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Henry Robert Crosthwaite.

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CO-OPERATION



COMPARATIVE STUDIES

AND THE

CENTRAL PROVINCES
SYSTEM



BY

H. R. CROSTHWAITE



PRINTED AND PUBLISHED BY

THACKER, SPINK AND CO., CALCUTTA

FOR

THE CENTRAL PROVINCES FEDERATION

OF

CO-OPERATIVE BANKS.

1916
A II rights reserved.



^7



Without the patient labour and unselfish devotion
of a small band of unpaid workers there could
never have been a Co-operative Movement in the
Central Provinces and Berar. The gift of this
book to the Movement is a small token of the
writer's deep respect and admiration for the work
of the unpaid Co-operator.

MAIN \ »r«!»' ^^'-AGRICULTURE DERT.



^c



532722



OPINIONS OF THE PRESS.



" The book comes from the pen of one of the most distinguished
experts on co-operation in India, and is written for the most part in an
admirably easy, pointed, and even eloquent style. Mr. Crosthwaite's
knowledge of the literature of co-operation is profound though never
obtrusive, and there is scarcely any branch of his subject which he fails
to illumine with some fresh fact or shrewd comment."

The Times of India.



" The yearly departmental reviews, the co-operative reports, the
Pusa bulletins, the agricultural magazines, the publications of the
agricultural colleges, etc., constitute only the light artillery of the
agricultural reform movement. The heavy guns speak more rarely.
In over 500 pages Mr. Crosthwaite, whose knowledge and opinions
are based on practical experience, offers information and analyses of
co-operative banking in other countries and in his own province never
more acceptable than at this juncture when our problems of higher
co-operative finance have begun to press so insistently for solution. A
book which will furnish information on practically any question relating
to co-operation in India. It ought to become the text-book for all
interested in the movement, and is sure to rank as a standard work on
the subject."

Capital.



PREFACE.

To understand the meaning and importance of the Co-operative
Movement in India, requires a knowledge of certain historical
facts and some acquaintance with co-operative achievement
in other countries. That is the reason for Parts I and II of
this book.

In compiling a volume of reference it is legitimate to follow
the example of Moliere and to take what is good from where
it is to be found. Accordingly, it is not so much in the character
of an author as in that of an amanuensis that I tender my
apologies to Messrs. Cahill, Fay, Hewins, Wolff, Dicksee,
and Conant for my borrowings from their standard works.
I have also made much use of the admirable Bulletins issued
by the International Institute of Agriculture in Rome, of the
writings of Nicholson and Hclyoake, and of the articles by
that exceedingly well-informed expert " Home Counties,"
published in The World's Work.

It must be understood that nothing contained in this book
is, in any sense, a declaration of Government policy. Such
declarations are contained in Government Resolutions, and
not in a book prepared by a humble co-operative worker for the
use of his fellow-workers.

H. R. CROSTHWAITE.
June i^th, 1916.



TABLE OF CONTENTS.



INTRODUCTION

PART I.
The Growth of Environment.
Chapter I. — Some Pages of Commercial History . .
Chapter II. — The Genesis of the Central Provinces and Berar . .
Chapter III. — A Century of Progress .. .. \.

PART II.

Comparative Studies.

Chapter I. — The Co-operative Movement — Co-operati\'e Credit
— Rural Credit Societies in the United Kingdom
— Rural Co-operative Credit System in Germany
— The Systems of Raiffeisen and of Haas — The
Prussian State Bank

II. — Rural Credit in Roumania — Rural Credit in Japan

III. — Overwhelming Importance of Agriculture in the
Central Provinces — Agriculture the Source of
Future Industrial De\'elopment — Class Industrial
Societies not recommended — People's Banks the
best for Industries — German Model — Italian
Model — People's Banks, Co-operati\'e Stores and
Industrial Development . .

Long Term Credit — Co-operative Mortgage Credit
— Mortgage Banks — American Opinion — The
Ginko of Japan

^^ — Co-operation in Agriculture

\l. — The Co-operative Store



Page
vii



Chapter
Chapter



Chapter I\'



Chapter
Chapter



I

II

19



36
119



142

164

195
227



PART III.

The Co-operative System in the Central Provinces
and Berar.

Chapter I. — General Description . . . . . . 251

Chapter II. — The Primarj- Co-operative Credit Society with

Unlimited Liability . . . . . . 262



VI



TABLE OF CONTENTS.



Chapter III. — The Circle Union of Primary Co-operative Credit
Societies • • •

Chapter IV. — The Co-operative Central Bank

Chapter V. — The Provincial Co-operative Bank

Chapter VI. — The Central Provinces Federation of Co-operative
Banks

Chapter VII. — Co-operative Organization at present outside the

Federation Circle . . . .

Appendix I. — Co-operative Credit and the Central Bank
Appendix II. — Wilhelm Haas

* PART IV.

Accounts, Procedure, Audit, Periodical Returns,
Circular Instructions.

Chapter I. — On Book-keeping

Chapter II. — Primary Co-operative Credit Societies

Chapter III. — Circle Unions of Primary Societies

Chapter IV. — Central Banks . .

Chapter V. — The Provincial Co-operative Bank

Chapter VI. — Audit and Returns

Appendix I. — Circular Instructions issued by the Registrar

Appendix II. — The Co-operative Societies Act, 1912 (II 01^1912)

Appendix III. — Exemptions and Concessions

Appendix IV. — Rules under the Act



Page.

291

307
32S

343

352
374
379



383
405
432
441

454
461

484
504
519
522



INTRODUCTION.



" Co-operation leaves nobody out who works. Those who
do not know this do not understand, co-operation ; those who
do know it and do not mean it, are traitors to the principle.
Those who mean it and do not take steps to secure it, or are
silent when others evade it, or do not advocate it when occasion
offers, are unseeing or supine. Co-operation touches no man's
fortune ; seeks no plunder ; causes no disturbance in society ;
gives no trouble to statesmen ; enters into no secret associations ;
it contemplates no violence ; needs no trades union to
protect its interests ; it subverts no order ; envies no dignity ;
it accepts no gift, nor asks any favour ; it keeps no terms with
the idle, and it will break no faith with the industrious. It is
neither mendicant, servile, nor offensive ; it has its hand in
no man's pocket, and does not mean that any other hands
shall remain long or comfortably in its own ; it means self-
help, self-dependence, and such share of the common
competence as labour shall earn or thought can win." These are
the words of that great English co-operator, George Jacob
Holyoake, and they may be commended to all workers in the
cause as an epitome of what " Co-operation " really means.
Co-operation is mutual help ; and a co-operative society begins
in persuasion, proceeds by consent, seeks success by common
efforts, incurs risks, and shares losses, intending that all its
members shall preportionately share whatever benefits are
secured.

Co-operation produces equaUty ; but this equality is the
result not the beginning. Any co-operative movement must
start with inequality and authority, and must steer steadily
towards self-government and independence. It will take time.



viii INTRODUCTION.

co-operators must remember, to regenerate the world.
Co-operation is a religion which, though weak in creeds and
collects, renders humanity service. The main creed of
co-operation is that all co-operators should mean well, work
well, and neither beg, steal, nor annoy.

Leslie Stephen has recorded that " Robert Owen was the
most conspicuous figure in the early part of the nineteenth
century." And when Robert Owen originated " Co-operation "
most men said that the idea was contrary to human nature.
What was new to them they concluded was new to humanity.
But Aristotle tells us of nations who held the land in common
and divided the produce, and of others who divided the land
and stored the produce in common. Minos the Cretan would
not suffer an}' of his people to lead an indolent life. Persons
of all classes sat at common tables, partook of the same diet,
and at the public expense. The laws of Minos remained in
force for nearly a thousand years. When Lycurgus governed
Sparta obedience to the law and the dread of living for himself
were the earliest lessons imprinted on the mind of a Lacede-
monian. Robert Owen was born in 1771, and thus was a
contemporary of Wellington and of Napoleon. From being a
humble draper's assistant he became a wealthy cotton
manufacturer. Owen piurchased and worked up the first bale
of cotton imported into England, foreseeing at once the future
importance to the spinning trade of England of encouraging the
foreign supply of raw material. Owen's scheme of administer-
ing his factories shared with his labourers and their families
a portion of the common gain. Amongst other arrangements
for the welfare of his people Owen provided model schools for
their children, and thus it came to pass that the education, or
formation of character, of members of the co-operative body
has always been deemed a part of the co-operative scheme
amongst those who rightly understand it. A co-operative store
was a mere detail of Owen's factory management. Huxley
has written thus of Owen : "I think that every one who looks
closely into the problem of popular education must be led to
Owen's conclusion that the infants' school is, so to speak, the
key of the position. Robert Owen discerned this great fact^



INTRODUCTION. iX

and had the courage and patience to work out his theory into
a practical reality." Owen was the first who looked with
practical intent into the kingdom of the unborn. He saw that
posterity — the silent but inevitable judge of us all — if left
untrained may efface the triumphs, or dishonour, or destroy the
great traditions of the race. Robert Owen put infant schools
into the mind of the world ; and he, when it seemed impossible
to any one else, proposed national education. Moreover, Owen
was not a sentimental, speculative, or barren reformer. He
was for submitting every plan to experiment before advising it-
He cared for no cause that reason could not win ; and whatever
he commended he supported with his purse. He saw, as no
man before him did, that environment is the maker of men.
Robert Owen died in his 88th year, on the 17th November,
1858, at Newtown, Montgomeryshire, the place of his birth.
In 1902 the co-operators of England and Scotland subscribed
to erect a handsome screen round Owen's tomb.

Although England is the parent-country of the co-operative
idea, Germany is that of co-operative banking and credit. The
German pioneers were Herr Schulze, Mayor of Delitzsch, and
Herr F. W. Raiffeisen, Burgomaster of a group of villages round
Neuwied. Both were men who had seen government service.
Schulze-Delitzsch was a Judge and a member of the Prussian
National Assembly of 1848. Raiffeisen, ex-soldier and wine
merchant, who even to the age of eighty, when he was sick and
blind, had a marvellous facility for arithmetical calculation,
directed the building of the railway on the left bank of the
Rhine. Both these great reformers broke entirely new ground,
although Schulze-Delitzsch had learnt the powers of thrift
from the English Friendly Societies, and Raiffeisen had seen
from the public savings-banks and Schulze-Delitzsch's own
institutions how some of the larger farmers could be accom-
modated with credit. Both began with an individual effort
to relieve the distress in their particular districts. Both ended
with the conviction that improvement was only possible when
it depended upon and came from the people themselves. 1848
was a year of distress general throughout Europe. In 1849
Schulze-Delitzsch founded a Friendly Society for relief in



INTRODUCTION.



sickness, and in the same year an association of shoemakers for
the purchase of raw materials. In 1850 he founded in Delitzsch-
Eilenberg his first loan society with ten members, all artisans,
and remodelled it two years later as a self-supporting institu-
tion with a capital and shares. He saw that the lack of good
credit was at the root of the small man's helplessness, and that
this credit could only be provided if the small man by self-help
organized himself to obtain it. In 1848 Raiffeisen founded at
Weyerbusch (Coblenz) a co-operative society for distributing
potatoes and bread to the poor. In the year after he founded
at Flammersfeld, in the Westerwald, a loan society for the
support of small farmers ; but, let us note, the members of this
society were rich philanthropists who sold cattle at easy rates
to the farmers, they were not the farmers themselves. In 1862
— mark the long interval — Raiffeisen founded, at Anhausen, his
second society. This was a co-operative credit society, and in
it the borrowing farmers were themselves the members. It
was at this stage that Raiffeisen discovered that the poor
required no donations of money but the organization necessary
to command this money for themselves.

Neither Schulze-Delitzsch nor Raiffeisen had a government
commission to establish credit banks. Their sympathy stirred
them to efforts of relief : their experience showed them the
conditions under which permanent improvement was alone
possible : their genius created triumphantly the conditions
which their contemporaries thought to be unattainable. Schulze-
Delitzsch was first in the field, but Raiffeisen worked out his
own organization. Schulze-Delitzsch blinked suspiciously,
when he detected certain variations from his own regulations,
Raiffeisen held boldly to his position. Both observed that they
had solved a great problem by principles essentially the same ;
neither understood that their differences of method were due
to, and justified by, differences of environment. Now the German
mind is peculiarly prone to proceed by formulae. It draws
from observation or study conclusions which in their place are
correct. It celebrates their discovery by promoting them to
an " ism " which, applied regardless of environment and
context, is incorrect. An " ism " is to its disciples a universality ;



INTKODUCTION. XI



variation from that " ism " is heresy and not an intelUgent
apphcation of one principle to different conditions. The party
of Scliulze-Dehtzsch railed at Raiffcisen for methods which in
the town would have been insecure : the party of Raiffeisen
reproached Schulze-Delitzsch for methods which in the country
would have been impossible. Schulze-Delitzsch was right in
raising share capital for his town banks, Raiffeisen in rejecting
it for his country banks. Being Germans it did not occur to
them to conclude, or if they concluded to confess, that each
was right in his own line. To-day if you question a member of
a Schulze-Delitzsch bank about Raiffeisen institutions, he turns
up his nose and patronizes them as unsafe " charity " banks
in a tone of contemptuous pity. If you question a member
of a Raiffeisen bank about Schulze-Delitzsch institutions he
shakes his head and apologizes for them, as for heretics convicted
of capitalism and exclusiveness.

One word more. It is necessary for the student of co-
operation to understand that there are two aspects of the
movement and that they are linked inseparably together. The
one aspect is material, the other moral. But morality is not
a cloak which unsound business ought to wear. The moral
enthusiast, blinded by the refulgence of his ideals, is apt to be
impatient in his haste to reach the Promised Land. His head
is amongst the stars, while his feet are stumbling in the gutter ;
and there will always be people vulgar enough to take advantage
of him. But if the moral enthusiast is wise he will build up his
scheme of reform on the solid foundation of material progress
secured by sound business. Good economy is apt to produce
good morals. And if the movement is to destroy the forces of
ignorance and waste co-operators must be conscious of the
efforts and sacrifices which their cause requires.



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Online LibraryHenry Robert CrosthwaiteCo-operation : comparative studies and the Central Provinces system → online text (page 1 of 51)