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members (but not to non-members) who need it and whose need is certified by the managing committee of the society. The managing committee will itself be chosen from the members and will itself decide whether to grant or refuse a loan to an individual member. The Co-operative Loan Board will merely issue a limited sum to the society to be administered by the managing committee of that society. It is not necessary that the managing committee should be of literate members, there is plenty of intelligence amongst the illiterate; but it is very necessary that only those members shall be admitted who are considered by the other members to be trust- worthy persons and whom they think they can supervise in the use and repayment of the money. The basis of co-operative credit is not property but income, which may be derived from temporary property bought with borrowed funds. The basis of co- operative credit is also the character of the members, and the best judges of character in a village are the members themselves. It is often necessary for the Registrar or his organizer to give assistance to the poorer farmers in order to exclude the richer farmers from the society. These latter cannot always be controlled by the other members, and are, therefore, unsuitable for admission. They are, also, sometimes moneylenders.
kind. The
There is no objection to a credit society making its advances in kind. wholesale purchase of food-stuffs may sometimes be convenient.
These village societies, each of which should be limited to a small hamlet or group of houses where all the members can watch each other every day, may in the future. join together in a co-operative union; and if funds from the Co-operative Loan Board were still necessary, the Board would then make a loan to the union, which would lend to the societies, which would lend to their members. Provided that the Registrar is really trained for his duties and can give the maximum skilled advice with the minimum of orders, the more self-government a co-operative movement develops the better.
It may be practicable at a later stage to organize the small producer for joint marketing of pigs or poultry or even for breeding purposes such as the maintenance of a selected boar or the distribution of selected cocks, but I would not advise that this work be made a primary function of a credit society. Keep the societies simple. If a marketing society or a breeding society is subsequently necessary, make a separate society in the same area or in a different or over-lapping area. The credit societies should, therefore, adopt bye-laws which will permit the grant of loans for any useful purpose. It will always be in the power of the Co-operative Loan Board to impose conditions on the use of the money which they are advancing to the society. They may, if they wish, restrict loans from this money to the purchase of stock or of food-stuffs. On the whole I think they would be unwise to make too rigid a rule, but the funds of a society in the form of shares, savings and undistributed reserves will be continually growing and the Registrar and his organizer will be continually teaching the members how best to carry on their business. A credit society in China lends for all useful purposes, and at least owned funds of the society should be available for every useful purpose; they should even be available for furnerals, for a farmer cannot avoid spending money on a funeral, and if the society does not lend to him, he is driven back into the hands of the moneylender. The society will, of course, limit his expenditure on the funeral to the absolute minimum.
I should be able, if desired, to supply a model of bye-laws for a marketing society or a breeding society when the time comes for their development, but by that time the Registrar will no doubt be able to prepare them himself.
In the urban field the Registar should explain to any association which wishes to understand the subject the nature and principles of Co-operation, but he need