{"id":113373,"date":"2021-04-08T14:59:50","date_gmt":"2021-04-08T21:59:50","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=113373"},"modified":"2021-04-08T14:59:50","modified_gmt":"2021-04-08T21:59:50","slug":"the-general-election-of-1956-part-5d","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2021\/04\/08\/the-general-election-of-1956-part-5d\/","title":{"rendered":"THE GENERAL ELECTION OF 1956 Part 5D"},"content":{"rendered":"

KAMALIKA PIERIS<\/em><\/span><\/h2>\n\n\n

Philip\nGunawardene accomplished much in food and agriculture during his short stay of\nthree years in the MEP government. These are described at length in other\nessays in this series. This essay looks at certain aspects of Philip\u2019s vision. <\/p>\n\n\n\n

Philip studied the rural sector carefully. Philip said that\nthe   peasantry had many problems,\npoverty, indebtedness, need for credit, lack of scientific techniques of\nproduction, and marketing facilities. Two main obstacles to agricultural\nprogress were the backwardness of the agricultural techniques used which result\nin poor yields and the fact that villagers were landless or had insufficient\nquantity of land. <\/p>\n\n\n\n

There\nwas also the need for cheap power, cheap transport, managerial\nknowledge and above all the lack of a home market for industry.  The home market in an agricultural country is\nthe rural market. It is only a prosperous peasantry that can provide this home\nmarket for our industry, said Philip. <\/p>\n\n\n\n

The way to break the cycle of village under development was to introduce\nnew agents of change. Philip saw the cooperatives as the executor and initiator\nof change in the rural sector. He wanted the existing cooperative movement\nrejuvenated, and given a new approach, where the state intervened and supported\nit. Philip\nwanted to develop a state supported cooperative movement. <\/p>\n\n\n\n

 There were successful coops\nin the island already. There was a successful cooperative hospital at\nSandalankawa run by private individuals. There\nwere a few well run producers and marketing coops that were supported by\nwealthy patrons.  In Chilaw the residents\nhad formed three cooperatives, Paddy Pounders Society, Poultry Breeders Society\nand Rice Sellers society. The Rice Sellers was a great success, selling to\nMarketing Department as well. Vincent Subasinghe, who had run a successful\ncooperative project, was made Chairman of CWE. Philip found all this very\nencouraging.<\/p>\n\n\n\n

The     villagers badly needed money. The main avenues\nfor borrowing money in the rural sector are the private loan agencies,\nindividual money lenders, landlords and merchants. Debts from these private sources\namount to nearly 66%. Almost 50% of the debt accrues to \u2018undesirable sources\u2019,\nwhere rates of interests are usurious, affording no scope for economic\ndevelopment, said Philip. It was therefore extremely important to establish a   lending institution that catered to the\nrural sector. <\/p>\n\n\n\n

Philip\nfocused on the need for medium and long term credit for the rural population. The\nrural sector   lacked provision for\nmedium and long term credit. There was no institution that was prepared to lend\nmedium or long term to the rural sector. <\/p>\n\n\n\n

Bank of Ceylon was not interested, it ignored the farmer and\npeasant and served only   the commercial\ncommunity and the prosperous landed gentry.  The other two banks, Agriculture and\nIndustrial Credit Corporation and the Cooperative Federal Bank were not interested\neither. <\/p>\n\n\n\n

Philip wanted the co-op to be the channel through which credit\nwould be provided for village economic activity.  \u2018Philip thought up a Cooperative Development\nBank that would lend money to the smaller cooperative banks, which in turn\nprovided supervised credit to the villager. The\nCooperative Development Bank, as planned by Philip, was to have branches in the\nprincipal towns and important rural centers. \nHe planned to open 100 branches in the first year. The\nbank would be cooperative bank as well as a development bank. <\/strong><\/strong><\/p>\n\n\n\n

The Cooperative Development Bank\nas planned by Philip would have the power to grant loans co co-ops and\nindividuals   for building and for\nfinancing small agricultural industries and business undertaking and for small\nloans. It would also have the power to carry on business as a normal commercial\nbank and the right to do business as a pawn broker. <\/p>\n\n\n\n

The functions of a commercial bank were necessary because banks\nneeded funds to cater to medium and long term loans.  It took time to recover the loans. The bank had to be\nliquid, it had to earn money. The commercial side would earn money and the risk\nof giving credit to the rural sector would be   \nundertaken by the development side.<\/p>\n\n\n\n

The Central Bank was very encouraging. They were very keen that\nthis Bank should be set up.  <\/strong> Arthur\nRanasinha, Governor of the Central Bank, had written to Philip to say that he\nwished to see a Bank that would attract deposits of the rural population and\nalso serve their credit needs.<\/p>\n\n\n\n

Central Bank officials would help draw up the constitution for the\nnew Bank. The new Bank should take over the provincial and district cooperative\nbanks and   the Cooperative Federal Bank. The Central Bank\nhad inspected the Cooperative Federal  \nBank on many occasions and found it to be utterly inefficient. <\/p>\n\n\n\n

But the Cooperative Bank Bill met with strong opposition. At\nevery point we met opposition, from Finance Minister, Stanley de Zoysa and Minister\nof land and land development, CP de Silva, said Philip. CP de Silva wanted the\nCooperative Federal Bank strengthened, by giving it Rs 10 million more. That\nshould be sufficient said CP. <\/strong><\/strong><\/p>\n\n\n\n

Minister of Finance had submitted a memorandum questioning\nPhilip\u2019s right to prepare a Bill of this nature. Banking came within his Ministry\nnot Philip\u2019s. This Bank was to be set up under its own Act of Parliament, not\nby registration under the Cooperative Ordinance like the other cooperative\nbanks. Further, this Bank would have the powers of a normal commercial bank, he\ncomplained. <\/strong><\/strong><\/p>\n\n\n\n

To soothe his MPs, Bandaranaike took over the Bill and said he\nwould see it through Parliament but that did not happen  and\nthe Bank did not become a reality. Instead the Bill became the precipitating\nfactor in Philip\u2019s departure from the MEP government. The Cooperative Bank Bill\nwas the  trigger, said analysts.  <\/p>\n\n\n\n

Philip\u2019s Cooperative Development Bank was not a Communist ploy,\nobserved Meegama. If successful it would have strengthened both the agricultural\nsmall holder and the rural industries. It\nwould have helped the village cultivator, the craftsmen and\nfishermen. Philip\u2019s\nCooperative Development Bank predated the Grameen Bank set up with much acclaim\nin Bangladesh in 1970. The local cooperative banks were later absorbed into the\nPeoples Bank, but that Bank was a normal bank. It played no role in village development.<\/p>\n\n\n\n

Philip was concerned about the health of the estates. Pile\nwanted to rehabilitate run down estates and for this purpose brought a Bill for\n the creation of a Tea Subsidy Fund\nthrough a cess of 4 cents a pound on exports. \nThis was to be used for rehabilitating the estate and replanting tea.  He also introduced a Tea Replanting Subsidy Scheme\nwhere a generous subsidy would be paid for replacing old tea bushes with new\nclones. <\/p>\n\n\n\n

Philip was concerned about fragmentation of estates.\n There are Ceylonese who buy up highly\ndeveloped plantations and pull down the factories, sell the scrap to Pettah,\nbreak up the land and sell to various speculators. Since 1945, 62 rubber\nestates and 20 tea estates have been fragmented. Also estates are acquired by government\nfor village expansion. The\nAgricultural and Industrial Credit Corporation was giving credit for the\npurchase of estates which would then get fragmented  Workers were thrown out of these fragmented\nestates. <\/p>\n\n\n\n

Philip\nhad appointed a committee to inquire into the fragmentation of tea and rubber\nplantations. The Treasury, under Stanley de Zoysa refused to send a representative\nto the committee. In December 1957 he presented the Anti\nFragmentation Bill to Parliament. Anti\nFragmentation Bill was an act to protect plantations from getting broken into\npieces. It also stopped factories being stripped for scrap. This will\napply more to tea than rubber since rubber is to a great extent a small holders\ncrop. <\/p>\n\n\n\n

The Anti Fragmentation Bill was carried though despite opposition.  It was passed in 1957. It faced many obstacles, Philip\ncharged that CP de Silva delayed presenting the Bill for months and Philip sent\nsix letters about it.  But for me\nthat legislation would never have been passed, Philip said later when he\nresigned.  I had to write more than one\ncabinet paper to get the consent of the cabinet. Even after everything was\nready, CP de Silva sat on it for months.  <\/p>\n\n\n\n

Philip had offered a painless\nnationalization scheme of tea plantations. He said that compensation if Land\nacquisition Act was followed would have been prohibitive.  Payment on quoted share price would be\ncheaper. The other way we would have to pay Rs 3000 or so per acre of tea. This\nway we can get away with Rs 80 million or so. Cabinet was divided and decided\nnot to go ahead with this, though it was in the manifesto.   ( CONTINUED)<\/p>\n","protected":false},"excerpt":{"rendered":"

KAMALIKA PIERIS Philip Gunawardene accomplished much in food and agriculture during his short stay of three years in the MEP government. These are described at length in other essays in this series. This essay looks at certain aspects of Philip\u2019s vision. Philip studied the rural sector carefully. Philip said that the   peasantry had many problems, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[104],"tags":[],"class_list":["post-113373","post","type-post","status-publish","format-standard","hentry","category-kamalika-pieris"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/113373","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=113373"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/113373\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=113373"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=113373"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=113373"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}