156 AGRICULTURE IN THE TROPICS [PT. Ill 



The essential principles of the scheme are that each society 

 is confined to a village or other community, all of whose 

 members are of course acquainted with one another, that the 

 funds are collected from the members of the society, each of 

 whom pays as a rule a commencing subscription, and that the 

 liability is unlimited. The societies, in India at any rate, being 

 officially audited and inspected, their credit is good, and they 

 are able to lend to their members (for outside loans are not 

 allowed) at low rates of interest, with easy repayment in in- 

 stalments at crop times. 



The society is usually managed by a committee (unpaid) 

 of its own members, who have control of its funds, and lend 

 small sums to local cultivators for various purposes, when they 

 are convinced that the said cultivators have the ability and the 

 intention to repay. As the committee will of course be well 

 acquainted with the would-be borrowers, and as, owing to the 

 unlimited liability, all losses fall on all the members of the 

 society, great care will naturally be taken to lend only in 

 fairly safe cases. This, incidentally, has worked for good in 

 the thousands of European villages in which such societies are 

 now at work, by making the villagers careful of their ways in 

 regard to drunkenness and other offences. All profits which 

 are made by the society, after repayment of any money it may 

 have borrowed at the start, are returned to the members in the 

 form of dividends, so that the rate of interest charged, provided 

 only that it is a good deal lower than that charged by the local 

 money-lenders, does not much matter. 12 / o is the usual rate 

 in India. 



In this way the respectable peasant agriculturist is able 

 to get money at lower rates of interest and on easier terms of 

 repayment than from the money-lenders, while all profits made 

 by the society, after the commencing loans have been paid off, 

 come to him in the form of dividends. 



It is obvious that in most cases such a society, starting in 

 a tropical village, would have to borrow some capital to begin 

 upon, otherwise its members would be like the inhabitants of 

 the famous island who eked out a precarious living by taking 

 in one another's washing. This small amount of capital, if it 



