working of this committee must be left to local decision, but we would suggest that in order to prevent fraudulent weighment, they should instal a weighbridge in the market with suitable arrangements for its use, and that machinery should be provided for settlement of disputes which arise. For this purpose a board of arbitration consisting of three members, one nominated by the buyer, one by the seller and a third who would be chairman, selected by both the parties from the market committee, would seem to be the most satisfactory arrangement. Market committees should charge themselves with the duty of posting prices, ruling in the market centres of the tract and at the ports, for the products dealt with in the market. They would frame rules for the control of brokers, especially for preventing them from acting for both buyer and seller, and might provide limited storage accommodation in the markets.

A question which has for long engaged attention is the standardisation of weights and measures. These vary most extraordinarily throughout the country and, in some provinces, almost from village to village. Although a committee to investigate this subject was appointed by the Government of India in 1913, no action has yet been taken on its recommendations. We consider the matter of such importance that we would recommend that the Government of India should again undertake an investigation into the possibility of standardising weights and measures throughout India and should lay down general principles to which provincial governments should adhere so far as this is possible without undue interference with local trade custom. A Bill to provide standards of weights and measures for use in Burma has been introduced in the local Legislative Council. A feature of the Bill is the power which is taken to recover from the villagers the cost of equipping village committees with standard weights and measures by the imposition of a tax or a cess on lands assessed to land revenue. It is explained that the reason for this provision is that the total expenditure involved in a free supply at the cost of Government would be considerable; and that the share of each village, if the cost is distributed over all villages, will be very small and its collection will do more than anything else to advertise the fact that standard weights and measures have been provided.

Much of the Indian produce exported to foreign markets would appear to be marketed in an unsatisfactory condition though matters have considerably improved within recent years. In England, we were informed that cotton is badly mixed, that jute is badly retted and graded and suffers from excessive moisture, that Indian hemp is very irregular in quality, badly mixed and contains an excessive proportion of dust and dirt. On the other hand the report on Indian oil-seeds, with the exception of groundnuts which frequently suffer from excessive moisture, was satisfactory. Opinion on the quality of Indian wheat was divided; in view of the possible expansion of the crop in Sind and in the Punjab as a consequence of the Sukkur Barrage and the Sutlej Valley project, we think that the possibilities of developing an export trade in high class strong wheats should be borne in mind. The buyer is the ultimate judge of the quality to which he gives a value by an increased or decreased

price. Organisation amongst the ultimate buyers can, in some instances, be an effective weapon in securing improved quality but it is difficult except in such a case as that of wheat in which the greater part of the exports from India go to one country. Effective measures to secure improved quality must, therefore, in the main be applied by the agricultural and co-operative departments who must keep in close touch with trade requirements so that the cultivator may get the benefit of his better cultivation and better methods of preparation. Organised trade associations such as the East India Cotton Association who are in a position to lay down grades and standards can give great assistance. Co-operative sale societies should be encouraged as these furnish the best means of enabling the cultivator to secure an adequate premium for produce of superior quality. The agricultural departments can substantially assist the co-operative sales societies by grading their produce. Auction sales by agricultural departments provide a useful means of securing to the cultivator in the early stages an adequate premium for the superior quality of a new variety grown under their supervision. Such auctions should, however, be only continued until they can be taken over by co-operative societies or suitable private agencies.

We do not consider that further investigation is called for into the possibilities of grain elevators. An elevator system would have to be financed by Government and the advantages to the cultivator appear altogether too problematical to justify this.

The marketing of his produce is such an important matter from a cultivator's point of view that we consider that an expert marketing officer should be appointed to the staff of the agricultural departments in all the major provinces. One of his first duties will be to organise market surveys. There is a great lack of exact information on the subject and this must be obtained and studied before Government can work out a scheme to assist the cultivator in his marketing operations.

One of the specific duties of the marketing officer will be to examine the working of the regulated markets, and to make recommendations for their improvement where necessary. He would advise the market committees on any points that may be referred to him.

In view of the growing importance of Indian agricultural products in Europe, we consider that the Indian Trade Commissioner in London should be given the assistance of an officer with experience of agriculture and co-operation in India. The main duties of this officer would be to keep in touch with all aspects of the trade in Indian agricultural products at the European end and with all developments of co-operation in Europe. An officer of similar standing and experience should be attached to the staff of the Director General cf Commercial Intelligence in Calcutta, who would pass on to the departments concerned information which he receives from his colleague in Europe, in a manner which would enable them to utilise it to the best advantage. Ultimately, as Indian trade grows, it may be necessary to appoint separate Trade Commissioners in other countries.

X. THE FINANCE OF AGRICULTURE

CHAPTER XII OF THE MAIN REPORT.

As in every other country, the cultivator in India needs, from time to time, some source of capital either for carrying out permanent improvements, for the purchase of more expensive implements or for current requirements. The greater proportion of the funds required for these purposes is provided by local moneylenders, who, however, make no distinction between capital required to finance an industry and the money needed for ordinary household expenditure. Government also give loans for agricultural purposes under the Land Improvement Loans Act, 1883, and the Agriculturists' Loans Act of 1884. It has, however, never been the policy of the State to impose restrictions on the financing of agricultural operations by private individuals. Such restrictions as have been imposed have all been devised to deal with agricultural indebtedness and to check the activities of the usurious moneylender.

Mortgage of agricultural land is the most common method of arranging long-term credit and the total sum advanced upon this form of security must now be very large. Mortgage credit is rarely used to finance improvements in agricultural land. It is resorted to when the unsecured debt becomes larger than the lender considers safe and, in times of distress, for ordinary agricultural needs. In some provinces, legislation has laid emphasis on automatic extinction in certain cases within a limited period. The evidence given before us inclines to the view, in which we agree, that no usufructuary mortgage of agricultural land should be permitted by law unless provision is made for automatic redemption within a fixed period of years of which twenty should be the maximum. The risk of collusive evasion must be recognised but education and the development of character are the only specifics against both the wiles of the lender and the recklessness of the borrower. Another point in connection with mortgages is the reluctance of the mortgagees to accept redemption. The Usurious Loans Act was amended in 1926 to enable a mortgagor to take advantage of its provisions when suing for redemption. The Punjab Alienation of Land Act of 1900 and the Punjab Redemption of Mortgages Act of 1913 give certain powers to deal with the question. The operation of the latter Act is restricted to mortgages, the principal sum secured under which does not exceed Rs. 1,000, or to mortgages of land not exceeding thirty acres. These restrictions might perhaps be removed. We commend to local governments the consideration of legislation on the lines of the Punjab Acts in regard to the redemption of mortgages.

Various enactments have from time to time been passed by different local governments to deal with transfer by sale or mortgage of agricultural land to non-agriculturists. The best known of these are the Punjab Land Alienation Act and the Bundelkhand Land Alienation Act. The Bombay Land Revenue Code lays down rules with a similar object. The desirability of extending the principle

of statutory restriction on the alienation of land to districts or provinces other than those in which it is now operative is one which, in our view, can only be measured in the light of local conditions including the state of mortgage debt amongst cultivators, the extent to which land is actually passing from agricultural to non-agricultural classes, and the feasibility of defining with reasonable precision those agricultural tribes or classes whose interests it is sought to protect.

The business of joint stock banks, so far as it relates to the advancing of loans on the security of agricultural land, is usually confined to the larger landholders, the planting community and others who possess tangible marketable security. Outside these narrow limits, its effect on agricultural operations is not appreciable. Schemes for wholesale redemption of debt by private banks with the help of government funds have been put forward from time to time. The history of the Agricultural Bank of Egypt is, however, an instructive warning to those who hold that problems of rural debt are to be solved by the provision of cheap and abundant credit. In fact, cheap credit is a blessing to a rural population only where the average cultivator is possessed of the knowledge and strength of character required to induce him, on the one hand, to limit his borrowing within the range of his capacity to repay, and, on the other, to apply the greater part of the borrowed money to sound productive purposes.

As a general rule, it may be said that the larger landlords do not take that interest in the development of their estates which might be expected. In some cases, tenure or tenancy laws are an obstacle. We would suggest that, where existing systems of tenure or tenancy laws operate in such a way as to deter landlords who are willing to do so from investing capital in the improvement of their land, the subject should receive careful consideration with a view to the enactment of such amendments as may be calculated to remove the difficulties. The establishment of "home farms" run on model lines is to be commended and, where tenure difficulties arise, action to permit of the establishment of such farms appears especially necessary.

The Land Improvement Loans Act has on the whole worked well, but it is doubtful if its provisions are as widely known as they should be. Complaints of delay in dealing with applications are numerous, but reflection will show that in most cases some delay is inevitable if the enquiries preliminary to the grant of a loan are to be carefully carried out. Greater elasticity in the rules would increase the temptation to unwise borrowing, while careful scrutiny of the security offered, supervision to ensure that the loan is actually expended on the improvement for which it is granted, and insistence on regular recoveries are all necessary in the interest of the borrower himself. When land mortgage banks are firmly established, part of the allotments under this Act might be placed at their disposal provided that steps are taken to ensure utilisation on objects which fall within the scope of the Act.

With the limitations referred to in the case of the Land Improvement Loans Act, the Agriculturists Loans Act has also on the whole worked well. The grant of loans is restricted to the owners and occupiers of arable land and the purposes of the loans to the relief of distress, the purchase of seed or cattle and any other purpose not specified in the Land Improvement Loans Act but connected with agricultural objects. Since the Act came into force, it has proved of immense value in times of distress, whether arising from drought, floods, epidemics or earthquakes and is a potent weapon in the hands of any local government called upon to deal with a sudden emergency which requires the immediate issue of capital for current needs. The rules have repeatedly come under revision and are now as elastic as the interests of both borrower and lender permit. We are of opinion that this Act must remain on the Statute Book until the spread of thrift or of co-operative credit or of both renders it obsolete.

Knowledge of rural indebtedness and its causes has steadily increased as the subject has again and again come under review. The general expansion of the credit of the land holder, his illiteracy, and the temptation he has to relieve present necessities by mortgaging his future income and even his capital, have, on the one hand, led to increase in indebtedness, while, on the other the position of the moneylender has been strengthened by the rapid development of commerce and trade, the introduction of established law and permanent civil courts, and the enactment of such measures as the Contract Act. The annual reports on co-operation have contributed much information of value on the subject of indebtedness and village surveys in different provinces have thrown light on the details, whilst Mr. Darling's book on "The Punjab Peasant in Prosperity and Debt " is a valuable study of the subject. The conclusions drawn in this book apply to an area far beyond the confines of a single province.

Legislative measures designed to deal with the problem of indebtedness have proved a comparative failure. Evideuce was received in one province that the provisions of the Civil Procedure Code exempting the cattle, implements and produce of agriculturists from sale may be ignored. The Kamiauti Agreements Act in Bihar and Orissa has been found ineffective. The provisions of the Deccan Agriculturists Relief Act are being evaded and the Usurious Loans Act is practically a dead letter in every province in India. We consider that an enquiry into the causes of the failure to utilise the last-named Act should be made in all provinces. If its provisions were fully utilised, this would go far to remove the worst evils of uncontrolled usury. Other Acts worthy of the consideration of local governments are the Punjab Moneylenders Bill and the British Moneylenders Act of 1927 while the case for a simple Rural Insolvency Act should also be examined.

We have no hesitation in recording our belief that the greatest hope for the salvation of the rural masses from their crushing burden

MOY 392-4