m 



be wholly dispensed with, and the latter must, especially 

 when the banks' claims were made to take precedence of 

 their own, for self-protection necessarily impose harder con- 

 ditions than before on their debtors. 



As regards the first objection, it must be remembered 

 that in all European countries where peasant properties 

 prevail and where the agricultural classes are far ahead of 

 the Indian ryots in point of education, enterprize and habits 

 of thrift, it has been found necessary and practicable for the 

 State to mitigate the evils of agricultural indebtedness by 

 giving facilities for the establishment of land credit banks. 

 It is true that the Government cannot usefully undertake 

 and effectually perform the functions of a bank in the way 

 of discounting the bills of traders in need of loans for short 

 terms when they have no other security to offer than their 

 own personal credit, but the case is entirely different as 

 regards loans on the security of immoveable property, the 

 value of which is capable of being ascertained with a con- 

 siderable amount of precision by official estimators aided by 

 information obtainable from the records of the Eegistration 

 Department. Professor Sidgwick has pointed out that this 

 is a work which can be performed efficiently by official 

 agency. He states " Experience has shown that peasant 

 cultivators are liable to become loaded with debt to money- 

 lenders who, either through the absence of effective compe- 

 tition — partly in consequence of a certain discredit that 

 attaches to their business — or perhaps sometimes through 

 unavowed combination, are enabled to exact very onerous 

 interest. This condition of debt tends to paralyse the pro- 

 ductive energies as well as to cause distress; accordingly, 

 under these circumstances. Governments may operate for the 

 benefit of production, no less of distribution, by encouraging 

 with special privileges the formation of commercial com- 

 panies for the purpose of lending money on easier terms. 

 Indeed, as was before said, the business of lending on the 

 security of land seems to be of a kind which might be under- 

 taken by Government itself, under certain conditions, with- 

 out the kind of risk that is involved in ordinary banking 

 business. So too, where the pawn-broker is the normal 

 resort in an emergency of poor labourers. Government by 

 undertaking the business of lending money at a moderate 

 interest may give sensible relief without offering any material 

 encouragement to unthrift. These encouragements would 

 tend to strengthen on the whole, rather than weaken, habits 

 of energetic industry, thrift and self-help in the individuals 

 assisted." In this country the considerations above referred 



