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European and American co-operative societies aim almost entirely at a direct economic benefit. It has, however, been realized in Japan, India and to some extent also in Yugo Slavia that health, education and the avoidance of quarrels and extra- vagances are as great indirect economic benefits as any direct monetary gain. For instance in the three countries mentioned there are co-operative societies for the maintenance of a doctor in rural areas in which no doctor would settle unless he were assured of an income; the name of Kagawa is well-known in Japan in this connection. In India also there are societies for the maintenance of a teacher for either juvenile or adult schools, sometimes also for the maintenance and man- agement of the whole school itself. Societies for postal delivery in areas in which the Government postal service is scanty; societies for the prevention of useless litigation by the compulsory reference of all disputes between the members to arbitrators; and societies for the prevention of foolish and competitive expenditure on domestic ceremonies are all as fully qualified for co-operative registration as a society for the multiplication of pigs or for a consumers stores. But I will not dwell on this class of institution because it is unlikely to succeed until the Registrar himself has learned some experience and the people have learned to trust the co- operative staff as men who are working wholeheartedly for their benefit and are prepared to attack any economic problem which may be laid before them.
I recommend, therefore, that in the first place the Hong Kong Government send a carefully chosen Cadet for co-operative training by means of a tour in Europe and in Asia. I shall be glad to assist him with detailed advice if desired. He should be a man capable of understanding economics, (though not necessarily at present an advanced economist), and also capable of understanding the value of social service and spontaneous social effort. On his return, he should be appointed Re- gistrar of Co-operative Societies and should select a Chinese co-operative organizer whose pay might be derived from the Agricultural Association, which in its turn would receive a grant from Government. He should work in the villages of the New Territories explaining the co-operative idea and should, in my opinion, register no society until he has been at work for six months. The right time for registering a group of simple men as a co-operative society is not when they have first grasped the idea that cheap money may be available, but when at a later moment they have begun to doubt whether it really is coming or not and are thoroughly tired of being taught the way in which it should be used. The Registrar should, of course, remain in constant contact with the District Officers who should assure the people that there is no trap or fraud in his proposals. He should inform the District Officers of his movements and intentions in order that district arrangements may not be upset. Whether he should himself be an Assistant District Officer or not is a matter de- pendent on the arrangements of Government. If and when he ceases to be Assistant District Officer he should retain his post as Registrar of Co-operative Societies whatever other duties he may be carrying on in Victoria or elsewhere. The Re- gistrar should welcome non-official help from the Agricultural Association and other bodies. Unofficial enthusiasm is sometimes mistaken, but it is well worth- while to train it on the right lines. In the end the Registrar's time will be saved by so doing. He should not discourage or repress the enthusiasm of urban co- operators, but should invite them to study the real meaning of Co-operation, and discuss with them any specific proposals for the formation of a society. The amount of time which he can give to urban work will depend on his other duties and upon his interest in Co-operation.
If a suitable urban body comes into existence a grant should be made to it by Government in the same way in which the Agricultural Association is aided. I con- sider that the funds granted to the Agricultural Association for the purpose of the Agricultural Show should be separate from the grant made for general purposes of which co-operative propaganda would be the chief. At the present moment an