of debt rests in the growth and spread of a healthy and well-organised co-operative movement based upon the careful education ard systematic training of the villagers themselves. Apart altogether from the question of debt, co-operative credit provides the only satisfactory means of financing agriculture on sound lines. Thrift must be encouraged by every legitimate means, for the savings resulting from the thrift of the cultivating classes form the best basis of the capital they require. If the rural community is to be contented, happy and prosperous, local governments must regard the co-operative movement as deserving all the encouragement which it lies within their powers to give.

XI. CO-OPERATION

No subject allied to agriculture is more frequently referred to in the course of our Report than co-operation. Like CHAPTER XIII OF irrigation, it has been dealt with by a special THE MAIN Report. Committee, that presided over by Sir Edward Maclagan, which reported in 1915. The report of that Committee contains an authoritative series of recommendations which have formed a guide for provincial policy in the direction of the movement. It dealt chiefly with credit societies which still form the main line of activity of the movement.

Historically, the co-operative movement may be said to have originated with the recommendations of the Indian Famine Commission of 1901. Prior to that date, an exhaustive study of the system had been made by Sir Frederick Nicholson on behalf of the Madras Government and his reports were published in 1895-97. A few societies, which at that time could only be registered under the ordinary company law, had been started in the United Provinces and the Punjab, but the movement only really began to function with the passing of the first Co-operative Societies Act of 1904. The operation of this Act was strictly limited to credit. It was passed, not as the outcome of a popular demand, but was essentially the act of a Government anxious to ameliorate the condition of the people, and, to give it effect, a government department had to be established. In 1912, a second Act was passed and is still in force throughout India (except in Bombay and Burma which have their own Acts). This permitted the extension of the movement to non-credit activities. But credit societies still hold the field as is natural where rural indebtedness is so general, and they have this further important advantage that a good credit society has an excellent educative value and is the best foundation for more ambitious schemes. The rural credit society is, in point of fact, the chief corner-stone of the whole movement.

The progress of the movement is indicated by the fact that, in 1926-27, there were in British India some 67,000 agricultural primary societies with over two and a quarter million members and with a total working capital of nearly 25 crores of rupees. The main results achieved may be said to be the provision of a large amount of capital at reasonable rate of interest, and the organisation of a system of rural credit which, carefully fostered, may relieve the cultivator from the burden of usury.

Success in co-operation cannot, however, be gauged by figures and our enquiries have shown that progress has not been uniform in all provinces, and that increase in numbers has not always been accompanied by improvement in quality. The reasons for this would appear to be that, while societies have been registered freely, there has been a lack of patient and persistent education of the members in the principles and meaning of co-operation by teachers competent to perform their task efficiently under adequate supervision. Further there is evidence

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that supervision and guidance have been withdrawn too soon. Members of co-operative bodies have not been adequately trained to assume the responsibilities thrown upon them; a natural restiveness under control has found expression in resentment against what has appeared to be undue official interference and transactions have been embarked upon which have led to disaster.

Within recent years, a large number of honorary workers have interested themselves in co-operation, and their contribution to the success of the movement has been great. But it stands to reason that these honorary workers, most of whom have other professional or private interests, cannot devote the amount of time necessary for detailed instruction or supervision of societies. To the failure to recognise the limitations inherent in the system of utilising honorary workers must be largely attributed the very serious defects in the movement which have been brought to our notice. We consider that there is full scope for both the honorary workers and the official staff, and the time has not yet come when the official staff can be eliminated or even reduced. We, therefore, strongly recommend that every effort should be made to build up a highly efficient and well trained official staff in all provinces. Their duty will be to educate the members up to the point at which they will be competent themselves to undertake the duties of the official staff and so to dispense with their services. It will be for them to strengthen the hands of the honorary workers by furnishing skilled advice and guidance in the more difficult problems and to supervise the work of unions and federations engaged in the management and control of the movement. They should also devise new schemes to facilitate the work of other departments, to prepare the ground for their special propaganda and to organise the people to receive and adopt expert advice.

As the official head of the movement, the personality of the Registrar is a matter of the greatest importance. The post requires such special qualifications that we would recommend that local governments should select the very best man available. Administrative experience and knowledge of the people and their economic conditions and ability to enlist the co-operation of honorary workers are essential qualifications. It is most important that the Registrar should not be constantly changed. We consider that the minimum period of tenure of this appointment should be not less than five years and the maximum not more than ten years. The promotion in the regular line of an officer appointed to the post of Registrar should not be affected and we consider that he should retain his appointment as Registrar with the emoluments of the position of a higher grade in the service if he has reached the stage of promotion. It is most important also that a Registrar should always have one or more officers under training to act for him when on leave and ultimately to succeed him. Every opportunity should be given to registrars and the officers of the department to study the co-operative movement in Europe or elsewhere.

With regard to the training of members of the government staff, the Punjab entrusts this duty to three educational inspectors who give

a course of intensive training in rural economics to approved candidates for the post of inspector in the Co-operative Department and hold classes for training sub-inspectors. In Bombay, auditors have to pass an examination in co-operative accountancy conducted by the Government Accountancy Diploma Board. We consider that the question of training the staff should be taken up seriously by all provinces and would recommend for consideration the procedure followed in the Punjab and in Bombay.

As regards the supervising agency, in some provinces supervision is largely undertaken by provineial unions which maintain a paid staff for whose education, training and efficiency they are responsible. The federation of primary societies into special unions who organise the work of supervision has been tried in some provinces with varying success. Provincial unions or institutes also undertake the work of propaganda and organisation and in other ways strengthen and stimulate the movement. Efforts in the direction of organising and developing such unions or institutes deserve every encouragement. Such unions or institutes may reasonably look to Government to supplement their resources with grants-in-aid. As a general principle, we do not think that central banks should undertake the work of supervision although there is no objection to deputing inspectors from provincial or central banks to examine the working of societies provided the duties of the inspectors are clearly defined and they are strictly confined to them.

In the early stages of the movement, Government advanced considerable sums of money as capital. This practice has now almost entirely ceased. We consider, however, that assistance from Government might be given in the following ways:

(a) by contributing towards the out-of-pocket expenses of honorary workers both whilst under training and whilst they are working in the field;

(b) in assisting institutions whose object is to spread education and the application of co-operative principles to various objects and assisting unions in supervision;

(c) in promoting organisations on a co-operative basis to facilitate specialised forms of co-operative activity, such as the consolidation of holdings, adult education, irrigation and the like;

(d) in the propagation of the movement in backward tracts.

As a rule, we consider that Government should spend money rather on education than audit. The audit of healthy societies is not a proper charge on the public funds.

Various concessions are given by provincial governments to co-operative societies such as exemption from income tax, from stamp duty and from registration fees and the provision of facilities for the transfer of funds at par by means of remittance transfer receipts. These are detailed in the main Report and we recommend that, where possible, all the concessions indicated should be granted by provincial

governments to societies within their area. In particular, co-operative societies should be allowed to take full advantage of the facilities afforded by the district treasuries and subtreasuries for the movement of money to finance agriculture. They should be given a refurd of threefourths of the commission on postal money orders, when these are employed for remittances between societies, and should have a first charge" on the property of their members where this has been purchased by a loan from a society or consists of a crop grown from seed obtained by such a loan.

The question of land mortgage banks has come into prominence within recent years. It has become apparent that villa ge credit societies are not suitable agencies for the grant of long-term loans and that this class of business should not be mixed up with the shortterm credit which it is the function of the village society to provide. The Conference of Registrars held at Bombay in January, 1926, considered the question and decided that land mortgage banks could, and should, be established under the provisions of the existing Co-operative Acts. We endorse the resolution passed on the subject at the Conference. The Acts already provide for land mortgage credit and we consider that, for the present, they should be utilised for the formation of land mortgage banks, and that no special legislation is required to establish such banks. With regard to assistance by Government to land mortgage banks, we do not recommend that Government should subscribe to debentures but we consider that a guarantee of interest on the debentures would be a suitable form of assistance. We consider also that the issue of debentures of land mortgage banks should be controlled by a central organisation, otherwise the position will arise of a number of small institutions flooding the market with competing issues. Land mortgage banks would be a suitable agency for distribution of loans under the Land Improvement Loans Act, and their debentures should be added. to the list of trustee securities. We would emphasise the importance of a most careful preliminary enquiry before a land mortgage bank is floated and would insist on efficient management as essential. The simpler the constitution of such banks, the better they are likely to function.

So far little progress has been made with non-credit societies as compared with credit societies. This is natural as advance in other directions is difficult until the burden of rural debt has been definitely lifted from the shoulders of the cultivator. Purchase and sale societies, seed societies, cattle insurance societies and other forms of non-credit activity have been attempted with varying success, but it cannot be claimed that any substantial advance has generally been made in any of these directions. If such societies are to be successful, business management is required and it is not easy to find the capacity for this & mcrgst their members. As a matter of principle, the single purpose society seems the best line of development. "One thing at a time" should be the policy.