connection with 
 Co-operation — to a considerable extent they do more than 
 is at all desirable. But they do not represent the prime 
 moving or driving force. It was -private individuals, 
 attracting a private following to themselves, placing before 
 their followers a distinct specified programme — narrow, as 
 it may seem to some, but all the more intensely cherished 
 and the more energetically pursued — who took up in each 
 case their own particular cause, by the side of one another, 
 each section working for itself and for that reason working 
 all the more strenuously. There was accordingly, and there 
 still is, a private .driving- force at the back of Co-operation, 
 holding well-defined views, pursuing well-defined ideals, 
 working from intense conviction, employing all its energies 
 towards the attainment of a desired, weU-defined end. Each 
 particular type of Co-operation thereby becomes a definite 
 thing. And the resolution which prompted to its prose- 
 cution is a wonderful generator of power and energy, far 
 more impelling than any influence that a Government could 
 devise. Throughout the movement it may be noticed 
 that it is a special object pursued which nerves to an active 
 propaganda and to self-sacrifice and vigour. Among the 
 followers of Schulze Delitzsch it is the principle of pure self- 
 help, as opposed to Government assistance and domination ; 
 among the followers of Raiffeisen it is the moral good of 
 those who enlist under their banner ; among the Socialists 
 it is the hope by unceasing effort to realise the Socialist ideal 
 of a coUectivist Commonwealth ; among the Slav societies, 
 alike in Austria and in Prussia, it is consciousness of a 
 nationalist interest requiring defence, which prompts them, 
 as the German Herr Wrabetz, of Vienna, has owned 
 in his paper, to put far more " back " into their movement 
 than do the Germans ; among the " Catholics " it is the 
 good of " Mother Church " ; and in all these organisations 
 it is moreover the specific co-operative programme framed 
 
 tolerantly intolerant, if I may so put it, that is, readily 
 
 bearing with others in .their own conduct of matters, and 
 
3o8 CO-OPERATION IN INDIA 
 
 recognising them as brother co-operators, but allowing only 
 one particular code in their own organisation, which has 
 inspired the zeal and energy with which these people work — 
 ready, if need be, to make sacrifices for the cause. They are 
 not thinking simply of making life easier or cheaper. So 
 far from asking anything from Governments, the organisa- 
 tions here referred to — in contrast with those formed for 
 political ends — show themselves particularly anxious to be 
 let alone by Government. Their own zeal is considered 
 enough driving-force for them. Animated by such ideas 
 these people come forward willingly to teach, educate, pay 
 for their own credit, their own inspection, their own 
 " publicity." They pay their own leaders, so far as such 
 require to be paid, as making a profession of their labour. 
 
 In India things are widely different. There are people 
 there sincerely anxious for the spread of Co-operation and 
 willing to work for it. But there is as yet too little cohesion 
 among them to make of them a sufficiently propelling 
 moving force for working for one common distinct ideal. 
 Indeed their ideals and aims go not a little apart. And all 
 their programme and their " Credo " may be said to be stUl 
 in the making. Above them, as the real motive and driving- 
 force in the matter, stands the Government with necessarily 
 very neutral views, prompted by the most benevolent 
 intentions, but by reason of its very neutral tint not cal- 
 culated to inspire keen enthusiasm, still rather seeking for a 
 final programme than working from such. Quite neces- 
 sarily under such conditions, and not by any means wrongly, 
 the Government has to trim its sails so as to catch all winds, 
 allowing free action to its local agents. It lays down 
 general rules in its Acts and Resolultions, and the Report 
 of the Committee on Co-operation — to all points in which 
 I must candidly confess that I do not subscribe. I am by 
 no means thinking of censuring this. Nothing else was 
 possible in India. But it carries its own drawback with it. 
 There is no other way for proceeding than that described 
 when the Government is the moving force. The Govern- 
 ment desires to see Co-operation established and prospering. 
 But it naturally leaves the discovery of the best methods 
 for practising it to those actively engaged in the work. It 
 has declared in favour of no school. It has taken the lead 
 because there was no one else to take it. The thing must 
 
THE FUTURE 309 
 
 be done. So the Government has stepped in to fill the 
 hiatus. It has no predilections, but wants to see that 
 established which is found to answer best. That gives 
 breadth, undoubtedly, to a programme. But it does not 
 generate the maxinium of propelling and leavening force. 
 It makes Co-operation accepted, not as a dictate of con- 
 vinced enthusiasm, but as a dose of medicine prescribed by 
 a kindly intentioned physician. All this is unavoidable. 
 But it is a factor to be reckoned with when we compare 
 progress in India with development in Germany or Italy. 
 The Government encourages, but it cannot propound a 
 decalogue, such as M. Luzzatti, or Schulze Delitzsch, or 
 Raiffeisen could put forward. And those who work to back 
 it up are not leaders in the matter among the people 
 directly interested, but its own agents, whose views neces- 
 sarily vary — and it is well that they do so. 
 
 And not only do their views vary, but their persons 
 change. The Indian Schulze or Raiffeisen of to-day is some- 
 thing else to-morrow and sees his place in the organising 
 phalanx taken by a newcomer with possibly quite different 
 views, certainly a different face, with which the co-operative 
 herd has still to grow familiar. That makes a great differ- 
 ence. There is surely no ground whatever for any com- 
 plaint about want of zeal or energy shown on the part of 
 Registrars. Quite the reverse. There could not have been 
 better labour given to the cause. However, the Registrars 
 are here to-day and gone by promotion to-morrow. Accord- 
 ingly continuity becomes a doubtful quantity. One 
 Registrar prescribes compulsory deposits. His immediate 
 successor taboos them. One Registrar asks for compulsory 
 powers. His successor declares such entirely uncalled for. 
 One Registrar pleads with native eloquence for " Guaran- 
 teeing Unions." His immediate successor states his dis- 
 belief in such. One Registrar wiU not have a rural society 
 number more than twenty-five members, and wherever 
 there are more in the same village willing to join, rules that 
 there must be several distinct societies. Another goes 
 straight against this, and even unites — quite rightly — 
 several hamlets into one for society purposes, objecting that 
 the existence of several societies in the same village is 
 certain to " crystallise party " and mean strife and envy, 
 and that contiguous hamlets may well be joined together. 
 
310 CO-OPERATION IN INDIA 
 
 And so on. One could not expect Registrars to sacrifice 
 their further career for the sake of Co-operation. But 
 there is the awkward fact to reckon with that, instead of 
 having one Schulze Delitzsch, onte Raiffeisen, one Luzzatti, 
 with a staff of their own training, wedded to their cause and 
 faithful to their co-operative career, there is a' kaleidoscopic 
 succession of men, with no permanent staflE around them, 
 no sacr amentum to bind them to any particular colours, each 
 being given only a few years for his own brief career in the 
 cause, all of them, practically speaking, happily good men, 
 but some not disinclined to paddle their own canoe and mix 
 up borrowed items taken from various foreign systems with 
 a possible prospect of creating a Frankenstein hotchpotch 
 of co-operative odds and ends. 
 
 That makes it all the more desirable that Volunteer 
 workers should be enlisted in plenty. They would represent 
 a great help indeed for Co-operation. Among volunteer 
 workers one can look for some permanence in residence, 
 accordingly some continued action- and some identification 
 with the particular locality. Also for continuity of plan. 
 Traditions are likely to harden, habits to be formed and 
 rules made permanent. Evidently there are excellent men 
 for such work in India. However, their number is still far 
 too restricted. They would have the future of Co-operation 
 in their hand, like a truly beneficent fairy, carrying a 
 cornucopia laden with good gifts for the country. But 
 there are too few of them. Go to a German, a French, or 
 an Italian Co-operative Congress and see how strongly 
 volunteer workers muster there. Or pursue them into their 
 villages. Half the strength of the European movements 
 comes from the intelligence and business experience 
 voluntarily enlisted there in the service of Co-operation. 
 One could not, of course, in India, with all its difficulties, its 
 distances, its want of communications, look for anything 
 of the same sort. But it would be an excellent thing indeed if 
 — by degrees, at any rate — something like it coidd be created. 
 
 Now, in default of such volunteer assistance, the Govern- 
 ment appears disposed to beat up its own official body- 
 guard, directing its District and Revenue oflficers to take an 
 active interest in the operations of Co-operative Societies, 
 to attend their meetings, take the chair — ^whether members 
 or not — and broach any subject that they feel moved to 
 
THE FUTURE 311 
 
 take up. Certainly one would wish agents of the Govern- 
 ment to show favour to Co-operation. However, the way 
 proposed is evidently not quite the right one for the purpose. 
 There IS too much belief, as it is, that, because the Govern- 
 ment IS the moving factor and urges people to join societies, 
 the whole thing is in fact a Government "machine," 
 financed, endowed and worked by the Government, that it 
 IS Government money that is being dealt out, and that, 
 accordingly, so long as no compulsion is applied, repayment 
 is not a matter of necessity, and vigilance and discrimina- 
 tion in the employment of money is not called for. 
 It is supposed to be for the Government to see to that. 
 'J he ex- officio presence of Government officers, other than 
 Registrars, as ex-officio supermembers, is sure to intensify 
 the vicious misapprehension. Besides, it means steering 
 the craft in the wrong direction altogether. For Co- 
 operation is self-government, self-help, self-determination. 
 What you want to teach Indians is that in the society all 
 are equals, have equal rights, and also equal responsibilities. 
 Mr. G. Deshpande has pointed out the difficulties already 
 to be contended with. " There are," so he writes, " the 
 social disunions and party factions existing in every village. 
 The old panchayet system has disappeared, and the Criminal 
 Courts are but a poor substitute for the adjustment of minor 
 quarrels and petty jealousies. The headmen and their 
 families have always enjoyed certain social privileges and 
 rights, what we call ' Man-Pan.' In fact my lawyer friends 
 tell me that phenomenally heavy sums are spent in the 
 assertion of these rights. In truth the whole of our village 
 system is opposed to the idea of equality. Co-operation, 
 on the other hand, is whoUy based upon equality. It is 
 therefore not to be expected that the seed of Co-operation 
 planted on such uncongenial soil will germinate rapidly." 
 
 Accordingly the thing to be done, evidently, is to Hndle 
 and stimulate the sense of equality among members, to 
 bring it home to them that in the society all are equal, and 
 encourage the rank and file to assert themselves, and not to 
 intensify the feeling of disparity by the introduction of ex- 
 officio members as superiors. 
 
 If Co-operation is to develop, those who practise it will 
 have to be taught by degrees to do without their present 
 official go-cart, not to be strapped up more tightly in it. 
 
5 12 CO-OPERATION IN INDIA 
 
 In the early days of the movement I begged Registrars to 
 keep the District Officers as much as possible out of the 
 movement. And they wrote me that they were doing so. 
 Why then turn round now upon the policy which on the 
 whole has answered as well as it could be expected to do in 
 difficult circumstances ? 
 
 If the Co-operative Movement is to prosper, people will 
 needs have to be taught to do things for themselves and to 
 supervise their own officers. As things stand, that can be 
 no easy process. However, such aim should be consistently 
 kept in view. 
 
 Now, if that is tobe brought about, there wiU have to be 
 a deal more teaching — ^teaching, first, of the sort already 
 spoken of, to be accomplished under Government authority 
 in the primary schools; and teaching, next, such as Co- 
 operative Societies themselves can best administer. Under 
 that head the weakest point in present organisation without 
 question is that of Inspection. Almost every Registrar's 
 Report complains of the want of Inspection. That is the 
 diapason sounding through the entire harmony struck up. 
 And that is in itself a serious admission. For all Co- 
 operative Credit hinges absolutely upon efficient Inspection- 
 Inspection is, in co-operative matters, the Education of 
 Educations, the soul of the entire science of Co-operation. 
 And, as matters stand, unfortunately there seems ho ready 
 remedy for the want. It is not the Revenue Officer or 
 District Officer's eloquent but necessarily only very general 
 oratory at a society meeting that wiU supply what is wanted, 
 but the critical examination of the Society's doings by an 
 expert, who can lay his finger upon the very spot where the 
 evil lies and say : " Here you have done wrong ; this is what 
 you ought to have done," gathering the society, or at any 
 rate the fanchayet, round him and driving his lecture home. 
 And then he must come again, and see if effect has been 
 given to his bidding, and carry his teaching farther. For it 
 will have to be continued while the society lasts, but wiU of 
 course prove most needful, and at the same time most 
 laborious, in the present, being an early stage. Now this, 
 of course, is inherently the society's own work — the work of 
 the associated, or, as it is called in India, " federated," 
 societies — and eventually they WiU have to find a way for 
 doing it. It is for their benefit, not only momentarily, as 
 
THE FUTURE 313 
 
 keeping business straight, but permanently, as creating a 
 settled rule of action, ensuring continuity of policy, captur- 
 ing public confidence and so strengthening Credit. How- 
 ever, for the moment, to undertake such work is beyond their 
 power. In the first place there are no " Federations " of 
 the sort suggested in existence. Registrars and others 
 interested in the matter meet once a year to discuss things 
 in their particular province in a free and easy way, and once 
 more, collectively at Simla, as a meeting for all India. 
 There things are talked over, not without some repetition, 
 which is not in every case profitable. Resolutions are 
 passed. And according as he is inclined the Registrar then 
 in his particular province revises his programme accordingly, 
 and inserts new items, or else he does not. It is always he 
 who dictates what is to be done. The appointment of a 
 Committee made at the last Conference to consider, as it 
 seems, the creation of a more permanent central organ, is 
 a step in the right direction. But even that, of course, could 
 not bring about the formation of a " Co-operative Parlia- 
 ment." Such all-Indian Conference could have no power 
 to prescribe anything. It may record the views of people 
 interested in Co-operation, but not of the Co-operators 
 themselves — ^from whom, indeed, at the present time, not 
 much could be expected. But, organisation rather of 
 patrons than of beneficiaries as it must be, it might prove 
 something of a beginning and give continuity, national 
 character and unity to the movement. 
 
 The other reason why federated societies cannot yet 
 undertake the "federal" Inspection which is so much needed 
 —a diflEerent matter altogether for Credit than for other 
 forms of Co-operation — ^is that, even if a Federation existed, 
 they would have no money for the purpose. Now that 
 defect is remediable. The Government has quite rightly 
 directed that societies are henceforth to pay for their own 
 audit, it is no more than fair that they should be made to 
 begin to pay their own way and answer for what is instituted 
 for their own benefit. And perhaps that will help to teach 
 them what for the moment they probably do not nearly 
 fully realise — namely, that it is for their benefit, and not 
 merely a whim of a pedantic Government, resorted to to keep 
 things safe, so as to spare their liability. And they ought 
 now to be in a position to afford the small charge. Hov/ever, 
 
3H CO-OPERATION IN INDIA 
 
 Inspection, such, as one would like to see it to be, above all 
 things during the present stage of evolution, is a more 
 laborious and more costly matter than mere audit, calling 
 for the services of more highly skilled officers. Auditing, 
 it is true, is likewise out-and-out best done by skilled men. 
 We are insisting upon that in the United Kingdom — in the 
 place of the audit permitted by two unskilled members — 
 even for distributive societies. And in view of such a 
 number of societies as there are already in India there ought 
 to be scope for the employment of competent trained 
 auditors at only a small fee, such as is established among 
 societies of the British Co-operative Union. But aijdit is 
 only a matter of accountancy. Inspection means much 
 more. The Inspector employed should be the real teacher 
 of Co-operation. In Europe — meaning the Continent, 
 where alone Co-operative Credit is practised and therefore 
 the necessity arises — ^he is made togo through a regular course 
 of training and to pass an examination. One is glad to see — 
 in Bombay ;' it may be also in other Provinces— courses of - 
 training established for Secretaries of Co-operative Societies. 
 That is decidedly a step in the right direction. But once the 
 movement is thoroughly organised, there ought to be also 
 regular courses for Inspectors. And those Inspectors ougkt 
 to become the backbone and the regulator of the movement 
 — being themselves of course fully responsible to superiors, 
 who will have to consist of the Committee of the Federation 
 and the Federation itself — though distributed over Pro- 
 vinces. But they will be, so to put it, the permanent civil 
 servants of the organisation. Only by such means can the 
 weight of responsibility which now rests upon the Registrars 
 — who are made to be the arbiters in everything in a so- 
 called " self-help " movement — be gradually liited off their 
 shoulders. They cannot evidently always remain Vetat 
 c'est mot. There will be quite enough for them to do when 
 the Co-operativeMovementwillhavebecome self-governing. 
 Our Registrars in the United Kingdom do not complain of 
 having too little to do. And they perform most useful 
 work and put a clear impress on the provident work that is 
 going on under their guidance in the kingdom. Their 
 business is to see that the law is obeyed, that the accounts 
 published are correct, that the several movements remain 
 sound. But they do not interfere in the actual management 
 
THE FUTURE 315 
 
 of societies. They do not decide who is to be trusted and 
 who not, and to what extent he is to be trusted. All that 
 is left to the societies themselves. They are left free to put 
 into the reserve funds what they think right, to keep that 
 reserve fund " liquid " to the extent that they deem proper, 
 to limit or fail to limit the business of each member, to deal 
 at lower prices or else pay a heavier dividend, to levy 
 entrance fees or not, to allow whole families to join or only 
 one member of each family, to vote for charitable or educa- 
 tional purposes what they please, and so on. 
 
 Indian co-operators have not yet got nearly to the point at 
 which free handling of the matter is possible for them. But 
 they rnust by degrees be brought nearer to it. Hence the 
 necessity of Inspection — careful, expert, independent, 
 searching Inspection. Lord Curzon has paid me the 
 compliment of stating that it was in deference to my 
 opinion that he curtailed State aid. But there are occasions 
 in which State aid is perfectly in its place. There are in 
 fact two kinds of State aid. There is State aid in support 
 of business; and that should be anathema. No society has 
 a right to claim that. I have Mr. Gladstone on my side, 
 besides many others of high authority, in asking for this. 
 When our Friendly Societies Bill was before the Commons, . 
 and again the Industrial and Provident Societies Bill — 
 which governs Co-operative Societies — ^in the early sixties, 
 he distinctly laid it down during the debate that money 
 must not be given (so as to lighten the cost of provident 
 action) but that exemptions and similar helps to encourage 
 the movement are legitimate. But for such State aid our 
 Friendly Societies Movement, which now answers for so 
 very much good done among our working classes, would 
 probably at one critical period have gone down. The small 
 amount of money help towards business decreed in 1904, and 
 given afterwards, is now at any rate growing perpetually 
 smaller. Assuredly under conditions as they are in 
 India it Avas needed at the start. But the time is nearing 
 when it will be unnecessary. On the other hand, the need 
 of money help for teaching purposes has become pro- 
 gressively more urgent and pressing. On teaching — v/hich 
 interferes with no rival interest — so all authorities agree, 
 the State may without fear of doing mischief spend as much 
 as it pleases. It ought, I think, at the present juncture to 
 
3i6 CO-OPERATION IN INDIA 
 
 take charge of the cost of that Inspection, which is in Co- 
 operation the most valuable and — once the movement has 
 attained the dimensions of that in India — ^the most indis- 
 pensable kind of teaching required — or of as much of i't as 
 the movement itself is not in a position to take upon itself. 
 The charge should not be contemplated as a permanent 
 burden to the State. As a capable staff came to be organised 
 the service might be expected to become self-recruiting and 
 eventually self-supporting. And in any case, once' societies 
 have grown sufficiently strong to bear the cost, that cost 
 ought without question to be put upon them. And with 
 that they will have become at least half self-governing. 
 Then the burden upon the State will cease — and very many 
 of the troubles which now beset the progress of the move- 
 ment may be expected to come to an end. Under a com- 
 petent provincial Inspection, we may expect local society 
 Inspection, by supervising Councils, to work its way in. 
 We may look for a cessation of Ranches monopolising all the 
 benefits for themselves. We may look for less shirking of 
 repayment. We may expect to see less recourse to Civil 
 Courts, altogether less litigation, less abuses generally. 
 And we may also look for a better general understanding 
 of the principles of Co-operation and a correspondingly 
 more rapid growth of co-operative spirit and practice, whiclj 
 in itself is the best pioneer for an extension of the movement, 
 eventually, let us hope, to all the " 700,000 villages " of the 
 country. 
 
 ' It is, at any rate in part, for want of a sufficient, and a 
 sufficiently skilled, inspecting staff, that Registrars have been 
 tempted upon paths which, if farther pursued, threaten to 
 lead to some extent away from true Co-operation, some of 
 which have already been pointed out. Naturally when the 
 burden of work becomes excessive, people charged with it 
 have sought for means of lightening it in some way or other, 
 in order to enable them to get through it somehow. That 
 is the way in which the spinning- jenny and a thousand 
 other labour-saving appliances have come to be invented. 
 Workmen exerted their inventive power to lighten the labour 
 for themselves. That has been a benefit to Industry and 
 to the world. However, in the case of Co-operative 
 Societies, it is not lightness of labour which determines the 
 value of the institution. The point is, to have the thing 
 
THE FUTURE 317 
 
 well done. Under pressure, never too light, but now 
 become heavy, we see Registrars resorting to new devices 
 for cramming a gallon of work into a pint pot of time. 
 Those methods apparently achieve their immediate end. 
 But they do so in some cases at a prospective cost of principle 
 weighing very much heavier in the balance than the gain 
 now secured. Inspectors set to inspect an unmanageable 
 number of societies of necessity inspect irregularly and 
 somewhat perfunctorily. Under stress of the additionail 
 burden imposed, we see all manner of labour-saving devices 
 adopted. We see the haissiyat — ^which is a useful method 
 enough in its proper place — accepted apparently in lieu of 
 careful inquiry into the merits of each case. That means 
 that property, a capitalist test, is being substituted for the 
 quality of character and opportunity, which is the co- 
 operative. The co-operative test, to be sure, means more 
 trouble. But it helps the poor people whom it is desired 
 to help. We have, on the sam6 lines, the " Guaranteeing 
 Union," to save the lending body the trouble of inquiry. 
 And, to make matters more convenient to Central Banks, 
 we actually have a proposal before us to compel societies 
 to join such Unions, although the Reports of Registrars show 
 that the latter are distasteful to many. For want of proper 
 training and inspection local societies are held not to be 
 equal to the task of deciding who is to be judged deserving 
 of being lent to — ^which task is put upon the Central Banks, 
 that is, of institutions which cannot possibly obtain the 
 information necessary for forming a judgment. Accordingly, 
 once more, property, the guarantee, is substituted for 
 inquiry. Again, only to make things easy, cash credits are 
 recommended. Even the classing of societies, which is 
 scarcely quite fair to them, is, for the sake of the Registrars' 
 convenience, to enable them to get through their work, 
 made a semi- mechanical business, with societies classed as 
 A, B, C, and D. Now, if societies were schoolboys, moving 
 up into higher forms, that would be as right as could be. 
 However, they are intended as business bodies, pledging 
 their security for deposits. And to brand them as C and D, 
 for a year or more, means to deprive them of the very means 
 to mend their character. " The poor man has no credit 
 because he is poor ; and he remains poor because he has no 
 credit ; so we keep on moving in a vicious circle." That was 
 
318 CO-OPERATION IN INDIA 
 
 Giustino Fortunato's plea for the formation of Co-operative 
 Credit societies. Are we to deal with, societies as the world 
 is here shown to be dealing with poor individuals ? Classi- 
 fication is all very right as a matter between the Registrar 
 and the society, though a reasoned judgment, passed by a 
 capable Inspector, indicating clearly on what particular 
 points the society is ranked as C or. D, would be better. 
 But to put a society into a public piUory, which must needs 
 spoil its credit, is a matter of doubtful propriety. Nor does 
 it seem strictly necessary, since, as matters stand, on questions 
 of credit the Registrars, who know whether a society is 
 A, B, C, or D, appear to be regularly consulted. Local 
 people, the people to be appealed to for the paying in of 
 deposits, may be trusted to judge whether a society is worthy 
 of their confidence or not. Co-operative Credit is a most 
 valuable boon. But it certainly is not altogether an easy 
 thing to handle. It ought always to be borne in mind that 
 its object is not to make things easy for the administrators, 
 but to supply what is wanted to those who require it. And 
 if there is not sufficient power to discharge that task, 
 additional power ought to be created. That will not, as 
 already observed, have to be for ever. As societies become 
 educated, and eventually emancipated, the burden would 
 become more and more shifted upon them. Of the precise 
 time at which such transformation would become effective — 
 it has not yet come — only those-who are in direct contact 
 with the mass of co-operators can properly judge. Still, 
 that must remain the goal to be made for. Even if Regis- 
 trars possessed the apostles' power of discernment of spirits, 
 they could not with confidence pronounce a fully trust- 
 worthy judgment on all questions now referred to them. 
 Once the movement is fuUy developed it will be the 
 Registrars' business to decide whether a society should be 
 registered, whether its registration should be cancelled, 
 and to see that it complies with the law. The question of 
 particular loans will then have to be left entirely to the 
 societies, which are responsible in the matter, and which 
 will only learn to appreciate and realise their responsibility 
 if they are, bit by bit, however slowly, made to exercise their 
 discretion on their own judgment. That, obviously, brings 
 us back to the great point of Education. For it is only by 
 Education, strenuously and judiciously applied, that co- 
 
THE FUTURE 319 
 
 operators and the societies in which they are associated can 
 be gradually brought up to the point at which they will be 
 able to fend for themselves. And such Education wiU be 
 found well worth even a fairly liberal supply of public 
 money. " Education," so the American Senator Benjamin 
 Hill has declared, " is the one subject for which no people 
 ever paid too much. Indeed, the more they pay, the richer 
 they become. Nothing is so costly as ignorance, and nothing 
 so cheap as knowledge." Certainly, if Co-operation is to 
 fulfil expectations and carry out fully its high mission, it is 
 desirable that out of its present chrysalis stage it should by 
 degrees emerge as the perfect butterfly, winging its way 
 freely on lines similar to those on which we see it prospering 
 elsewhere — not as a Government-imposed, Government- 
 led, Government- overruled, more or less stereotyped, 
 institution, but as a free, self-governing movement, for 
 which self-interest, prompting to different applications, 
 under different conditions, provides the driving-force. 
 There cannot be one rule for aU, as there must be under 
 Government direction. Government rule tendsrto same- 
 ness and unity in application, when it is just in application 
 that diversity, according to local conditions and local tastes, 
 is called for. And where such diversity should be, only 
 local people, acting for themselves, can determine. There 
 must be unity in principle. And such unity is to be secured 
 only by the conviction of those who act in the matter. You 
 cannot, as the Latin proverb puts it, hunt with unwilling 
 hounds. Principle, without conviction and a keen desire 
 among those who adopt it to see it enforced, will not be 
 respected. A Government may legislate and pass what- 
 ever Resolutions and Decrees it pleases. Proverbially, 
 there is not an Act of Parliament through which you could 
 not drive a coach and four. Once the stage of maturity has 
 been reached, the movement must become the movement 
 of the members themselves. To make it so in India is indeed 
 a difficult task. The most efficient helpers towards its 
 realisation, as already observed, wiU be— if they can be 
 found— volunteer friends to the cause, impressmg a racy 
 stamp upon each particular form of application, endowing 
 the movement with continuity of aim and a distinctive 
 character, and making it self-contained and self-reliant, 
 with a keenly felt sense of responsibility aroused in all its 
 
320 CO-OPERATION IN INDIA 
 
 parts. Once that point is reached, Indian Registrars will 
 be able to supervise the whole thing just as English, Scotch 
 and Irish Registrars of Friendly Societies supervise Co- 
 operative Societies at home, which thrive all the better for 
 being left to fend for themselves, one in principle, very 
 diverse, according to circumstances, in application. 
 
 All this relates to the point which has been raised of the 
 quantity of the "leaven" used. The "leaven" itself 
 appears to be sound enough. Indeed, never do Registrars 
 appear to have been more active and eager, and the Depart- 
 ment which governs them more alive and attentive to the 
 wants of Co-operation so far as such are at present discerned. 
 And I may add that never do Registrars appear to have been 
 more resourceful. If in the exploration of their resources 
 one or other should have occasionally lighted upon a barren 
 vein of supposed good ore, there is nothing to be surprised at 
 in this. And he is not likely to persevere. 
 
 However, there are other hindrances standing in the way, 
 which certainly deserve tlie attention of the Government 
 and which appear removable by its action. 
 
 One such Is the apparent impotence of societies when 
 having to do with refractory debtors. There have in the 
 past been many complaints about this. Why so many 
 Civil Courts should deliberately confirm refractory debtors 
 in their contumacy, by declining to give judgment against 
 them, and, in addition, by disallowing penal interest — which 
 is a well-recognised and well-established institution in the 
 case of Irrigation Loans granted under the two Acts authoris- 
 ing takavi, and on the necessity of which a late Lieutenant- 
 Governor of the United Provinces has expressly insisted — 
 one fails to see. It only means making the contumacious 
 still more contumacious. Not content with sheltering the 
 dishonest debtors from the justice which they are there to 
 administer, it appears from a Report of one of the Registrars 
 that " the Civil Courts seem to delight inputting obstacles 
 even in the way of arbitration proceedings by visiting petty 
 oversights (in such) with uncalled-for rigour. A President 
 of a Co-operative Society omits to describe himself formally 
 as such in an arbitration award, signing only his name. The 
 award is quashed. He omits to put a stamp on the deed. 
 He is fined lo rupees." This would strike people in Europe 
 as childish. But it is also extremely mischievous. In one 
 
THE FUTURE 321 
 
 important case the High Court appears to have upset an 
 adverse judgment of this kind. However, there are munsiffs 
 who have declared themselves still bound by the rulings of 
 the lower Courts. And it is not everyone who can afford 
 to appeal to the High Court. Such jurisdiction tempts one 
 to consider " Mr. Bumble's " verdict upon " the law " to 
 have been not altogether founded upon imagination. 
 
 While Civil Courts remain what they appear to be, 
 judging Co-operative Credit Societies as if they were 
 profit" mongering mahajans, and taking advantage of every 
 false statement made by the mahajan, every petty flaw in the 
 proceedings, to let off the usurer, we shall needs have to 
 look for better justice for ourselves. It grates upon one's 
 sense of propriety to read in a letter from a Registrar : 
 " The subordinate staff of the Civil Courts are so corrupt 
 and so frequently collude with the judgment debtor that 
 even with the concession (a reference to arbitration still to be 
 explained) the existing machinery is lamentably ill adapted 
 to recover money owed to a Co-operative Society by a 
 dishonest member." The application of the Public De- 
 mands Recovery Act, under which the Registrar examines 
 a case and certifies for the Court to collect, as under English 
 law a barrister certifies for accelerated procedure under 
 Order XIV,, ought of course to be restricted only to cases 
 of societies in liquidation. Application to such will be 
 sufficient. The concession to a right to arbitrate referred 
 to by my correspondent appears to be this, that the Regis- 
 trar or his deputy has become entitled to act in company 
 with two other arbitrators to be nominated severally by the 
 two contending parties, the society and the defaulting 
 member, as a determinating tribunal. The decree of such 
 tribunal the Court is required to execute as if it were a 
 judgment of its own. One would hope that such process 
 would be left only " a rod upon the mantelpiece," kept 
 there in terrorem. Under ordinary circumstances moral 
 influence and pressure by the society ought at any rate in 
 course of time to become equal to the task of enforcing 
 repayment. And then much will be gained besides the 
 actual recovery of the debt in question. For the entire 
 moral of the members would have become strengthened. 
 
 We see the effect abroad, v/herever Co-operative Credit 
 has become fully acclimatised. There is no worse poverty 
 
 21 
 
322 CO-OPERATION IN INDIA 
 
 than exists — or existed some time ago ; for with the expan- 
 sion of Co-operation things have appreciably improved — 
 among poor contadini (that is the Italian for " raiyats "), 
 in Italy. Yet these people have proved honest to the last 
 stiver. Even contadini emigrating to the United States, 
 to Brazil and to Argentina, beyond the reach of Italian 
 justice, when owing a society money, have from the far 
 and secure exile repaid it fully and honestly. They would 
 not defraud their old comrades. 
 
 The question of penal interest for delayed repayment 
 touches societies as nearly ; and really one cannot see why 
 such penalising should have been' disallowed. If the law 
 prescribes that, the law ought to be altered. However, we 
 are told that a Higher Court has pronounced in its favour. 
 Then why are my,nsifis stiU allowed to go on on the cJd 
 disallowing tack ? Penal interest is, as already observed, 
 exacted without demur in the case of Irrigation Loans, which 
 are practically on a par with the loans which Co-operative 
 Credit: Societies grant. And while Lieutenant-Governor 
 of the United Provinces, Lord Macdonnell, who surely is 
 a good judge, has added the weigKt of his authority as a 
 patron of Co-operation to the recommendation thatit should 
 be permitted. Prohibition of penal interest leaves societies 
 without a weapon for exacting what is indispensable for the 
 good conduct of their business. In the absence of the right 
 to levy it, one or two Registrars have had recourse to the 
 expedient of advising societies to charge a higher rate of 
 interest than has been usual on loans in general, and allow 
 a discount when the proper date is observed. That is a 
 very good practice in itsdf, which has been adopted with 
 very salutary effect by Raiffeisen societies both in Germany 
 and in Italy, in their early days — ^however, with a , very 
 different object in view. The ordinary rate of interest was 
 in such societies not raised. But borrowers were allowed a 
 discount if they repaid before the stipulated date. That 
 might mean a trifling loss to the society in each particular 
 transaction, but it secured a gain to general business by the 
 formation of the habit of punctuality in repayment and a 
 desire to get out of debt as soon as possible. To make the 
 margin between discount and nominal interest really penal, 
 so as to make of the higher charge an actual deterrent, that 
 margin would have to be made very wide indeed — wider 
 
THE FUTURE 323 
 
 probably than people would be prepared to put up with. 
 In any case Co-operative Credit is not likely to gain by 
 unnecessarily high rates of interest, though they be quoted 
 only pro forma. One would think that in this matter the 
 Government might come to the aid of societies. 
 
 Another point which seems to call for attention is the 
 transmission and safe custody of money. In some provinces 
 the Government appears to refund to societies a substantial 
 portion of the cost of remittal of money by postal order. 
 In Bombay that portion is three- fourths. Possibly that 
 practice has by this time become general. Certainly what- 
 ever fiacilities can be granted in the matter either of trans- 
 mission or of safe custody it will be, as Mr. Gladstone has 
 urged, in the interest of the community to concede. 
 
 Many of the minor troubles with which the cause now 
 has to cope would, as observed, have a good prospect of 
 being removed if the movement were to come to be 
 organised on independent lines as a self-inspiring, self-,! 
 propelling movement. As one step towards this, it may' 
 be well to recall a proposition made at the Simla Conference 
 in 1900 by Mr. Dupernex and there disregarded by his 
 colleagues — namely, for the formation of local Organising 
 Committees. Why that recommendation — which one may 
 be glad to note has nevertheless begun to be acted upon 
 independently in at any rate one northern province — was 
 ruled out of court at Simla, it is difficult to conjecture. 
 Mr. Dupernex, indeed, impor'ted a decidedly objectionable 
 financial feature into his proposition. He proposed to draw 
 largely upon the public purse, so as to make money rather 
 than inherent merit the driving-force. Any money help 
 given should be strickly safeguarded as to right employ- 
 ment, and restricted to what cannot be raised otherwise. 
 
 Now in respect of such minor troubles, just as in that of 
 the graver ones of misfeasances and abuses caused by want 
 of understanding and knowledge of the co-operative 
 principle, the Co-operative Movement would probably 
 occupy a much firmer stand if it had an organised body of 
 vdunteer workers of fair practice to stand up for it and press 
 the claims of the movement upon the authorities, whilst 
 at the same time also labouring systematically and steadily 
 to raise the educational status of the shepherded flock. It 
 is not leaders that are wanting under this head. For India 
 
324 CO-OPERATION IN INDIA 
 
 possesses admirable, highly capable, and genuinely self- 
 sacrificing volunteer workers. However, they want to form 
 an organised body of comrades. Apart from the point of 
 money, the Conference at Simla might have accepted 
 Mr. Dupernex's proposal. As regards money help for 
 societies, guarantees are, where practicable, preferable gifts, 
 because they put the first responsibility upon the persons 
 who employ the money. There is in that case a third party 
 to answer to. That enhances the sense of responsibility. We 
 tried here, in England, in the early days, to form volunteer 
 Committees of Guarantors. However, the Registrar of 
 Friendly Societies would not allow me to put anything about 
 that into the Rules. Otherwise, the question of guarantee 
 apart, an active and interested Organising Committee, com- 
 posed of persons who understand Co-operation, might do a 
 great deal of good. And whatever it did would come ten 
 times better from it than from the Registrar, while also 
 holding out a prospect of continuity and permanence. 
 
 Thus far I have in this chapter, for reasons easily to be 
 divined, confined my remarks to Co-operative Credit only. 
 And, fortunately, it is only the particular form which 
 Co-operation takes in the case of Credit which presents the 
 " wire entanglement " difficulties that we have had to 
 consider and which, thus far, we have failed completely to 
 cut through. And that is just because it is Credit — that is, 
 because it is not the dealing out of goods or work in exchange 
 for money, as in the case of Supply or Distribution, or else 
 of Production, nor the mere provident distribution of risks 
 as in Insurance — ^which solves the difficulty by excluding 
 risk, but the parting with money in exchange for security, 
 non-existent, or existent only in the shape of the raw, 
 untooled material, the manufacturing of which out of such 
 material has proved one of the knottiest problems of the age. 
 
 As we come to Supply and Distribution — which are the 
 same thing in principle, Supply being the collective purchase 
 of goods for further productive employment. Distribution 
 the purchase for purposes of consumption- — our barque 
 glides into smoother water, not altogether devoid of reefs and 
 shallows, but unruffled by cross-currents of distinct schools 
 or parties — otherwise than Socialist and Non- Socialist. 
 And our progress becomes all plain sailing. There is no 
 difficulty about effecting unity in the envixonmeixt. It is 
 
THE FUTURE 325 
 
 difficult to tell at present what future at any rate Distribu- 
 tion may have before it in India. One would wish it God- 
 speed. For it might mean millions saved for the humbler 
 classes — millions saved and corresponding millions laid by 
 and piled up, and a general raising of status, tone and that 
 standard of living desired, other considerations apart, as a 
 remedy to the ruinous subdivision of the soil, by Professor 
 Stanley Jevons. On this ground no fresh legislation appears 
 to be called for to assist progress, nor any other artificial 
 aid. Once it catches the fancy of the people it may be left 
 to shift for itself. 
 
 Co-operative Production is a far more ticklish matter to 
 deal with. And it has to be dealt with, because— Agri- 
 culture apart, with its coming Co-operative Dairies, 
 Co-operative Sugar Factories (in organising which Lakshmi- 
 kole appears to have set a good example), and the like — it 
 is a question of the highest importance for the " 16,692,000 
 people," more or less, who are, according to Mr. Ewbank's 
 statistics, engaged in small industries. Many of these are 
 Home Industries. For their benefit certainly aid seems 
 required. But it is exceedingly difficult to suggest what 
 that aid should be. The mere organisation of common 
 purchase of raw material — ^which has begun to be practised 
 — is the very easiest part of it, provided that money can be 
 got. European precedents teach us little in the matter 
 except that it is private benevolence which will have to be 
 largely looked to. Government advances have proved, as 
 one may say, not only not helpful, but distinctly detri- 
 mental. Of the host of productive societies established 
 with the aid of those " three million francs " granted in 
 1848, in the teeth of Thiers's vigorous protest against " this 
 great foUy," in 1895 I found only two survivingr One had 
 become a very close corporation, netting large profits and 
 admitting no new members. The other consisted of three 
 upholsterers who had a diminutive, dirty little shop with a 
 few chairs in it. It has gone the way of all flesh since. The 
 Austrian Government has expended large sums in en- 
 deavouring to develop and support productive societies — 
 just like the Prussian, wasting five million marks upon pro- 
 posed granaries — only to see them all coming to grief. The 
 assistance which the French Government and French muni- 
 cipalities now give to productive societies — more particu- 
 
326 CO-OPERATION IN INDIA 
 
 larly to joiners and cabinet-makers, in the shape of contracts 
 for schools and other public buildings — ^practically serve 
 only to corrupt their Co-operation. The societies have been 
 fortunate in being able to start a credit bank for their ovs^n 
 purposes, as has been already mentioned. However, the 
 bank — ^which is well managed — ^would be nowhere if a 
 philanthropic Jew, named Moigneu, had not, as has been 
 already shown, died at the opportune moment, leaving it-aU 
 his property to add to its own paltry capital. And even 
 sa it has to keep begging the Government's aid, by requests 
 which become recurrent, because the money granted 
 steadily " leaches " into the pervious subsoil. In Italy 
 even co-operative banks have not been able to help much, 
 consistently with regard for their own safety. It is friends 
 to the cause who must help and produce the Archimedean 
 point from which Co-operative Production can set out upon 
 its task of " moving the earth." But they will have to be 
 careful and keep a watch upon the societies sponsored. 
 The late E. Vansittart Neale, with aU his abiUty, benevo- 
 lence and wealth, lost a fortune in starting productive 
 societies which he left to themselves. A German philan- 
 thropist, setting to work about the same time, at Brunswick, 
 but looking very carefully after his society when formed, 
 and keeping it in hand, led it to prosperity. Our British 
 productive societies — I mean the genuinely co-operative 
 ones, not those which legitimately enough and rightly 
 enough, but not really co-operatively, produce goods for the 
 distributive societies, which run them in their own interest, 
 to yield them cheaper wares — start with this advantage 
 that they have a large co-op'erative demand ready to befriend 
 them, if the two interests can be made to agree. That is a 
 very material help, not only in respect of a m^ket, which is 
 the crux of the whole matter, but also in the provision of 
 funds, the distributive societies taking shares. We have 
 (industrial) productive societies with 300 distributive 
 societies or so on their books as shareholders. Provided 
 that the productive societies, satisfy the distributive society 
 shareholders' — ^by producing wares of not only good and 
 suitable, but also uniform, quality appropriate to their 
 market, and a steady current of supply, which is a matter of 
 supreme importance — the latter provide a good dependable 
 nucleus of customers. In any case they assist in the forma- 
 
THE FUTURE 327 
 
 tiMi of a sufficient share capital. In India matters are very 
 different. There are no distributive societies there to 
 speak of, and such as there are are not in anything Hke a 
 position to render appreciable help. One would not wish to 
 see the Government interfering by providing either money 
 or giving uneconomic orders, even if public opinion were 
 to tolerate that. Technical instruction is already given to 
 some extent, as for instance in weaving schools, the number 
 of which, as well as the care bestowed upon them, one is 
 glad to see increasing. Possibly there might be more. 
 Precedents taken from Europe are to no purpose, because 
 circumstances are so widely, dissimilar and the apparent 
 precedents are on so small a scale in comparison with what 
 would have to be done in India. I have seen a good deal 
 of the Continental organisation of small industries. But 
 there is nothing to my knowledge that one could hold up as 
 an example for India. Nevertheless the prickly cactus will 
 have to be grasped. Evidently Registrars and their volunteer 
 friends are grapphng with it and one may hope that they 
 will prove successful in devising means for developing and 
 extending this form of production. In this matter, as 
 Professor CrOger, Schulze Delitzsch's successor as head of 
 the great German " Co-operative Union," has pointed out 
 in his book upon Co-operative Production, " one success 
 must count for more than a hundred failures," inasmuch 
 as it proves that success is possible. 
 
 The question of Co-operation in India acquires even 
 greater importance than it possessed previously since the 
 Chelmsford- Montagu proposals for endowing the country 
 progressively with self-governing institutions has come upon 
 the scene. Under this aspect it deserves very grave and 
 attentive consideration. For self-government, we know, 
 may become a curse instead of a blessing when entrusted 
 to a multitude which, without well-balanced minds, does 
 not rightly know how to use it. A people, to benefit by 
 representative institutions, wants to be educated up to the 
 point of being able to use its_representative rights with 
 judgment. Now, experience has shown that there is no 
 educator for this purpose like Co- operation, which, practising 
 people in the government of their own affairs on a smaller 
 scale, acts as a most effective preparatory or elementary 
 school for self-government in graver matters, not only 
 
328 CO-OPERATION IN INDIA 
 
 dealing with distinctly practical affairs, such as sober 
 judgment and restrain wild imagination, fitting people for 
 comjpromise, but at the same time also impress and keep alive 
 a sturdy respect for principle. Such effect is very clearly 
 to be observed in the United Kingdom, where the delibera- 
 tions of Co-operative Congresses, and Co-operative gather- 
 ings altogether, are found marked by a sound, sober, 
 practical tone. There is no random talking there for 
 talking's sake, or to air fanciful conceptions. WTiatever 
 arguments are used are to the point and have a practical 
 bearing ; and it is evident that speakers consider well the 
 consequences to be looked for from the adoption of their 
 proposals, weighing pros and cons. It is the same thing in 
 Italy where, before co-operative organisation came in to 
 bridle natural wild fancy and fantastic aspirations, views 
 put forward took as a rule a very extreme shape and practical 
 business seemed often hopeless. All this is changed now. 
 In Germany, which has had Co-operation longer, and in 
 larger extension, than Italy, the effect is — ^unfortunately 
 only in matters of local administration — ^particularly striking. 
 On co-operative ground the governmental theory of " the 
 limited understanding of subjects " has long since been 
 triumphantly overthrown, and co-operators have shown 
 that they know how to look after their own affairs. And 
 even in Russia, where free Co-operation is still only a new- 
 born child, scarcely out of its swaddling clothes, the 
 politically educating, sobering, maturing influence of Co- 
 operation is very visible. One would think that in India, 
 where indeed multiloquial oratory flourishes to a remark- 
 able extent, but well-weighed argument is not always very 
 clearly discernible in political discussion, such an educative 
 effect as that here referred to could not be unwelcome. To 
 judge by precedents, Co-operation bids fair to do a great 
 deal towards fitting the democracy of the country for the 
 exercise of its coming, political rights. " Therefore it would 
 be well on this ground, too, to push Co-operation. 
 
 I have dwelt at length upon what to me appear to be 
 shortcomings and moves likely to prove in th^ wrong 
 direction, upon difficulties and mistakes made in the Indian 
 Co-operative Movement, because that appears to me to be 
 what at the present juncture most requires to be called 
 attention to. However, when all is said that can be said 
 
THE FUTURE 329 
 
 about shortcomings and difficiilties, it will have to be 
 admitted that Co-operation has a most successful opening 
 of its work in India to boast of. The danger is that amid 
 so much irnmediate material gain secured, holding out 
 promise of even further benefits, those higher objects may 
 be lost sight of which especially endear Co-operation to the 
 philanthropist and the statesman and which really represent 
 its most valuable prizes. Upon the greatness of such danger 
 European precedents, valueless in some other respects, are 
 indeed instructive. Money and money's worth are good 
 things ; but they are not all. " Co-operation," so M. Luz- 
 zatti has laid it down, " is a form of business founded upon 
 a lofty ideal ; the measure of the value of the business is the 
 degree in which it is illuminated by that ideal (£« Co- 
 operazione e^ un affare sorretto da un idea morale; tanto vale 
 Va-ffare quanta s-plende quella idea)." It is the raising not of 
 money, but of character and of mental status, qualifying 
 for the obtainment of further good, which constitutes the 
 greatest benefit conferred by Co-operation and which 
 accordingly Co-operation has the most urgent duty to 
 strive for and the best right, when achieved, to make a boast 
 of. It is to make the nation better as well as richer, and 
 more internally united, with more objects in common, more 
 thought of one for another, more bonds to sling around the 
 isolated sticks, to make of them a strong faggot. It is to 
 supply a modern substitute, appropriate to the times, for the 
 defunct and worn-out old Indian village community, which 
 is, as Registrars' Reports show, regretted not merely in the 
 North, the district to which very accountably Sir J. Meston 
 specially referred in the passage of a speech of his quoted. 
 It has, mutatis mutandis, accomplished much in this way 
 wherever it has struck rcJot well in Europe. And conditions 
 in India appear to be more, rather than less, favourable than 
 on our side of the Red Sea. For the natural bent of Indian 
 people appears to me most to incline that way. There is 
 also still more Nature in India, more mutual interdepen- 
 dence. In respect of Industry, the big chimney and the 
 buzzing machine have not asserted nearly so wide a sway. 
 And small industry, hand industry— the suppression of 
 which in Europe Arnold Toynbee so much regretted— 
 has, as I have put it, still a thoroughly good chance and is, 
 if judiciously practised, indeed almost a necessity. 
 
330 CO-OPERATION IN INDIA 
 
 Drop the ideal objects of Co-operation and the concep- 
 tion of comprehensive breadtli, and you lose the best part 
 of the institution. You do so even from an economic point 
 of view. For even in their chosen province of Distribution, 
 despite its most brilliant success as a whole, our British 
 Distributive Co-operators have been found to stray from 
 beaten business paths more than once into mistakes which 
 to men of business sometimes appear ludicrous. One hears 
 of such cases in Manchester. As compared with the whole 
 flow of business these things are but mere fleabites. But, 
 as Lord Rosebery has remarked, even fleabites are not 
 pleasurable in themselves, and they do not altogether indicate 
 mastery of the business. The eflEect is otherwise to be 
 observed in every co-operative movement which has taken 
 a one-sided shape. And there are more such than one. 
 In Germany the Haas movement is all agrarian, and, 
 upsetting the balance of various interests, thereby naturally 
 sets all other interests against itself. The " distributive " 
 movement in the same country is all anticapitalist and 
 fights like a second Ishmael, with its hand against everyone 
 and everyone's hand against itself. The old regime authori- 
 ties, scenting danger in it, would not recognise it. In 
 Belgium and Italy the Socialist and the " Catholic " move- 
 ments have divided the country into two hostile camps. 
 Even in our British Co-operative Movement, which is 
 rightly held up as an example of magnificent and indeed 
 unparalleled success, you observe the results of one-sidedness 
 only too plainly. Practically it has confined itself to Distribu- 
 tion. A little Production is tolerated in it, after a stiff fight 
 conducted with great bitterness. Even Profit-sharing, the 
 recognised stepping-stone to that emancipation of Labour, 
 upon which every social reformer, certainly among the old 
 school of co-operators, fixed his eyes longingly as the coming 
 solution of the troublesome problems of employment ever 
 becoming more serious — and which, so it is now plainly 
 seen, might, if accepted, have averted scores of strikes and 
 trade disputes which have filled the country with anxiety 
 and alarm during the war, our distributive co-operators 
 have ruled altogether off their programme. It would have 
 averted those strikes and disputes because they one and all 
 turned upon the question of a fair division of war profits 
 between employer and employed, which Profit-sharing 
 
THE FUTURE 331 
 
 would have settled automatically and amicably. Agri- 
 culture supported by Co-operation, the settling of working- 
 men on their own farms, to live there happily — ^figuratively 
 speaking, under their own " vine and fig-tree," as the Bible 
 puts it, the ideal of the early pioneers of the movement — 
 has been openly discarded in favour of the new aim of 
 colossal farms to be owned by " societies " and worked for 
 them on the wage system. 
 
 And what is the result ? Distribution has become a class 
 movement with membership limited, as an officer of the 
 Co-operative Union has placed on record, to "well-paid 
 artisans " only, leaving the poor, for whom in truth Co- 
 operation was from the outset specially intended, out in the 
 cold. " The consumer transcends the producer " — that 
 principle, which Professor Mukerjee appears so much in 
 love with, is the result of the Co-operative Movement in 
 Great Britain having become, from one a,ppealing equally 
 to all classes of the population and all caUings, a movement 
 distinctively of factory workers. The factory worker thinks 
 instinctively of himself and of his ovi'n needs — as everyone 
 else belonging to a distinct class does. Everyone's shirt 
 lies closer to his skin than does his coat. "Co-operation" 
 means to him, with his regular paid employment. Dis- 
 tribution. For he has, or realises, no other wants. He 
 wants to see his wants supplied and believes them to be the 
 stereotype wants of aU the world — il est avis au renard que 
 tout le monde mange foule comme lui — ^he wants his interest to 
 reign supreme. He does not really mean to be selfish. But 
 he is so, because, like Washingtom Irving's ". Knickerbocker," 
 he can see but one side of a question. Hence Agriculture 
 is by him conceived of merely as a servant to Distribution, 
 just as Production is. So it comes about that our British 
 Co-operation finds itself opposed both to Agriculture and to 
 Co-operative Credit — the two forms of Co-operation in 
 which India is specifically interested — ^because it holds both 
 to be " individualist " — that is, calculated effectively to 
 help the poor worker in his struggles with poverty. Of 
 course they are " individualist " in this sense. Everyone 
 in the world has his own individual interest to study — not 
 least so the distributive co-operator, who keeps pondering 
 over his " divi," by the amount of which he often enough 
 measures the value of his Co-operation ; and who reflects 
 
332 CO-OPERATION IN INDIA 
 
 upon his steadily growing deposit in his society's keeping, 
 which is eventually, of course, to benefit his individual self. 
 That Mammon worship of '* dividend " has in truth become 
 one of the snares of Distributive Co-operation, just as, ac- 
 cording to Milton, did the gold pavement of Heaven to the 
 still unfallen angel Mammon. Study of dividend means 
 prices kept up to the decided detriment of the poor. The 
 movement has, in fact, as observed, become distinctly a class 
 movement, with all the peculiar characteristics of a class 
 movement about it, bellicose for class interests, a movement 
 from which those whom Frenchmen and Belgians welcome 
 as " intellectuals," but whom British co-operators brand as 
 " individuals," are advisedly being more and more excluded. 
 And, as a matter of course, from social and economic ideals 
 it has come to fix its eyes now first of all on financial, and, 
 as a further development, upon political, aims. It is no 
 longer to assist the weak and poor to attain equality with 
 the strong and the rich. It is to grasp the helm of govern- 
 ment and to force its own system willy-niUy upon the world, 
 to put the community into a strait-waistcoat of collectivist 
 rule, which means a triumvirate rather than a republic. 
 Fortunately for the world that feat is beyond the reach of 
 human power. Deeming it, in their overconsciousness of 
 power, like Hotspur, " an easy thing to pluck bright honour 
 from the pale-faced moon," these modern revolutionaries 
 are likely to find out that they are indeed in part " crying 
 for the moon." 
 
 The movement having become one-sided, it is no more 
 than natural that such aberrations of judgment as have been 
 remarked upon should have occurred. For we all judge of 
 the world as we see it. The co-operative working-man and 
 his employee — ^who likewise poses as a " working-man," 
 although he has been bred up in a shop or a factory and is 
 really a man rather of the ledger than of the lathe or the 
 trowel — sees the world as permanently divided between 
 employers and employed. Employment as wage labour 
 appears to him a law of Nature. Self-employment, accord- 
 ingly, the desire of the ordinary man, does not fit into his 
 conception of what should be. Therefore he will not have 
 profit-sharing, nor independent Production, nor Self-employ- 
 ment, nor Agriculture as a cultivator's pursuit, nor Co- 
 operative Credit as a help to the small man, to aid him to 
 
THE FUTURE 333 
 
 economic emancipation. Master and man there are, and 
 master and man there must remain. The " man " is indeed 
 in a sense to become emancipated. Accordingly there is 
 no alternative but this, that he must become collectively 
 master of his individual self — and master, so it now appears, 
 not alone of himself. We see in practice how vain are these 
 aspirations. The " man " after all remains a " man," 
 whether his master be one man or a multitude. And since 
 there are master and man still, between the two there is 
 sure to be diversity of interest. Such diflEerences of interest 
 have as a matter of fact cropped up readily enough also 
 under co-operative mastership. And they have ripened 
 into wrangles, and threats, and very serious strikes. 
 
 There are, as it happens, more interests than one in the 
 world. And we may take it that all were intended to have 
 equal justice done to them. The natural aspiration of 
 every man — especially every Briton — ^is for freedom and 
 independence, and mastership of himself. And it is the 
 individual who is called to account for his acts and who is 
 entitled to a personal reward for his personal doings. The 
 servant who made his one pound produce ten pounds 
 received the largest meed of praise. With equal right 
 does his counterpart in industrial or agricultural employ- 
 ment look for a corresponding personal reward. It is the 
 individual effort which devises new processes, makes new 
 discoveries, helps the world onward. These things are not 
 done without incentive. Job might " serve God for nought," 
 but the world is not so served. The arm may respond to 
 the call ; but the head, and the purse which incurs the risk 
 of failure, do not. We cannot conceive of a Stephenson or 
 an Edison as proceeding from a collective workshop, nor yet 
 a " Coke of Norfolk " or a " James Hope " from a collective 
 farm. But the world would be poorer for the absence of 
 their achievements. In respect of Agriculture, Distributive 
 Societies are perfectly right in raising theif own farm and 
 garden produce for their own stores on their own land and 
 through their own paid management. There is a well- 
 beaten path to tread there, and in this description of farm 
 management they have, with creditable enterprise, taught 
 the world a timely and most valuable lesson which ought 
 to be taken to heart, in their most highly intensive conduct 
 of husbandry, which b'y its results practically refutes the- 
 
334 CO-OPERATION IN INDIA 
 
 famous " law of diminishing returns." They have stuffed 
 the soil with fertility, and got their return. Out as we are 
 for quantitive production, that lesson comes most oppor- 
 tunely. However, to jump from such achievement to the 
 conclusion that collectivist farming must henceforth replace 
 individual — which latter has brought Agriculture to its 
 present point of creditable productiveness, is an absurdity. 
 The very " Socialists " of Italy in their collective land- 
 holding — their affittanze collettive — eager as they are for 
 collectivist labour, where it is in place, guided by experience, 
 array themselves against it, for the most part carrying on their 
 farming on collectively owned land in individually occupied 
 holdings, because collectivist farming for profit is found to 
 be in practice a mistake. Hence for our British distributive 
 co-operators to set their face against that individual 
 husbandry which their own forerunners made almost their 
 main aim, and for which all human desire longs, is like 
 fighting against the law of Nature. 
 
 Co-operation we want and that urgently — ^but many-sided 
 Co-operation — Co-operation for all, with a balance of 
 interests maintained, distinctive in its application, one in 
 spirit, fair to all, bringing help to aU. The less we hear of 
 " class " within it, the better will it be. We want Co- 
 operation all-embracing in its forms, but kept within its 
 limits in its application. It can do a wonderful amount of 
 work ; but it cannot do everything. Farmers want to be 
 able to buy in common, to sell in common, to do such work 
 as can best be done collectively in common ; it may be to 
 acquire or rent land in common, to assist one another and 
 form fraternal communities in common ; but not — ^as a 
 general rule — ^to bring their efforts from the height of what 
 is possible to individual energy down to the level which has 
 produced " ca' canny," to enervate it by depriving it of its 
 proper prize and limiting its utility. Napoleon could not 
 win victories while he was overruled by the " Representa- 
 tives of the People." You think and scheme and run risks 
 for yourself, just as you eat for your own stomach. There 
 are things which you cannot share with others. An Italian 
 proverb instances as such a horse and a wife. The present, 
 of all times, when we have learned, during the war, how 
 important it is that we should produce things at home, as 
 much as possible, when allotment-holders may be said to 
 
THE FUTURE 335 
 
 Kave saved the country from famine by working their plots 
 individually in competition with each other, seems a curious 
 one for bringing forward the theorythat the consumer "tran- 
 scends " the producer and that individualist farming should 
 not be tolerated. The consumer pure and simple — that is, 
 the consumer who is nothing else — ^is of all men the most 
 selfish, thinking only of himself and closing his eyes to all 
 other aspects. His being employed on productive work, so 
 long as he has not a personal interest in the product of his 
 labour, so long as he works only for his wage and accordingly 
 thinks of nothing but his wage, leaves him a mere consumer 
 still. The producer is a consumer as well — quite to the 
 same extent. But his being a producer opens his eyes to 
 other considerations. He takes a broader view of things 
 and accordingly does justice to a greater extent to varied 
 interests. Do not let India, dazzled, it may be, by the 
 sounding phrase " The consumer transcends the producer," 
 fall into the error of one-sided Co-operation, which narrows 
 the mind as much as comprehensive Co-operation broadens 
 it ! Among a nation of small cultivators, one-sidedness 
 must mean the doom of Co-operation. We have good 
 exemplars to follow — the " fathers " of British Co-operation 
 who laid the foundation of the success now achieved : 
 Vansittart Neale, Hughes, KingsJey, Maurice, and in our 
 own day Plunkett. There should be one Co-operation — 
 Co-operation which can help everyone, which aims at 
 economic and social improvement for all, and does not allow 
 itself to be made a tool or pretext for either political or 
 class warfare, either under a Kaiser, as in Germany, in the 
 realm of Agriculture, or under a Labour Party, as in these 
 modern days jn the one-sidedly distributive camp of the 
 Co-operative Movement in Great Britain. 
 
 However, if this end is to be achieved, there is one thing, 
 which is needful and which accordingly in these pages, as 
 in my frequent private letters to Registrars, I have tried to 
 lay stress upon. If the Co-operation, for the perfecting of 
 which so much energetic and on the whole so undoubtedly 
 iudicious work is being expended, is to be worth much, it 
 vvill ultimately have to be self-wrought, self-reliant, the 
 willing work of those who engage in it, governed by them- 
 selves not a forced and coddled hothouse plant. Govern- 
 ment is there to see that laws are obeyed and to ensure that 
 
3^6 CO-OPERATION IN INDIA 
 
 nobody else's rights are invaded. It does so in our daily 
 activity. But it leaves the merchant, the manufacturer, the 
 farmer, the banter, free to pursue their business according to 
 their own individual liking and their own ideas. It is private 
 initiative which produces success, which discovers new- 
 methods, devises new processes. Were it otherwise neither 
 our Commerce, nor our Banking, nor our Manufactures, nor 
 our Agriculture would be worth much. It must be the 
 same with Co-operation. The scientist advises the manu- 
 facturer and the farmer, the market asserts its claim to 
 regulate Industry and Commerce, Education evolves new 
 arrangements and new processes for them aU. But business 
 as such remains free. 
 
 The Co-operator likewise wants to be taught, instructed, 
 guided. But the decision and the enterprise must be his. 
 While in Co-operation Indians, speaking collectively, are 
 children, they think as children, they act as children, they 
 want to be led like children. But we are bound to look 
 forward to the time when they wiU attain manhood, when 
 childish things will have to he, put away and self-determina- 
 tion will have to take the place of subserviency. That 
 coming period wants to be kept steadily in view. The 
 ship's prow will have to be kept towards it. There is no 
 hunting, says a Latin proverb, with unwilling hounds. 
 There is no putting " back " into action which is dictated 
 from outside. The labourer who is not directly interested 
 in the result of his work bestows little thought upon it. 
 He works mechanically. The best gain that Profit-sharing 
 brings to industry, so industrial men have found, is the 
 " head " that, under it is put into the employment. And 
 " back " and " head " are evidently what are wanted in 
 India's economic and intellectual evolution. If the full 
 interest of the Indian people can be fixed upon Co-operation, 
 if in this way free scope can be given to its remarkable 
 stimulating power — stimulating alike to mental and to 
 business energy — the gift which in 1904 Lord Curzon 
 presented to the country, upon the sound and well-con- 
 sidered advice of his counsellors both in India and at White- 
 hall — will indeed prove to be what one of its native Regis- 
 trars has called it, " one of the greatest benefits that it has 
 yet received." 
 
POSTSCRIPT 
 
 While the sheets of this book, ready paged, are actually 
 waiting to go on the machine, I receive — by the courtesy 
 of the authorities at Delhi — an advance copy of the " Report 
 of the Proceedings at the Eighth Conference of Registrars 
 of Co-operative Societies," held at Simla last August. 
 Those proceedings — ^which clearly demonstrate the great 
 value of periodical gatherings for the discussion in common 
 of practical questions — embrace a few points which appear 
 to me to call somewhat imperatively for notice at this 
 place. 
 
 On the question raised by Sir D. Hamilton of the suffi- 
 ciency or insufficiency of the remuneration allowed to 
 Registrars for their somewhat exacting work — to which 
 they have devoted themselves with undoubted zeal and 
 interest — I am not in a position to offer an opinion. But 
 it appears to me that the time may well be held to have come 
 for making something more of a career of the Registrar's 
 calling, calculated to fix men interested in the matter to 
 this particular work and so assuring to the pohcy pursued 
 something more of continuity and permanence. More 
 particularly while those volunteer workers are still lacking, 
 whose collaboration would offer a guarantee of stability 
 of policy, it is disappointing to see good men, broken in to 
 the particular work, and having gathered judgment by 
 experience, men whose administration might be taken a« 
 an earnest of even more valuable services to come, disappear 
 from the scene so soon— often enough at decisive moments, 
 when selected for probably well-merited promotion. And 
 one would think that this must be prejudicial to the service. 
 So stabilising the Movement, which is now generally under- 
 stood to have become an important feature in Indian 
 administration, would rid the conjectural programme of 
 such undesirable items as that of the introduction of the 
 
 337 22 
 
338 CO-OPERATION IK INDIA 
 
 strictly official element into the service by giving the District 
 Officers and Civil Servants of similar status an ex-officio 
 position in the Movement. We have no reason in India 
 to apprehend that official, influence would be abused for 
 political purposes as it has been on the European Continent. 
 However, a Co-operative Movement is avowedly a movement 
 destined for Self-help and Self-admijnistratioir, in which 
 people are to be taught to fend for themselves. Registrars 
 are honestly endeavouring to train those placed temporarily 
 under their charge up to this point. Themselves officers of 
 the State, they seem generally to be hastening the time when 
 Co-operation can be fully de-officialised. Bringing the 
 truly official element as a ruling factor into the Movement, 
 the character of which is already misunderstood by the 
 majority of those for whose benefit it is designed, as if it 
 were a Government institution, financed, and necessarily 
 led, by Government, and therefore excluding the realisation 
 of personal responsibility, would infallibly weaken just that 
 fibre of personal responsibility on the strength of which 
 sticcess entirely depends. 
 
 The point of the administration of Reserve Funds — the 
 absolute desirability of accumulating which is admitted on 
 all sides — ^which figured prominently in the discussion, 
 I have already dealt with in this book. But I could not, 
 when writing, foresee the arguments which were to be 
 brought forward' at the Conference. To my mind Mr. 
 Mant, the President — with a correctness which has thus 
 far, I think, neyer failed the Indian Government when 
 dealing with this matter — ^hit upon the right solution — 
 in the abstract — of this problem in the Resolution which 
 he proposed and which was adopted, framed to this effect : 
 " That, while recognising the ultimate advantages of creating 
 a separate reserve fund invested outside the Movement, 
 the Conference consider that, at the present stage of develop- 
 ment, it may in many cases be desirable to prefer to this 
 object the creation of capital owned by co-operative in- 
 stitutions for utilisation in their business. Subject to 
 provision being made for the maintenance of a safe standard 
 of cash reserve of fluid resources, they consider that there 
 is no objection to the employment of the surplus assets or 
 undistributed profits of co-operative institutions in their 
 own business." That is absolutely right in principle, but 
 
POSTSCRIPT 339 
 
 It still leaves the Registrar without positive guidance in 
 specific cases. It is only what Bishop Butler terms a 
 "general precept." A "positive precept," indeed, it is 
 scarcely possible to give on a matter which necessarily calls 
 for that " elasticity " upon which Sir Denzil Ibbetson so 
 emphatically insisted and that adaptabiUty to every kind 
 of circumstances whi^ch may arise, which could not be dis- 
 pensed with. The Committee on Co-operation has prob- 
 ably caused as much confusion of mind by trying to deal 
 with the point in a concretely mathematical spirit, as it 
 has done good by reminding administrators of the undoubted 
 necessity of keeping an adequate proportion of their reserve 
 fund " fluid." This is, like the giving of credit, a matter in 
 which each case will have to be considered according to its 
 circumstances. 
 
 It may not be amiss, in connection with this point, 
 to urge the remarkable stability of co-operative deposits 
 to the extraordinary good " lying " character of which in 
 India Mr. Beatson Bell and Mr. Mitra have called attention 
 and which has been even more markedly attested in Europe 
 after longer working. Even under the heavy trial of a great 
 war Co-operation has shown the same remarkable power 
 of resistance that Sir Robert Morier noticed on a smaller 
 scale during the war of 1 866. Co-operative Banks have once 
 more rendered most valuable service in preserving and 
 steadying business and keeping money safe, not only in 
 countries like Germany and Italy, but even in martyred 
 Belgium, robbed, sacked, and mangled as it has been, bleed- 
 ing at every pore. The banks have kept on in their steady 
 course and, instead of there being a run upon their deposits, 
 there has even been a small increase of such. I receive, 
 while writing, reports to this effect alike from Banques 
 fotulaires, formed on the Schulze Delitzsch pattern, and 
 from the Raiffeisen caiises of the Boerenbond — which last 
 named, animated by its humane purpose, has afforded relief 
 and help indiscriminately to all who were Belgians. It 
 is this security of the deposits received, defying the danger 
 of a run, which has enabled the two great Wholesale Societies 
 of England and Scotland to deal with their deposit money 
 for all the world as if it were capital of their own, investing 
 it in productive establishments, farms, colonial estates, and 
 so on. The time for proceeding on anything like the same 
 
JJ 
 
 340 CO-OPERATION IN INDIA 
 
 lines in India has not yet come ; and banking establishments 
 could indeed never act upon the same principle. And the 
 Committee's calling for " fluidity " of an adequate portion of 
 the Reserve was decidedly timely. Only the " proportion 
 to be so dealt with will have to be allowed to vary according 
 to circumstances. There will have to be different rules for 
 Central Banks and for primary societies . And even in organi- 
 sations of the same class the proportion will have to vary or 
 there may be, on the one hand risk incurred, on the other 
 opp or tunity wasted . Under the Raifleisen system the Reserve 
 accumulated — partly as an Endowment Fund, becoming 
 Capital, partly as a true Reserve, the latter to be kept liquid 
 and handy — was designed to serve both these purposes. 
 And it would not be convenient by general rule to separate 
 the one from the other, just because the proportion in which 
 they may have to serve either one purpose or the other will 
 at the outset be doubtful. To earmark for the " Endow- 
 ment Fund " what might in cases of emergency have to be 
 used for " Reserve " purposes would reduce, instead of 
 strengthening, the security offered. On the other hand, to 
 set apart for " Reserve " — and therefore keep " fluid " and 
 handy, but comparatively idle — what there might be no 
 call for under this head and what would accordingly be far 
 better employed as forming part of the " Endowment 
 Fund," employable in business — might needlessly tax the 
 Society's finance. Since the point was particularly men- 
 tioned, it may be well for me to state with no uncertain 
 sound that certainly the investment of Reserve Fund 
 money in shares of other co-operative organisations is a 
 matter to be avoided, as after all involving some risk. I 
 have the opinion of a high legal authority for it that in 
 England it would be disallowed by Courts of Justice. 
 
 Incidentally' I would take occasion to point out that Mr. 
 English's reference to the very small proportion of share 
 capital to loan capital in German societies, taken en bloc, 
 rather obscures the lesson which he is rightly trying to im- 
 press upon his hearers. I do not dispute his figures. But, 
 to be quite fair to Sir F. Nicholson, whose admirable Report 
 of 1895 remains a landmark in the study of this question, 
 one ought to remember that that Report was written full 
 sixteen years before Mr. Cahill's no less valuable Blue book., 
 Whatever discrepancies there appear in the two documents 
 
POSTSCRIPT 3+1 
 
 may be taken to be due to changes which have taken place 
 in the interval. There have been not a few such. The 
 undercapitalisation in German societies pointed out of 
 course occurs only in Raiffeisen or soi-di=ant Raiffeisen 
 societies, which are h^eld to require no share capital. In 
 bchulze Delitzsch Banks the proportion is generally the 
 same as in Burma— that is, about i share capital to 5 loan 
 capital, which is considered a safe ratio. The undercapitali- 
 sation pointed out by Mr. English is rife more particularly 
 among societies supported by the State, and therefore relying 
 upon the State's supplies rather than upon their own 
 resources. It is a gross abuse, to pillory which I in 1904 
 published Herr Heuzeroth's highly interesting Report 
 upon this very subject in the Proceedings of the Inter- 
 national Co-operative Congress of Budapest. One may be 
 glad that in India the tendency appears to be altogether 
 the other way, and that there even societies which would 
 be perfectly legitimate without, or with only a very small, 
 share capital, make a point of raising what share capital 
 they can, which unquestionably gives them greater stabUity. 
 Here is one of the " German precedents " against which 
 I have taken occasion to warn Indians. 
 
 The great battle of the Conference, however, was fought 
 out on the point of State assistance. And with regard to 
 that one may be thankful that the Government has once 
 more maintained a decidedly correct attitude, and so saved 
 the Co-operative Movement of India from threatening 
 peril. The discussion also shows how well founded was my 
 impression, owned to in this book, that that Movement 
 has arrived at an important turning-point in its history, 
 with a right and a wrong way before it. No doubt there is 
 " meat " in those " Egyptian fleshpots " of State aid sighed 
 for by some Registrars. But there is also " death in the 
 pot," or at any rate danger of a serious aberration. Un- 
 questionably the temptation is great. The Registrars, 
 feeling the pinch of shortness of cash for useful employ- 
 ment, see considerable sums voted for takavi going a- 
 begging — which does not exactly speak for the efficiency 
 of the takavi institution. And naturally they ask them- 
 selves : Why is not that idle money given to us to employ 
 like the self-decupling talent in the parable ? Well, one 
 good and sufficient reason is that takavi and Co-operative 
 
342 CO-OPERATION IN INDIA 
 
 Society loans are two entirely distinct and heterogeneous 
 things — lent out for different purposes, based upon different 
 security, and of different natures altogether. The co- 
 operative loan is of the borrower's own raiding, intended 
 to be used — again and again, it may be— as working capital 
 for his business. Takavi is allowed for special purposes, 
 and in emergencies, to individuals, or it may be to districts, 
 whether their inhabitants be members of Co-operative 
 Societies or not. And they are not intended to go out 
 " again and again." Their specific object achieved, they 
 com^ to an end. Co-operative Societies are no doubt to 
 afford help also in emergencies. -^ But their first and main 
 object is to supply the borrower lacking such with working 
 capital whenever he needs it, with as little to-do' as possible, 
 not in the circuitous way of takavi. The existence of 
 Co-operative Credit Societies cannot preclude the possi- 
 bility of emergencies, for which not self-help alone, but 
 help al«o from the outside, is called for. We have raised — 
 and well raised — any quantity of such outside-help money 
 during the war. And in India, the land of periodical 
 famines and droughts, assuredly there can be no need for 
 proving the legitimacy, nay, the necessity, of help to the 
 individual or to classes of the population by the mass of 
 the nation in certain urgent cases. Possibly takavi iaa.y 
 constitute the proper form which outside help is to take 
 in such circumstances. Co-operative Societies can render 
 such help only within comparatively narrow limits, because 
 they necessarily have to cut their coat aooprding to their 
 cloth and can deal only with members. 
 
 However, if Co-operative Credit Societies require more 
 money than they can now get, and the State should decide 
 to give it, there are no other but prudential considerations 
 to stand in the way. Lord Curzon, when on the intro- 
 duction of the Act of 1904 explaining the cause of apparent 
 Government chariness in allowing (Jnly scanty money help, 
 distinctly added — in the passage already quoted — that in 
 the event of more substantial pecuniary aid proving called 
 for, it would be forthcoming. And there is no reason to 
 doubt that, if the reason could be established, his successor 
 of the particular day would redeem that promise. Should 
 such help be found indispensable, however, it had much 
 better take a shape similar to that in whch advances are 
 
POSTSCRIPT 343 
 
 made by banking institutions, than in that of takavi, the 
 giving of which to organisations like these banks could 
 ^*^"c^ly be made to fit into the terms of the two Acts under 
 which it is bestowed. Of course it is right that in granting 
 takavt the authorities should avail themselves of the local 
 and personal knowledge of Co-operative Credit Societies. 
 But that must be without attaching any responsibility to the 
 advice given. For what society would make itself respon- 
 sible for the repayment of loans granted in this way to 
 persons who may be non-members, especially when it is 
 known that repayment is exacted, as the Irrigation Commis- 
 sion has placed upon record, with " rigour " ? 
 
 Sir Daniel Hamilton, who appears to think only in crores, 
 delighted the Conference with a wildly imaginative picture 
 of the good which State aid, to be bestowed in hundreds of 
 crores — to the destruction, as Mr. Parsons showed, of the 
 security given under existing currency arrangements-^to 
 be backed by the " 100,000 organisers and 10,000 additional 
 teachers " of whom he had previously spoken, would produce 
 in turning a desert of mahajan rule and neglected agriculture 
 into an Eden of plenty. Wisely he abstained from quoting 
 precedents. For what precedents there are are all against 
 him. Where are the " 100 per cent." made out of 
 such Government advances by cultivators in Egypt ? 
 The cultivators have had the money and have spent it, and 
 allowed their land to become more and more unfruitful. 
 That Arabian Night tale of wonders will not go down. 
 The race of Aladdins has died out. 
 
 An advance— whether coming from the State or from 
 other sources — ^will do good, no doubt; it may even produce 
 Sir Daniel's " 100 per cent. " of increase — when backed by 
 other qualifications, not represented by money, and which 
 certainly State advances — as precedents on record clearly 
 show — not only fail to produce but actually render im- 
 possible: a vivid sense of responsibility, conscientiousness, and 
 industry. These qualities Co-operation has it in its power, 
 and makes it its first object, to produce. They are worth 
 ten thousand times more to the community than the mere 
 money which, without them, is sure to be lost. 
 
 Now, should further money aid be called for in support 
 of Co-operation, as I have Ftated elsewhere. State money is 
 in itself no better and no worse than other money ; the State 
 
344 CO-OPERATION IN INDIA 
 
 rupee is as good as any other rupee, provided that it is 
 -advanced in the same strictly businesslike way, imposing the 
 same conditions. But that is just what it cannot. Just 
 as the District Officer to be enlisted in the service of Co- 
 operative Credit cannot divest himself of his official char- 
 acter, which fact is bound to confirm the helpless raiyat in 
 the belief that the entire institution is a State institution, 
 financed by the State, directed by the State, making the 
 State the creditor, and fixing no other responsibility upon 
 himself except to obey under compulsion, so State advances 
 cannot be freed of the accompanying circumstance that 
 they are given by the State. " Why do you not repay me, 
 when you pay your kists so regularly to your Self-help 
 Society ?" So asked the late Vicar of Ealing a parishioner 
 to whom he had lent ^2. " Oh, you're the Vicar ; you 
 don't want it." The State likewise is held not to " want 
 
 it." 
 
 Sir Daniel Hamilton has himself in a subsequent motion 
 showed us a better way. If deposits fall short — as they 
 naturally may, not only in the early stages of weakness, 
 but even more in subsequent times, when calls are great — 
 the proper remedy is, to tap the great banking market. 
 That is done in Europe through Central Banks. And that 
 is in truth half the work that Central Banks are intended 
 for. The Imperial Bank of Germany, the Bank of France, 
 the Bank of Italy, the great Dresdner Bank, and other insti- 
 tutions besides, open their cash boxes freely to Co-operative 
 Credit Societies, making specific advances or else discounting 
 those pro. notes which Indian Registrars complained at the 
 Conference that societies could not place; the Bank of France 
 freely discounting such down to notes for five francs only, 
 that is, about three rupees — because they know what the 
 security is on which they are asked to pay the money. There 
 cannot be the least doubt that Indian banks would be ready 
 to do the same thing if they had the same knowledge. They 
 have not. And one of my complaints against Indian 
 Co-operative Credit in its present shape is that under it 
 Central Banks are employed for different purposes than those 
 for which institutions of their kind were really designed 
 — ^seemingly as a permanent arrangement — and not for this 
 very important one. Of course, when in this connection I 
 speak of " Central Banks," I mean " Central Banks " in the 
 
POSTSCRIPT 34S 
 
 European sense of the word, something like what in India 
 Provincial Banks " should develop to. You want such 
 concentration of financial resources. In responsibility decen- I 
 tralisation, in finance concentration ! Central Banks, in ' 
 the European sense, are not to serve as instructors, not to 
 audit and the liie, but as balancing-stations and " trans- 
 formers " — ^like those which in the electric- power works 
 transform " high velocity " current, coming from the main, 
 mto " low," for local use — making co-operative security, 
 which is a thing -per se, employable in the capitalist manner 
 and so rendering it serviceable in the capijtalist market as a 
 basis of credit. 
 
 That desirable connection between capitalist and Co- 
 operative Credit has not yet been brought about, because 
 capitalist banks do not yet understand Co-operative Security. 
 To remedy this defect Sir Daniel Hamilton has proposed 
 the appointment of a Committee, to be composed of 
 bankers, business men, and co-operators, to consider the 
 matter. One may hope that the proposal will be adopted. 
 For that is likely to lead to a solution of the present difficulty. 
 Indian bankers are of the same genus as European, and are 
 not likely to decline to avai,I themselves of a good oppor- 
 tunity for business. It was Indian capitalists who hatched 
 the ambitious scheme of a few years ago, " cabled " across 
 to Europe, of a giant bank — for which much cash was actually 
 already paid in — to raise money at the English rate of 
 interest, and employ it in India, for the use at any rate in 
 part of Co-operative Credit Societies, at the Indian rate — 
 the patient raiyat paying the difference. Once the two 
 markets are connected there is likely to be ample money. 
 
 In any case Indians in authority will do well not to allow 
 themselves to be led astray by such wiU-o'-the-wisp phan- 
 tasms as Sir Daniel's fertile imagination has in his " hundred 
 crore " mood flashed before their eyes. The Co-operative 
 Movement in India is, as Sir R. Carlyle has well pointed 
 out, intended, not for the moment only, but for a long and 
 fruitful future. You may flood the country with money 
 easily enough, if that is your object. If you want to set up 
 a structure that will last, that will do good, and resist the 
 "descending rains, coming floods, and blowing winds," 
 you want to build upon a " rock " solidly, though it be, 
 slowly. Rome was proverbially not buUt in a day. If 
 
346 CO-OPERATION IN INDIA 
 
 it had been it would not have become the " Eternal City." 
 I remember in my schoolboy days, sixty-four years ago, 
 asking the captain of a ship which carried me across the 
 North Sea, how soon we should get into Hull. His rather 
 severe answer was : " My business is, not to take you there 
 in the least possible time, but to bring you there safely." 
 Safety and enduring success is what we are out for in India ; 
 and we must not grudge the time or trouble and labour 
 for ensuring that. Aedjficare diu cogitate ofortet, says Cato. 
 Festina lente. Therefore let us curb our impatience ! 
 The policy of 1904 and 191 2 has yielded, and continues 
 to yield, excellent results. Our child is growing. It is 
 almost weaned from dependence upon the " mother's milk " 
 of State aid. Its powers are increasing. Let us beware' 
 of " more haste, worse speed." Give the approved principle 
 a fair chance, and precedents tell you that you wiU not be 
 disappointed. 
 
INDEX 
 
 Abuses of Co-operative Credit, 86, 
 87 
 
 Account-keeping, 145, 146 
 
 " Affittanze CoUettive," 265, 333 
 
 Agricultural Bank of Egypt, 23, 25, 
 26, 27, 28, 29, 30, 33, 35, 84, 1 54 
 
 Agricultural Credit, 131 
 
 Agricultural Education Inquiry, 136 
 
 Agricultural Loans Act, 19 
 
 Agricultural Syndicates in France, 
 42, J07, 127, 130, 131, 260 
 
 Agriculture in India, i, 2, 8, 18, 33, 
 220 
 
 Agriculture stimulated by Co-opera- 
 tion. 73. n, loi, los, 122, 125, 294 
 
 Akharas, 38, 39 
 
 Alienation Act, 17 
 
 American Expert on Indian Irriga- 
 tion, 261 
 
 American Irrigation dominated by 
 Co-operation, 261 
 
 American methods of instruction, 
 301, 302 
 
 " Andelsbevoegelsen " in Denmark, 
 254 
 
 D'Andrimont, Leon, 42, 105 
 
 " Animate Machine," 33 
 
 Anti-Usury Act in Great Britain, 10 
 
 Arbitration, 95 
 
 Arminjon, Professor, on Agricultural 
 Bank of Egypt, 27 
 
 Artisans' Co-operation, 220 
 
 "Associations Syndicales" in 
 France, 262 
 
 Audit, 171, 313 
 
 Avebury, Lord, commends Co- 
 operative Banks, 43 
 
 Balance to be maintained in Co- 
 operation, 218, 330 
 Balancing Centres, 191, 233 
 " Banca Popolare" of Milan, 187 
 " Banche Popolari " of Italy, 187 
 " Banques Ouvriferes " of France, 227 
 Beatson-Bell, N. D., on Security of 
 
 Co-operative Banks, 90, 1 59, 339 
 Belgian Co-operation, 104 
 " Benami " Loans, 167 
 
 Benares Weavers, 90 
 
 Bengal Home Industries Associ- 
 ation, 286 
 
 Bernard, Sir Charles, 28 
 
 " Bien de Famille," 264 
 
 Booth, General, 9, 10 
 
 Brabrook, Sir E. W., 12, 143, 156 
 
 Brander, J. P., on " Takavi," 20 
 
 Breeding, importance of female 
 parents, 275 
 
 Brown, Rev. Wilkie, of Jalna, 25 
 
 Buckley, L. E., 301 
 
 Bulgarian Co-operative Credit, 119 
 
 " Caisse Centrale," Gambetta's, 3 
 " Caisses R^gionales," 128, 129, 180 
 "Caisses Rurales et Ouvri^res," 126 
 Calvert, H., 90 
 
 Canadian Boys' and Girls' Clubs, 304 
 Canning Clubs, their value, 304 
 " Capitalisation of Honesty," 121 
 Capitalist Central Banks, 200 
 Capitalist Credit, its methods, 140 
 Capital of Guarantee, 223 
 Carlyle, Sir R., 291, 345 
 Carmichael, Lady, her " Bengal 
 
 Home Industries Association," 
 
 286 
 Carmichael, Lord, on Co-operative 
 
 Credit, 224 
 " Casse rurali " in Italy, 196 
 " Catholic " Banks, 196 
 " Catholic " Central Bank, 196 
 "Censeurs," 172 
 Central Bank of Polish Societies, 
 
 196 
 Central Banks, 74, 84, 109, 121, 130, 
 
 146, 147. 149. IS3, 160, 163, 173. 
 
 181, 18s, 190. 191. 192, 194. 198, 
 
 200, 202, 204, 209, 211, 212, 233, 
 
 252 
 Central Banks in Germany, 193, 
 
 195, 196 
 " Centre Fdd^ratif '' of France, 103 
 Chambers of Agriculture in Prussia, 
 
 113 
 Character-raising, 95 
 Chatterjee, A. C, 149, 214 
 
 347 
 
348 
 
 CO-OPERATION IN INDIA 
 
 Chauduri, Rai Paravata Shankar, 237 
 
 Checking Credit, 25 
 
 Chit-Funds, 38 
 
 Civil Courts' Justice, 83, 85, 321 
 
 " Civil Service Provident and Credit 
 
 Society," 320, 321 
 Clarke, Sir G., 95 
 Classing Societies, 317 
 Clubs, Educational, their value, 304 
 "Collecting Banks," 156, 157 
 Collecting deposits, 156 
 Collective employment, 99 
 Collins, B. A,, 200, 214, 224 
 Committee, Managing, 172 
 Committee of Credit^ 227, 230 
 Committee on Co-operation, 162, 
 
 308, 339 
 Common interest, 79 
 Competition among Co-operative 
 
 Societies, 149 
 Comprehensiveness, 218 
 Concentration of resources, 235 
 Consolidation of holdings, 263, 265 
 Consumers' Co-operation, 100 
 Control of Officers, 163 
 " Control Societies," 276 
 Co-operation in Agriculture, 73, loi, 
 
 105, 122, 294 
 Co-operation and banking pro- 
 gress, 232 
 Co-operation a remedy for abuses 
 
 in India, 2, 17, 85 
 Co-operation as an educator, 139, 
 
 212, 296, 343 
 Co-operative Conferences, 312, 328, 
 
 337, 338, 342 
 Co-operative Credit, 6, 104, 205 
 Co-operative Credit different from 
 
 Capitalist, 140 
 Co-operative Credit in Belgium, 42, 
 
 los — 
 
 Co-operative Credit in Denmark, 254 
 Co-operative Credit in France, no, 
 
 119, 126 
 Co-operative Credit in Italy, 105 
 Cp-operative Credit, its value to 
 
 Germany, loi, 223, 234, 251 
 Co-operative Credit starts in weak- 
 ness, 249 
 Co-operative Gurus, 92, 93 
 Co-operative ideals, 330 
 Co-operative Irrigation in England, 
 
 262 
 Co-operative Pathshalas, 92, 93 
 Co-operative principles, 142, 202 
 Co-operative Production, 69, 99, 286 
 Co-operative Production in France, 
 
 220, 227 
 Co-operative Sale, 268, 276, 286 
 
 Co-operative Societies Acts, i, 60, 64, 
 66,71.231 
 
 Co-operative Societies the best thrift 
 institutions, 12, 13 
 
 Co-operative Wholesale Societies, 
 99, loi, 140, 159, 201, 216, 279, 339 
 
 Cottage Industries, 90 
 
 Cotton, Sir Arthur, 40, 45 
 
 Cotton-grovirers' Co-operation, 272 
 
 Councils of Inspection, 141, 151, 152, 
 
 167,168,171,172, . . 
 Country Life Commission, Mr. 
 
 Roosevelt's, 292 
 Ctjw-testing Societies, 272, 276 
 "Credit Agricole," tte Emperor 
 
 Napoleon's, 32, 154 
 "Credit Agricole," the modern, 113, 
 
 128, 129, 163, 195, 216 
 "Credit- capacity," 220 
 Credit combined with other forms of 
 
 Co-operation, 238, 257 
 Credit, democratised, 34 
 Credit, improvident, 1 5 
 Credit made fructifying, 248 
 Credit, productive, 16 
 " Credit-worthiness," 230 
 Cromer, Earl, 24, 26, 32 
 Crosthwaite, Captain, 44 
 Curzon of Kedleston, Lord, 64, 71, 
 
 89. 315 
 
 Dairying, 268, 270, 272 
 
 Dangwdras, 78, 267 
 
 Danish High Schools, 295, 305 
 
 Decentralisation, 134, 199, 235 
 
 Demonstration, 273, 302 
 
 Denmark, 119, 259 
 
 Denmark introduces Co-operation 
 Credit, 254 
 
 Denmark, peculiarities of its Co- 
 operation, 255 ^ 
 
 Denominational Co-operation, 113, 
 118 
 
 Department of Revenue and Agri- 
 culture, 291 ^ 
 
 Deposits, 73, 158, 341 
 
 Deposits, fixed, 161 
 
 Deshpanda, G., 311 
 
 Dharma Golas, 238, 244, 262 
 
 Difference between Capitalist and 
 Co-operative Credit, 203 
 
 " Diseased Tissue," 81 
 
 Dispensaries, 280 
 
 Distribution, 32, 140, 278, 324 
 
 Dividend hunting, 332 
 
 Dobransky, Professor, off " A New 
 World," 108 
 
 Donovan, J. T., 216 
 
 Dresdner Bank, 196, 197 
 
INDEX 
 
 ^';P^™3^'^3'«-38.39.45,6o,65,78, 
 
 Durand, Louis, "the RaifFeisen of 
 i' ranee,' 122, 126, 212, 221 
 
 349 
 
 Eastern Switzerland, Profitable 
 Agricultural Co-operation, 259 
 
 Education. 67, 78, 92, 93, 94, 134, 
 13s. 136, 139, 282, 28s, 294 
 
 Education, elementary, 247, 305, 312 
 
 Educating effect of Co-operation, 93, 
 
 94, 343 
 Electric power and light, 268 
 Employees' Societies, 222, 224, 308, 
 
 309 
 
 Endowment fund, 177, 179, 180 
 
 English, A. E., 277 
 
 Ewbank, R., 94, 284 
 
 Expert advice one benefit of Co- 
 operation, 259 
 
 Extension of time, 164, 167 
 
 Famine Commission, 20 
 Federation, 182, 183, 184, 186, 188, 
 
 189, 190, 191, 313 
 Feeding stuffs, 91 
 Fertilisers, 91 
 Financing, 155 
 Finnish University Students' active 
 
 propaganda, 297 
 Five Feddans Act in Egypt, 22, 29 
 Fluidity, i, 177 
 
 " Fokkingconsulenten," 137 - 
 France, State aid in, 119 
 French Co-operative Credit, 119, 126 
 Fructifying outlay, 199 
 
 General meeting, 171, 172, 173, 174, 
 
 Gladstone, W. E., on legitimate help 
 
 to Co-operative Societies, 315 
 Gourlay, W. R., an active pioneer, 
 
 66, 67, 207, 210 
 Government lending, 21, 32 
 Government policy, 80 
 Government servants befriending 
 
 the^Mahajan, 83 
 Grain^Banks, 237 
 Group Secretaries, 141 
 "Guaranteeing Unions," 184, 185, 
 
 197, 208, 210, 211, 212, 213, 215, 
 
 216, 232, 309, 317 
 Gupta, G. M.'s " Survey," 90 
 Guru, the Co-operative, 92, 93 
 
 Haas Central Bank, 193, 195, 204 
 
 Haas Congresses, 124 
 
 Haas Societies, collapse of, 120, 122, 
 
 123 
 
 Haas Union, 156, 258, 330 
 
 Haas, Wilhelm, no, iii, 114, 119, 
 i?o..i3i, 136, 217 
 
 ^Mssiyat, 120, 147, 162, 230, 231, 239 
 
 Hamilton, Sir Daniel, 3, 8, 35, 81, 82, 
 
 „8s, 93, 291 
 
 Hamilton, Sir D.'s, Proposed Com- 
 mittee, 343, 349 
 
 Hammond, E. L. L., 7, 299 
 
 Havenstein, Dr., 114 
 
 Hessian Bank crash, 120, 204 
 
 High Schools in Denmark, 295, 305 
 
 Hill, Senator B., on costliness of 
 ignorance, 319 
 
 Hindoos naturally disposed to Co- 
 operation, 72 
 
 Holdings, consolidation of, 91 
 
 " Home Banks," 157 
 
 "Home Safe," 157 
 
 " Homestead " rights, 264 
 
 Housing, 278, 279 
 
 Hughes, Th., loi, 335 
 
 Hungarian Co-operation, 107, 219 
 
 Ibbetson, Sir D., 11, 12, 60, 173, 267 
 
 Ideal objects, 78, 94, 115 
 
 Ignorance, costliness of, 319 
 
 Illiteracy, 88, 142, 144, 293 
 
 " Imperial Bank," proposed, 193, 197 
 
 " Imperial Union " of Germany, 42, 
 IIS, 156 
 
 Implements, supply of, 91 
 
 Indian Board of Agriculture, 30 
 
 Indian conditions differing from 
 European, 308, 309 
 
 Indian Irrigation prospects judged 
 by American expert, 261 
 
 Indian predisposition to Co-opera- 
 tion, 38, 39 
 
 Indian village community, 72, 78 
 
 "In Hospital," 21^ 
 
 Inspection, 171, i73, 2i4. 225, 306, 
 
 312. 315 
 Instructors, 306 
 Insufficiency of staff, 291 
 Insurance, 277 
 
 Italian Co-operative Credit, 104 
 Ireland, 32, 80 
 Irrigation, ^^, 261, 277 
 Irrigation Commission, 20, 21, 23 
 Irrigation loans, 320 
 
 Jalna, Co-operative Credit among 
 
 aborigines, 85 
 Japan Co-operation, 38, 257 
 Japanese small industries, 266, 280 
 Jevons, Professor Stanley, 265 
 " Jews " in Germany, 106 
 Johnstone Pasha, on the Mahajan, 8 
 
350 
 
 CO-OPERATION IN INDIA 
 
 Keatinge, G. F., 21, 30^ 31, 273 
 Khedivial Agricultural Society, 252 
 Knowledge never too dear, 319 
 Kutcheri slow repayers, 222 
 Kuttu Chittoo, 38 
 
 Lakhmi, 238 
 
 Ldnas, 267 
 
 Land Alienation Act, 264 
 
 Land Improvement Act, 19 
 
 Land settlement at Maulden, 264 
 
 Land settlement in various countries, 
 
 118,278 
 Langley, R. D. M., 216 
 Large Agriculture, 128 
 Law, Sir E., 60 
 
 Legislation 46, 48, 58, 60, 61, 64, 71 
 Liability, 231 
 
 Liquidation of societies, 8; 
 " Literates " to help, 143 , 
 Litigation mitigated, 95 i 
 Livestock, importance of quality, 274 
 Livestock improvement, 274 
 Loan Societies, 224 
 Loans, 161, 190 
 Local autonomy, 216 
 Local knowledge, 20; 
 Long-term loans, 190 
 Loreggia, " Cassa rurale," 144 
 Ludlow, £. M., loi 
 Luzzatti, L., 105, 132, 143, 206, 223, 
 
 257 
 
 Macdonnell, Lord, 45, 322 
 
 Machinery, co-operative employment 
 of, 266 
 
 MacKenna, J., 91 
 
 Maclagan, Sir £., 44, 89, 95 
 
 MacLeod, H. Dunning, on Credit, 
 3S. 254 
 
 Madras weavers, 90 
 
 Mahajan (or Sahukar), 3, 4, 5, 9, 11, 
 72, 83, 89, 100, 164, 300 
 
 Mahomedans, taking of Interest, 25 
 
 Mailath, Count, 217 
 
 Maine^ Sir H. (on Village Commu- 
 nities), 263 
 
 "Man-Pan," 311 
 
 Mant, R. A., 338 
 
 Markets (co-operatively organised), 
 272 
 
 Marriages, Hindoo, 164, 165 
 
 Maurice, F, D., 335 
 
 Mechanical Expedients, 86, S7 
 
 Mechanism of Credit Sod«ty, 150 
 
 Members, 170, 171 
 
 Memorandums (the Author's) on 
 desirable legislation, 48-58, 61-64 
 
 Mentone, People's Bank, 60, 103' 
 
 Meston, Sir James, 95, 329 
 Metzels, a poor people's village 
 
 bank, 144 
 Middlemen, 102 
 
 Middlesex Self-help Societies, 38 
 Middleton, T. H., 275 
 Milk, 268, 269, 270, 274 
 Milk inquiry in Bombay, 271 
 Milk inspection, 272 
 Milk judges, 272 
 Milk wars, 100 
 
 Milner, Lord, on "Re-enclosure," 263 
 Misconception among Indians, 85 
 Mitra, J. M. Rai Bahadur, 16, 85, 
 
 90, 92, 96, 339 
 Moberley, A. W., 239 
 " Moberley Grain Gola," 239 
 Monti frumentari, 238, 239 
 Monti nummarif 239 
 Moral qualities, 149 
 Morier, Sir R., 150, 159, 208, 339 
 Mortgages, 166, 208, 254 
 Moslems, fraternal feeling among 
 
 them, 38 
 Mukerjee, Prof. R. K., 5, 12, 97, 98, 
 
 100, 102, 262, 284 
 Mukhya, 92 
 Munsiffs' Justice, 83 
 
 National Agricultural Union 
 
 (English), 138 
 Nicholson, Sir F., 8, 28, 38, 44, 59, 
 
 65, 78, 108, 237 • 
 Nidhis, 38, 78 
 Ninomiya Sontaku, 38, 238 
 Nivemais, Popularised Credit, 231 
 Non-agricultural Societies, 74, 224 
 
 " Office of Farm Management " (in 
 
 the United States), 146 
 Officialism, 87, 88 
 One'-man rule, 16% 
 Operations of societies, 2 j2 
 Organisation, i jo, t67 
 Organising Committees, 324 
 Outside support, 1 54 
 Overcentrahsation, 207, 216 
 Overdraft, 121 
 
 Panchayet, 93, 145, 150, 152, 161,162, 
 
 163, 167, 168, 169, 171, 172, 229, 
 
 230, 293, 311, 312, 316 
 Panches, 84, 100, i6'8, 172 
 Panjawar, Co-operative experiment 
 
 in, 44 
 Paper transactions, 167 
 Paresram, Babu, 239 
 Fathshala, co-operative, 92, 93, 294, 
 
 301 
 
INDEX 
 
 in Ger- 
 
 138, 
 
 112, 
 
 " Peasants' Associations 
 
 many, 113, 117 
 Personal credit, 252 
 Personal interest, 320, 322 
 "Pivofofsystem, 147, 211 
 Plunkett, Sir Horace, 98, 102, 
 „ 252, 335 
 
 Policy, continuity of, 309 
 Poligny, pioneer "caisse," 126 
 Polish Co-operation, 186 
 Polish land settlement, 118 
 Politics in Co-operation, in, 
 
 115, 117. 124, 127, 131 
 Fostios, 238, 239, 240, 243 
 Poverty disposing to Co-operation, 8 
 Precedents, 97, 104, 116 
 Preference shares, 200 
 Principles of Co-operative Credit, 67 
 Private help, 307 
 Producers' Co-operation, loi, 226 
 Production (Co-operative), 325, 326, 
 
 327 
 Promissory notes, 229 
 Propaganda, severally in Europe 
 
 and in India, 218 
 Prothero, E. R., 264 
 Provincial Banks, 197, 201, 216 
 Public Demands Recovery Act, 321 
 Pure seed, 273 
 
 Qualification of borrowers, 161 
 
 RaifTeisen Central Bank, 193, 194, 
 
 19s 
 RaifTeisen Congresses^ 124 
 RaifTeisen Credit, 41, 67, loj, 106, 
 
 107, 115, 145,223, 258; 
 Raiyat population, their needs, 2, 3, 
 
 4, 33, 79 
 Raiyats, debts to be paid of, 164 
 R^thas, 267 
 Reay, Lord, on French Agricultural 
 
 Syndicates, 42, 127 
 Recovery of debt, 84 
 Regional Banks, 128, 129, 180 
 Registrars, 67, 80, 206, 210, 291, 294, 
 
 309, 311, 316, 319, 337, 339, 341 
 Religion in Co-operation, 109, 113, 
 
 118 
 "Re-Loans," 167 
 Renewals, 167 
 Rentenbank, -Prussian, 186 
 Repayment, 158, 163, 164 
 Reserve Fund, 176, 180 
 Responsibility, sense of, 147 
 Rhineland, Co-operation in, 114, 145 
 
 Risks, 229, 230 , ^ 
 Rivington, Canon (on Co-operation 
 in India), 95 
 
 351 
 
 Roumania, 119 
 
 " Rural Atmosphere," 299 
 
 Russian Co-operation, 14 
 
 Safety, 339 
 
 Salapur weavers, 90 
 
 Salisbury, late Lord, on abundance 
 
 of money, 34 
 Say, L^on, 134 
 Schoolboys' Societies, 92, 308 
 Schools started by Co-operators 92 
 Schulze Delitzsch, 74 
 " Scolaires Forestiferes," 301 
 Scotch Cash Credit, 34, 35, 166 
 Secr6tan, M., on co-operative 
 
 employment, 99 
 Secretary-Cashier, 153, 168 
 Security, 162, 165, 166 
 Security, capitalist and co-operative, 
 
 208 
 Security, real, 162 
 Security, study of, 19 
 Seeds, provision of, yy, 91, 252 
 Self-government, 319 
 Self-help, 154, 330 
 Shares, 123, 231 
 
 Simla, Committee of 1901, 60, 61 
 Simon, Jules, on People's Banks, 236 
 Simplicity of system, 79 
 Simpson, J. Hope, 81, 198, 287 
 Sirpanch, 141,- 170 
 Size of Committee of Supervision, 152 
 Size of Council of Supervision, 1 52, 
 
 .153 : 
 
 Size of Societies, 142 
 
 Slate Clubs, 38, 234 
 
 Slavs as Co-operators, 117, 307 
 
 Small Industries, 77, 225, 265, 280, 
 
 281, 283, 284, 285, 329 
 Small trade, 225, 226 
 Sradhs, 164, 165 
 Staflf, 245, 279 
 Staff, an adequate, 316 
 State aid, 17, 125, 143, 217, 307, 310 
 State aid abused, 66 
 State aid, Governments' policy with 
 
 regard to, 64, 65, 75, 76, 89 
 State aid, impotence of, 17, 32, 33, 
 
 107, 136 
 State aid in France, 1 19 
 State aid, its irksomeness, 117, 156, 
 
 3" 
 State aid looked for, 18 
 State aid, why it was kept down in 
 
 India, 64, 65 
 State-endowed Central Bank of 
 
 Prussia, no, 116, 154, 156 
 State interference, 170, 200, 206 
 Statistics, 103, T04 
 
352 
 
 CO-OPERATION IN INDIA 
 
 Steadiness, 291 
 
 Stocking money, 199 
 
 Stores, Co-operative, 14, 279, 287 
 
 Storks, Sir Henry, 42, 43 
 
 Strickland, C. F., 225 
 
 Success of the movement, 71, 73, 79 
 
 Sugar-cane growing, 8 
 
 Sugar industry, 273 
 
 Super-inspection, 145, 169, 173 
 
 Supervising Council, 231 
 
 Supervising Council in Bombay, 299 
 
 Supervision, 88, 132 
 
 Supply, 91, 140, 252 
 
 Sureties, 166, 167 
 
 Swiss education, 299, 305 
 
 Switzerland, 118 
 
 Takavi, 18, 19, 20, 21, 22, 23, 30, 31, 
 
 32, 43, 113. "6, 142, 154, 341, 343 
 
 Templecrone Co-operative Society, 
 
 283, 284 
 Thrift, 13, 14, 156, 16s, 179 
 Tradesmen's Banks. 227, 233 
 Training Schools for Officers, 314 
 Transmission of money, 323 
 Transylvania, 217 
 
 Ulterior objects, 248 
 
 Union inspection and audit, 197, 
 
 210, 216 
 Unions, 82, 183, 184, 186, 187, 188, 
 
 190, 191, 197, 205, 210, 216, 219 
 Unions for supervision, 210 
 Unlimited liability, 211 
 
 " Urban," Credit, 121 
 Usury, 10, 96 
 
 Value of clubs, 302, 304, 305, 335 
 Vansittart Neale, E., loi, 102, 335 
 Variety in membership, 222 
 Village Community, 93, 94, 329 
 Village improvement, 93 
 Village Society, 134, 181 
 Voelcker, Dr. J. A., 19, 20 
 Voluntary effort, 36 ^ 
 Volunteer workers, 310 
 
 Weavers, 90, 287 
 Wedderbum, Sir W., 41 
 Weddings, Hindoo, 164, 165 
 Wenlock, Lord, 44, 45 
 West India, attempt to introduce 
 Agricultural Co-operation, loi, 
 
 273 
 
 Wheat, Indian, for England, 260 
 
 Willingdon, Lord, on live-stock im- 
 provement, 274 
 
 Willingdoij, Lord, on the value of 
 sound milk, 268 
 
 Willoughby, R. W. A., 209, 213, 214 
 
 Wilson, Sir James, beneficent inter- 
 vention, 60, 66 
 
 Winchilsea, Lord, faulty organisa- 
 
 . tion, 138 
 
 WoUemborg, Leone, 42 
 
 " World, A New," 108 
 
 " Zuivelconsulenten," 137 
 
 BILLING AND SONS, LTD., PRINTERS, GUILDFORD, ENGLAND