Part I - Historical Background (1997)

This document has been made available in electronic format
by the International Co-operative Alliance (ICA)

Part I - Historical Background (1997)

Source: Co-operative Laws in Asia and the Pacific
by G.K. Sharma (pp.1-29)

Historical Background 
Co-operatives in UK
The Asian Co-operative Movement was greatly influenced by
Co-operative Development in Europe. While there were
considerable similarities in socio-economic situations between Asia
and Europe during the 18th and 19th century; to certain extent
agricultural and rural economy in many parts of Asia was better than
many countries of Europe. The co-operative movement in Europe was
an attempt to fight poverty  and exploitation, by the working classes,
farmers, artisans etc. supported by many social thinkers and reformers
particularly due to the deteriorating socio-economic conditions of
workers as a result of industrial revolution. 

Economically, the condition of workers under the factory system,
a product of industrial revolution and old domestic system was not
much different. Under domestic system as cottage industries they
worked at their homes    but still depended for raw material and sale
of products on others. "Although under the domestic system the
workers were poor, oppressed, insecure and obliged to labour long
and hard for a pittance, they had a measure of freedom to decide their
hour and pace of work." The loss of this freedom, long working hours
and unsympathetic attitude of masters created a lot of resentment in
the working class particularly around Manchester, the industrial belt.

The factory system made the workers, labourers in the factories, where
human beings were treated as machines and exploited with no human
touch. This over exploitation created a serious concern in the workers
to improve their economic and working conditions. They increasingly
realised the need to unite in the form of unions or to find other methods
to improve their living conditions. It was the result of this thinking that
as early as year 1760 workers organised their own two corn mills in
Chatham and Woolwick. This was the time when government
discouraged the workers to unite. The Combination Act of 1824
allowed workers to combine together only to improve wages and
for nothing else. In 1834 a group of farmers in Dorset organised a
union and were tried for administrating illegal oaths. They had adopted
their oath directly from the one based in Rochdale Weavers to organise
their union. The farm workers were found guilty and transported to
Australia and became known as "Talpuddle Martyrs"*. Their case and the
severe sentences served on them dampened the spirit of farmers and
workers to organise themselves openly for many years. It was only in
1868 that trade union congress dared to have their first national meeting
in Manchester. 

Robert Owen and Co-ops 
However, in spite of repressive laws, some of the workers continued their
efforts to organise themselves. John Fildon, a mill owner and an MP,
wrote in November 1833  "I am persuaded to believe that we are in the
era of important changes, the working people who will not long submit
to the chains with which they are enthralled. Co-operative societies, trade 
unions etc., exist in almost every manufacturing town and village"*. One
person who did pioneering work to promote the co-operative idea was
Robert Owen (1771-1858). Robert Owen was an outstanding person
during his time in 18th century as a writer, speaker, philanthropist,
educator, social reformer, trade unionist and a factory reformer. Many
people believed and call him the founder of  the Co-operative Movement. 
He was married to the daughter of a mill owner where he introduced many
reforms. This mill near Lanark became not only the largest cotton spinning
mill in Europe during his time but also a model for workers reforms with
high profitability and became so popular that about 20,000 visitors visited
the factory every year during 1814-1824. Even today, it is a tourist
attraction in Scotland with thousands visiting every year. 

It is said that it was Robert Owen who first coined the word "co-operative
society"** in 1821 in his magazine  "Economist" where he talked of
"Each for one and one for all". However, Owen was an utopian who
preached and applied the concept of community where every one's need
would be taken care of. These communities were also at times called
utopian colonies. After introducing this concept in Europe, Owen visited
America and tried to promote such communities in Texas and in Mexico,
due to favourable quasi-judicial system there. Even Karl Marx was
impressed by Owen's ideas. After hearing Robert Owen in a public
meeting to celebrate his 80th birthday in 1851 in London he wrote to
Engels, the author of the "Conditions of Working Class in England"
(1845) and close associate of Karl Marx  "in spite of fixed ideas the
old man was ironical and lovable"*.  

Another important contributor to co-operatives at the same time 
(1786-1865) was Dr. William King. However, they differed in some
aspects. Owen did not believe in family and religion. He opposed and
condemned all organised religions. King openly and firmly based his 
co-operatives as Christian doctrine. He believed that ethics and spirit of
Gospels were the spirit and ethics of co-operatives. However, in spite
of their differences they both worked and contributed for co-operatives
and by the end of 1830 there were reported to be around 300

These early co-operatives did not last long and failed for a variety of
reasons. Even in Rochdale, the first Rochdale cooperative established
in 1930 did not long even for a decade. Though the earlier attempt on
co-operatives failed the co-operators did not lose their faith and spirit.
They analyzed the reasons of failure and attempts were made for a
stronger movement starting from Rochdale Society of Equitable Pioneers
in 1844 which became a model of successful co-operatives not only in UK
but for many countries in Europe and then the whole world. 

Co-operatives in Europe 
While the UK movement was largely the product of industrial workers,
similar attempts were made in other parts of Europe. In France, Francis
Buchez promoted co-operative associations for cabinet-makers and
goldsmiths between 1832 and 1834. During the same period Hermann
Schulze and Friedrich Wilhelm Raiffeisen (1818-1888) promoted credit
co-operatives in Germany. Although Raiffeisen adopted Schulze
Delitzsch's principles of self-help there were fundamental differences
between the two types of these societies. Raiffeisen insisted like Dr. King
in UK brotherly love and Christian principles for motivating the credit
unions, while Schulze was mainly concerned with promoting economic
self-sufficiency. Moreover, Schulze concentrated on urban workers
and shopkeepers, while Raiffeisen devoted himself to helping farmers.
Schulze also believed that membership should come from a large and
economically varied area, but Raiffeisen preferred to restrict membership
to small district, preferably a parish. 

The Raiffeisen Co-operative Societies enjoyed much larger growth than 
the Schulze. The Rochdale movement of UK and Raiffeisen of Germany
particularly influenced the Asian cooperative movement. Co-operatives
and co-operative type institutions were organised in many Asia-Pacific

Model Co-operative Rules in 1832
The first attempt for the systematic self-regulation of co-operatives
could be found in the model rules or bye-laws adopted by the third
co-operative congress held in London from April 23 to 30, 1832. The
Rev. Mr. Dunn brought up the report of the committee appointed to
draw up the rules and regulations of co-operative societies. It was as

i.	Let  it  be universally understood that the grand ultimate
 object of all co-operative societies whether engaged in trading,
 manufacturing or agricultural pursuits, is community on land. 

ii. To effect this important purpose, a weekly subscription, either
	in money, goods or labour from a penny to any other amount
	agreed upon, is indispensably necessary to be continued from year
	to year, until a capital sufficient to accomplish the object of the
	society be accumulated. 

iii. The next preliminary step to be pursued as auxiliary to the former
will be for the society to purchase at wholesale price, articles of
ordinary consumption of the most genuine description, in order to
be retailed at the market prices for the purchase of further
accumulation. The adoption of these instructions will, of course, be
regulated by the circumstances and inclinations of particular

iv. We would observe that the immediate benefit derivable from these
societies in their successful approximation of community, are the
mutual employment of members, the establishment of schools for
education of children, and of libraries and reading rooms for

v. In order to ensure without any possibility of failure the successful
consummation of these desirable objects, it is the unanimous
decision of the delegates here assembled, that the capital
accumulated by such associations should be rendered indivisible,
and any trading societies formed for the accumulation of profits,
with a view to making a dividend thereof at some future period,
cannot be  recognised by this congress as identified with the
co-operative world, nor adopted into that great social family which
is now rapidly advancing to a state of independent and equalised

vi. It is deemed more especially essential in all the trading transactions
of co-operative societies that credit shall be neither taken nor given
as deviation from this important principle has been the sole cause
of the destruction of so many previous societies, and this banefully
operated to retard the general progress of co-operation. In order to
carry this important measure into successful operation, the
congress recommend that in case of want of employment among
the members, means should be taken by the society, if possible, to
provide them some employment as local circumstances may admit.
In cases of sickness, should there be no other sources of relief,
pecuniary assistance may be given from the funds belonging to the
society, or from individual subscription amongst the members.

vii. The congress is of the opinion that it is extremely inimical to the
principles of co-operation and productive of the most serious
consequences, to permit an individual who is already a member of
one society to become a member of another. This report was
unanimously adopted.

It could be seen that these model rules were greatly influenced by
Owen's vision of  `Community on Land' when Rule 1 states "Let  it  be universally understood that the grand ultimate object of all co-operative societies whether engaged in trading, manufacturing or agricultural pursuits is community on land". 

The other important  features of these rules were: 

i. Every member had to give weekly subscription in money,
labour or goods till the society collected the required capital.
This was an important rule (Rule 2) which in course of time many
co-operatives lost sight and just buying one or two shares was
considered the only obligation of members to avail of the same
benefits as of others who might have subscribed much larger
capital to the society. This rule finds place in the new rules adopted
by the Manchester Congress in 1995 in the 3rd Principle
"members economic participation".
ii. The model rules provided that a co-operative should not
Make profits for the sake of giving dividends and the capital 
accumulated should be indivisible. (Rule 5) 

iii. Rule 6 debars taking or giving anything on credit. This rule was
 relevant more at that time than today as the banking and lending
facilities were not developed at that time and was deleted from
co-operative principles by the ICA later on. 

iv. These rules were for all types of co-operatives and under its
objectives along with providing employment, taking care of
member needs in difficult times was also encouraged. 

Rochdale Rules 1844
The model rules were based more on ideals than practical experience.
These rules were modified and expanded based on the experience of the
past and analysis of causes of the failures of  co-operatives, in the laws
and objects of the Rochdale Society of Equitable Pioneers in 1844.
These Rules contained 34 articles against 7 in the model rules and
were based more with practical needs than on future dreams.

The important feature of this law and objects were: The objective of
"Community on Land" was replaced by "the objects and plans of this
society are to form arrangements for the pecuniary benefits, and the
improvement of the social and domestic conditions of the members
by raising a sufficient amount of capital..." The law also deals with 
various activities and facilities which the co-operative would
undertake to achieve its objective which included, trading,
manufacturing, running a store, buy and rent land and even open
a temperance hotel to encourage prohibition. 

The law provided for governance body which included President,
Treasurer, Secretary, three trustees and five directors and they had to
meet every Tuesday at eight in the evening in the committee room.
The general meeting was to be held on the first Monday of the month
of January, March, July and October again at 8 O'Clock to consider
quarterly financial reports, position of funds and stocks held. The law
also provided that AGM would be held on `First Market Tuesday'
on which occasion a dinner shall be provided at a charge of one
shilling each person, and one week's notice. The board based on
quarterly result, paid 3 1/2 % interest on shares which was later on
raised to 5% as also, the remaining profit to be paid to each member
as patronage rebate. 

The importance of this law lies in the clarity and demarcation of
responsibility and accountability of office-bearers, employees, and
members as also transparency in operations. It is a combination of
objectives, governance and a code of conduct for all concerned.
These regulations were self-made, self-imposed and were not enforced
by government or any external agency. Even today if these strict rules
are adopted and followed by any cooperative its chances of success
would be much higher.  

Early Co-operative Laws
The first separate law for co-operatives in Europe was in UK  called 
`The Provident and Industrial Societies Act' and in Austria, `Law on Co-operative Credit Societies' in 1852. The U.K. law was enacted due to
various constraints in the Friendly Societies Act, 1793 under which
co-operatives were registered in UK. The co-operatives, their leaders
and Christian Socials were actively involved in the framing of this law.
The next country to have co-operative law was Prussia/Germany. (1867).

When the first co-operatives were formed in Germany in the middle of
the 19th century there was no appropriate legal framework for such type
of organisations. In order to be registered and to obtain the status of a
body corporate, they had to seek the approval of government, which
could be withdrawn at any time. The initiative to create a special law
for co-operatives was basically taken by Hermann Schulze-Delitzsch.
A draft co-operative society bill elaborated by Schulze-Delitzsch and
approved in 1860 at the annual general meeting of the Federation of
Credit and Savings Societies at Gotha served as a basis for the Prussian
Act governing the legal conditions of cooperatives under private law
promulgated in 1867. The application of this Co-operative Societies
Act was extended to other German states in 1868 and in 1871 the
Co-operative Societies Act in force became the  law for entire German
Reich. The German Co-operative Societies Act is one of the oldest
enactment of co-operative legislation in the world. Despite far reaching
changes that have occurred in the social, economic and political situation
in Germany during the past one hundred years, the essential provisions
of this Act have remained in force without major amendments.* 

Along with UK and Germany, the third important country which had influence on Asian Laws was Netherlands. In Netherlands a special law
for co-operative was enacted in November 1876 which later on provided
framework for first Indonesian Cooperative Law in 1915. However, not
all co-operatives got themselves registered under this law and many
of them continued under the old Act of Companies and Societies (1855)
in Netherlands.

Presently co-operatives in Europe are governed by four types of laws:

i.	Specific laws enacted for co-operatives; 
ii.	Commercial laws with specific co-operative provisions
iii.	Commercial laws and
v. Bye-laws alone

Margaret Digby in her "Digest of Co-operative Law" has distinguished
co-operative laws into six different kinds: 

i. BRITISH (industrial and provident type): This form applies to
Industrial Consumers' Societies. 

ii. GERMANY and AUSTRIA (Central European type): Here the
legislation has been designed to meet the needs partially of
consumers and of credit societies. 

iii. FRANCE (Latin Type: The co-operatives are primarily placed
under the commercial code. But the law is supplemented by
decrees applying to special branches of co-operation. 

of co-operative law as in Denmark and its presence in a primitive
stage in other Scandinavian countries is a peculiar feature of the
flourishing movement in these countries.

v. USA: Here the typical form is based on large scale agricultural
marketing organisations, single cultivation and compulsory
marketing contract, and ultimately introducing compulsory
co-operative marketing.

vi. Here the combination of various types of legislation is prevalent
e.g. in Japan, Latin and Central European countries, these
characteristics are combined. 
A.  The countries which had enacted specific co-operative laws in the last century were: 
1. United Kingdom " Industrial and Provident Societies Act, 1852

2.	Austria: Law on Co-operative Credit Societies, 1852
Law on Productive and Economic Co-operative Societies, 1873 

3.	Netherlands	Act on Cooperative Societies, 1876 
			Act on Societies and Companies, 1855 

4.	Prussia/Germany :1867/1871/1889 

5. 	Ireland : 1893

6.	Switzerland "Act of Legalised Co-operative Societies, 1881.

7. 	Sweden: Registration of Economic Societies, 1895 

8.	Luxembourg : Law for Associations for Mutual Benefit, 1891
	Law on Agricultural Associations, 1900.

B.	Commercial Laws applicable to co-operatives were: 

1. Belgium : 	Code of Commerce 1873 (Law distinguishes seven
		types of commercial Societies',  cooperatives being one of

2. Switzerland : Code of obligations 1881 

3. Italy : General Commercial Code 1823 

4. Netherlands: Act of companies and societies 1855

4. Portugal : 	Law of commercial societies 1867 and code of
		societies 1888 

6. France : 	Law of Societies 1867, Code of Commerce 1807 and 
		Civil Code of 1804 

7. Turkey: Law of Commerce 1926 

8.  Norway :Commercial law 1935 

C. No Co-operative Law - Denmark

Asian Situation 
Co-operative Movement in Europe was the product of Industrial
revolution to a large extent. In Asia, it could be linked to a great extent
to affect of land revenue system enforced by colonial powers as a
source of revenue without any consideration to the paying capacity
of farmers, resulting in the large scale landless labour and rural
indebtedness. Introduction of cash crops for export at the cost of
food grains needed for local consumption further added to the rural
misery. The rural poverty also affected the economy of artisans and
cottage industry. These developments took up mostly in the second
half of the 19th century particularly with the development of steam
engine and faster transport system. The rural indebtedness, a product
of colonial land revenue policy and tax collection also created large
scale resentment within the masses against the governments. The
Government seeing this growing unrest in rural areas, the British
in India, the Dutch in Indonesia and the Japanese in Korea introduced rural co-operatives half-heartedly as they were also concerned that
democratic content of co-operative might encourage national
independence movements. However, people had their own reservations
about these Government initiatives. Thus in Asia, even though many
early initiatives came the co-operatives picked up only in the second half
of the present century when they got their freedom, the exception being
Japan and Australia.

As mentioned earlier there were many reasons for this slow growth
of co-operatives in Asia when cooperatives were fast expanding in
Europe. First of all the economy of Asia was not affected by the
industrial revolution as in Europe except Japan creating large scale
unemployment, under employment and hard condition for farmers
and rural workers. In fact in most part of Asia the socio-economic
conditions of farmers and artisans was better than in Europe till the
middle of the 19th century. 

For example, India and China were the largest countries having
great influence not only on each other but also on most Asian countries
for centuries. There economic prosperity attracted people from many
parts of the world. Christianity came to South India as early as second
century and so was Islam. People at that time did not come to India
necessarily to rule but to trade or learn or preach and at times to take
shelter in distress. Even Jesus Christ is reported to have spent many
years in North India (Himalayas) and Tibet to study the Hinduism
and Buddhism*. Within Asia there was constant flow of traders and
Hindu, Buddhist and later on Muslim missionaries. The economic
situation in India which included present Bangladesh, Pakistan and
Burma also as late as middle of 19th century was not only at a
comparable stage to other countries in Europe but in fact was better
placed for modern growth in agriculture as also in manufacturing. 

Early Indian Economy
India was predominantly an agricultural country. According to 1871
census, 56.2% of adult male population was engaged in agriculture.
In addition another 12.3% population was classified as general labour
which basically constituted agriculture labours. Indian agriculture had
attained a high degree of development and was flourishing. Dr. Voeleker
in his Report on the improvement of Indian Agriculture (1889) mentioned
that Indians grew wheat centuries before the English and so was cotton
and many other major crops. The industrious peasantry was highly skilled
from many generations. These included like land husbandry keeping land
free of weeds; proper training of sowing and reaping operations, rotating
the cultivation of mixed crops, keeping some land fallow for recuperation.
Irrigation techniques were equally advanced.**

In the industrial field also India had attained a high degree of
development. There were many industries, some of them of national
importance. The variety of crafts and goods produced was large. To
mention a few there were for example, spinning, weaving, dying,
manufacture of gold and silver thread and cloth, building brick-laying and
lime manufacture, leather work, pottery, carpentry, copper, tin and iron
works, ship building, sugar and salt manufacture, stone-cutting, paper
manufacture, perfumery, etc. The country was also reputed for high
manufacturing skills. Rich tributes in this regard have been paid by such
celebrated historians like Weber, Lecky, Romesh Dutt, Wilson, Ranade
and others. Mummies in Egyptian tombs, dating 2000 BC have been found
wrapped in Indian muslin of the finest quality. The quality (and
cheapness) of Indian textile was such that it threatened the woollen and
silk manufacturers of England. To meet it England resorted to political
weapon of legislation in 1700 and 1721 to ban the use of Indian printed
or dyed calicos ... and goods made of cotton. *

As far the level of India's industrial development is concerned, it was
fairly high. The degree of technical skill of the Indians was unsurpassed
in many lines. This is amply obvious from the Report of the Indian
Industrial Commission. It says: "At a time when the West Europe, the
birthplace of the modern industrial system, was inhabited by uncivilised
tribes, India was famous for the wealth of her rulers and for the high
artistic skill of craftsmen. And even at much later period, when merchant
adventurers from the west made their first appearance in India, the
industrial development of this country was at any rate not inferior to
that of the more advanced European nations."*

Rural Life 
Most of the people, around 90 percent, lived in villages. Their way of
living characterised the Indian economy. The Indian economy was
almost entirely a rural economy. The villages, however, were mostly
self-sufficient units, isolated from outside. All the material needs of
the village people were satisfied locally. An important feature of rural
life was the fact that the majority of artisans was servants of the village.
The artisans possessed lands which were given to them by the village free
or at reduced rent. The artisans performed various services for which they
were given a share of the produce of land cultivated by other villagers.
This non-dependence on outside gave to the village strength to survive and
resist any external attack.  Another predominant aspect of the village life
was the extremely simple division of labour. This made the skill hereditary
and at the same time enabled a village to ensure the supply of artisans and
their services even during turbulent times. Thus the plight of artisans and
workers was much better than in Europe at that time. 

Stagnation in Indian Economy 
Stagnation of Indian economy started with the British getting involved in
Indian affairs particularly from 1857 after the `Sepoy Mutiny' or the
`Great Uprising' which was crushed by British led forces and the Indian
British Government came into existence. From around 1870 they started
formulating policies for the Indian economy. 

The Government of India, manned at the top by British Nationals and the
British Government in London saw their role in making India useful to the
British economy. Two clear* policy directions emerged from the
commitment. First was to encourage in agriculture the growth of cash
crops on the best lands, and second since agriculture was the main activity,
to obtain funds for Government expenditure through land revenue.*
Certain international events too influenced the British need for cash crops.
The American Civil War in 1864-65 led to the cessation of cotton supply
to Britain, and hence Lancashire was in urgent need of cotton. India
provided the alternative source. 

But by far more important reason for the decline in grain yields was the
colonial government's policy on land revenue. The amounts of collection
as well as the machinery for realisation were such that it not only
impoverished the self-sufficient village communities, but disrupted the
interdependence of groups within the village. As Chaudhari states: 
"It was the revenue measure of the government that proved the greatest
depressor in the rural economy. Even the pervasive disaster (famines)
did not make the government relent in the matter of revenue collection."
In collecting land revenue, the Government had, of necessity, to assign
responsibility for its payment and settlement on some persons.  The
choice the colonial government made had a profound unsettling effect
on the power structure within Indian society. 

Prior to the advent of the British, rent collection was a collective
responsibility of the panchayat, which was headed by a Patel who also
lived in the same village.  This made it necessary to evolve consensus and
a willingness on the part of the Panchayat to share the economic setbacks
of individual peasants of the village. The colonial land revenue system
abolished this collective responsibility of the Panchayat.  The new land tax
was collected in money without reference to a             cadastral survey or
productivity paving the way for the rise of the money lender who would
extend loans in his individual capacity to the cultivator to enable him to
pay the fixed revenue.  These assessments were excessive, and hence the
indebtedness of the farmer especially in grain cultivation grew in an
unprecedented way. The Famine Commission in its report in 1898
expressed the view:*

"Although the agricultural classes of India have not at any
known period of their history been generally free from debt...
individuals and classes may have fallen into deeper
embarrassment under the British Rule than was common
under the Native dynasties which preceded it."

The colonial administration also introduced the modern courts of law
In urban towns to enforce the payment of loans and taxes. Thus the
English system of courts wrested the judicial power of the panchayats.
The money-lender rose even more in authority since he had a decided
advantage in being able to process his court petitions with greater facility
in urban towns against the peasant. Quick auctions of lands were arranged
by the authorities, and soon, the money-lenders became non-cultivating
owners of land, by first ruining the peasant who had borrowed from him
and had been in debt.  In each village of India this basic pattern of change
induced by the colonial land revenue system was common: the Patels and
the principal cultivators who had formerly guided the affairs of the village
were reduced to the status of tenants tilling the fields of the money-lenders
and later quite dispossessed.  A new class emerged in rural India
dominated by the foreclosing creditor.  Soon more than two-thirds of the
land came under tenants-in-cultivation in India. 

The economy of China and India during the 18th and mid 19th century
were by and large at the same level.  However, in the second half of 19th
and first half of 20th century the per capita grain production was faster
in China than India. 

In 1870 per capita grain production in China and India was about the
same.  By 1950, Chinese level rose 54 percent above India's not due to a
faster per capita increase in China. (In fact per capita output was constant.
The decline in grain yield per acre in India was mainly due to the sharp
decline in rice and coarse grain yields.  Rice crop declined even in total
output at the rate of 0.09 percent per year. These declines were in fact
accentuated after World War I. This led to the widening of the gap in
the Chinese-Indian yield in foodgrain crops. 

The central reason why the grain yield per acre declined in India and did
not in China was due to the differing attitudes of the governments in the
two countries.*  In China, the elite and the Ching  were greatly sobered
by the Taiping Rebellion and chose not to extract revenue through the
land tax without regard to the economic position of the peasant.  The `paochia' and `lichia' indigenous systems kept good records of the
peasant conditions, and through a system of granaries helped the
peasant in bad times.  In India too the Patels and Patwaris had earlier
maintained this socially conscious attitude, but the advent of British
rule disrupted this indigenous system of checks and balances. 

In China during the period of Ching Dynasty from 1753 to 1906, land
tax grew at an average rate of 0.4 per cent per year which was lower
than the growth rate of output from agriculture. Philip Kuhn has pointed
out that the Ching dynasty, although weak in later periods nevertheless
saw to it that the local elite did not come between the Central
Government and the collection of land tax. 

Further while India was always open to foreigners and never strongly
and collectively resisted their activities, China chose to remain close
to foreigners and strongly resisted their entry till lost to the Japanese. 

The economy of Indonesia was also doing well as was the case in India
and China. According to Jan Pietersgoon Coen the Dutch Governor
General appointed by United East India Company in 1618 had expressed "The Company would never make money by trading European
commodities from Asia as the countries of Asia exceed those of Europe
in population consumption of goods and industry."*  It was in other
words, Europe which in relation to Asia was underdeveloped and
produced little that Asia wanted. The Dutch adopted the same approach
as the British did in India; ensure production of goods needed by them
in their country and not for local needs and displaced the peasantry
from their lands and centralised the power in the hands loyal to them.  

For example the Dutch found coffee as an important commodity for trade
to Europe. Coffee was thus first planted around 1700 in Java from South
India. In 1710 100 pounds of coffee was delivered to the company. By
1720 the crop amounted 100,000 pounds and by 1731, 12 million pounds.
But the Dutch wanted limited supply which could give them high return
in Europe. They reduced the area of cultivation, reduced the price and 
short-paid the producers.*

In 1810 Lord Minto Governor General of India was asked by the
English East India Company to oust Dutch from Java. This was to
Counter Napoleon's design for the encircling of India though the British
Did not intend to oust occupied-Dutch Empire permanently. The Dutch
lost Java and young Thomas Stanford Raffles a junior officer at Penang
was appointed Lieutenant Governor of Java. 

Raffles who was the founder of Singapore followed the same policy as
the British followed in India on the land revenue. He declared that
Government was the sole owner of land. The local inhabitants therefore
became Government tenants paying rent for the land they cultivated** 
(P-417 DGE Hall). Based on this concept, he satisfied his need for money
by selling cultivated districts to European or Chinese financiers. The
peasants therefore went into bondage. Four years later under an agreement
concluded in 1814  Java was handed over back to Netherlands in 1816
while Raffles was called back in 1815. 

The Dutch continued their policy for producing goods they needed for
their trade. In number of districts of Java fields were used for export
crops to the extent of resulting famine. The submissive Javanese
population was ruthlessly exploited for the benefit of Netherlands.*
Consequently the economy deteriorated more or less of the same level
As Indian economy under the colonial rule by the end of 19th century.
The same is true about other parts of Asia occupied by either the Dutch or
English or the French and even Japanese. 

Co-operation in the form of Dure, Pumasi, Kye and Hyangyack had been
a part of traditional Korean Society. However, emergence of capitalism
and opening of ports like Pusan, Wonsan and Inchon the petty Korean
tradesmen suffered heavy hardships and losses. 

The factory system was first introduced in Korea around the end of 19th
century. As a result, the traditional Korean manufacture collapsed, and
farmers in traditionally agricultural society were deprived of the side
jobs year after year.  Slowly the Korean industries came to be entirely
controlled by the Japanese. This phenomenon applied not only to
agriculture but also to mining, fisheries, banking and financial
business also.   

The position of Korean farmers further deteriorated because of the
Japanese initiated national land survey scheme. The heavy burden of
share rent  imposed on tenancy and precarious share cropping contracts
also played a role in prompting farmers to give up farming and made

During the First  World War period influenced by the American President
Woodrow Wilson's statement of principle of self-determination, the
Koreans launched an independent movement in March 1919. This was
met with  brutal Japanese oppression. Koreans tried to resist Japanese
rule by non-cooperation by not paying taxes, not to purchase land from
Japanese, not to buy Japanese currency and to sell Korean currency to
Japanese. This created long dispute between tenant and landlords and
rural unrest. To provide some relief to the people, the Japanese Governor
General began to establish financial, industrial, and farmers' associations.
However, they did not get desired response.

On the other hand, some Koreans also promoted civilian-led
co-operatives, including YMCA and Cheondoism (Korean native
religion) but the real re-organisation and growth of co-operatives
started only after Korea got liberation after the Second World War. 

Co-operative organisations as Shaso, Ko, Senzokabu association
and Hotokusha of farmers, trades people, industrialists and low-
ranking Samurai were established principally based on policies of
the Shogunate government, feudal clans and landlords over about
a century between the latter half of the 18th century and first half
of the 19th century.        

Economically the possession of land forming the foundation of feudal
system became questionable. Being in possession of land the Shogunate
and the feudal clans collected the land tax in kind (chiefly in rice) from
the farmers and imposed labour upon them. However, notwithstanding
the imposition of additional taxes and labour, the amount of production
did not increase resulting more land tax in rice falling into arrears or
unpaid. As the input of producers' goods such as fertilisers came to
decrease, it became so frequent that farmers suffered from poor harvest,
which depressed their will to produce remarkably. Therefore, farmers
gave up their cultivation and left their native villages or rose in rebellion
to make a protest. 

When the natural economy of self-sufficiency of the farm village began
to be destroyed by the imposition of too heavy land taxes and the
encroachment of money economy under the waving feudal system
local efforts appeared in the form of Tanomoshiko, Shaso, Hotokusha
and the like. 

In 1873 ( the 6th year of Meiji) the land tax system forming the basis
of state taxes was revised, and the rate fixed at 3% of the value of land.
Until the previous year the sale of land was prohibited, and land taxes
were paid in kind. But this system was changed into the payment in
money in that year. The amount of money to pay was converted from
the quantity of rich equivalent to that which has so far been paid to
the Shogunate or the feudal clan on a basis of the prices of land and rice
at the time of inflation going on. So the land tax was very heavy. The
land taxes in rice paid to the former Shogunate or feudal clan averaged
about 50% of the production. Here came out the landlord system in the
open. The Shogunate, feudal clans and Meiji Government has been in
possession of lands. Wealthy farmers who had purchased lands from
poor ones in secret, collected farm rents more than land taxes.
Therefore, the substantial landlords already came into existence in the
latter period of the modern age.

Money economy and commodity production gave rise to co-operative
business close of the modern age, on the basis of such as city and farm
village. As forerunner of a city co-operative association, co-operative
firms were built in Tokyo, Osaka and Kobe as early as in 1877.  It was
co-operative purchasing activities carried on by the educated class to
plan the capitalistic rationalisation of consumers livelihood co-operative
association. The co-operative firms had a considerable amount of funds
and  carried on independent activities; but they were dissolved after
several years. Later on, co-operative purchasing organisations having
the similar substance and pattern were formed in different cities, but
their business did not continue long. 

In small and medium local cities financing organisations similar to a
 co-operative came into existence one after another or they might as
well be called co-operative firms similar to a financing organisation. 

In farm villages `Kyoso' and `Hotokusha' had been resuscitated.
Among co-operatives that came into existence in this period, most
well known were co-operative financing company, the Shizuoka-Jusan
reliance association, a raw silk marketing association and a tea
marketing association.      

As a result of victory in the Sino-Japanese war in 1894 Japan
Received repatriate of 300 million yen gold which strengthened
the Japanese economy. This followed with reforms and enactment of
new legislation which included a draft law on co-operative. However,
the first co-operative law called industrial co-operative law was passed
only in 1900 which covered rural credit, marketing and other
co-operatives also.

While the economic imperialism of Europe was spread over a period
of around 400 years 1500-1900, in Asia, the real impact of this was
felt only in the 19th century with the industrial revolution and advent
of railways, steamship and other scientific advances. This facilitated
the European traders to establish their first interest to use Asia as a
ground for their own needs and growth. The attitude of the colonial
rulers could be seen from the extract of the Budget speech of Sir John
Starehy on March 28, 1877;  "We are often told that it is the duty of
the Government of India to think of Indian interest alone, and that if
the interest of Manchester suffer, it is no affairs for us. For my part,
I utterly repudiate such doctrines. I have not ceased to be an
Englishman because I have passed the greater part of my life in India,
and have become a member of Indian Government. The interests of
Manchester at which foolish people sooner are the interest not only of
the great and intelligent population engaged directly in the trade in
cotton but of millions of English men." 

Thus in the 18th and even in 19th century the economy in India, China
and most Asian countries was not bad and the class conflict between
entrepreneurs and labourers as a result of industrial revolution did not
prevail in most Asian countries. With the deterioration of economy
during the colonial rule which saturated by the end of the 19th century,
while European economy picked up, the Asian economy went backward
and conditions prevailing in Europe in 18th century got created in many
Asian countries. 

The success stories of Rochdale Pioneers and Raiffeisen Credit movement
did create keen interest in many of the Asian countries. There were initial
attempts to organise co-operatives by the people and social reformers in
many countries in Asia during the second half of the 19th century
particularly in Japan, India, Indonesia, and Australia. The first
International Congress in 1895 held in London was attended by
Australian and Indian participants. The next one to join the ICA from
Asia was Japan in 1910. However, the most Asian countries being
under colonial rule the people's initiative to promote co-operatives
was taken over by government officials and the people lost interest.
Thus  the growth of co-operatives became slow in most countries with
the exception of Australia and Japan and picked up only when these
countries got freedom and had their own national governments. 

Co-operative Laws in Asia
The first co-operative law was enacted in Japan in the year 1900
followed by India in 1904, Philippines in 1906 and Indonesia in
1915. The framework of these laws were based on co-operative
laws in Germany, UK, and Netherlands. However, the co-operative
laws in colonial Asian countries were drafted by the foreign
bureaucrats and co-operatives or co-operators were not involved as in
the case of UK, Germany and other European countries. Thus in the
framing of co-operative laws main consideration had been, "what is
good considered by the rulers and not by the members or the people".
The co-operatives were made to look towards the Department and not
to their members for guidance and working. The post of Registrar was
borrowed from the United Kingdom. The Registrar under the Friendly
Societies Act and later on under Prudence and Industrial Society Act,
was concerned with the registration and dissolution of co-operative
societies, and collection of annual returns of their activities only.
In Margaret Digby's `Agricultural Co-operative in Commonwealth'
about the enactment of Co-operative Law in India it is stated "It soon
became apparent, however that in a country like India, where rural
leaders were few, and over 90 percent of population was illiterate,
the Registrar would have to do more than record and correct. He and
his staff would have to initiate, educate, organise and supervise and
both their numbers and importance would be greater than had been
anticipated from the study of European models". Thus the Registrar
was called "the Friend, Philosopher and Guide" and no co-operative
could afford to go against his wishes. Mr. Asnavi Hassan in 
`Development of Co-operative Legislation in Indonesia' states, "the
Netherlands Indies" Government suspected the co-operatives as an
organisation which could be utilised as a political level and encourage
the people to live independently in the economic field and not on the
colonial government."

Thus in the first half of the 20th century colonial governments in
most countries in Asia tried to control local cooperative leadership
through legislation and people not having faith in state favoured
leadership and in the Government, the growth of co-operatives
remained rather slow. The situation changed considerably in the
second half of the present century when most countries got freedom
and national governments took over.

1.	P7 - Weavers of Dreams - O.J. Thompson
2. P9 - Weavers of Dreams - O.J. Thompson
3. P11 - Weavers of Dreams - O.J. Thompson
4. P.18 - Weavers of Dreams - O.J. Thompson
5. Co-operative Law in Federal Republic of Germany
H. Munkner
6. Jesus Lived in India - Holger Kersten
7. P.30 Indian Economy : A Historical Perspective
8. P.31 Indian Economy - A Historical Perspective
9. P14 - Economic Growth in China and India 
Dr. Subramaniyam Swamy
10. Report of the Famine Commission, Part II, Chapt III,
Sect.IV, Simla 1898
11. Economic Growth in China and India
Dr. Subramaniyam Swamy
12. P41, Indonesia, Leslie Palmer
13. P417, Indonesia - Leslie Palmer
14. A History of South East Asia - D.G.E. Hall
15. P7-, Indonesia, Leslie Palmer
16. P63, Agricultural Co-operatives in Korea-
Kun Hwan Yun