debtor upon an order of the court, which can be obtained on simply proving the debt. The second class covers open accounts or book debts for amounts beyond 250 pesetas. In these latter cases the law proceedings are slow, laborious, and expensive, and are on that account not often resorted to unless there are many creditors of that class, who can then club together and initiate regular bankruptcy proceedings. 13. Is bankruptcy frequent?

Very unfrequent in this district in all branches of the wholesale trade; in the retail trade, as a whole, failures are also very uncommon, and almost entirely confined to the dealers in dry goods, hats, shoes, and wearing apparel, and cognate branches.

14. To what extent do relief acts in bankruptcy prevail?

No legal relief exists, except such as is embodied in the statutes bearing on bankruptcy outlined in answer to question No. 12.

15. Are fortunes readily made and lost?

There being very little speculation or overtrading, the chances for either great gains or losses are not frequent, and there seems moreover to exist a laudable disposition to eliminate every form of gambling from business methods. During the flush times from 1863 to 1873, there were a number of instances of rapidly-made fortunes, especially in the wine trade; since that time, however, such cases have grown to be very rare. Instances of great losses are probably rarer still, and it may therefore be said that great stability in this respect is a characteristic feature of the trade of this district.

16. What are the general effects of credit?

The general effects of credit in this section, in spite of the minor abuses adverted to, are on the whole undoubtedly beneficial. Credit in the wholesale trade is generally given with caution and moderation, and, on the other hand, is hardly ever demanded for speculative or dishonest purposes. In the retail dry goods trade and kindred branch es the prevailing trust system undoubtedly increases the volume of sales, a result not altogether felicitous, as has been shown above; this, how, ever, only reflects the love of dress and attention to personal appearance which are local characteristics here. In the retail trade in household commodities, on the other hand, it does not appear that credit has a marked tendency to increase consumption; the great abstemiousness of the southern Spaniard, in regard to both food and drink, puts a limit to his expenditure in that direction which no inducement in the way of "easy terms" is likely to extend.

UNITED STATES CONSULATE,

ERNEST L. OPPENHEIM,

Consul.

Cadiz, July 12, 1883.

GIBRALTAR.

REPORT BY CONSUL SPRAGUE.

Years gone by credit was but little known among the commercial community of Gibraltar.

There is no doubt that the credit system stimulates trade; but not being based on solid grounds, it often results in serious disasters.

Owing to excessive competition, the great eagerness to obtain customers, especially among the retail dealers and grocers, the credit system

has become almost universal. It has for many years past gradually increased in importance, till it has reached such immense proportions that to-day the community at large, even those who may have means, hardly think of paying ready money for what they purchase to meet even their domestic wants, and with few exceptions they anticipate their incomes. The rich as well as the poor all succeed in obtaining credit from baker, butcher, grocer, tailor, haberdasher, &c.; the result is unfavorable; it encourages expenses which were never dreamed of, and finally many go to ruin or die leaving behind heavy debts or numerous unsettled accounts for their posterity to face.

At one time tradesmen in giving credit were able to overcharge in their prices, as somewhat of a protection to the extra risks they ran for the collection of debts; but to-day this precaution is even overlooked, on account of the keen competition ruling, as their books will constantly show, by having long-running unsettled accounts.

Under this condition of affairs, it would be a matter of impossibility for any one connected with the sale of merchandise to count upon establishing a business on strict cash principles; to insist upon this course instead of granting credit would at once curtail business and render it almost a nullity.

Unless among the well-to-do class, interest is seldom insisted upon in time accounts; people are generally satisfied in collecting the principal, and gladly renounce the item of interest. It is among the retail importers and dealers that the evils of credit are most conspicuous, and all kinds of produce or manufactured articles fare alike in cash returns; but it is seldom that any sale is squared up before forty-five to sixty days elapse.

No sumptuary laws or regulations exist in Gibraltar concerning credits.

Mortgages, both on freehold and leasehold property, are prevalent among all classes. Judgment debts are uncommon, as the statutes 27 and 28 Victoria, chapter 112, provide that no judgment shall affect any land until such land shall have been actually delivered in execution.

The law of arrest and imprisonment for debt still rules in Gibraltar, but no advantages seem really to be derived from it. It is but food for the lawyers, attorneys, and court officials, whose charges generally run up to excessive figures, resulting in the creditors getting little or nothing by adopting legal proceedings.

Once a man has obtained his certificate from the court of bankruptcy he can resume business at any time.

By the above act, any one may petition the court to be declared a bankrupt, if he be in a position to pay five shillings in the pound and costs.

An ordinance for the relief of insolvent debtors in Gibraltar of the year 1832, brought into force the insolvency acts, which still rule here, notwithstanding that all these laws have been repealed in Great Britain long ago.

Bankruptcies are frequent, especially among the retail dealers and grocers, who have the facility of evading the law, by easily betaking themselves to the Spanish lines, out of British jurisdiction, until they succeed by tiring their creditors into whatever kind of arrangement they please, to enable them to return to their home to resume business; or if not succeeding, they migrate to distant lands where their creditors finally lose entire control over them.

Fortunes are more readily lost than won. It is generally conceded here that those who have, by dint of labor and perseverance, made their

fortunes, generally know how to keep them, while those who have inherited them invariably lose them.

To-day one can only count upon the honor and character of an individual for punctuality in the payment of his debts. The great facilities offering for obtaining credit bring on debt, as is proved by the many claims that are constantly presented in the debt court for settlement. HORATIO J. SPRAGUE,

UNITED STATES CONSULATE,

Consul.

Gibraltar, June 30, 1883.

AUSTRIA-HUNGARY.

AUSTRIA.

REPORT BY CONSUL-GENERAL WEAVER, OF VIENNA.

I have the honor to submit herewith the following answers to the interrogatories contained in your circular under date of May 15, 1883.

CREDIT AND TRADE.

1. Does credit stimulate trade?

The scope of the meaning of the term "credit" is so extensive that a categorical affirmation or negation can hardly be given. If its general signification be considered, to wit, that mercantile reputation which inspires trust and confidence, then the interrogatory can be answered with great positiveness, yes; for confidence and trust in a general sense must form the basis of every commercial transaction, and without them trade would be reduced to the simplest barter or exchange of one commodity for another, since it would be impossible to employ drafts, checks, notes, and other kindred financial paper; and, in fact, the whole presentdeveloped system of banking could never have existed. If, however, the ordinary commercial signification of the term "credit" be implied, viz, the delivery of goods or supplying of services without equivalents, in reliance upon future payment, which doubtless is the sense intended in the question, then the reply must be so conditioned as to lose much of its force and certainty. For here, again, we must distinguish between the varieties of commercial credit, whether it be productive, that, is granted for the purpose of trading, or non-productive, devoted simply to the purpose of consumption; for in the latter case it would then take on the simple form of the improvident contraction of debts, with but slight prospect of canceling them, and in so far, instead of being a healthful stimulus to trade, it would be rather an unmitigated evil; for although the disposition of a merchant's stock even on credit might temporarily increase the demand, yet the expense of collection and the loss resulting from bad debts would weigh so heavily on his margins that eventu ally the effect must be to increase prices and injuriously hamper, if not utterly destroy, his trade, especially when practiced to any considerable extent. But, on the other hand, productive credit, granted by one merchant to another, or one individual to another, for specific purposes, such as according the necessary time in which to dispose of goods and realize on their sale, or for the development of a new industry, &c., is not open to these objections, at least not to such a degree; and in the

present condition of trade, and under existing customs, such credits are, if not an absolute sine qua non for successful transaction of business, at least a great stimulus to trade; for although there may be differences of opinion theoretically as to the exact nature of credit, its usual effects are generally recognized. John Stuart Mill lays down the principle that credit cannot create capital, that the debtor and creditor cannot both at the same time possess a given amount of capital, but that it simply transfers the amount from one to the other; yet he clearly points out how idle capital, in the hands of those who cannot or do not wish to employ it, may, by a system of credit, be transformed into a state of active productiveness, or, in his own terse language, that "although the productive funds of a country are not increased by credit, they are called into a more complete state of productive activity."

Commercial productive credit it would seem, therefore, becomes an exchange of one man's wealth for the capacity and industry of another; or, in other words, the capital of the rich is set over against the brains and muscles of the poor, and both are necessary factors for complete commercial success. It may, therefore, be seriously questioned whether capital be not in a sense created when, through the harmonious utilization of these two factors, money and productive labor, the wealth of a country be materially increased.

Again, credit may be said to stimulate trade by supplying the neces sary substitutes for money, thus simplifying commercial transactions by facilitating the settlement of accounts. not only by means of drafts, checks, &c., but by the credit granted in the shape of promissory notes and outstanding book accounts, which increase so materially the circulating medium thereby made available for the operation of trade. As, therefore, the increased supply of the circulating medium of a country must eventually create an increased demand for its articles of commerce, this stimulus to trade must be healthful, as long at least as credit is confined within reasonable limits. But even should wild speculation be rendered more easy by a too great use of credit, which doubtless is sometimes the fact, yet an exceptional case should doubtless be regarded as only the abuse of credit and not its legitimate use; for since like speculations are possible, although certainly to a less extent, without credit, yet the abuse of credit should no more contemn its legitimate use than the abuse of capital would warrant a condemnation of its appropriate use. As, therefore, money or capital is only a single though important factor in the development of trade, productive credit holds an intimate complementary relation thereto, by supplying the necessary energy, conveniences, and stimulus, provided always that this credit be restricted within reasonable limits; or, in other words, that the energy, capacity, and industry of credit combine with and supplement the non-productivity of capital. Therefore, in order to produce the great commercial and industrial development of a country, its "coined" credit is almost as essential as its coined capital.

CONTRACTING DEBTS.

2. Are people averse to contracting debts?

On the contrary, they are greatly addicted thereto. The vicious habit of contracting debts does not seem to be confined to any class or classes of people, the poor and the rich alike having become accustomed to defer payment as long as possible. The effects are, as should be expected, to destroy confidence, and exact, whenever possible, cash payments, particularly for rents, purchases in retail, and articles of con68A-No. 43-13

sumption in general. But, on the other hand, when once the ability and inclination of a client to pay his debts are well established, it then be comes even difficult to obtain accounts from merchants, who hope by having an open running account to retain a good client's patronage and increase by such a system of credits the amount of his purchases. I is, therefore, not only the poorer classes who contract debts for the pur pose of procuring the necessities of life, but also the better classes such as tradespeople and merchants, who buy on trust; nor yet is the contraction of debts confined to the foregoing classes, but the evils ex tend in a deplorable degree to the nobility of the country, who, for lux ury and show, frequently exhaust their patrimony and then try to re lieve their impoverished condition by resorting to the hard money lender. Nor does the evil stop here, for it may be seen from each suc cessive budget that both the Government of Austria and that of Hun gary add annually many million florins to their indebtedness, or specific ally an average of 36,600,000 and 23,000,000 florins, respectively, dur ing the last five years. But it may possibly be insisted that these debt are only productive credits. If so, then the transaction may be ap proved of, seeing that such credits stimulate trade.

SUMPTUARY LAWS.

3. Are there any sumptuary laws or regulations concerning credits Strictly speaking, there are in Austria no laws or regulations restrict ing a man in the amount of his credits, but the same result is obtaine indirectly by means of penal action brought against insolvent debtors Paragraph 199 of the penal laws of Austria defines the various fraud which are punishable by imprisonment for terms varying from si months to one year, which, in case of aggravating circumstances, ma be increased to from five to ten years. Clause "f" of said paragrap reads as follows:

If any one, by extravagance, puts himself in an insolvent condition, or by intrigu has sought to prolong his credit, or by presenting fictitious creditors, or otherwise b fraudulent arrangements, or by secreting a part of his possessions, misrepresents th true condition of his assets.

This would constitute fraudulent bankruptcy, and be punished accord ingly. But if the fault of the bankrupt be not so grave, constituting misdemeanor rather than a crime, in that the intention to damage th creditors cannot be imputed, then the penalty is applied according t paragraph 486 of the penal code, which reads as follows:

When a debtor falls into bankruptcy, and cannot show that only through misfor tune and without his fault it has become impossible to satisfy his creditors in full or if his expenses have been excessive; or if he did not immediately himself notif the court when his assets surpassed his credits, but contracted new debts or execute payments, mortgages, or preferences, he is, in so far as his acts do not constitute th crime of fraud,* guilty of a misdemeanor punishable with imprisonment for from thre months to one year, which is also to be increased according to circumstances.

This might be designated simple bankruptcy, in conformity with the French code.

Traders and merchants, however, are especially subject to the sam punishments in the following cases:

(a.) If the insolvent commences business while in an insolvent con dition, or without possessing the necessary permission to transact busi

Paragraph 199, clause "f," given above.