AGRICULTURAL CREDIT AND INSURANCE SOCIETIES BILL. [H.L.] (Hansard, 1 August 1911)

§ THE PRESIDENT OF THE BOARD OF AGRICULTURE AND FISHERIES (EARL CARRINGTON)
My Lords, the object of the Bill which I have the honour to ask your Lordships to read a second time is to promote the formation and extension of agricultural credit and insurance societies. It is recognised on all hands that there is a necessity for some such legislation, and in framing this Bill we have had two main objects in view. Tile first is this. In view of our limited experience in this country we have thought it necessary not to attempt to frame any very precise code of rules, such as were adumbrated in Lord Shaftesbury's Bill which was read a second time last week, as to the working and constitution of these societies. Secondly, we have tried to frame the Bill, and I hope we have to some extent succeeded, so as to secure what is an absolute necessity—the confidence and co-operation of the leading bankers of this country.
I will now briefly explain the main provisions of the Bill. If your Lordships will look at Clause 1 you will see that, as it is most important that the Board of Agriculture should take an active part in the formation of these societies, we propose to pay the preliminary expenses, not exactly in the same way but on the same lines as in the Small Holdings Act, so as to enable the societies to run alone and to put them, as it were, on their legs; but it must not for one moment be supposed that the Board of Agriculture in any way intend to dispense with voluntary help. On the contrary, we 733 want as far as possible to enlist it; but having done so much towards bringing the new system of small holdings into existence, we feel that it is our duty to secure for the present small holders all possible means by which they may be able to achieve the success which noble Lords on both sides of the House so earnestly desire.
The societies may at present register under two Acts of Parliament. They can register under the Industrial and Provident Societies Act of 1893, which, as your Lordships are aware, permits limited liability, and also under the Friendly Societies Act of 1896, which permits unlimited liability. We propose to enable societies to register either with unlimited liability or with liability limited by guarantee. These are very complicated Acts. I have tried to make our intention intelligible, but I will explain again that our intention is to allow these small holdings societies to be registered under both Acts either with unlimited liability or with liability limited by guarantee. A man would guarantee so much, and his liability would be limited to the amount that he had guaranteed.
The word "guarantees" brings me to the next point, and that is that we hope and believe that we shall have no necessity to ask for State guarantees. We are very strong on that point, as all our land legislation has been attempted to be made as self-supporting as possible; and as your Lordships know from the debates that have taken place within the last few weeks, we have resolutely set our face against any schemes, however good the results might be, if they necessitated the dipping of hands into the public purse to carry out those experiments. But the initial difficulties in the formation of these societies are very great. I will mention one or two. There are difficulties in regard to the framing and registering of the rules and the appointment of a secretary, and a secretary is an absolute necessity before these societies can properly run alone. There is also the difficulty of hiring a room or an office for holding meetings to explain the objects of these societies to the agricultural population, and also the expenses of management. Therefore to meet these difficulties and these necessary expenses we propose that a grant should be made out of the Small Holdings Account. That Account was originally granted to me for contingencies of various 734 descriptions in connection with the formation of small holdings. Between three and four years ago I was given £100,000, and I think there is at least £40,000 of that money still available out of the original grant, and it might be expended for this purpose. I think this will meet the difficulty which I suppose induced Lord Mersey's Committee to approve of the combination of trading and banking with unlimited liability which is adumbrated in the Report signed by the noble and learned Lord. As I have said before, that is a combination which I do not think for one moment would meet with approval in the banking world.
In Clause 2, subsection (1), paragraph (b) we provide that the accounts of the society shall be audited by a person nominated by the Board. To those words we attach great importance. It is considered an essential point, and I think your Lordships will agree that there should be a very strict and proper audit of the accounts of these societies. That is, of course, considered an essential point by the great banking interest if they are in any way to help the scheme. I think I have now explained the main provisions of the Bill. Its object is to secure sums as working capital for agriculturists of small means, from whom up to the present moment all assistance has been withheld. We propose to secure these sums as working capital for productive purposes, and for productive purposes only. It cannot be too clearly explained that this Bill is not introduced in any way to enable farmers or others to purchase land. The object of the Bill is to foster agricultural co-operative credit and insurance, and to utilise the existing agencies and authorities, educational and otherwise, and to prevent the overlapping that at present exists. The object is also to provide for the expense of forming societies, for auditing their accounts, and for the organisation of accredited societies by properly trained men. That is one of the great difficulties at the present time. We have not men properly trained for this work. This must be done cautiously, for if the wrong sort of persons are sent helter skelter over England to assist in the formation of these societies the result will be very different from what we hope for and have every reason to anticipate under the Bill.
Some people are contending in the newspapers that this Bill is only a skeleton, but 735 I repeat that our land policy is to go step by step and to build up stone by stone and brick by brick. Our endeavour all the way through has been not to dip our hands deep into the public purse, but to see that our land legislation is practical, economical, and self-supporting. I am not asking for any large sum of money for an experiment, however good that experiment may be. I am trying to initiate by degrees a system which will be financially sound, and, I hope, approved of by the great banking houses and acceptable to the hard-working small holders, whom it is the object of both sides to assist. I beg to move that this Bill be read a second time.

§ LORD FABER
My Lords, I listened with great interest to the words which fell from the noble Earl, and with all the more interest because the noble Earl was good enough to allow a group of bankers, of whom I happened to be the chairman, to have a conversation with him on certain features of this Bill. I said then, and I say now, that bankers are very willing indeed to find help for large and small farmers and for these credit societies if it is a proper business proposition. They look first of all and last of all to that. I have heard the proposition put forward that if a man has nothing and ten such men, each of them having nothing, are banded together and become a society, those ten men are more worthy of credit than the one; but I have never been able to see how ten men who have nothing could be more trustworthy than one man who has nothing. That, at all events, would not be a business proposition. As regards the audit of the accounts I think that is an important matter, and so far as that goes, if we can be of any assistance to the noble Earl in lending him trained men for auditing the accounts of the societies we will do so gladly.
It has been said up and down the country that bankers have not been sufficiently liberal in the past to big farmers, and perhaps more especially to small farmers. That is very easy to say, but let us analyse it, remembering the fact, first of all, that banks have large sums of money deposited with them by their customers and the public, and that their first care must be to see that those funds are not placed in any jeopardy 736 by what I may call bad banking. I speak in this matter from ray own personal experience, and I will take you back to the year 1872. During the twenty years previous to 1872 farmers had been exceedingly good customers of bankers. They had got into the confidence of bankers, who let them have what they wanted and they never had any reason to regret it. But in the year 1875 there happened to farmers what happens constantly to whole groups of trades. Somehow or other the farming interest collapsed and land values collapsed, and bankers had to face considerable losses—losses which a good many of them remember even to this day. What the cause of that sudden collapse was I know not, but looking back I think there were several causes. One cause was the state of luxury in which farmers had come to live, more luxury than the circumstances warranted, and they did not work as hard as they should have done. Then, again, we had disastrous wet seasons, and above all we had the great oncoming of the Western States of America, and wheat was literally shovelled over to the Continent of Europe and to this country. Consequently the price of wheat fell, and that injured the farmers as well. That lasted from 1875 to 1900 and perhaps later.
But of recent years farmers seem to me to be doing better. They are paying more attention to their business and prices are better, and, after all, I suppose population has been increasing faster than the wheat lands have come under cultivation. That, too, has helped farmers. I repeat that the bankers are ready to be of use to the farmers of this country. I do not speak in a political or philanthropic sense, but as a business man. If the propositions which you put before us are reasonably sound and if they will not endanger the safety which we are obliged to accord to our depositors, then we will vote for them with both hands; and as far as I am concerned I support the Second Reading of this Bill, which I think is a very fair and prudent one.

§ THE MARQUESS OF SALISBURY
My Lords, I do not rise to make any severe criticism on the merits of the noble Earl's proposal. He has heard from a noble Lord eminently qualified to speak words of considerable approval of the Second Reading of this Bill. But what I did rise just to note is the serenity with which the noble Earl and 737 his Department carry on their business, as if there was no great cataclysm of crisis going on at the same time. No one reading the draft of the noble Earl's Bill would believe that the main subject of discussion throughout the country is the invasion by the Lords of the financial privileges of the House of Commons. Yet when we read this Bill it appears to be a breach of privilege from one end of it to the other, and it is very interesting as showing how different the practice of the Government is from their theory.
In Clause 2 it is proposed that your Lordships should enact that certain grants should be made out of the Small Holdings Account. Now that account is a pure taxpayers' account. Even if it were a ratepayers' account that would not make any difference in the rigid theory which is prescribed by the noble and learned Earl on the Woolsack. But I believe it is a taxpayers' account, and yet we are asked by His Majesty's Government, without the benefit of italics, to vote with great solemnity for certain heavy obligations being thrown on the taxpayers of the country by the anachronism in which I have the honour to speak at this moment. And when I go on and read Clause 3 I am so shocked that I hardly dare remind your Lordships of the fact that we are positively asked to pass a provision in which certain expenses are to be met out of "moneys provided by Parliament." That, of course, we all know is the consecrated phrase meaning the Appropriation Act. So that your Lordships are almost asked to initiate an Appropriation Act in this House. Perhaps this little experience may convince noble Lords opposite how absurd are the exaggerations of the financial privileges of the House of Commons which they habitually push upon us. If we had submitted any such proposal as this in the course of Amendments in your Lordships' House, we should have been held up throughout the length and breadth of the country as invading the privileges of the House of Commons.

THE EARL OF MAYO
My Lords, I do not rise to oppose the Second Reading of this Bill, but the noble Earl the President of the Board of Agriculture said that his Board were going to initiate these credit and insurance societies, and I wish to 738 say that we have found in Ireland that it is much better that the farmers themselves should first form the societies and then that the Department should help them. For myself I believe greatly in self-help. Then the noble Earl spoke about sending people helter skelter over England to promote the formation of these societies. I do not know about helter skelter, but he will certainly have to send people down to explain the whole scheme and ask the farmers to come forward and establish these credit societies. In my opinion the noble Earl is beginning at the wrong end. I think the small holders themselves should be asked to start the societies, and if the Board of Agriculture found them going on well they might step in and help them. I regret that the proposal in this Bill does not commence with self-help. It commences with help from a Government Department, which, as I say, we in Ireland do not think is the right way to begin.