Agricultural Credit 



develop land settlement, from the outset 

 credit facilities were created. In this country 

 no serious attempt has been made to create 

 a system of agricultural credit. In 191 1 

 the Government attempted to formulate a 

 scheme, but the basis was so unsound that 

 it came to nothing. A clear distinction 

 should be made between land banks and 

 credit banks or societies. Technically speak- 

 ing land banks exist to enable occupiers of 

 land to purchase their holdings, and these do 

 not come under our consideration. Credit 

 banks or societies exist to provide the culti- 

 vator of the soil with working capital ; in some 

 cases all the working capital is advanced, 

 but more generally they supplement the 

 working capital he already possesses. The 

 essential feature is that the loan is for a 

 short period, and therefore a sinking fund 

 is a sine qua non. This is the only sound 

 form of borrowing. At present when a 

 small owner wants to borrow money he has 

 to mortgage his farm. No sinking fund is 

 provided, so that the mortgage becomes a 

 permanent charge on his land. This is the 

 most unsound form of borrowing. The 



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