May, 1909.] 



171 



Miscellaneous 



success attained in Germany and Italy 

 which attracted the attention of Sir 

 Frederick Nicholson, who was appoiuted 

 in 1893 to make a special inquiry into the 

 subject. As a direct result of Sir Freder- 

 ick's labours, the Co-operative Credit 

 Societies Act was passed in 1901, and 

 since that time considerable progress has 

 been made in the establishment of little 

 credit associations in the villages of 

 India. The Act has been in operation 

 for only four years, yet the capital in- 

 vested in the societies registered under 

 the Act amounts to 12 lakhs of rupees ; 

 and there are to-day throughout India 

 1.357 Rural and Urban Societies with 

 150,000 members. It is true that as yet 

 very little impression has been made 

 upon the enormous burden of agricul- 

 tural indebtedness in India, but the 

 progress made in the short space of four 

 years is, I think, sufficient to merit 

 your attention, 



"Raiffeisen societies are small demo- 

 cratically managed groups of agricul- 

 turists who join together for the pur- 

 pose of making their individual securities 

 of greater value and of enabling each 

 member to obtain benefits which, though 

 possible for all when united, are impos- 

 sible for each individually. Every man 

 possesses some security, or at least has 

 it in his power to possess something 

 which serves as a basis of credit, namely, 

 a character for honesty among those 

 who know him well. He may have no 

 money, he may have no property, but 

 he has it in his power to build up a 

 character for honesty in his dealings, and 

 all those who know rural India well know 

 that this character for honesty does 

 exist in the villages. In India, we wish 

 to attract the poorest of the poor, and 

 therefore we cannot ask them to make 

 payments towards the capital of their 

 society." 



" An important question to consider," 

 —continued Mr. Gourlay— " is the source 

 from which capital is to be obtained. 

 A great majority of the members join 

 from self interest : they have no money 

 to deposit ; they have come to b )rrow. 

 Capital must in the first instance be 

 sought from outside, and it is here, as 

 you can imagine, that naw societies find 

 difficulty. Until confidence has been 

 established, it is hard to attract capital, 

 and without capital the society is not 

 in a position to demonstrate its trust- 

 worthiness. Capitalists, however, have 

 been found who are willing to take the 

 risk, and Government, too, has shown its 

 readiness to assist. The aim is to attract 

 local capital, the hoarded wealth to 

 which Sir Ernest Cable refers in his 

 letter to the Times, and most of all to 

 attract the savings of the members 



themselves, when the benefits of cheap 

 capital have placed them in a position 

 to save. Societies can never succeed un- 

 less they have a good business founda- 

 tion ; and therefore the rate of interest 

 which they are willing to pay must be 

 such as wdl attract local capital when 

 the trustworthiness of the institution 

 has been clearly demonstrated. In my 

 own province I have found that this rate 

 lies between 12£ and 18| per cent, accord- 

 ing to the circumstances of the locality, 

 but as success crowns our endeavours 

 this rate will be lowered. 



How Capital is Safeguarded, 

 " The risk that a man takes in placing 

 his all m the hands of his felIow-viIla°-ers 

 would be very great were it not "for 

 certain safeguards which I will explain 

 to f^st, leading to outsiders is 



prohibited, and the operations of the 

 society are confined to the village with- 

 in which every man knows his neigh- 

 bour; secondly, every member before 

 he receives a loan must state his case 

 to the others, and must tell them what 

 he wishes to do with the money ; thirdly 

 the member is bound to use the money 

 for the purpose indicated ; if he does 

 not do so the members call the loan 

 back tor fear of being involved in loss ; 

 and, fourthly, every member has to find 

 two of his fellows to bo his sureties for 

 the repayment of the loan. The result 

 of these safeguards is that societies of 

 this description have been found a safe 

 repository for money, and up to the 

 present not a penny has been lost either 

 in Europe or in India. 



Co-operative Credit in Calcutta. 



"Sofar l have been speaking," added 

 Mr. Gourlay, "of rural India, but 

 similar principles have been applied 

 successfully in urban areas and parti- 

 cularly in Calcutta. There is much 

 in the life of Calcutta which leads one 

 to believe that the founding of mauv 

 such societies would be fruitful of much 

 good. There is no class who have been 

 so hardly hit by the high price of food 

 grains as the low grade clerks in mer- 

 cantile and Government offices, and the 

 result of the high prices has been that 

 many families have been forced to 

 contract debts from which there seems 

 little hope of release. I believe that this 

 is one of the great causes of discontent 

 amongst the clerk community. 



"The first difficulty in applying the 

 principles lies in the unlimited liabilty 

 Few of the clerks residing in the town 

 would be willing to pledge their all 

 for their fellow clerks. In a town there 

 is in the same intimate knowledge of 

 each other's life that there is of the 



