— 23 —

and prices were low. As a consequence the second dividend was reduced to

2| per cent.

Credit and Security.—It is generally recognised that the small owner or

tenant must be able to obtain credit, and that his command of borrowed capital

will be determined by the security he may be able to offer. Force of circum-

stances, however, at Zeidab has compelled the acceptance as leaseholders of

cultivators who in a majority of cases could offer no quid fro quo for extensive

advances on their account. The tenant, taking up new land, had to clear it

first from bushes and roots, for which he obtained a fixed price. He then

received oxen and implements in order to level the country ; or if the soil was

heavy, it was worked first by the steam ploughs belonging to the Company. The

cultivation was then begun, and tenants received advances every fortnight in

proportion to the quantity and quality of their work. These advances were made on account of the crop to be gathered. No interest was charged on these

crop advances, as it was intended to encourage the tenant in every way possible

and in order to make him prosperous.* As the land is let, and the water supplied

to tenants without security, and as the latter receive in a majority of cases

cattle, implements and seed on loan, the incidence of risk is entirely on the

Company, which is called upon to finance not only aU capital expenditure but

even the current costs of, cultivation. The possible incidence of consecutive

unfavourable seasons consequently calls for a further capital reserve, and the

entertainment of the additional risk that tenants with nothing at stake may

prefer to break their agreement rather than face the burden of heavy arrears.

Co-operation with the Freeholder.—A more equitable distribution of risks

would appear to be ensured by the alternative tentatively essayed at Zeidab,

whereby the owner of sakia lands was furnished with water and facilities for

the handling and marketing of his crops in return for fixed payments. The

coincidence of an abnormally unfavourable season with the initiation of this

policy, and the Company's inability to grant additional credit for a second

season's irrigation, unfortunately postponed an exhaustive trial of the system.

It has, however, since been elaborated as an important aspect of the work of the

Research Farm, and a brief account of early developments has been furnished

in the body of the current report.

Regarded as an effort to introduce an element of co-operation into local

agriculture, the system is essentially based on the security afforded by freehold

title for water supplied on credit and for such loans as may be needed by the

landowner for the development of his holding. The agreement embodies a

clause providing that all operations shall be conducted in accordance with

advice based on the results of field experiments conducted on the farm, and thus

* Proceedings of the Ninth International Cotton Congress, 1913.