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Bombay

     About three weeks were spent in Bombay Presidency, and during that time, under the guidance of Mr. Otto Rothfeld, t he Registrar of Co-operative Societies, a good many aspects of the co-operative movement in that Province were reviewed.

     As problems presented and the matters discussed were different in some respects from those seen in other provinces, it has been thought suitable to accord to this Province slightly different treatment, and to deal with the movement under the following heads :-

1. Classification of Societies.
2. Control of the Co-operative Movement.
3. Banking & Finance.
4. The "Resource" Movement.
      4a.Agricultural Credit Society.
      4b. Agricultural Non-Credit Society.
     4c. Non-Agricultural Credit.
5. The Consumers' Movement.
     5a. Building Societies.
6. The Producers' Movement.
7. Bombay Co-operative Institute.

 

Classification Of Societies In Bombay.

     Bombay is the first Province in India, and so far the only one, to adopt a classification other than the system prescribed by the Government of India some years ago. In 1920 Bombay co-operators found themselves confronted with knotty problems regarding the finance of the movement as a whole, and started to review and criticize their own situation. Mr. Rothfeld, the newly appointed Registrar, profiting by the studies he had been enable by the Bombay Government to make on the Continent of Europe, submitted a new classification based on the analysis made by Professor Nash in his book on Co-operative Jurisprudence. It was designed for clarity of conception, and was at once adopted. The new classification cleared the air, and removed many obstacles to successful finance. There is now growing in India a feeling that a revision of the Government of India's present classification is long overdue, and that the Bombay system is more logical than the one in use in other Provinces.

     The International Co-operative Alliance has lately adopted the same classification, with a change in the name of one of the classes, the term "Resource" being altered into "Credit & Agricultural".

     The new classification divides co-operative societies into three classes, namely,

  1. the RESOURCE MOVEMENT.
  2. the CONSUMERS' MOVEMENT.
  3. the PRODUCERS' MOVEMENT.

     Mr. Rothfeld explained the classification to us at some length, and we give it as follows in practically his own words.

     THE RESOURCE Societies are those, either credit or non-credit, either rural or urban, whose object is to provide for their members as individuals the resources necessary to them for the individual exercise of their trade or profession. Such Societies include Credit Societies, Sale Societies (of members' produce sold on their own behalf), Manure Societies, Co-operative Insurance, and so on.

     The CONSUMERS' Societies have as their object the general collective appropriation of all means of exchange or production by all Consumers in common, and the substitution of a collective method for the existing capitalist or competitive regime. These are the Co-operative Stores and the Housing Societies, the latter being included as a sub-head.

     The PRODUCERS' Societies are those in which a number of persons combine in order to exercise a trade in common for their common advantage. Such Societies in-clude the Labour Societies, Collecticve Farming, Industrial Producers, and so on. Members of a society under this class work for the societ;y in producing goods from the raw materials which it supplies, being paid a wage or by piece-work. The society sells the goods on its own behalf, the profits being utilized in forming a reserve or distributed as the bye-laws provide.

     The question of classification is undoubtedly a most important one, and in a country like ours where Co-operation on a large scale is in contemplation, care should be taken to strat on proper lines of demarcation.

     The advantage of a good classification is thus indicated :-

  1. Avoidance of financial confusion.
    A Credit (Resource) Society in Bombay is allowed 8-1 liabilities to assets ; in Madras it goes up to 10-1. A Consumers' Society cannot be allowed such credit, while a Producers' Society's securities are essentially its goods and its plants.
  2. Avoidance of confusion of method and ideals of working, so that we may not get a dangerous confusion of functions as in the Irish General Purposes Society, which came to grief.
  3. It provides a correct basis for future expansion. For instance the Producers' Movement, when fully developed, will certainly require banks of its own.

 

Control Of The Movement.

     The machinery of control in the Bombay Presidency may be classed under three heads :-

  1. Finance is controlled by the Provincial Bank and the Central Banks.
  2. Propaganda and instruction are controlled by the Central Co-operative Institute and its branches.
  3. Legal obligations and audit are controlled by the Registrar.

     The method of controlled adopted in Bombay differs from the Panjab method in one important particular. Whereas in Bombay inspection is mainly undertaken by non-officials, and audit by the Registrar and his staff ; in the Panjab the Registrar's Department carries out the inspection and leaves the audit mainly to non-officials. In a country where Co-operation is in its early infancy, it is necessary for officials to undertake both the audit and the inspection, but it is important to decide which part of the work of control shall in future be delegated to non-officials.

     It is the object of all Provinces in India to make the Co-operative Movement pay a larger and larger part of the expenses of its own control and supervision, but much more time must elapse, and far greater progress made, before the Government of India can rid itself of a heavy expenditure of public money for the benefit of the Movement. In Bombay Government expenditure from public funds (not including loans) last year amounted to a sum exceeding Rs400,000, while collections from societies towards the cost of their own control was only Rs.11,000.

 

Banking And Finance.

     Co-operative finance in Bombay has the Provincial Bank as the apex of the structure. It deals with the District Banks which finance the agricultural societies on the one hand, and with the Urban Banks which supply the monetary requirements of the non-agricultural and town movement on the other. In districts where Central Banks do not exist, the Provincial Bank through its branches finance primary societies direct.

     The Housing Societies, which get their capital almost solely from the Government, also bank with the Provincial Bank.

     The present banks in Bombay are all part of the Resource Movement, but they do finance societies of other types when required. The ultimate object is to have banks solely for the Producers : societies, as is the case in France. Where the Government assist the movement with loans, the assistance is, as a rule, given through the banks.

 

THE "RESOURCE" Movement.

     The majority of Co-operative Societies in Bombay, as everywhere in India are Rural Credit Societies. They are in a strong position, and have the reputation, in common with similar societies in the Panjab, of being less dependent on Central Banks than in any Province in India. This is distinctly good, as Bombay does not possess the Banking Unions which are a strong feature of Panjab Co-operation.

     There is, however, one weak point in Bombay which is distinctly noticeable - a large percentage of overdue debts. The Registrar has been urging the importance of the reduction of these overdues, and although improvement is still imperceptible, he does not consider that it has grown worse. At the Co-operative Conference held at Aminbhavi during our visit, at which 2,000 co-operators were present, the subject was brought up and discussed. The leading Bankers assured the Meeting that steps were immediately to be taken to minimise the weakness as far as possible. It is claimed in Bombay that Co-operation in that Province depends on a self-subsistent, self-controlled banking system ; and a strong determination by the leading bankers to reduce the overdues should have a good effect.

It may be added that overdues are also to be found in many other Provinces in India, amounting in some cases to large sums.

 

Agricultural Credit Society.

     Agricultural Credit Societies in this Presidency work on the no-share system, funds being made up of members' deposits, non-members deposits, and loans from banks. In sind, however, which is a distinctive part of the Bombay Presidency, the share system is in use.

     Bombay (exclusive of Sind) is the only province in India that we visited, including Burma, which has not adopted the share syatem in its Agricultural Credit Societies. Arguments for and against the share system are many, but the main points in its favour appear to be that it enforces thrift ; that it gives members a proprietory feeling towards their Society, and that they continue to identify themselves with it after their first needs have been satisfied. It is pointed out, on the other hand, that voluntary thrift is more valuable than compulsory thrift, and further, that thrift is measurable far more by 'member' deposits than by their share contributions. Bombay without shares, and Burma with chiefly Luzatti shares, stand out in prominent contrast as the followers of the two different systems, and a comparison of the composition of owned-capital of the two Provinces as shown in latest available reports, is interesting :-

     Composition & percentage of owned-capital.
     Bombay. Burma.
     No. of Societies. 2,599 4,023
     Working capital. Rs.15,600,000 Rs.16,970,000

     Share capital. 300,000 2,590,000
     Reserve. 1,200,000 2,650,000
     Members' deposits. 3,600,000 288,000

     Total (owned capital) Rs.5,100,000 Rs.5,528,000

 

     Percent (owned capital) 32.69 32.57 As we had visited a large number of Primary Credit Societies (Agricultural) in other Provinces, and there was no new feature particularly to be studied in this regard in Bombay, we only visited one Society of this type in the Presidency. It is a Society with a novel idea, and is called a Fencing Society. It has as its object the building of stone walls round cultivated and village land to keep out large herds of wild pigs, which are to be bound in thousands in the neighbouring hills. The walls are 1 foot thick and 4 feet high, and surround acres and acres of land, including whole villages. The Society is one of a number which have recently been formed, and draws its capital from the Government through the Registrar in the form of loans granted under the Land Improvement Scheme.

     Apart from the one weakness of overdue loans mentioned under No.4 (a weakness by no means peculiar to Bombay), Rural Co-operation on the whole in this Presidency is reported as sound. The fact that Bombay is strong in urban societies has led many people into the belief that she is weak on the rural side of the movement. That is not the case.

 

Agricultural Non-Credit Society.

     Agricultural non-credit in this Presidency is making good progress, though the number of societies (146) is not large for the size of the Province. The best societies are those for the sale of cotton. We visited one of these societies at Hubli, and found that it disposed of cotton to the value of over Rs.400,000 last year. The society has a storage dogown for cotton, and conducts a periodical auction on the sopt. A member obtains good seeds from his society, which also makes money advances to him on account of his cotton in the godown. He also gets better prices from the sales, and receives a bonus at the end of the year, as well as a dividend on shares.

     The sale socieites in this Presidency, (cotton, grain and other produce) realised nearly Rs.2,200,000 from Co-operative sales last year, which is good, considering that Co-operative sale is admittedly the most difficult form of agricultural Co-operation.

     There are other types of societies under this heading - Seed Societies, Manure Societies, Implement Societies, etc., etc. - but most of them are on a small scale. Cattle-Breeding Societies are not successful, nor, so far, are those for cattle-insurance.

 

Non-agricultural Credit.

     The Urban movement is strong in the Bombay Presidency. Societies are to be found both with Unlimited, and with Limited Liability. The Unlimited Liability system is adopted for societies of poor people of the labouring classes. The members are men without education, and command very little capital. They are not as yet of much importance to the movement as a whole, and will have to be nursed and guided more energetically by educated workers in the cause of Co-operation before they can make progress. At the present moment they have neither succeeded or failed - they are on trial.

     Limited Liability Societies, on the other hand, are to be found in great strength. Three hundred and thirty-five societies, with a membership of 94,569, have a working capital of nearly Rs.11 millions. Of this sum of 11 millions, owned-capital amounts to more than 8 1/2 millions.

     We visited some of the best Central Banks in the Province. The Banks in Bombay (both Urban and District) make use of both the cheque and the draft system, and are altogether in advance of similar institutions that we saw in other Provinces. It is hoped by Bombay Co-operators that, so far as country business is concerned, these banks will in future take the place filled in other countries by Joint Stock Banks.

     Of the seven Centeal Banks we visited, the Karnatak Central Co-operative Bank Ltd., in the Dharwar District, appears to be the strongest. with a share capital of Rs.232,000 and deposits amounting to Rs. 1,200,000, it has made full use of its funds, and at the time of our visit, had Rs.1,351,850 out on loan to societies.

The Provincial Bank.

     At the Bombay Central Co-operative Bank, otherwise the Provincial Bank of Bombay, we met one of the best type of non-official Co-operative workers in India. The Bank, which has been in existence for 12 years, was started by men who were well-known and respected, and on the strength of their names, the shares were over-subscribed from the very commencement. Deposits flowed in from many sources. At the time of our visit, the Bank had 4 million rupees out on loan to Central Banks and Primary Societies, but had still a very large balance in hand (about 30 lakhs) which it holds back mainly in consequence of overdues.

     In addition to its own funds, the Bank has a cash credit of Rs.800,000 from the Imperial Bank, and Rs.300,000 from the Tata Bank, both of which it treats as fluid resources. It can also use promissory notes from primary societies as instruments of credit for drawing on some of the large exchange banks. The Provincial Bank is staffed by highly efficient men and served by a strong and capable committee, many of whose names are well know in Co-operative literature.

     The strength of the Bank is indicated by the following figures :-

     Shares (paid up) Rs.700,000
     Debentures 800,000
     Fixed Deposits Individuals 950,000
     Co-operative 3,600,000
     Current Deposits Individuals 450,000
     Societies 550,000

     Rs.7,050,000
     Miscellaneous fund 400,000
     Rs.7,450,000

 

The Consumers' Movement.

     The Consumers' Movement in Bombay, as else where in India, has been a disappointment to Co-operators in that province. The Burma Registrar reports that distributive Co-operation is not yet understood in Burma. The Bombay Registrar makes the same remark, and adds that much further instruction and teaching will be required before the societies can be put upon a healthy basis.

     We visited a society under this heading at Surat, which is one of the best in the Presidency. With a share capital of over Rs.30,000, annual sales amounting to over Rs.60,000, and a membership of 440, the society should be ablee to run smoothly and make good progress, especially as it is reported to be very intelligently managed. But it has to content with a great difficulty, namely, the disloyalty of the members. The Chairman of the Committee stated that, given loyalty on the part of all member, the society could run successfully with a much smaller membership.

 

Building Societies.

     One of the most gratifying forms of Co-operation in Bombay are the Building or Housing Societies. The problem was most carefully considered, and after the Registrar had been enabled by the Government to consult legal opinion in England the bye-laws were drafted and put into use last year. By March 1922, 34 societies had been registered, with a working capital of Rs.3,000,000, a large proportion of which are loans from the Government.

     We visited a number of these Housing Societies in the suburbs of Bombay, and were show over some well-constructed buildings both of the individual, and also of the collective, ownership type. The societies obtain land from the Bombay Improvement Trust for 999 years, paying a smaller rent than the market rate. The plans fo the settlements are approved by the Government Surveyor, while plans of houses and estimates are also scrutinised by other expert officials. The capital is derived partly from shares (payable in instalments), but mostly form loans.

     The Scheme is altogether a good one, and strongly supported by the Bombay Government, who see in it a means of reducing the congestion, and the consequent insanitary conditions of the cities concerned ; and thereby of lowering the high death rate, which is the inevitable result of those conditions.

 

The Producers' Movement.

     Co-operators hope to find in this movement a solution of some of the problems of industrial discontent. But as it involved, in its ideal form, the necessity for the workers to combine to find their own funds, to submit to their own discipline, to eliminate the capitalist, and to deal direct with the consumer, the difficulties cannot be underrated. They demand find qualities in the members inside the movement, and have to face strong opposition outside.

     There are not many societies under this class in the Bombay Presidency, nor in fact in the whole of India (including Burma). We visited a society of coppersmiths in Poona, which may be admired for its pertinacity of purpose in the face of almost overwhelming difficulties. Founded in 1920 it has suffered two boycotts, but has nevertheless been able to pay a bonus of nearly 10 per cent. In this movement again, disloyalty on the part of members is the crux of the problem, and we were informed by the Chairman of the above society that, had it not been for this factor, the boycotts would have been much more easily overcome.

     Other societies under this class are the Salt Owners Societies and Salt Workers' Societies, types which may in future prove useful in Siam in the salt-producing districts.

     Weaving being the principal cottage industry in India, Weavers' Societies are to be found in every Province. In Bombay there are about 50 weaving societies but neither there, nor in the other Provinces did we see true Producers' societies which carry out the whole operation from the purchase of the raw material to the sale of the produce for their joint benefit.

     Other miscellaneous societies - Soap makers, Carpenters, Cobblers, Gold-smiths, Foundries, Dairies - are to be found in the Presidency classed under the Producers' Movement, working with varying success. Much more space work remains to be done before this form of Co-operation can push rapidly ahead.

 

The Bombay Co-operative Institute.

     The Central consultative and propagandist body in the Bombay Presidency is the Bombay Co-operative Institute. Here, as at the Provincial Bank, we met the best type of non-official co-operators, who by their keenness and efficiency impressed us more favourably than similar people in the other Provinces. The Institute is consulted by the Registrar regularly on matters of policy. It holds training classes for honorary organizers and bank managers, and arranges the annual Provincial Co-operative Conference. Its journal, with contributions by men in Bombay as well as in other Provinces, is ably run and is a most useful publication.

     In t he words of the Registrar, Co-operation in Bombay has now reached a strage when its further growth must depend primarily on non-official effort ; and in the Bombay Co-operative Institute with its spreading brances, in the Banks and in the Unions will such effort be found.

     There is a last point we would mention in connection with the Bombay Presidency. Guaranteeing Unions have not been a success, and there is now a movement in Bombay, as in Burma, to abandon the guaranteeing function of the Unions, and make them solely superviory.

 

 

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