- The peasants in Pakistan are mostly in debt.
- Germany made a good start with co-operative methods.
- Now many Pakistani villages have them.
- Could be extended elsewhere.
Even the person who has never been in a village heard that the Pakistani peasants are often in debt. They are simple in nature, and borrow without looking to the future. It is because they live from hand to mouth, and have no reserves. When a peasant wants seed, a new Bullock, a plow, he goes to a monėylender for a loan. For this, he pledges his land, his crop for the coming season, and agrees in his simplicity to very high and ruinous rates of interest. The loan is never redeemed. Each year, another loan is taken, and principal and interest go mounting up so that he spends all his life in debt.
Co-operative societies aim at rescuing the small farmers and land holders from debt by lending money on reasonable terms for the cultivation of their land. The scheme was first launched in Germany about a century ago by a man called Raiffeisen, who saw how the poor German peasants were hopelessly in debt to the Jews. He started village banks, the idea being that, although it is not a safe risk to lend money to one peasant without security, it may be lend to a society or organized group of peasants on their collective security. That is the basic idea of co-operative credit. Banks will not lend to one poor man; they will lend to a society farmers. The banks will gladly lend enough money to pay off the money-lenders; then the members of the society will be encouraged to build up a fund by investing all their savings in a bank of their own. When this fund is established, they will be able to advance small loans to individual members for the development of their land. That scheme meant the end of the Jews power over the German peasants.
The same process is going on in Pakistan. In some districts, the power of the money lenders has been broken, and prosperous village co-operative societies finance the peasants and teach them habits of industry. Government have extended the system and it is flourishing. Moreover, the Pakistan Government has set up Agricultural Development Corporation for the betterment of cultivators.