Ireland In The New Century

by Sir Horace Curzon Plunkett

On another occasion a similar project was abandoned because the flow of water to the disused mill which it was proposed to convert into a creamery, passed through a conduit lined with cement originally purchased from a man who now occupied a farm from which another had been evicted. To some minds these little complications would have spelled failure. To my associates they but accentuated the need for the movement which they had so laboriously thought out, and the very nature of the difficulties confirmed them in their belief that the economic doctrine they were preaching was adapted to meet the requirements of the case. And so the event proved.

In the year 1894 the movement had gathered volume to such an extent—although the societies then numbered but one for every twenty that are in existence to-day—that it became beyond the power of a few individuals to direct its further progress. In April of that year a meeting was held in Dublin to inaugurate the Irish Agricultural Organisation Society, Ltd. (now commonly known as the I.A.O.S.), which was to be the analogue of the Co-operative Union in England. In the first instance it was to consist of philanthropic persons, but its constitution provided for the inclusion in its membership of the societies which had already been created and those which it would itself create as time went on. It had, and has to-day, a thoroughly representative Committee. I was elected the first President, a position which I held until I entered official life, when Lord Monteagle, a practical philanthropist if ever there was one, became my successor. Father Finlay, who joined the movement in 1892, and who has devoted the extraordinary influence which he possesses over the rural population of Ireland to the dissemination of our economic principles, became Vice-President. Both he and Lord Monteagle have been annually re-elected ever since.

The growth of the movement in the last nine years under the fostering care of the I.A.O.S. is highly satisfactory. By the autumn of this year (1903) considerably over eight hundred societies had been established, and the number is ever growing; of these 360 were dairy, and 140 agricultural societies, nearly 200 agricultural banks, 50 home industries societies, 40 poultry societies, while there were 40 others with miscellaneous objects. The membership may be estimated—I am writing towards the end of the Society's statistical year—at about 80,000, representing some 400,000 persons. The combined trade turnover of these societies during the present year will reach approximately £2,000,000, a figure the meaning of which can only be appreciated when it is remembered that the great majority of the associated farmers are in so small a way of business that in England they would hardly be classed as farmers at all.

These societies consist, as has been explained, of groups of farmers who have been taught by organisers that certain branches of their business can be more profitably conducted in association than by individuals acting separately. The principle of agricultural co-operation with its economic advantages will, as time goes on, be further extended by the combined action of societies. With this end in view federations are constantly being formed with a constitution similar to that of the societies, the only difference being that the members of the federation are not individuals but societies, the government of the central body being carried on by delegates from its constituent associations. The two largest of these federations, one for the sale of butter, and another for the combined purchase by societies of their agricultural requirements, have been working successfully for several years. Federations, too, are being formed, as societies find that their business can be conducted more economically, for example, in dairying by centralising the manufacture of butter, or in the egg export trade by the alliance of many districts to enable large contracts to be undertaken. In the near future a further development of federation will be required to complete a scheme now under consideration for the mutual insurance of live stock. Such a scheme involves the existence of two prime conditions, a local organisation for the purpose of effective supervision, and the spreading of the risk over a large area.

In all such enterprises and economic changes the Organisation Society is either the initiator, or is called in for advice, and its continued existence in a purely advisory capacity as a link between the societies where concerted action is required, will be necessary even when the organisation of farmers into societies is completed. The economic life of rural communities is in continual need of adjustment. Now it is an invention like a steam separator which revolutionises an industry. At another time the crisis created by a change in the tariff of a foreign country forces the producer either to find a new outlet for his wares, or to abandon a hitherto profitable employment. A striking instance of the value of organisation and connection with a central advisory body occurred in 1887, when swine fever broke out in Denmark, and the exports of live swine fell from 230,000 in one year to 16,000 in the next. The organisation of the farmers, however, enabled them easily to consult together how best to meet the emergency, and their decision to start co-operative bacon-curing factories was the foundation of their present great export trade in manufactured bacon.

I must not overburden with details a narrative intended for readers to whom I merely wish to give a deeper and wider understanding of Irish life than most of them probably possess. But there is just one form of agricultural co-operation to which I can usefully devote a few paragraphs, because it throws much light upon the associative qualities of the people and also upon the educational and social value of the movement. I refer to the Agricultural Banks, more properly called Credit Associations, which have been organised upon the Raiffeisen system. Before the Irish Agricultural Organisation Society was formed we had read of these institutions, and of the marvellously beneficial effect they had produced upon the most depressed rural communities abroad. But only in the last few years have we fully realised that they are even more required and are likely to do more good in Ireland than in any other country; for on the psychological side of our work we formerly but dimly saw things which we now see clearly.

The exact purpose of these organisations is to create credit as a means of introducing capital into the agricultural industry. They perform the apparent miracle of giving solvency to a community composed almost entirely of insolvent individuals. The constitution of these bodies, which can, of course, be described only in broad outline here, is somewhat startling. They have no subscribed capital, but every member is liable for the entire debts of the association. Consequently the association takes good care to admit men of approved character and capacity only. It starts by borrowing a sum of money on the joint and several security of its members. A member wishing to borrow from the association is not required to give tangible security, but must bring two sureties. He fills up an application form which states, among other things, what he wants the money for. The rules provide—and this is the salient feature of the system—that a loan shall be made for a productive purpose only, that is, a purpose which, in the judgment of the other members of the association as represented by a committee democratically elected from among themselves, will enable the borrower to repay the loan out of the results of the use made of the money lent.

Raiffeisen held, and our experience in Ireland has fully confirmed his opinion, that in the poorest communities there is a perfectly safe basis of security in the honesty and industry of its members. This security is not valuable to the ordinary commercial lender, such as the local joint stock bank. Even if such lenders had the intimate knowledge possessed by the committee of one of these associations as to the character and capacity of the borrower, they would not be able to satisfy themselves that the loan was required for a really productive purpose, nor would they be able to see that it was properly applied to the stipulated object. One of the rules of the co-operative banks provides for the expulsion of a member who does not apply the money to the agreed productive purpose. But although these "Banks" are almost invariably situated in very poor districts, there has been no necessity to put this rule in force in a single instance. Social influences seem to be quite sufficient to secure obedience to the association's laws.

Another advantage conferred by the association is that the term for which money is advanced is a matter of agreement between the borrower and the bank. The hard and fast term of three months which prevails in Ireland for small loans is unsuited to the requirements of the agricultural industry—as for instance, when a man borrows money to sow a crop, and has to repay it before harvest. The society borrows at four or five per cent, and lends at five or six per cent. In some cases the Congested Districts Board or the Department of Agriculture have made loans to these banks at three per cent. This enables the societies to lend at the popular rate of one penny for the use of one pound for a month. The expenses of administration are very small. As the credit of these associations develops, they will become a depository for the savings of the community, to the great advantage of both lender and borrower. The latter generally makes an enormous profit out of these loans, which have accordingly gained the name of 'the lucky money,' and we find, in practice, that he always repays the association and almost invariably with punctuality.