Art. 5.-THE CO-OPERATIVE MOVEMENT IN INDIA. 1. Report of the Committee on Co-operation in India, 1915. Simla Government Press. 2. Co-operation in India. Resolution by the Government of India, in leaflet form. Calcutta Superintendent, Government Printing, 1914. 3. Proceedings of the Conference of Registrars of Cooperative Societies in India, 1906, 1907, 1908, 1909, 1911, 1912, 1913. Simla: Government of India Press. 4. Annual Reports on the Working of the Co-operative Societies in the Presidencies of Bombay, Madras and Bengal, the Provinces of the Punjab, Burma, United Provinces, Central Provinces, Bihar and Orissa, Assam, Coorg, Ajmer, and the Native States of Mysore and Baroda. Printed at the Government Presses of the respective Administrations. 5. Statements showing Progress of the Co-operative Movement in India, annually, 1910-11 to 1913-14. Simla : Government of India Press. 6. Rural Economy in the Bombay Deccan. By G. F. Keatinge, C.I.E., I.C.S. London: Longmans, 1912. 7. Handbook of Co-operation for Burma. By A. E. English, C.I.E., I.C.S. Maymyo, 1914. No phenomenon in the economic life of Modern India is more striking than the rapid growth of the co-operative movement. Introduced only eleven years ago, it has spread and progressed until it now comprises 15,000 societies, with 744,000 members, and a total working capital of about 5,144,000l. These are amazing figures to have rewarded so few years' work among a population to whom the ideas implied in the co-operative system were at first quite foreign; and they foreshadow developments which promise in time to solve some of the most stubborn problems with which the Government of India is faced. The new societies have weathered local famines in Gujerat, the Deccan, and the United Provinces, and have passed almost unscathed through the financial crisis which brought down so many joint-stock banks in Bombay and the Punjab during 1913 and 1914. It is, perhaps, too soon to assume that the higher finance of the movement has been placed on a basis which leaves no room for alarm in the future. But the village societies, on which the whole co-operative structure rests, have been at work long enough to show that they are on the whole sound and well-managed, and likely, as time goes on, to prove themselves increasingly important factors in the rural economy of the country. The causes which led Government to introduce the movement into India deserve a brief notice. The past fifty years have witnessed a remarkable growth in the commerce and total wealth of India. In this general prosperity the peasant class has had little part. Far from decreasing, the burden of their indebtedness has probably increased. Bad seasons, the fatalistic tenour of their minds, lack of education, and absence of organisation and business capacity have combined to prevent them from securing their fair share in the profits of agriculture. The great mass of them still turn to the village money-lender for the capital necessary for carrying on their industry; and in a transaction in which their needs and ignorance are pitted against the greed and shrewdness of a hereditary class of financiers, they are usually overreached and have to pay far higher rates of interest than the security which they have to offer justifies. Agriculture can never be a lucrative occupation so long as the capital with which it is carried on is considered cheaply obtained at 20 or 30 per cent. This persistent indebtedness and stagnation amongst vast masses of the agricultural population is, perhaps, the greatest barrier in the way of progress that the Indian Government has to encounter. From time to time various remedies have been tried. The Legislature has placed numerous restrictions on the alienation of land by agriculturists; in certain tracts a legal maximum has been set on the rates of interest chargeable by moneylenders; a system of State loans has been introduced; Post Office Savings Banks have been opened; and the principles governing the assessment of land revenue have been revised in the direction of lenience. But no mere legislative fiat can control the working of economic law. The weaker class has continued to go to the wall, and their general condition to stagnate. It was seen that in order to restore the equipoise between lender and borrower, which under more primitive conditions was assured by the public opinion of the countryside and the difficulty of recovering dues from an unwilling debtor, the first step was not only to redeem the debtor and supply him with working capital at cheap rates, but at the same time to set before him an ideal of self-help and independence and to inspire him with a sense of responsibility which would prevent him from borrowing rashly or misusing the money placed within his reach. The idea of using co-operation as a means of combating the Indian rural problem was first conceived by the Government of Madras, which sent Sir Frederick Nicholson to Europe to study the theory and practice of agricultural banking and to suggest means by which a similar movement might be started in their Presidency. Between 1895 and 1897 he issued an exhaustive report, which is even yet a mine of information on the subject; and he summarised his conclusions in the words 'Find Raiffeisen.' By this he meant not only that the system of rural credit societies first invented by Raiffeisen should be given a trial, but that genuine enthusiasts were needed to launch the movement. To the honour of the Civil Service, such men were speedily forthcoming. Scattered Societies on the lines indicated by Nicholson were started by Mr Dupernex in the United Provinces, Mr Maclagan in the Punjab, and by a few other keen and far-sighted officers. Lord Curzon, the Viceroy at the time, was quick to realise that no great results could be expected from uncoordinated individual effort, and accordingly appointed a Committee under Sir Edward Law to examine the existing pioneer societies and to suggest lines on which legislation might be undertaken. The result of its enquiry was the Co-operative Credit Societies Act, which was passed into law in 1904. Societies were classified as rural and urban; and, while the latter were left a free choice, the former were bound to accept unlimited liability. Their area was closely restricted. Loans might be made only to members and on personal or real, but not ordinarily on chattel, security. An annual official audit was made compulsory. The interest of any member in the share capital of the Society was strictly limited; and special exemption from fees payable under the Stamp, Registration, and Income Tax Acts were conceded. Separate official Registrars were at once appointed in each Province, the results of whose work may best be seen from the figures in the subjoined Table, which includes the statistics for the native states of Baroda and Mysore as well as for British India : The movement so far outran the dreams of its authors and ramified in so many new directions that in 1912 it became necessary to undertake fresh legislation. The new Act swept away the old distinction between rural and urban societies, and substituted a more scientific distinction based on the character of the members' liability. The registration of new types of association for the supervision or finance of primary co-operative societies was for the first time legalised. Co-operative organisations with other objects besides that of furnishing credit were allowed. The exact form which these should take was not definitely laid down; and, pending fuller experience, Registrars were left a wide discretion in building up the higher storeys of their provincial cooperative structures. In 1914 a Committee, presided over by Sir Edward Maclagan, was appointed to review the whole position and to advise the Government of India more particularly on the higher organisation of the co-operative movement and the financial connexion of the various parts of the system. Their report, which has recently been published, marks a definite epoch in the history of the movement. It is the first critical survey of the whole field of Indian co-operation by men of administrative experience in the East, and abounds in practical suggestions and cautions, which cannot fail to have a profound influence on future policy. Such in very brief outline is the history of a movement which deserves more attention than it has yet Vol. 225.-No. 447. 2 c received at the hands of economists in Great Britain. It has already achieved results of which it is worth while to take careful stock. The co-operative ideal, alien as it was in origin, has struck root so firmly in Indian soil that the manner of its growth demands careful study, both in order to forecast the influence which it is likely to have on the future of India and to bring to light any peculiar features, unknown to European practice, which have come into being under Eastern conditions. It is a familiar fact that the great bulk of the population of India belongs to the peasant class and still depends on agriculture for its livelihood. Outside a few large towns, the percentage of persons in industrial occupations is very low. This circumstance is reflected in the returns, which classify no less than 13,882 of the 14,566 societies existing in British India as agricultural. The development has, perhaps, been too one-sided. The founders of the movement have had their eyes fixed mainly on the rural problem. But with rising prices, insufficient housing accommodation in large towns, the prevalence of sweating in the matter of pay and factory hours, and the growth of higher standards of living due to education, industrial unrest is bound to appear; and the time has probably come when it would be wise to make an effort to mitigate the difficulty before it becomes acute by fostering suitable types of co-operative association among artisans and the lower urban classes generally. Several most successful societies of this type in Bombay, Madras, and elsewhere have shown that the way is clear for such a development. At present, however, the number of these societies is so few that they may be excluded from a general survey without affecting its conclusions. In the same way, although a hopeful beginning has been made with agricultural societies for purposes other than credit, their numbers are still too small to call for particular notice. Of the 167 such societies, no less than three quarters are situated in Burma, and are chiefly concerned with the insurance of cattle, and the sale of paddy and groundnuts. The remaining societies, numbering nearly 14,000, confine their operations to agricultural credit. It is the constitution and working of these last societies that at the present stage will best repay study. The stability of every co-operative system must |