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undue proportion of the funds of the Association is being devoted to the show the other hand, associations, urban and rural, will be discouraged if Government prescribes too exactly the way in which the money is to be used. The object of Government in making these grants should be to build up unofficial bodies capable of giving co-operative education and arranging a co-operative audit.
In the future the chief part in unofficial Co-operation should be played not by associations of benevolent individuals, but by co-operative unions built up from below. The rural societies will some day form a co-operative credit union, perhaps also one or more co-operative marketing unions. In the towns also there may eventually be co-operative unions of thrift societies, a co-operative wholesale society and perhaps a co-operative bank which will take over the functions of the Co- operative Loan Board. All this change will be brought about by a slow process of education chiefly carried on by the Registrar himself. This is far in the future, but it is well to keep the future in mind in order that institutions which can never become co-operative should be regarded as temporary however valuable they may be.
In the draft ordinance I shall recommend that, as in many other countries, the use of the Chinese words HOP TSOK which represent the root of the word co- operative be forbidden in any title used by an individual or a firm for a trading or other purpose. If this is not done, there will be confusion in the popular mind. There appear to be at present no companies, firms or individuals using this name in Hong Kong.
The rate of interest at which co-operative credit societies should make loans to their members should be 1% per month. The Co-operative Loan Board should not endeavour to loan at exceedingly low rates. If it loans to a society at (say) 6%, it will then be impossible for a co-operative union to come into existence, for a co- operative union borrowing from Government at 6% would have to lend to the societies at 9% and the societies would resent this if they were accustomed to borrow from Government at 6%. Government should, therefore, lend to the societies at the same rate (9 per cent) at which a union will hereafter lend to them; and if the Government feels that it is improper to receive so high a rate on Government loans, it can refund 3% not to the societies but to the audit fund main- tained by Government or by the unofficial associations for the purpose of organiza- tion, education and audit.
HONG KONG, 29th June, 1935.
C. F. STRICKLAND.
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