AGRICULTURAL CREDIT BANKS 99 



The Government which finances rural banks will sooner 

 or later claim an amount of control over them which 

 will rob them of much of their power for good. The 

 question whether a single society should be concerned 

 with credit and with trade is one regarding which there is 

 much difference of opinion. Except in the case of very 

 small societies, I think the attempt to combine the two 

 functions is inconvenient, if not dangerous. 



The problem which presents itself in Eastern and 

 tropical countries is not identical with the European 

 problem, because of the different character of the people 

 at their present stage of development and the comparative 

 absence of ordinary banking facilities. It is fortunate, 

 therefore, that we have now eight years' experience of 

 the successful working of rural banks in the different 

 provinces of our Indian Empire, much of which is 

 included in the tropics. It must also be remembered that 

 in some of our tropical Crown Colonies East Indians are 

 now an important element in the population. My own 

 Indian experience was gathered from a long residence in 

 the Punjab, and part of what I have to say has special 

 reference to the state of things existing in that province. 



The Indian population is predominantly rural, being 

 engaged either in tillage or in crafts ancillary to tillage. 

 As a rule, land is cultivated in small parcels by peasant 

 farmers, who are either tenants or owners. An ordinary 

 holding in the Punjab, a land of small proprietors, is 

 one of 6 or 7 acres. 



If the British Government did not create ownership in 

 Northern India, it certainly made what was previously 

 worth little a very valuable possession. It made titles 

 secure by drawing up a complete record of rights, and it 

 gave the landowner a substantial share in the profits of 

 farming by limiting its demand for land revenue and 

 assessing it for comparatively long terms. Finally, it 

 established the pax Britannica. The result was a rapid 

 extension of cultivation and a rise in the value of land, 

 which to-day on the average sells in the Punjab at over a 

 hundred times the land revenue. But the very success of 

 the policy created a new problem. Ignorant peasants, 

 hard-working but rarely thrifty, and on certain occasions, 



