NOV. 1906. J 



419 



Miscellaneous. 



CO-OPERATIVE CREDIT IN BENGAL. 



While the problem of the improvement of Indian Agriculture is being 

 attacked from the experimental and the research side by the Imperial and Provincial 

 Departments of Agriculture, the important question of financing the agriculturist 

 has not been forgotten. It is remarkable that the industry by which over eighty 

 per cent, of the population live is supplied with most of its capital at a rate of 

 interest varying from 25 to 50 per cent, per annum. Any other industry would 

 die under such conditions, but the agricultural industry cannot die ; it is the ryot 

 who dies. He cannot turn to a more lucrative occupation when agriculture does 

 not pay ; he either starves or becomes hopelessly indebted and the slave of the 

 money-lender. If the problem of financing agriculture can be solved, the benefit 

 to the ryot will be greater and more direct than the saving occasioned by new 

 methods of agriculture or the profit to be gained from a greater outturn. Without 

 the use of capital at a reasonable rate, the agriculturist will be unable to take 

 advantage of new ways and means. The success of the results of research and 

 experiment depend directly on the success of the effort to supply the ryot with 

 capital at a reasonable rate. 



Cheap capital or facile credit is not necessarily a boon in itself. Switzerland 

 has organised a system of cheap credit with the result that 60 per cent, of the land 

 is now mortgaged. The present and past generation have merely discovered a 

 system of robbing future generations of a portion of their means of livelihood. 

 Any increase in comfort has been obtained at the expense of their children's children. 

 If credit of this kind were supplied in India, the ryot, who formerly was in a 

 position to borrow Rs. 100 from his mahajan for his daughter's marriage and pay 

 50 per cent, per annum lor the accommodation, would simply spend more on the 

 marriage, and so land himself deeper in debt. With credit cheap he would purchase 

 more. 



The question has thus two sides, commercial and economic. A system of 

 finance which might prove a commercial success would not necessarily prove an 

 economic success, but the system which promises to be an economic success must be 

 based on commercial principles. The commercial side may be shortly stated thus : — 

 The ryot is ready to borrow a sum of money for which he is at present paying 

 interest from 25 to 50 per cent, or more ; the majority of ryots have good security 

 to off er for the sum which they require, while the capitalist has money to lend on 

 good security at 6 per cent. These two have to be brought together for their 

 mutual benefit. It would be easy aud commercially profitable for the State to set 

 up an agricultural bank provided with special summary powers for collecting its 

 dues, but such a system would not benefit the agriculturist in the long run. 



It is impossible for the large capitalist to come into direct contact with the 

 small cultivator. The capitalist has no local knowledge of the individual, he has 

 no agency for collecting small loans, and he could not keep millions of small accounts. 

 There must be some intermediate organisations. In Germany this has been found 

 in Co-operative Credit Societies, and in India an attempt is being made to create a 

 similar organisation. This system aims at capitalizing the honesty of the villages. 

 Where anything in the shape of a village community exists the majority of the 

 cultivators have a character for honesty, often not extending beyond the narrow 

 limits of the village, but within these limits most transactions take place without 

 any written bond, the man's word being sufficient. On this honesty a certain 

 amount of credit is based ; it may be a credit of only a few rupees, but the measure 

 is known to the villagers. They know exactly how much a man ought to spend 

 and how much he can earn. We want, therefore, to teach the people to amalgamate 

 this village credit and jointly borrow a sum sufficient to meet the whole village. 



