16. What are the general effects of credit?

Credit, when judiciously given, stimulates trade immensely, and to the benefit of all parties concerned; when otherwise it leads to overtrading, the middlemen and even the importers sooner or later falling into the hands of the usurers, when their fate is decided, their final and total depletion being only a question of time in almost all cases. A. MORRELL,

UNITED STATES CONSULate,

San José, Costa Rica, July 5, 1883.

Consul.

HONDURAS.

REPORT BY VICE-CONSUL ROLOFF, OF AMAPALA.

I beg to acknowledge receipt of your dispatch to consular officers, of the 15th of May last. Its contents I have duly studied, and now I permit myself to answer in the following manner:

Credit always stimulates very much commercial transactions, and for this very reason the merchants of this Republic provide themselves from Europe mostly, where they receive a credit from six to twelve months, and only buy from the United States those articles which bear very high prices in Europe, as flour, grain, and a few other kinds of merchandise. From Europe they receive their dry goods (only very few come from the United States), fancy goods, hardware, &c. It would be very difficult for the merchants of South and Central America to accustom themselves to the way of doing business in the United States when for many years their trade has been with Europe, and have been accustomed to their way of doing business with long terms of credit. If the United States merchants desire to get the business of this country they must imitate the merchants of Europe, and once in possession of the trade of South and Central America, then they may accustom the people to the way business is done in the United States.

In this country, the same as in all others, there are people who are adverse to making promises which they cannot fulfill, while there are others who do not object to any whatever; but before there is any credit given it is advisable to ask for proper information.

This Republic has a very good code of commerce, which offers security to all who do business here, but this same code is of no importance at all if there should be any revolutionary troubles in this country. For the last seven years, however, all has been perfectly quiet in this Republic, and it seems it would remain so in the future, as everybody only thinks of settling down to work for new enterprises.

The extent of credit which prevails here is about two-thirds of the commercial volume.

Commercial losses depend entirely upon the political state of the country; when peace prevails everything flourishes.

Those who buy for cash have the advantage of lower prices than those who buy on time.

The interest on time accounts is generally 12 per cent. per annum in this country.

The classes with which the evils of credit are most conspicuous are the agriculturists. A bad crop may bring them under very great obligations, and it may be difficult to get out of them again.

None of the products or manufactured articles of this country require cash returns, without exception.

If a person desires credit, and is not known, or there is not full confidence in him, he has to mortgage his property and also to compromise himself for his present and future possessions. When the person is well known, and has good credit, a simple document is sufficient, stating in it amount, terms, &c.

For the merchant who fails in business it is difficult to resume again until he has satisfied his creditors, or compromises.

Bankruptcy is not very frequent here, but still it will happen. The laws are rather hard on those who fail.

With a commercial house, well assorted, on the American principle, "quick sales and small profits," I think a fortune can be made readily, if peace prevails in the country.

American goods are very little known in this country; only a few articles are imported from New York yearly, and flour and grain from San Francisco. I think it would be very desirable to make known American manufactures here. It would be advisable that merchants of the United States should send agents to this country as those of Europe do, or open a sample room for American manufactures, so that people may learn to know the difference between them and European manufactures.

UNITED STATES CONSULATE,

Amapala, August 16, 1883.

CARLOS ROLOFF,

Vice-Consul.

BRITISH HONDURAS.

REPORT BY CONSUL MORLAN, OF BELIZE.

In reply to your circular-letter dated May 15, 1883, containing the interrogatories of the Board of Trade of Scranton, Pa., I will state that the conditions of trade here are very different from what is customary in Pennsylvania and other manufacturing centers.

In Belize there are no factories of any kind, and the few mechanics who find work here do not work by the same rules that are observed elsewhere. For example, work commences here at 6 o'clock a. m., and at 9 o'clock all stop work and go to breakfast, taking an hour for that purpose; they then work until 4 o'clock p. m., when the day's work is done, and all go home to dinner.

Wages here are not as high as in the United States, averaging $1 to $2 per day for journeymen mechanics, such as carpenters and builders of all kinds. Money is also at an average discount of 10 to 12 per cent., as compared with American coin. (The Mexican dollar is the standard here, and a pound sterling is called five dollars.) I might also add that the workmen do not accomplish near so much work in a day as the average American, as they do not seem to work to advantage and are never in hurry to get through or see how much work they can do.

Credit is very general here and undoubtedly stimulates trade. In fact, credit prevails here to such an extent that it might be said that business could not be conducted without it. People here are not at all averse to contracting debts, and if time is no object it is generally safer to credit them for small amounts. They are, however, very slow

in paying up, and when they do, it is usually with the intention of con tracting another and perhaps greater debt.

All the mechanics and laborers, and, in fact, all the inhabitants of this blessed region can get time or have credit until they get a bad name with the storekeepers here; then credit is at an end. Experience with most of them here proves that it is safe to credit them with a smal amount on first acquaintance, which is generally promptly paid, but the credit which follows the first trial is apt to prove very long, if not an absolute loss.

There are no special laws here in regard to collecting debts, but spe cial laws are enacted in regard to hiring hands to mahogany and log wood works and sugar plantations. Most of the laborers of this class sign a contract before the police magistrate for six months' or a year's time and receive three or four months' wages in advance. Wages are usually $10 to $12 per month with rations.

The greatest bulk of the trade here with the country merchants and traders is done on credit. They usually come to town once or twice a year and settle up the old account and get credit for a new one. It is a general rule here to charge interest on time accounts that are much overdue, but with good customers this is not generally insisted on, as there is considerable competition among the merchants here for that trade, and a good customer would have little trouble in having at least a part of the debt extended through two or three years.

There are no means of ascertaining the exact amount of losses incidental to credit business, but I should estimate it at about 10 per cent. of the total amount of credit.

Cash buyers here have a great advantage, if they choose to adopt the "jewing principle,” i. e., make lower offers than the price asked, the inducement being the ready cash. But merchants here do not, as in the United States, have their price lists and billheads ornamented with the discounts for spot cash or a limited time, as, for example, 6 per cent. off ten days, 5 per cent. off thirty days, or four months net.

The evil effects of credit are most apparent with the lower classes and those who have small but regular salaries, such as clerks and Government officials, as it induces them to spend their salaries long before they are earned.

The only articles that command cash returns in Belize are natural products of all kinds, particularly those that are suitable to ship to Europe or the United States. The principal articles of export are mahogany, logwood, sugar, India rubber, sarsaparilla, &c.

Credits of record, such as mortgages, judgments, &c., are very common in the colony, and are found among all classes, more particularly small traders and property holders. The colony has no bank or banking-house, consequently there is not much done in that line among the larger property holders and merchants of the colony. Most of the lands of the colony are either crown lands or are held by the large firms and companies, and consequently they have no one to borrow from or to mortgage to.

Business here has usually been of a very profitable nature, and the number of failures in actual business has been comparatively few. The worst failure that ever occurred here was caused by the action of a branch house in London. In that case the principal creditors here had a meeting and forced the house to go into bankruptcy, which was accordingly done. The house finally paid 15 shillings in the pound, or 75 per cent. of its indebtedness. Owing to the fact that the colony is small and failures are few, special laws for bankrupts do not exist. The

common law of England is in force here.. A man cannot leave the colony while there is a judgment against him that is unsatisfied. This law is sometimes put in force when it would appear that the debtor is leaving the colony with the intention of defrauding his creditors. The average creole here does not often leave the colony except for short trips, and consequently losses caused by people running away do not often occur. The foregoing remarks have reference to the retail trade and the exports of the colony with Central America. Merchants and manufacturers who expect to sell goods in this part of the world must be prepared to give long credits, as people here have to sell that way, and even were the merchant here to sell immediately and for cash, the time that must elapse between shipping the goods, receiving them, selling, and sending the money or produce to pay for them, could not be much less than six months. The European merchants understand this thoroughly and make their calculations accordingly. They sell goods mostly on from six to twelve months' time, and if the buyer overruns the year, they add a small interest, say 5 per cent., and are well satisfied therewith.

Merchants of this part of the world, in ordinary goods from Europe, have to make up their orders at least six months before they expect to receive their goods, and when the goods arrive, six months more is not too long a time to expect to realize on them.

Fortunes have been readily made and lost in Belize in times gone by, but at present trade is much closer, and although fortunes are not so readily made as in former days, business as a rule is very profitable and the number of failures are few.

The general effects of credit are, I think, beneficial, as it stimulates trade, and affords small firms opportunities of business that would be denied them were everything cash, and also assists large mercantile houses to bridge over their embarrassments. Without it there would not be much wood cut, as most of the gangs of men engaged in cutting are paid by money that is advanced to the captain or contractor for that purpose.

What is really necessary for the American exporters to get their proper share of the trade of Belize, is to buy more of the products of the country, viz, mahogany, dyewood, &c., and, as mentioned.in my report on the commerce of this colony, a good, reliable manufacturer's agent would undoubtedly do a good business, and build up a demand for all classes of American manufactured goods.

In provisions, the market is almost entirely supplied from the United States, but in cotton and other manufactured goods the United States does not begin to compare with England.

The total imports of the colony for the year ending December 31, 1882, are as follows:

I hope that my efforts to answer the questions propounded by the Board of Trade of Scranton will prove satisfactory. ALBERT E. MORLAN,

UNITED STATES CONSULATE,

Belize, August 6, 1883.

Consul.

SOUTH AMERICA.

UNITED STATES OF COLOMBIA.

ΡΑΝΑΜΑ.

REPORT BY CONSUL ADAMSON.

The circular from Department of State, dated May 15, 1883, has had my careful attention. It calls for replies to certain interrogatories proposed by the Board of Trade of Scranton, Pa. Understanding that each consular officer is required to consider the questions only in their relation to his particular district, I deemed it prudent to consult the most experienced and successful merchants of Panama before attempting to reply, and the answers which follow are the result of thorough discussion of each point with intelligent business men.

1. Does credit stimulate trade?

Yes, undoubtedly; but if we confine the answer to profitable trade, then it only does so when carefully restrained within limits marked by strict prudence.

2. Are people averse to contracting debts?

No; not more than one person in a hundred shows any such aversion. 3. Are there any sumptuary laws or regulations concerning credits? None.

4. To what extent does credit prevail in proportion to volume of business?

The answer to this question must, of necessity, be a variable quantity. There are and have been certain periods of activity and consequent general prosperity which make money plentiful, enhance the price of laborof things which poor people have to sell-of lands and houses, or the rental thereof, &c. Such periods, for instance, as during the rush to California in 1849; during the time employed in making the Panama Railway, when large amounts were disbursed on account of construction of said road; during the war in the United States for suppression of the great rebellion, when vessels of war frequently visited this port or that of Colon, on the opposite side of the Isthmus, and by their expendi tures made money very plentiful; and now on account of the enormous sums expended here by the Interoceanic Canal Company, by which labor, food products, rents, value of property, &c., are greatly enhanced in price, owing partly to excess of demand over supply and partly to greater purchasing power of the people who have their labor to sell. During these exceptional periods of prosperity cash payments have been larger and the proportion of credit to volume of business is estimated at 66 per cent. In the intervening periods of dullness the proportion of credit has been about 80 per cent.

5. To what extent do losses incidental to business prevail?

From about 6 per cent. in times of prosperity to 10 per cent. in the intervening periods of dullness.

6. Do tradesmen extend credit to mechanics and laborers?

The laboring classes here are improvident, and as a rule have no reserve fund of savings. In order, therefore, to do any business the small shopkeepers are compelled to extend to them a monthly credit, which is limited or enlarged according to their confidence in the customer. Large profits are depended upon to make good the inevitable losses from bad debts.